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Why California Tax Lawyers are Necessary in Estate Planning

Monday, October 3, 2011

Why California Tax Lawyers are Necessary in Estate Planning

Many people have a jaded view of what estate planning really is. Some people think that the necessity for estate planning is only for those who are wealthy, but this is not so. California tax lawyers are able to advise anyone on the necessity for estate planning and the various ways in which a person can protect their assets. Estate planning is necessary even if you only have a little cash in the bank and own a home or rental property and your California tax lawyers will be able to help you with the procedures. The necessity for this is so that your beneficiaries are not burdened with paying unnecessary taxes or being tied up in probate court while fighting the IRS over the tax liabilities.

What Changes have been made to Estate Planning?

In 2010, the IRS repealed the estate tax, but re-established the tax in 2011. Many people as a result of the planned repeal figured that it was no longer necessary to enact any type of estate planning. California tax lawyers were advising taxpayers to continue with estate planning procedures to avoid diverting the burden onto beneficiaries.

What is the purpose of estate planning?

The main purpose of estate planning is to avoid unnecessary taxes that are imposed by the IRS. You can do estate planning with the help of your California tax lawyers and with the help of a valuator. A valuator is important and will work with both the IRS and your California tax lawyers to answer any questions that might arise about the valuation of your personal property. Forensic reasons account for the need of a valuator to assign specific values to your estate. Many California tax lawyers work with valuators specifically for estate planning purposes.

What types of tax deductions can I take to ease my Estate Tax Burden?

This is a good question and one that warrants a visit to your California tax lawyers for an in-depth evaluation. However, there are several broad categories of deductions that you may find yourself qualified to take to lower your tax liabilities on your estate.

  • Marriage tax – if you leave your personal property to your spouse and it transfers immediately on death, your spouse will not be charged any kind of tax on the gifts or bequest. This is one of the most common exemptions from the estate planning taxes that are routinely applied to estates. Speak with your California tax lawyers to determine if your estate will qualify for this.
  • Charitable deductions – if you leave any portion of your estate to a charitable organization, there will not be any taxes levied against the total donated. Professionals like California tax lawyers routinely advise clients to consider charitable donations as they will be tax free.

In addition, the tax exemption rate increases every couple of years as inflation rises. The IRS allows more money to be gifted without being taxed. When you give a gift, it has no bearing on your federal or state income tax filings. It may affect those who you gift with money or property, however. This should not deter you from the estate planning process as the process will make your estate easier to handle after you pass.

If you are looking to establish estate planning, contact your California tax lawyers today for sound advice.