A frequent question we receive is whether family will pay taxes on inheritance.
And a question we’re often asked is, will my family have to pay taxes on their inheritance?
A frequent question we often receive is whether our clients’ loved ones will have to pay taxes on their inheritance.
If in several states, an inheritance tax is imposed by the state, sometimes the threshold is as low as $1 million, meaning that anything you leave behind in addition to that amount will be taxed at whatever rate is required by the state.
The state of California does not currently impose a tax on your estate after you pass away.
So the only estate or inheritance tax your family has to be concerned with is the federal estate tax.
Currently, this is a tax that only applies to the very wealthy.
Under current law, each person can leave behind around $12 million, double that for married couples before estate tax kicks in. So it’s not every family that has to pay this tax.
For those families that may be subject to estate tax, irrevocable trusts are often used to transfer assets out of your estate and lower your tax exposure.
Note that it’s likely that the $12 million threshold will be cut to $6 million in 2026, bringing more families into the estate tax net.
