Estate planning is often misunderstood, leading many Californians to put it off or make decisions based on misinformation. Whether you believe estate planning is only for the wealthy or think your assets will automatically transfer to your spouse, it’s important to separate fact from fiction. In this guide, we’ll debunk common myths about estate planning in California and explain why having a well-crafted plan is essential for everyone, regardless of the size of your estate.
In this article, you can discover…
Estate planning isn’t just for the wealthy—it’s for everyone, no matter the size of your assets. It ensures that your affairs are organized, reducing stress and responsibilities for your family during an already difficult time.
Estate planning helps with more than just distributing assets. It also streamlines decisions about your medical care, financial matters, and other important legal issues, making it easier for your loved ones to manage everything according to your wishes. Whether you have a large estate or a modest one, having a plan in place ensures that your intentions are clear and helps prevent unnecessary complications down the road.
Although creating a trust can provide certain tax advantages, it doesn’t eliminate all taxes. There are various types of taxes that may still apply to your situation, such as federal estate taxes, capital gains taxes, and property taxes.
The federal estate tax exemption is $13.61 million per individual and double that for married couples. Estates valued below this threshold aren’t liable to pay this tax. However, taxes may apply for estates exceeding this amount.
Capital gains taxes may also occur when selling assets that have appreciated in value. A revocable living trust offers a step-up in basis, meaning beneficiaries could sell the assets without capital gains taxes, but it doesn’t apply in all cases.
Property tax reassessments under Proposition 19 are another factor to consider, especially when transferring property between generations. Under Proposition 19 (Prop 19), the rules around transferring property tax assessments have changed significantly. Previously, Californians could retain the same property tax basis their parents or grandparents had when they owned a home.
Now, if that same person were to transfer the home to a child or grandchild, they could potentially keep the original property tax basis only if the property is their primary residence. This exemption applies specifically from a parent or grandparent’s primary residence to their child or grandchild’s primary residence.
Consulting with both an attorney and a tax professional is a sure way to understand the specific tax implications in your case.
Despite California being a community property state, automatic transfers only occur under specific conditions. For jointly owned financial accounts or real estate held as joint tenants with the right of survivorship, the surviving spouse automatically gains full ownership. However, they still need to file an affidavit of death to remove the deceased spouse’s name.
Assets solely in one spouse’s name will not automatically pass to the other. Even if the surviving spouse has a community property interest, legal steps like spousal property petitions or affidavits may be required, depending on the asset’s value. Separate property issues also arise if the deceased had children from a prior marriage or owned the property before marriage.
As a dedicated attorney at Preston Law Group, P.C. in California, Taylor Preston focuses on estate planning for clients of all financial backgrounds. With a proven track record of helping individuals navigate the complexities of estate management, Taylor understands the importance of having a solid plan in place—no matter your asset level.
His personalized approach ensures that your unique needs will be met, preventing unnecessary complications for your loved ones in the future. If you’re ready to secure your legacy and ease your family’s burden, contact Taylor today to start your estate planning journey and gain the peace of mind that comes from having a comprehensive plan in place.
You can certainly write your will by hand, and it will be legally valid as long as it meets certain criteria. This is known as a holographic will.
For a handwritten will to be valid, it must be written entirely in the testator’s handwriting, meaning the person creating the will must write and sign it. It can even be written on something as informal as a napkin or piece of paper. However, the testator must have the capacity to understand their assets, family, and the significance of their actions in distributing their property.
While legally valid in many cases, a holographic will is not the ideal way of setting up a will. It’s better to work with a professional to ensure that all legal formalities are observed. Doing so will dramatically reduce the chances of challenges arising and heading to court.
While there are strategies to reduce taxes, simply gifting assets to your children won’t necessarily allow you to avoid taxes. Gifts are subject to gift tax, with annual exemptions in place, but any amount above the exempt limit could trigger a gift tax.
Additionally, larger gifts will count against your lifetime exemption, currently $13.61 million. If you exceed this amount through lifetime gifts, the remaining value of your estate will be subject to estate taxes at the time of your passing.
False! Online estate planning tools may be enticing due to their lower cost, but they are often quite limited in terms of their scope and quality. These tools only provide as much value as the information entered into them, and many people don’t understand the complexities of estate planning.
Working with an experienced attorney ensures that the specific details of your situation are properly addressed and your estate plan aligns with your intentions. Attorneys can offer personalized advice, make necessary adjustments, and ensure legal compliance. Online tools lack this depth and support.
To make the most of your first estate planning visit, it helps to come prepared with a few key details:
While you don’t need to have everything figured out beforehand, arriving with these details in mind will make your meeting more efficient and productive.
For more information on Estate Planning In Orange County, CA, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (949) 993-0639 today.
As a dedicated attorney at Preston Law Group, P.C. in California, Taylor Preston focuses on estate planning for clients of all financial backgrounds. With a proven track record of helping individuals navigate the complexities of estate management, Taylor understands the importance of having a solid plan in place—no matter your asset level.
His personalized approach ensures that your unique needs will be met, preventing unnecessary complications for your loved ones in the future. If you’re ready to secure your legacy and ease your family’s burden, contact Taylor today to start your estate planning journey and gain the peace of mind that comes from having a comprehensive plan in place.
