Estate Planning in California

The documents in a California estate plan

Each document covers a different decision, and the gaps between them are where families run into trouble. Most plans include:

• Revocable living trust — holds title to your home and accounts, names you as trustee during your life and a successor trustee to take over at incapacity or death.
• Pour-over will — sends any asset left outside the trust into it, and nominates guardians for minor children (Probate Code §1500–1502).
• Durable power of attorney for finances — lets an agent handle banking, taxes, retirement accounts and property outside the trust; “durable” means it stays effective during incapacity (Probate Code §4124).
• Advance health care directive — names a health care agent and records your treatment wishes; California provides a statutory form (Probate Code §4701).
• HIPAA authorization — lets the people you name receive medical information so they can act quickly.

Why a will alone usually isn’t enough

A will works only through probate. In California, assets held in your own name — without a trust, joint tenancy or beneficiary designation — generally require probate when they exceed $208,850 in gross value (deaths on or after April 1, 2025). Probate is public, court-supervised and often takes a year or more, and statutory compensation is calculated on the gross value of the estate, without subtracting mortgages. On a $1,000,000 estate, the executor’s statutory fee is $23,000 and the attorney’s is another $23,000 (Probate Code §10800, §10810). A funded living trust avoids that process for the assets it holds.

Funding: the step that makes the trust work

A trust controls only what it owns. After signing, real estate is deeded to the trustee, bank and brokerage accounts are retitled, and beneficiary designations on life insurance and retirement accounts are coordinated with the plan; retirement accounts stay in your name and pass by beneficiary designation. Real estate in another state — Nevada property is common in this region — should also be held in the trust, or your family may face a second probate there. When an asset is missed, a Heggstad petition (Probate Code §850) can sometimes confirm that it belongs to the trust, but it is far simpler to fund correctly from the start.

Planning for incapacity

Without a durable power of attorney, a health care directive and a funded trust, a family may have to ask a court to appoint a conservator to manage finances or make medical decisions (Probate Code §1801). A complete plan names the people who act for you, says when their authority begins and gives them documents that banks, doctors and title companies will accept.

Children, blended families and beneficiaries who need protection

Minor children cannot manage an inheritance, and an outright gift to a minor can require a court-supervised guardianship of the estate. A trust lets you name who manages the money and when children receive it, in stages if you prefer. In a blended family, a plan can provide for a surviving spouse while preserving assets for children from an earlier relationship, and a special needs trust can supplement, rather than replace, a beneficiary’s public benefits.

Married couples and community property

California is a community property state. Whether property is community or separate affects what each spouse can leave and how it is taxed. At the first spouse’s death, both halves of community property can receive a new income tax basis (Internal Revenue Code §1014(b)(6)), which can sharply reduce capital gains tax when the survivor sells. Holding the same assets in joint tenancy can forfeit part of that benefit — one reason couples often hold property in a joint trust as community property.

Real estate, family cabins and Proposition 19

Since February 16, 2021, Proposition 19 limits the parent-child property tax exclusion to a family home or family farm that becomes the child’s principal residence, and only up to the parent’s taxable value plus $1,044,586 for transfers from February 16, 2025 to February 15, 2027. An inherited Tahoe cabin or rental is reassessed to market value. A plan for shared family property can set who may use it, who pays taxes and maintenance, and how one heir can buy out the others.

Taxes

California has no estate, inheritance or gift tax. The federal estate tax applies only above the exemption — $15 million per person in 2026, indexed for inflation — and a surviving spouse can preserve a deceased spouse’s unused exemption by filing a timely estate tax return that elects portability. For most families, the more practical tax questions are capital gains, the step-up in basis and property tax.

Keeping the plan current

Review your plan after a marriage, divorce, birth or death in the family, a move to or from California, the purchase or sale of real estate or a business, or a significant change in tax law. A revocable trust can be amended or restated without starting over (Probate Code §15400).