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WHAT IS THE ESTATE TAX EXEMPTION AMOUNT?

Law Office of Emily J. Buchbinder • Sep 06, 2018

In 2021, a U.S. citizen may transfer up to $11.7 million to a non-spouse without federal estate tax. This amount is indexed for inflation each year through 2025. On January 1, 2026, this law sunsets, unless Congress and the President make this law permanent. If the law sunsets, the estate tax exemption amount will revert to 2017 levels when the estate tax exemption was $5.49 million per person. However, this amount will be indexed for inflation from 2018 through 2025.

Do You Still Need a Trust Now that the Estate Tax Exemption Amount is $11.7 Million?

Absolutely! Remember that your trust allows your beneficiaries to avoid probating your estate when you die. Attorneys’ fees and executor’s fees for probating an estate in California are set under Probate Code §§10810 and 10811 and are very costly. These fees increase with the value of your estate. For example, if you have a gross estate worth $1 million, the attorney and executor are EACH entitled to $23,000. In addition, Probate is a public and lengthy proceeding that your heirs will have to endure! The most efficient way of passing assets on at your death is through the use of a revocable trust.

PROPOSITION 19 PRESENTATION FOR THE SANTA CRUZ COUNTY ESTATE PLANNING COUNCIL | JANUARY 13, 2021

By Emily J. Buchbinder • 15 Jan, 2021

HAPPY NEW YEAR!

By Law Office of Emily J. Buchbinder • 04 Jan, 2019
Does Your Trust Still Fit?

DOES YOUR TRUST STILL FIT UNDER THE NEW TAX CODE?

By Law Office of Emily J. Buchbinder • 31 Aug, 2018
If your trust requires a division of assets into two sub-trusts on the death of the first spouse, your current trust may no longer suit your needs. (Look to see if your trust mentions a Bypass Trust, “B” Trust, Exemption Trust, Marital Trust, or Family Trust). Many couples created their trusts before 2011 when there was a dramatic change in the tax code. In addition to higher exemption amounts (the amount of money individuals can gift their children and non-spouse beneficiaries during life and at death), the manner in which couples can transfer that wealth also changed.  Prior to 2011, married couples were required to divide assets into two separate trusts when the first spouse died to preserve the amount the deceased spouse could pass to his or her children without estate taxes. The downside to dividing assets on the first death is that it requires that the surviving spouse allocate assets between the two trusts and retitle all the assets. In addition, the surviving spouse must file an annual tax return for the trust that holds the deceased spouse’s property. The assets in the deceased spouse’s trust receive a new cost basis (fair market value). However, the assets in the deceased spouse’s trust do not receive another step-up in basis when the surviving spouse dies. Only the assets in the surviving spouse’s trust receive a stepped-up basis.
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