California estates range wildly depending on how you have prepared and invested. When you pass on, you do not want to see more of your estate go to the government than to your loved ones you leave behind. Luckily, there are options you can take before and after to ensure your well-deserved fortune get to the people you want.
California is not a state that imposes inheritance taxes, but there are state estate taxes as well as federal taxes to be aware of.
Federal estate tax limits
As Forbes details, estate exemption extends up to $11.58 million which may mean you have nothing to worry about. Above that, the government taxes your estate at a flat 40%.
Other ways of lowering estate taxes
Tax free gifts provide you a way to lower your estate value while still giving to your loved ones. Every year, you are able to gift up to $15,000 to as many individuals as you would like.
Medical and tuition payments may not give your loved ones a monetary gift but it does lower their own financial burden. You are likewise unlimited on how much you can pay for others in that regard.
Setting up trusts can likewise secure your estate. From life insurance trusts that protect up to your policy amount, or setting up an AB trust that delays collection on your estate until your spouse passes away, there are options for you.
It is important to consider estate taxes before you are not able to. Beyond these, there are several more ways to plan your estate with proper consultation where your estate goes to your loved ones and friends before it gets portioned up by the government.