The Potential Return of California State Estate Tax

Currently there is a bill before the California State Senate to revive estate taxes at the state level in California, which was previously eliminated in 2005. As currently drafted, the tax will affect clients with estates ranging from $3.5 million ($7 million for a married couple) up to the federal exemption level, currently $11.4 million ($22.8 million for a married couple). Estates valued over the federal exemption amount will not be taxed under the California estate tax, in order to avoid double taxation. As drafted, the California exemption amount will not adjust for inflation as opposed to the federal exemption amount which does. If approved by the legislature and signed by the governor, the tax bill will be part of the November 2020 elections, and if approved by the voters, will be implemented starting January 1, 2021.

If your estate value is between $3.5 million ($7 million for a married couple) and $11.4 million ($22.8 million for a married couple), you should schedule an appointment to discuss how this potential tax may affect you and what you can do to minimize state estate taxes.

We will keep you updated on developments regarding this tax bill.