Terry Smith - The Tax Pro

Subscribe to blog

ADD THIS BLOG to your feeds or subscribe by email using the form below.

Request Information

How can we help? Any information you provide is considered confidential and will not be shared outside of our firm.

Follow sandiegotaxpro on Twitter

Inheritance Taxes

FEDERAL INHERITANCE TAX

While the estate tax may be gone for 2010, you should be reviewing your current wills and trusts. The exemption will fall to $1 million in 2011. A review of beneficiaries of your life insurance policies, wills and trusts is a must. You no longer can just put in “spouse” or “my legal issue children” as beneficiaries who have been “left out” of these documents are challenging them in court. To insure that the beneficiaries that you want to get your proceeds must be named by name, date of birth and social to avoid anyone claiming they are your heirs.

CALIFORNIA INHERITANCE TAX

California repealed its state inheritance tax on June 9, 1982. Since California has no state inheritance tax, beneficiaries–those inheriting assets upon the death of another–will not generally pay the state a portion of the value of the assets received. However potential beneficiaries should be aware of a number of tax-related issues. Some assets received by intestacy or bequest may be subject to taxation despite the absence of a state inheritance tax. Any inheritance classified as “income in respect of decedent” remains taxable as income for the beneficiary. Such inheritance is money that should have been received and paid taxes on, but was not because a person died before receiving the money. Additionally, if an estate is located outside California but the beneficiary is a California resident, the state hosting the estate may impose tax obligations on the beneficiary