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Wednesday, February 23, 2011

Estate planning tips for California residents

Image attribution: Arkyan. GFDL, CC BY-SA 3.0

Estate planning tips for California include those aspects of estate planning that may benefit either the estate planner or the inheritors of the estate. Determining the benefits of estate planning first involves defining the objectives of the estate in order for specific actions to take place to meet those goals.

In other words, in order to provide detailed estate planning tips, one must first know the intent of the estate. That said, this article will illustrate certain aspects of estate planning regarding California that may be of benefit or interest to the estate planner or estate beneficiaries. It will do so in three parts consisting of California estate planning tips, distribution via probate, and relevant references.

California estate planning tips


To plan an estate involves defining its objectives, after which techniques can be applied to the estate's and/or beneficiaries benefit and in accordance with financial and regulatory limitations and options. These tips can vary depending on the size of the estate, type of assets in the estate, complexity of the estate's goals, health and family of the estate planner etc. In California, some items to consider in regard to estate planning are listed below.

• A California State Tax Return is NOT required for Estate holders who die after 2004 as per California State Controller (7)

•A Grantor Retained Annuity Trust (GRAT) may reduce tax on inherited income (5)

•Family Limited Partnership may not be helpful in cases of favorable creditor rulings (8)

• California Gift tax does not apply to spouses of the estate holder (9)

• California probate, civil and other relevant legal code may supersede living Will (2)

• No inheritance tax is due from new California estate beneficiaries (7)

As evident from the points above, there are many nuances to estate planning in California as with any State. Due to the many potentially relevant laws, codes or requirements, California estate planning may best be achieved with the assistance of a qualified estate planner, accountant or attorney.

California estate distribution tips


The California probate process can take anywhere from 6 months to 21 months depending on the case and the circumstances. This California probate diagram illustrates an example of one California County's probate process from start to finish. However, in some instances, particularly when an estate's value is low, the probate process may be reduced in length or requirements.

A couple of interesting points in the California probate code are 1) the surviving spouse of the estate holder's legal right to contest the will in some cases of real property and 2) the legal right of family members and interested persons to file petition for information regarding the will of the deceased.

In other words, there is at least one instance in the California probate code in which a spouse can contest a valid will, and where information regarding the estate can be requested from persons not involved with the probate. The above points are further elaborated below with legal code or related links.

(1) Spousal contest of estate will:

According to California's probate code, section 120, the spouse of the deceased can "elect" to take a "portion" of real property if such property is not jointly owned and allocated otherwise in the deceased's will if the deceased lived out of State but owned property in California.


(2) Heirs may file a petition to determine beneficiary status of real property

California probate code 248-249.8 also states that heirs not entitled to real property via succession may request information regarding the will of the deceased via petition.


(3) Probate can be simplified in some cases when estate values are under a certain amount

In some counties, estates valued below an amount determined by the State and/or County may bypass the probate process via filing of an affidavit with the county court.

Useful California estate planning references


The following is a list of references both used in the creation of this article and potentially useful for the estate planner or reader. These references include information on California estate laws, taxes, and other references in addition to general estate planning instruments. The references are categorized as such for quicker location of information and are numbered in accordance with numbered references within the article.

California probate law:

1) http://www.megalaw.com/ca/top/caprobate.php
2) http://caselaw.lp.findlaw.com/cacodes/prob.html

California taxes:

3) http://www.retirementliving.com/RLstate1.html
4) http://www.bankrate.com/brm/itax/edit/state/profiles/state_tax_Cal.asp

Estate planning techniques:

5) http://library.findlaw.com/2002/Sep/1/130768.html
6) http://www.dsbcpas.com/estatetaxplanning/estateplanningtech.html
Additional California estate references:

7) http://www.sco.ca.gov/ardtax_estate_tax.html
8) http://www.rjmintz.com/ownership-spouse.html
9) http://www.taxes.ca.gov/Income_Tax/specialind.shtml

Disclaimer: The above content is provided for informational purposes only and does not replace the advice of a certified financial planner, accountant or attorney. The information herein is to be used at the reader's discretion and the author assumes no liability for any consequences associated from such.