For 2009, this amount is $3.5 million, and the highest rate is 45%.  It was set to completely disappear next year, and revert back to $1 million in 2011.  Which means, if nothing is done, those with very sizeable estates who pass away next year are “lucky” in a sense that they hit the estate tax jackpot.

This scenario is highly unlikely as I’ve written before how President Obama plans to freeze the current exemption, $3.5 million.  With proper planning, this tax can be avoided by most families, as $3.5 million is a fair amount.

California is one of a few states who do not collect any type of death taxes, estate, inheritance or gift.  Since 2005, estates don’t even have to file an estate tax return with California, because the US phased out a credit that the states received from the Federal tax.

What surprises me is that California is in such a financial mess, yet we haven’t heard any talk of an estate tax resurrecting itself.  They’ve increased taxes wherever they can, to much opposition.  But the budget is so unbalanced how long before we  see talk of implementing an estate tax at a lower exemption amount to capture more assets?  I hope they’re not reading this, I don’t want them to get any ideas!