The state of California does not have its own estate tax, unlike other states.

In 2011 and 2012, the Federal Estate Tax is set at $5,000,000.

For married couples, they are able to pass a total of $10,000,000 before their estate is subject to estate taxes. Under the current estate tax laws passed at the end of 2010, married couples no longer need an A-B trust to each receive his or her $5,000,000 exemption.

In 2013, the estate tax is set to drop to $1,000,000. This scenario could be similar

to what happened in 2010.  Based on laws set in 2001,  the estate tax in 2009 was $3,500,000 and in 2010 the estate tax was repealed. In 2011, the estate tax was set to drop to $1,000,000.  As 2011 approached, congress agreed upon raising the estate tax limit to $5,000,000.  Could this happen at the end of 2012?

What Taxes Could Be Expected?

Income taxes for the deceased’s final year and taxes on deferred retirement accounts may need to be paid before the estate is distributed.  Consult an accountant and/or financial planner for advice on these taxes.

How Do Estate Taxes Work?

If an estate’s net value (assets minus liabilities) is less than the estate tax limit, no estate tax is due.

If the estate’s net value is above the estate tax limit, only the amount over the limit is subject to the estate tax of 35%. That amount is due typically within nine (9) months of the deceased’s passing.