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  • A Fresh Approach. Comprehensive Estate Planning.
  • A Fresh Approach. Comprehensive Estate Planning.
  • A Fresh Approach. Comprehensive Estate Planning.
  • A Fresh Approach. Comprehensive Estate Planning.

Estate Tax

In addition to minimizing expenses by avoiding probate and thus minimizing attorney and executor fees, a revocable living trust allows married couples to maximize their allowable estate tax exemption, which could save their beneficiaries thousands, if not hundreds of thousands of dollars in estate taxes.

The estate tax is a tax that is owed by the estate of a deceased person, but only if the person dies while owning assets in excess of a certain amount, known as the “estate tax exemption.” The estate tax exemption is set by the federal government, subject to change, and has varied significantly from the date of its creation. The following chart gives a snapshot of how the estate tax exemption amount and tax rate has changed in the last several years.

Year Estate Tax Exemption Top Estate Tax Rate
1997 $600,000 55%
2002 $1,000,000 50%
2009 $3,500,000 45%
2011 $5,000,000 35%
2014 $5,340,000 40%
2015 $5,430,000 40%

In 2015, for example, anyone who dies with assets in excess of $5.43 million will be taxed at a rate of 40% on any assets above the exemption amount. However, a properly drafted revocable living trust will allow a married couple to avoid some, if not all, of the estate tax.* Additional strategies for minimizing and eliminating taxes can be identified during a meeting with an estate planning attorney.

*Disclaimer: The estate tax exemption and tax rates described here are for informational purposes only and should not be considered nor relied on in place of legal advice. You should seek advice from a qualified estate planning attorney who is licensed in the state of California to design a plan that fits your circumstances.