The death of a spouse is perhaps one of the most difficult and trying times in a person's life in California. After the funeral, much of the focus may be on settling the late spouse's estate. While this is certainly very important and must be taken care of, an estate planning review on the part of the surviving spouse is also very important.
More and more people are recognizing the need to have an estate plan in place, even if they are at the beginning of their careers and adult lives in California. There are still almost 64 percent of Americans without a last will and testament. Estate planning can help ensure that a person's final wishes are carried out as he or she intends.
Estate planning can be a complex undertaking in California. In creating an estate plan, a person is determining who will inherit his or her accumulated assets after the person's death. Assets can include personal belongings, financial assets and real property, to name a few. Assets included in estate planning can also include frequent flier miles and loyalty rewards from credit cards.
Changes in the estate and gift tax have made transferring wealth easier than before. New but temporary higher exemptions allow individuals and couples to gift, bequeath or give to the next generation greater sums of money than ever before. In California, there is less worry about estate taxes, but the concern still exists for some, and certain strategies can help those who worry about protecting assets.
The Tax Cuts and Jobs Act of 2017 is sure to have some long-term impacts on American finances. Since the change is so recent, experts are still trying to dissect the implications and make predictions about financial futures. Some people claim that the raising of the estate tax threshold will lead to a reduction in charitable giving by high net worth individuals. Others say that, for estate planning purposes, some California residents may even increase their giving, even in light of the changes.
A person with a significant amount of wealth may wish to maximize the benefit of passing along the wealth to heirs, or they could also wish to have some control over what happens to the assets after he or she dies. Certain types of trusts, such as a dynasty trust, may be more helpful for this than the typical will. Another benefit of a trust over a will is that it aids in reducing estate taxes. For some California individuals, a dynasty trust can help them achieve their estate planning goals.
A good plan never hurt, and indeed it has helped many individuals go through a challenging situation more easily. Estate planning may sound like overkill to those who don't have millions to distribute after their deaths, but in fact, a good estate plan can make everything crystal clear and also reduce the amount of your assets that are lost to court costs and confusion. California residents have the ability to estate plan at any age, and they may find some good reasons for doing so.
Many individuals like to have a plan for anticipated major changes in life. For some, estate planning is important for the inevitable event of someone's passing. When creating a plan, many folks in California wonder about how estate taxes could affect them and whether proposed changes could alter existing plans.
Charitable giving can be a philanthropic and strategic move for high-asset families. While the majority of California families do not have the net worth required for estate tax, those that do will face reduction of the estate due to taxation. Effective estate planning allots for strategies for reducing estate taxes, and charitable giving is one way that families can do that.
As the old adage goes, there are only two constants in life -- death and taxes. Luckily, folks who understand this fact can look to the future and plan for both. Recent changes to the tax exempt income threshold have already helped many in California with reducing estate taxes. Strategic choices about gifting and distributing assets can help others to pay less tax.