Most people in California don't have to be concerned about estate taxes when they prepare an estate plan. The federal estate tax only applies to estates that are worth more than $5,490,000. Married couples can effectively combine their estate tax exemptions, meaning that up to almost $11 million of their combined estates can be shielded from estate taxes. At the state level, California has eliminated its estate and inheritance taxes.
For those whose estates are above, or approaching, the federal exemption amount, tax planning is a critical part of the estate planning process. Fortunately, there are a number of strategies to reduce one's potential estate tax liability.