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California Tax Planning

Are you ready to embark on a journey to secure your legacy? You may be wondering, “Does California have an estate tax?” The good news is, California doesn’t impose a state-level estate tax. However, federal estate taxes still apply depending on estate size. 

In the world of California estate tax and asset protection, knowledge is power. It’s essential to understand how to shield your hard-earned assets and ensure your loved ones inherit the full benefits of your life’s work. At Vaksman Khalfin, PC, we’re here to guide you through this intricate landscape.

Robert B. Vaksman, Esq.

Founding Partner

“Some cases are easier than others, but this doesn’t matter at Vaksman Khalfin, because we have the resources to help our clients no matter what is at stake, especially if it’s hard."

Meet Robert
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ALAN D. KHALFIN, ESQ.

Partner & Managing Attorney

"People call me when they need to plan, but also when something terrible has happened and they need help. It is personal to my clients, so it is personal to me. We have to help — no matter what."

Meet Alan
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What is Estate Tax?

Estate tax, or inheritance tax, is a levy imposed on the transfer of a deceased person’s estate to their heirs. This tax is based on the overall value of the assets and properties left behind. In essence, it’s a tax on the right to transfer assets at the time of death. The estate tax applies to the total value of an individual’s estate above a specified exemption level set by the government. 

Estate tax laws and regulations vary by jurisdiction. Although there isn’t an estate tax in California, estates of $12.92 million are subject to federal estate tax. Understanding these laws when engaging in estate planning can mitigate tax burdens and protect your assets for future generations.

Know the Ropes: Assets and Estate Tax

To safeguard your wealth effectively, you need to know what’s at stake. Our experts can help you understand which of your assets are subject to or exempt from estate tax and how to navigate the taxation landscape. Here are some common assets that may be subject to federal estate tax:

  • Real property, including primary residences, vacation homes, and investment properties 
  • Financial assets such as stocks, bonds, and retirement accounts
  • Business interests and personal property like vehicles, art collections, and jewelry can contribute to the overall value of the taxable estate.

In California, you can exclude certain assets from estate tax calculations, including:

  • Life insurance proceeds
  • Assets left to a surviving spouse
  • Some charitable donations
  • A specific amount of assets that can be passed on tax-free

Valuation of Assets for Estate Tax Purposes

Accurate asset valuation is essential in estate planning to ensure the proper distribution of the estate. When someone passes away, their estate’s total value determines if it exceeds the applicable federal estate tax exemption thresholds. The valuation process involves determining the fair market value of all the assets owned by the deceased individual.

Each of your assets needs proper assessment. Real estate, investments, business interests, personal property, and any other assets are appraised at their current market value. Appraisers consider various factors, such as market conditions, the asset’s condition, and demand, during the valuation process.

Our team specializes in this crucial aspect, ensuring the correct appraisal of your assets for estate tax purposes. This meticulous approach minimizes potential discrepancies during estate settlement.

How to Protect Your Assets from Estate Tax

Protecting your assets from estate tax requires strategic planning and utilizing various legal and financial tools. Asset protection isn’t just about shielding your wealth from estate tax. It’s also about securing your assets from potential risks and liabilities. Our experts will guide you through the intricacies of asset protection and tax planning, helping you build a comprehensive shield around your legacy.

Estate taxes can cast a shadow on the wealth you intend to pass on to your heirs. Thankfully, you can use various strategies to protect your assets from estate taxes. We’ll delve into the art of estate planning and reveal how you can strategically reduce estate taxes, making your wealth transfer smoothly.

Trusts That Stand Strong Against Estate Taxes

Irrevocable trusts, like the bypass or credit shelter trust, allow couples to maximize their estate tax exemptions and can efficiently reduce the tax burden on the surviving spouse’s estate. 

A bypass trust utilizes the estate tax exemption amount of the first spouse to pass away, sheltering assets and preventing estate taxation after the second spouse’s passing. The surviving spouse can access the trust’s income or principal, while the trust ultimately benefits the heirs or designated beneficiaries.

Like bypass trusts, credit shelter trusts use the estate tax exemption to shield assets from taxes. Both trusts are commonly used in estate planning to ensure the maximum assets are passed down to heirs while taking advantage of available tax benefits. These trusts are powerful tools that can keep your wealth intact for generations to come.

