Preparing one’s estate can be a complicated process for many families here in California. An estate owner may have to decide what to do with a family home, certain heirlooms or the savings he or she has accumulated. Others may have to consider the process of how to manage passing down a family business or farm. A recent bill introduced in the senate may change the percentage of estate tax, and supporters claim that it will have a positive effect on those who want to leave their company to their children as part of the estate planning process.
Three U.S. senators from out of state introduced a bill called the “Estate Tax Rate Reduction Act.” If passed, it would reduce the percentage of estate tax from the current rate of 40 percent to 20 percent. This would bring the rate in line with the current rate for the capital gains tax. The senators say that the new rate will make the preservation of a family’s legacy much more easy.
The senators also say that the current rate is detrimental to small businesses and farmers who are simply trying to plan for a future that their families will someday face without them in it. Purportedly, many beneficiaries have to resort to selling part of the business just to afford the current 40% rate after the parent who originally owned the company or farm passes away. They argue that the rate is unfair and has a negative impact on the economy. They are hopeful that if the bill passes they can reduce the financial burden for families who might be affected.
Whether this bill passes or not, estate tax can be a complex issue. Those here in California who want to leave their business or farm to their children or another family member may want to consult an experienced estate planning attorney. An attorney can help create a comprehensive estate plan that will result in the best possible outcome for beneficiaries and help them create a new future.
