One of the most common questions people have during the estate planning process is whether the estate will be subject to taxation. Fortunately for most people in Orange County, the answer is “no.”
However, it is still possible that the state or the federal government will take a portion of the estate if it carries a significant monetary value. Even so, it is essential for all parties to understand whether an estate plan will leave heirs vulnerable to taxation.
Understanding the estate tax in Orange County probate cases is essential to effective estate planning. A dedicated probate attorney could evaluate your estate’s vulnerability to taxation and suggest alternatives to protect you and the heirs named in your will.
When Do Estate Taxes Apply?
The concept of an estate tax comes with much political controversy in Orange County. In some cases, people believe that taking a portion of an estate with a high value is an appropriate way to fund government operations. On the other hand, other individuals think this is an unfair property theft that a person has worked their whole life to obtain.
For example, the federal government still collects taxes on estates of a specific value. According to the Internal Revenue Service, estates with more than $12.06 million are subject to taxation. While only a small number of estates carry this value, it is still a point worth remembering when considering the tax in probate cases. A knowledgeable attorney could explain the concept of taxing an estate in further detail during an initial consultation.
Creating Estate Plans that Avoid Taxation
While it is true that most estates will be exempt from any form of taxation, surprises can still arise. For instance, an heir who is required to pay inheritance taxes and fails to do so could face legal consequences. However, legal options are available to mitigate these risks.
One option is to exempt property from taxation by removing it from the estate. The most common way to accomplish this is to place that property within a trust or by gifting the property away. As soon as property moves into a trust or is gifted, it cannot be a part of probate. Putting property in a trust or gifting the property could lower the value of an estate to ensure no federal guidelines are violated.
A skilled probate lawyer in Orange County could help a person draft an estate plan that addresses all potential forms of taxation and helps minimize any risks that might devalue their property.
Contact an Experienced Orange County Attorney About Estate Tax in Probate Cases
Although Orange County does not tax estates, federal or state laws may require an estate to pay taxes under certain circumstances. Because estates are subject to taxation, it is still vital to question what the effect of the estate tax will be in a probate case.
Fortunately, an attorney could offer alternative ways to transfer property to limit the value of an estate and assist testators in drafting wills that do not leave their estates at the mercy of government entities. Contact a lawyer today to learn more about the legal options that might be available to you to avoid estate tax in Orange County probate cases.