Leveraging Irrevocable Trusts for Estate Tax Reduction

Irrevocable trusts, like qualified personal residence trusts (QPRTs) or grantor retained annuity trusts (GRATs), can be strategic solutions. QPRTs facilitate the transfer of a personal residence to beneficiaries while minimizing its valuation for estate tax purposes. GRATs allow individuals to transfer appreciating assets with reduced tax implications.

Asset protection trusts are a powerful tool, shielding assets from potential risks. However, it’s vital to understand their limitations. While they provide protection from creditors and legal liabilities, they may have stringent legal requirements and could limit immediate access to assets.

Advantages of Establishing LLCs for Estate Tax Planning

Limited liability companies (LLCs) are instrumental in estate tax planning. They provide a unique opportunity to safeguard assets by allowing individuals to transfer ownership without losing control.

By placing assets, such as real estate, investments, or a family business, into an LLC, you can gift or sell ownership interests to family members or heirs. This gradually reduces the overall value of your estate and minimizes the taxable value of your estate.

Properly structured and managed LLCs can be valuable tools in estate tax planning strategies, offering a balance between tax advantages, control, and asset protection. This strategy not only mitigates estate tax but also offers liability protection and operational flexibility.

Minimize Your Estate Taxes with Gifting

Thankfully, there are other strategies to protect your assets from estate tax. Gifting, or transferring property during your lifetime with nothing in return, reduces estate tax liability.

Under the annual gift tax exclusion, you can give up to $17,000 per year to an unlimited number of people without facing gift tax. Gifting allows you to slowly reduce the size of your estate while minimizing estate taxes.

What You Can Expect

from Vaksman Khalfin Estate Tax & Asset Protection Attorneys

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Free Consultation

Our goal is for each client to have an opportunity to secure their assets. That is why your Vaksman Khalfin journey begins with a no-obligation free confidential consultation. This free session provides an opportunity to understand your unique needs, discuss your concerns, and establish how we can assist with estate tax and asset protection.

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FLEXIBLE PRICING

We understand that everyone's financial situation is different. Moreover, everyone may have different estate tax and asset protection. With this in mind, we offer flexible pricing structures to ensure our quality legal services are accessible to all. Our goal is to provide exceptional value, at a cost that makes sense for your personal circumstances.

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SAFE ACCESS TO YOUR DOCUMENTS

Your estate tax and asset protection documents are important and should be readily accessible when you need them. To ensure the security of these documents, we provide safe and easy access to your files.

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PERSONAL SUPPORT

A dedicated attorney and case manager will be assigned to your case to ensures a personal and concerted approach to your legal matter. This focused support provides a direct point of contact, personalized attention to your case, and ensures the swift resolution of any concerns or issues that may arise.

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Vaksman Khalfin, PC: Your Trusted Advisor

What makes Vaksman Khalfin, PC your go-to partner in California estate tax and asset protection? Our expertise, authoritativeness, and trustworthiness set us apart. With a team of seasoned attorneys specializing in estate tax and asset protection, we offer tailored guidance that ensures your legacy remains secure.

Our skills lie in California estate taxes and the art of minimizing them. We’ll show you the ropes, guiding you through the complexities of estate planning. Whether it’s understanding California estate tax exemptions, asset valuation, or trust structures, we’ve got you covered. Our team specializes in crafting personalized strategies that keep your wealth intact.

Your wealth represents your life’s work and your legacy to future generations. At Vaksman Khalfin, PC, we’re dedicated to helping you protect and preserve it. Let’s start the conversation about your estate tax and asset protection needs. Together, we can build a secure future for your loved ones.

California Estate Tax & Asset Protection

Frequently Asked Questions

The irrevocable life insurance trust (ILIT) is often a preferred option. It can help remove life insurance from the taxable estate, preserving more assets for beneficiaries.

One major drawback is the lack of direct control over assets placed in the trust. Assets are managed by a trustee, limiting your control.

Delaware and Nevada are frequently considered great states due to their robust asset protection laws and favorable business climate. But our California estate tax and asset protection lawyers will help you navigate California's legal landscape if you don't fall under Delaware or Nevada jurisdiction.

Asset protection comes in various forms, including trusts, LLCs, and insurance. The best type depends on individual circumstances and goals.

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