Most California families never owe federal estate tax. The exclusion is high enough that the question for the majority is not how to reduce a transfer tax bill, but whether other taxes — property tax reassessment, income tax on inherited assets, income tax during administration — are being handled sensibly.
This page explains what California and federal law actually impose, the 2026 federal figures, which families the estate tax realistically reaches, and what planning tools do and do not accomplish. Our attorneys work with families across California from our San Mateo office. For a free consultation, call 650-250-0705.
Robert B. Vaksman, Esq.
Founding Partner
“Some cases are easier than others, but this doesn’t matter at Vaksman Khalfin, because we have the resources to help our clients no matter what is at stake, especially if it’s hard."
ALAN D. KHALFIN, ESQ.
Partner & Managing Attorney
"People call me when they need to plan, but also when something terrible has happened and they need help. It is personal to my clients, so it is personal to me. We have to help: no matter what."
More about Estate Tax & Asset Protection
Does California Have an Estate Tax?
California does not impose its own estate tax. According to the California State Controller’s Office, the state death tax credit was eliminated effective January 1, 2005, and no California Estate Tax Return has been required for decedents dying on or after that date. Federal estate tax may still apply: for people who die during 2026, the IRS basic exclusion amount is $15,000,000 per person, so most estates fall below it.
Key Takeaways
- California has no separate state estate tax or inheritance tax; the federal rules are what apply.
- For 2026, the federal basic exclusion amount is $15,000,000 per person, up from $13,990,000 for 2025.
- The annual gift tax exclusion for 2026 remains $19,000 per recipient.
- For most California families, property tax reassessment and income tax basis matter more in practice than federal estate tax.
- Asset protection planning has real limits, and transfers made to defeat existing creditors can be challenged and undone.
The Federal Numbers for 2026
The IRS publishes these figures annually. The current amounts come from IR-2025-103 and Revenue Procedure 2025-32:
| Item | 2026 | 2025 |
|---|---|---|
| Basic exclusion amount per person | $15,000,000 | $13,990,000 |
| Annual exclusion for gifts, per recipient | $19,000 | $19,000 |
| Annual exclusion for gifts to a non-citizen spouse | $194,000 | $190,000 |
Two mechanics worth understanding. The basic exclusion is unified — it covers lifetime taxable gifts and transfers at death together, so lifetime gifting that exceeds the annual exclusion reduces what remains available at death. And the annual exclusion applies per recipient with no cap on the number of recipients, and gifts within it require no gift tax return.
Older material on this topic is frequently out of date. Figures circulating from 2023 and earlier, and predictions that the exclusion would fall by roughly half after 2025, no longer reflect current law.
What You Can Expect
from Vaksman Khalfin Estate Tax & Asset Protection Attorneys
Free Consultation
Our goal is for each client to have an opportunity to secure their assets. That is why your Vaksman Khalfin journey begins with a no-obligation free confidential consultation. This free session provides an opportunity to understand your unique needs, discuss your concerns, and establish how we can assist with estate tax and asset protection.
FLEXIBLE PRICING
We understand that everyone's financial situation is different. Moreover, everyone may have different estate tax and asset protection. With this in mind, we offer flexible pricing structures to ensure our quality legal services are accessible to all. Our goal is to provide exceptional value, at a cost that makes sense for your personal circumstances.
SAFE ACCESS TO YOUR DOCUMENTS
Your estate tax and asset protection documents are important and should be readily accessible when you need them. To ensure the security of these documents, we provide safe and easy access to your files.
PERSONAL SUPPORT
A dedicated attorney and case manager will be assigned to your case to ensure a personal and concerted approach to your legal matter. This focused support provides a direct point of contact, personalized attention to your case, and ensures the swift resolution of any concerns or issues that may arise.
Which Families the Federal Estate Tax Actually Reaches
At $15,000,000 per person, most estates are not close. Where a married couple’s planning preserves both exclusions, the combined figure is higher still. This is worth saying plainly, because a great deal of content on this subject implies otherwise.
The situations where the question becomes live tend to involve concentrated wealth rather than a family home: closely held business interests, appreciated real estate holdings beyond a residence, substantial equity compensation, or a family that expects significant appreciation before a transfer. Even then, whether anything is owed depends on the size of the estate, prior taxable gifts, deductions, and whether a surviving spouse’s unused exclusion was preserved.
