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California Estate Tax May Reach 2020 Ballot

Estate taxes have been less and less of a concern due to the steadily increasing exemption, which is currently $11.4 million per individual and $22.8 million for a married couple. However, that all may be changing for California residents come 2021.

A new Senate Bill, SB 378 (Scott Wiener), will propose a separate state estate tax for California residents with estates above $3.5 million, as explained in the LA Times Article “California voters could be asked to impose an estate tax, replacing the one Trump loosened.” If it makes it through the legislature, I wouldn’t be at all surprised if Governor Newsom signs off on it, and I suspect it would pass with the voters as well in the November 2020 statewide election if it makes it that far.

If the Bill becomes law, California would collect 40 percent of assets worth more than $3.5 million, or $7 million for married couples.

The tax would bring in an estimated $500 million to $1 billion a year, to be used on programs such as college savings accounts for low-income children. According to the latest estimates by the U.S. Census Bureau,

nearly 1 in 5 Californians lives in poverty, the highest rate of any state in the country.

This is definitely something to be aware of for estate tax planning purposes, especially if it makes it through the legislature and gets signed by Newsom later this year. The California estate tax is a much more ripe consideration than the potential for a reduction in the Federal exemption come 2026, in my opinion. If they can afford to so so, people with estates above $3.5 million ($7 million for couples) should consider making gifts to children and other beneficiaries no later than 2020 if this Bill makes it’s way into law.


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