Since the probate process is complex and multifaceted, there are numerous tax issues that could arise at any point. One of the most common complications involves something known as the estate tax, which is a fee levied upon an estate after a decedent passes away.
The federal government administers this program, and all California residents are likely subject to it. However, unlike many other states, CA does not have its own state tax system. If you are confused about how all this works, a seasoned probate attorney could explain the estate tax in Rosemead probate cases to help you understand your obligations under federal law.
California Does Not Have an Estate Tax
It is important for all local residents to understand that state laws do not levy an estate tax on a decedent’s assets. While the lack of a state-level estate tax can have a favorable impact on an estate’s beneficiaries, there are still times where a tax liability could be accrued.
For instance, a Rosemead resident could face a tax on their inheritance in probate if they are the beneficiary of an estate who lived outside the state. In these cases, the beneficiary might receive tax bills in the mail from a completely different part of the country.
The actual taxes accrued from a different state can vary substantially. There are times when exemptions are available, especially when the inheritance comes from the spouse of the beneficiary. For instance, states like Hawaii allows something known as “estate tax exemption portability” which lets the first spouse that passes away transfer their unused estate tax exemption to the surviving spouse. Other states like Minnesota allow married couples to pause all of their estate tax payments until after both spouses have passed away. A detail-oriented attorney could review the circumstances and determine potential exemptions when an estate tax arrives from out of state.
How Do Federal Tax Obligations Impact an Estate?
Regardless of the unique state regulations, federal laws also impact the tax obligations associated with every estate. The tax can be steep, as much as 40 percent, but many people are exempt from it due to an income cutoff.
To elaborate, it a family’s estate is less than a certain value, they will not need to pay any taxes on their assets. This value changes each year, but the average cutoff is for estates that are worth around 11 million dollars. In many cases, the value of an estate is determined individually, so a couple would not face tax liability for their beneficiaries as long as their inheritance is worth less than double the established cutoff.
Concluding that an estate is worth less than the cutoff for tax liability is a crucial part of the probate process, so families should be sure to work with a diligent Rosemead lawyer when valuing their inheritance.
Call an Attorney about the Estate Tax in Rosemead Probate Cases
Although state laws do not establish an estate tax, you could still face some substantial liability if you have a high-value collection of assets or are inheriting from someone who lived in a different state.
Fortunately, with the right legal counsel, you could face issues involving the estate tax in Rosemead probate cases head-on. Contact an attorney right away to start preparing for the future and protecting the value of your estate.