Whether you are navigating estate planning for yourself or deciding what to do about a bequest from a family member, understanding Orange County estate tax implications is a critical part of managing your finances successfully. Not only can understanding these implications help you make key decisions about how you want to distribute your estate, but it can also put you in a better position to plan ahead for your inheritance. An experienced estate planning attorney can help you determine how estate taxes have the potential to impact you.
Understanding Estate Taxes
Estate taxes are taxes imposed on an estate after the original owner passes away. Those taxes can significantly decrease the value of the estate and make it more difficult for heirs to keep all of the assets associated with the estate.
California does not have its own estate or inheritance tax, so beneficiaries are not taxed on the value of the estate. For large estates, however, the federal estate tax applies to estates that exceed the federal exemption amount. These taxes can range from 18% to 40% of the non-exempt amount.
Estate Tax Implications
Understanding estate tax implications can help individuals in Orange County with their estate planning needs. Several factors should be taken into account when deciding how to navigate the estate planning process or distribute assets after the original owner’s passing.
Paying Estate Taxes
When estate taxes apply, the estate itself will pay those taxes to the federal government before distributing the remaining assets to the beneficiaries. In some cases, this may mean selling assets to raise the funds for the taxes.
In states with an inheritance tax, on the other hand, beneficiaries will be responsible for paying the estate tax directly.
Out-of-State Inheritances
When an Orange County resident inherits assets and property from someone in another state, they may be responsible for paying taxes according to that state’s laws. Several states, including Washington and Oregon, do assign estate taxes.
Capital Gains Taxes
While California does not have a direct estate tax, individuals who choose to sell inherited assets or who receive income from them will be responsible for paying capital gains on any appreciation that occurs after the date of the individual’s death.
Estate Tax Planning and Its Impact on Estate Taxes
For individuals with high-value estates exceeding the federal threshold for taxation in Orange County, estate tax planning is a key part of determining how to manage assets after death. Estate tax planning may include strategic gifting, charitable donations, or establishing trusts to ensure that the individual’s heirs do not face unnecessary tax burdens after their death. Working with an experienced attorney is crucial to understanding possible tax implications and how to avoid excessive burdens on heirs.
Contact an Attorney to Discuss Estate Tax Implications in Orange County
Managing Orange County estate tax implications, even without state taxes, can prove challenging for many people. Whether you are creating your estate plan and want to make sure that you are managing your assets correctly to avoid unnecessary strain on your heirs, or you are a beneficiary who wants to make sure that you understand the implications of your new inheritance, working with a lawyer can help you understand your rights and implement effective strategies.
Contact Amity Law Group today to get started.