If your circumstances are on that scale, the analysis is genuinely individual and belongs in a conversation rather than on a web page.
The Taxes That More Often Matter in California
For families below the federal exclusion, the tax questions that actually arise usually look different:
- Property tax reassessment. When California real property changes hands, including at death, reassessment rules can significantly change the annual property tax bill. Proposition 19 altered the exclusions available when property passes to children, and whether any exclusion applies depends on the facts, including how the property is used afterward. On the Peninsula, where assessed values are often far below market, this is frequently the largest tax consequence a family encounters.
- Income tax basis. How assets are held and transferred affects the basis a recipient takes, which in turn affects capital gains when the asset is later sold. Lifetime gifting and transfers at death are treated differently in this respect, which is why gifting appreciated property is not automatically advantageous.
- Income tax during administration. Estates and trusts are separate taxpayers with their own returns, brackets, and timing considerations while an estate or trust is being administered.
- Retirement accounts. Inherited retirement accounts follow their own distribution rules, and who is named as beneficiary can change the income tax outcome for the people receiving them.
These interact. A step that helps with one can worsen another, which is the main reason this is worth reviewing as a whole rather than in pieces.
Planning Tools and What They Do
The tools below appear constantly in estate tax discussions. Each does something specific, each carries trade-offs, and none is right for everyone.
| Tool | What it does | Trade-offs to weigh |
|---|---|---|
| Revocable living trust | Holds assets and directs management and distribution; addresses incapacity | Revocable, so assets remain in the taxable estate; requires assets to be transferred in |
| AB and credit shelter structures | Used by married couples to structure how each spouse’s exclusion is applied | Adds complexity; portability has reduced the need in many situations |
| Irrevocable life insurance trust | Holds a life insurance policy outside the insured’s estate | Irrevocable; requires giving up control and following administration formalities |
| Qualified personal residence trust | Transfers a residence to beneficiaries while the transferor retains use for a term | Irrevocable; outcome depends on surviving the term; affects basis |
| Qualified domestic trust | Used where a surviving spouse is not a U.S. citizen and the unlimited marital deduction is unavailable | Ongoing administration requirements |
| Charitable structures | Direct assets to charity, sometimes with an income stream retained | Irrevocable commitment; the charitable purpose has to be genuine |
| Family entities | Hold family assets under a governance structure and facilitate transfers of interests | Formalities must be respected in practice; structures created solely for a tax result attract scrutiny |
Whether any of these fits depends on the size and composition of an estate, family circumstances, and current law. Our tax planning page covers the analysis in more detail, and how taxes work in a living trust covers the ongoing side.
Asset Protection: What It Can and Cannot Do
Asset protection is often described in stronger terms than the law supports, so it is worth being direct about the limits.
Timing governs almost everything. Planning done well before any claim exists is treated very differently from steps taken once a claim is foreseeable. Transfers made to hinder, delay, or defeat existing or anticipated creditors can be challenged and unwound, and attempting it can worsen a person’s position rather than improve it.
Control has a price. Structures that meaningfully separate assets from an individual generally require that individual to give up control. Arrangements that promise protection while leaving the person in full control tend not to hold up.
Some obligations are not addressed by these structures, and what a given arrangement reaches varies by the type of claim and the jurisdiction involved.
The most reliable protections are ordinary ones — adequate liability insurance, appropriate entity structures for business and rental activity, and consistent respect for those entities’ formalities.
Our asset protection page goes further, and an IRA trust covers the retirement-account side.
Estate Tax Attorney, Tax Attorney, or Estate Planning Attorney?
The titles overlap, and the distinction is about focus rather than a formal credential.
A tax attorney generally works across tax matters, which can include income tax controversies, business transactions, and disputes with taxing authorities. An estate planning attorney focuses on the documents and structures that govern property and decision-making. Work described as estate tax planning sits where those overlap: how transfers of wealth are structured and what tax consequences follow.
For most families, the practical question is not which title to search for but whether the person reviewing their situation will look at the whole picture — the documents, how assets are titled, beneficiary designations, property tax exposure, and basis — rather than one piece of it.
