How to Calculate Your California Estate Tax Liability

If you want to calculate your California estate tax liability, you'll first need to calculate the value of your gross estate under California law. Here's a quick guide on how to calculate your California estate.

The following assets will be included in your gross estate for California estate tax purposes:

1. Bank Accounts

In California, any checking accounts, savings accounts, money market accounts, and certificates of deposit you hold are included in your California estate. If the bank account is in only in your name, the entire value of the account is included in your California estate; if the bank account is held jointly between you and a spouse with California rights of survivorship, only 50% of the value is included in your California estate for estate tax purposes; if however, the account is held jointly between you and an individual other than your spouse with California rights of survivorship, 100% of the value is included in your estate for estate tax purposes, unless it can be proven that the other individual made contributions to the bank account. Finally, if the bank account is held jointly by you and another individual as tenants in common, only your proportionate interest in the bank account is included in your California estate.

2. Investment Accounts

In California, any investment accounts including brokerage accounts and mutual funds are included in your California estate for estate tax purposes. If the brokerage account is in only in your name, the entire value of the account is included in your California estate; if the brokerage account is held jointly between you and a spouse with California rights of survivorship, only 50% of the value is included in your estate for estate tax purposes; if however, the brokerage account is held jointly between you and an individual other than your spouse with rights of survivorship, 100% of the value is included in your estate, unless it can be proven that the other individual made contributions to the brokerage account under California law. Finally, if the brokerage account is held jointly by you and another individual as tenants in common under California law, only your proportionate interest in the brokerage account is included in your estate.

3. Stocks and Bonds Held in Certificate Form

Under California law, if you hold any stocks or bonds in your name alone, then the entire value of those stocks and bonds will be included in your California estate; if the stocks or bonds are held jointly in your name and your spouse’s name with rights of survivorship, only 50% of the value is included in your California estate; if the stocks or bonds are held jointly with someone other than your spouse with rights of survivorship, 100% of the value is included in your estate unless it can be shown that the individual helped to purchase the stock or bond; if the stock or bond is in joint names as tenants in common, only your proportionate interest is included in your estate.

4. U.S. Savings Bonds

If the U.S. savings bond is in your name alone (including payable on death bonds), the entire value is included in your California estate; if the bond is held jointly with your spouse with rights of survivorship, only 50% of the value of the saving bond is included in your estate; if the savings bond is jointly held with someone other than your spouse with rights of survivorship, 100% of the value of the bond is included unless you can prove that the other individual helped to purchase the savings bond; if the savings bond is in jointly between you and another individual as tenants in common, only your proportionate interest is included.

5. Personal Property

California personal property including household furniture, artwork, antiques; clothing; jewelry; watches, coin collections, stamp collections and other collectibles; books; guns; electronics and the like will be included in your estate.

6. Automobiles, Boats, and Airplanes

If you have any motor vehicles titled in California that have your name alone on the California title, then the entire value of the vehicle is included in your estate; if the motor vehicle is titled jointly in California in your name and your spouses name, then only 50% of the value is included in your estate; if the motor vehicle is titled in your name and someone other than your spouse, 100% of the value is included in your estate unless it can be shown that the other individual helped to purchase the motor vehicle.

7. Monies Owed to You

This includes promissory notes, mortgages held by you, personal loans you've made, and unpaid wages, bonuses, earned commissions and royalties from intellectual property that are owed to you at the time of your death.

8. Life Insurance Proceeds

If you are the owner of a life insurance policy on your own life, 100% of the proceeds of that insurance policy are included in your estate; if you own the life insurance policy on someone else's life, only the cash value is included in your estate.

9. Retirement Accounts

This category includes Roth and Traditional IRAs; Simple and SEP IRAs; 401(k)s; 403(b)s and annuities; 100% of the value is included in the value of your estate.

10. Closely Held Business Interests

This category of an asset includes sole proprietorships, partnerships, limited liability companies and stock held in closely held corporations. The value of your ownership interest is included in the value of your estate. There are a number of different ways to value business interests, including book value, fair market value, going concern value and liquidated value.

11. Real Property

If the deed to the real property is in your name alone, the entire value of the real property is included in your estate less any debt on the real property; if title to the real property is held jointly between you and your spouse with rights of survivorship, only 50% of the value of the real property is included in your estate; if title to the real property is held jointly with someone other than your spouse with rights of survivorship, 100% of the value of the real property is included in your estate unless it can be shown that the individual contributed to the purchase the real property; finally, if title to the real property is held by you and another individual as tenants in common, only your proportionate interest is included.

12. Certain Trust Assets

If you are the beneficiary of a trust, certain trusts, including any trust over which you have a "general power of appointment," will be included in your gross estate at the full value of the property held by the trust. This includes the full value of an "A Trust" established for your benefit as a surviving spouse using true "AB Trust" planning. It is important to remember there are a number of different ways of valuing trust assets, so it is important to consult a valuation expert when calculating the value of assets held by a trust.

13. Taxable Lifetime Gifts

These are gifts that you have made in excess of the annual gift tax exclusion amount. For 2017 the annual gift tax exclusion was $14,000 per gift.  In 2018 the gift tax exclusion amount has been increased to $15,000.

14. Certain Transfers Made Within 3 Years of Death

This includes life insurance owned by you and transferred into an Irrevocable Life Insurance Trust within 3 years of your date of death.