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Candidates’ estate tax plans will not affect most Californians

by | Oct 7, 2016 | Estate Planning |

As the 2016 presidential election enters its final weeks, those voters who have not already made up their minds will be studying the candidates’ positions on various issues. Some voters in the Sacramento area may wonder if the federal estate tax should be an issue of concern. The answer, for all but the wealthiest California residents, is no.

The Republican candidate has proposed abolishing the federal estate tax. Even if this were to happen, it would have no effect on the vast majority of people. Currently the federal estate and gift tax does not apply to the first $5.45 million of a decedent’s estate plus prior taxable gifts, due to the lifetime exclusion. Married couples can combine their exclusions and effectively shield $10.9 million from estate and gift tax.

For individual estates worth in excess of the applicable exclusion amount, the top tax rate is currently 40 percent. Hillary Clinton has proposed raising the top rate to 65 percent. That rate would apply only to individual estates worth over $500 million, or $1 billion for married couples.

At the state level, there is even less cause for concern. California has no estate tax for those who died on or after January 1, 2005. The state has no inheritance tax – a tax collected from heirs and beneficiaries – for deaths on or after June 8, 1982.

For those who have enough wealth to be subject to the federal estate tax, there are many strategies available to reduce the impact of the tax. A knowledgeable estate planning attorney can help prepare a plan that avoids unnecessary taxation.

Source:, “Clinton Wants 65% Top Estate Tax Rate, Trump Wants Repeal,” David Floyd, Sept. 23, 2016

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