Estate Tax Planning for San Mateo and Peninsula Families
Our office at 15 North Ellsworth Avenue, Suite 105, San Mateo, CA 94401 works with Peninsula families by appointment. The pattern here is distinctive: home values are high relative to the rest of the state, but assessed values for long-held property are often far lower, so the reassessment question at transfer frequently matters more to a family’s finances than the federal estate tax does.
Concentrated equity compensation is also common in this area, which raises both basis and valuation questions that a general template does not address. Details about the office are on our San Mateo page, and further explanations are collected in our California trust and estate guides.
How We Help
At Vaksman Khalfin, PC we start by looking at what you own, how it is held, and who it is meant to reach — then explain which tax questions are actually in play for your situation and which are not. Where the federal estate tax is not a realistic concern, we say so rather than building around it. Where it is, we walk through the available structures, what each requires, and what each costs in flexibility. Because we also handle trust administration and probate, we see how these structures behave years later.
The practice is led by Alan D. Khalfin and Robert B. Vaksman, who holds a Master of Laws in Taxation from New York University School of Law. Initial consultations are free. To talk with a California estate tax attorney, call 650-250-0705 or schedule a consultation. Our estate planning overview covers the foundational documents, and our California trust and estate page covers the wider practice.
This page provides general information about California and federal law and is not legal or tax advice; reading it does not create an attorney-client relationship. Tax rules change and apply differently to different situations. Every situation is different, and prior results do not guarantee a similar outcome.
Reviewed by Alan D. Khalfin, Partner and Managing Attorney, Vaksman Khalfin, PC (admitted in California). Last reviewed: 08/14/2026
Estate Tax Frequently Asked Questions Frequently Asked Questions
California does not impose its own estate tax. The California State Controller's Office states that the state death tax credit was eliminated effective January 1, 2005, and that no California Estate Tax Return is required for decedents dying on or after that date. Federal estate tax rules still apply.
Estates of people who die during 2026 have a basic exclusion amount of $15,000,000, up from $13,990,000 for 2025, per IRS IR-2025-103 and Revenue Procedure 2025-32. The exclusion is unified, so lifetime taxable gifts reduce what remains available at death.
The annual exclusion for gifts is $19,000 per recipient for 2026, unchanged from 2025. There is no limit on the number of recipients, and gifts within the annual exclusion require no gift tax return. The annual exclusion for gifts to a spouse who is not a U.S. citizen is $194,000 for 2026.
Not usually. A tax attorney generally works across tax matters, including controversies and transactions. An estate planning attorney focuses on the documents and structures governing property and decision-making. Estate tax planning sits at the overlap. What matters more than the title is whether the person is reviewing your whole picture rather than one piece.
No. With a basic exclusion of $15,000,000 per person for 2026, most estates fall below the threshold. Families whose circumstances raise the question typically hold concentrated assets such as closely held business interests or substantial appreciated real estate beyond a residence.
Commonly, property tax reassessment when real property changes hands, income tax basis and the capital gains consequences that follow, income tax during estate or trust administration, and the rules governing inherited retirement accounts. These interact, so a step that helps with one can affect another.
It depends on the type of trust, when it was created, and the nature of the claim. A revocable living trust generally does not shield assets from the settlor's creditors, because the settlor retains control. Structures that offer meaningful separation typically require giving up control, and transfers made to defeat existing or anticipated creditors can be challenged and unwound.
Gifts within the annual exclusion do not use lifetime exclusion, and lifetime transfers can move future appreciation outside an estate. But the exclusion is unified, so taxable gifts reduce what remains at death, and gifted property is treated differently from inherited property for income tax basis. Whether gifting helps in a particular situation depends on the assets involved and should be analyzed before acting.
That depends on what you own and how complicated your situation is. The value is usually less in the documents themselves than in catching the interactions — how property is titled, what beneficiary designations say, what reassessment or basis consequences follow — that generic forms do not address. An initial consultation is a reasonable way to find out whether your situation needs more than a straightforward plan.
The increase to $15,000,000 came from the One Big Beautiful Bill Act, which removed the scheduled reduction that earlier commentary anticipated after 2025. Tax law can change, so figures should be confirmed against current IRS guidance before relying on them for planning.
