Redlands California Estate Planning Blog

Successfully carrying out the task of closing a deceased family member's estate may require an executor to probate the will, secure assets, notify beneficiaries and more. California residents who have done this job have benefited from working with attorneys, accountants and financial and insurance advisors. Unfortunately, executors often make mistakes that can easily be avoided by having the right frame of mind and remembering a few basic things.

It's good to remember the end goal in regard to probate/estate administration. The executor's role is to move the estate forward and close it within a reasonable amount of time. An executor will likely deal with negative consequences if they use their role to bring up past family issues or to go on a power trip. They will need to be somewhat humble to do their job well.

The Tax Cuts and Jobs Act significantly raised the federal estate tax exemption. For the executor of an estate in California to know if an estate has exceeded this exemption, the person must calculate the gross estate of the decedent. Estates with values above the exemption will need to complete form 706 for the Internal Revenue Service. If any estate taxes are owed, they must be paid no later than nine months after the person's date of death.

Changes to tax law in 2018 raised the federal estate tax exemption to $11,180,000 per person from $5,490,000 per person. In 2019, the exemption went up again to $11,400,000 per person or $22,800,000 for a married couple.

Parents of special needs children in California often turn to trusts to provide funds and security for their kids. Eligibility for government benefits often factors into these decisions because many people want to ensure that their children remain eligible for government programs. Frequently, trusts solve this problem because they can set aside money to help a special needs person while not inflating his or her income and assets.

A special needs trust states how its assets will supplement a person's existence while he or she collects government benefits. This way, an individual remains eligible for public support for housing and other basic needs. The trustee will grant funds to the person as needed for extra expenses like travel and entertainment. Parents may fund a trust as soon as they create it or at the time of their passing. Funding could come from estate assets or a life insurance policy.

After people pass away in California, there are still a number of tax tasks and obligations related to their estate, which includes all of the assets owned by a person at the time of death. This includes real estate, bank accounts, securities, overseas properties and even gifts made during a person's lifetime. In addition, there are other types of property that are also considered to be part of a person's estate, even if their ownership structure is more complicated. These include annuities, some types of life insurance proceeds, jointly held property with a right of survivorship and property that the person can control even without ownership.

All of these assets are added together after a person's death. This amount is compared to the federal exemption for estate taxes, taking provisions for gift tax adjustments into account. If the estate is larger than the federal exemption amount, the executor must file a special tax return for estate taxes, IRS form 706. In some cases, no estate tax may be due because of special regulations for transfers between spouses, but the form must still be completed.