Alan R. Horvath, Attorney at Law
|
Assume a $4 million community property estate with an exclusion amount of $2 million.
If first spouse leaves everything outright to survivor, no tax on first death both because the decedent's half share of
the community property does not exceed the $2 million exclusion and because gifts to a spouse are deducted from
the value of the estate. However, on the death of the second spouse, all $4 million are in the estate, and only $2
million will be excluded. Therefore the remaining %$2 million will be subject to tax.
By contrast, if the first spouse leaves their share to a trust, there will still be no tax because the value of their share is
$2 million and there is a $2 million exclusion. However, on the second death, the remaining estate is only $2 million
since the trust is not in the estate. Applying the $2 million exclusion a second time yields no tax on the second death
either.
The surviving spouse may still have access to the trust funds as long as there is a clear standard for access and the
standard prohibits the surviving spouse from exercising full ownership and control.
P.O. Box 81
596 Mountain Ranch Rd.
San Andreas, CA 95249
Phone: 209 754-5291
Fax: 209 754-5293
|
ahorvathlaw@sbcglobal.net
|
Estate Planning By Phone for Any California Resident
|