Many people think that a primary reason for estate planning is to avoid paying estate taxes, but the truth is that less than .02 percent of Americans will actually pay any estate taxes. This number may be higher in California, but the $5.45 million exemption ($10.9 million for couples) means that most of us don’t have take special precautions to minimize estate taxes.
What most of us do need to be concerned about is avoiding probate and probate fees. All estates that own real property or have a total estate value over $150,000 will need to go through the probate court. Probate fees for an estate valued at $500,000 exceed $26,000. There are several planning options to avoid probate.
If the value of your estate exceeds the amount of the exemption, there are steps that you can take to reduce your overall estate value. These includes making gifts while you are alive and using certain types of trusts. Please contact us if you think you may be subject to estate tax or would like to plan to avoid probate so that we can answer your questions and offer guidance.