In CA when a spouse dies, do only l/2 if his assets get included in estate taxes due to community property ?

Answer 1

It depends.

If the estate passes to the spouse then no because there is not estate limitation if it passes directly to the spouse, however upon the death of the second spouse, the entire amount is included in the spouse's estate.

If the estate may cross the maximum exemption amount for estate taxes, then they couple should probably consider setting up a bypass trust so the first to die's assets, up to the maximum estate exemption, passes into the trust. The rest then passes to the surviving spouse (or their trust). That way upon the death of the first spouse their entire estate tax exemption is preserved.

Also in CA you can exempt from capital gains taxes $250K each upon the sale of the property. Again, if one spouse predeceases the other, it can pass to the living spouse without a taxable event, however their $250K exemptin is effectively lost. Soooo..if the house has more than $500K in equity, it would be wise to get a trust set up so the first spouse's half passes to the trust, so as to save the taxes on the first $250K.

So in CA, where real estate frequently does exceed that half mil mark, it still may require the proper trusts to fully exclude the maximum amount from taxation.

See a lawyer for details.

Answer 2

To answer your specific question.

100% of the spouse's assets are taken into consideration when looking at his or her estates.

The question is, what are those assets? Since, as you say, California is a community property state, both spouses own all the assets together, unless there were some special circumstances, like inheritances, assets owned before marriage, pre- or post-nuptial agreements.

Typically, 1/2 of everything the couple owns belongs to the dead spouse.

Now, with that in mind, read the more in-depth explanation provided by the financial advisor, above, about estate taxes.

Best wishes

Your TaxMama
TaxMama.com

Answer 3

NO. The entire 1/2 of his assets are taxed...I hope your spouse had a Trust than the assets can pass freely there than when you croak the taxes will be due on the entirety of whats left. Also depending on the amount his 1/2 is equal to it may be exempt any way so rest easy on this and consult an Estate Attorney or ask your CPA.