Most people in California don't have to be concerned about estate taxes when they prepare an estate plan. The federal estate tax only applies to estates that are worth more than $5,490,000. Married couples can effectively combine their estate tax exemptions, meaning that up to almost $11 million of their combined estates can be shielded from estate taxes. At the state level, California has eliminated its estate and inheritance taxes.
Some readers may remember the probate fight involving former model Anna Nicole Smith and the estate of her deceased husband, Texas billionaire J. Howard Marshall. Smith married Marshall in 1994 when she was 26 and he was 89. When he died the following year, Smith was not named in his will. She challenged the will unsuccessfully in a Texas probate court. She later filed for bankruptcy in California, and argued in that proceeding that Marshall's eldest son, Pierce Marshall, had improperly prevented his father from leaving an inheritance to her.
Probate in California can be expensive and time-consuming. But if an estate is of relatively modest size, a full estate administration proceeding may not be required. Under California's Probate Code, simplified proceedings are available for smaller estates.
Creating a family trust that will endure for generations is an ambition of many people who have amassed significant wealth. Under California law, however, there is a limit on how long an interest created by a trust can last. That limit is called the "rule against perpetuities."