California Estate Tax Exemptions Can Lower Taxation for Both Spouses

8:39 am Uncategorized

With the federal estate tax most likely coming home with the cows in 2011, there are a few things that folks can do to limit the damages done by the new taxation. One of the most effective methods for this that can be easily prepared by a California asset protection lawyer is the A-B Trust. Now, this trust can only be used by married couples, but it is quite effective, so read on if this is you.

To obtain and make an A-B Trust in California work:

1. A married partners’ final wills must include the verbiage that pertains to an A-B Trust. This language can also be added to a California Revocable Living Trust .

2. Both spouses will need to split his and her assets (or his and his and hers and hers as our last blog indicated) so that the value of the assets is not wildly disproportionate. Once this has been done, both spouses will need to place their (relatively) equal assets into separate living revocable trusts. IMPORTANT: If this step is not taken, the A-B Trust will not be valid, so be sure that your California Living Trust attorney is experienced enough to know this!

3. Ensure that the attorney has set up the A-B Trust: in other words, make sure that if one spouse dies, the assets of his or her revocable estate will be transferred to the revocable estate of the surviving spouse, and visa versa.

Of course, all of this does take planning and the proper legal counsel from a seasoned estate planning attorney in California, but once it’s done it protects both spouses from unfair taxation, and also allows the surviving spouse to control assets and money within a revocable trust. It’s a pretty smart move!

Let our Costa Mesa law offices help you get started by contacting us today.

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