How Do You Calculate the Value of the Estate Tax Purposes?

In our previous article about preparing the Schedule of Assets under California probate rules, we showed how the personal representative must proceed to calculate the estate‘s gross value. However, this value, called the probate value, is not the same as the value determined for federal estate tax purposes.

What does the Federal Estate Tax Return Consider?

The federal estate tax return considers all property in which the decedent had any interest. Assets that do not have to pass through probate and are left out of the probate value still have to be entered in the federal estate tax return. The most common are:

  • Joint tenancy property
  • Pay-on-death accounts
  • Life insurance policies
  • Property placed in living trusts
  • Pensions, annuities, death benefits…

Moreover, life insurance policies require particular attention. The proceeds of an insurance contract on the decedent’s life will be included in the federal estate tax value, if one of the following applies:

  • The proceeds are receivable by the estate.
  • The decedent possessed “incidence of ownership” in the policy.
  • The proceeds are receivable by another person for the benefit of the estate.

This means that the subscriber of the policy, in order to avoid having to pay federal estate taxes, must transfer the complete ownership, rights, and control over the policy to another person during his or her lifetime.

Talk to San Diego estate planning and probate attorney Scott Grossman about your situation and the questions you have. Call our lawyers at (951) 683-3704 or (888) 443-6590 for your FREE 30-minute telephone consultation. Also, order now our FREE book The Insider’s Guide to California Probate and Trust Administration.

Scott Grossman

Scott Grossman


The Grossman Law Firm, APC · 525 B Street, Suite 1500, San Diego, CA 92101 · (951) 523-8307

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