People in California know that steadily increasing taxes at the federal and state level can be a huge burden for older Americans, but Californians may not even realize that their burden is actually worse than those imposed in many other states across the country. According to a recent study, California is one of the nation's 10 least-friendly states when it comes to taxing retirees.
But Californians don't need to take this doom and gloom as a sign that they need to uproot themselves and migrate to a more tax-friendly locale. Instead, they just need to make sure they are making the most of their money by having an up-to-date and comprehensive estate plan. When it comes to complex estate planning, only an experienced estates and trusts attorney can help Californians find the best balance between avoiding unnecessary taxation and protecting themselves in the event of unforeseen events.
California retirees have a lot of different forms of taxation to consider, and when one or more of these taxes increase, those Californians living on a fixed income can be put in an uncomfortable position. For example, California is the only state in the country that imposes an additional penalty on seniors who take early withdrawals from their retirement accounts. And California seniors shouldn't expect any big breaks on property or sales taxes, either.
But fortunately, California no longer collects estate taxes, so California residents can feel better about passing on an inheritance to their children and other heirs without taking a massive tax hit on the state level. So, financially savvy seniors who can reasonably control their expenses during their lifetimes can still enjoy the peace of mind that their loved ones will benefit from their wealth after their passing.
Source: Laughlin Times "Retiree friendly: Arizona, Nevada make list of benevolent states for older Americans," Neil Young, Jan. 14, 2014