Estate Planning for California Families.
If you die in California without a trust, your estate goes through probate: 8–12 months, 4–7% in fees, and every detail public in court records. A revocable living trust is the single highest-leverage document most families never get around to creating.
The Five Documents Everyone Needs
1. Revocable Living Trust
Holds your house, brokerage, and other titled assets. Bypasses probate. You stay trustee during life, named successor takes over at incapacity or death. Cost: $1,500–$3,500 through a CA estate attorney.
2. Pour-Over Will
Catches anything you forgot to title into the trust. Also names a guardian for minor children. Without this, CA courts pick the guardian.
3. Durable Power of Attorney
Authorizes a trusted person to handle your finances if you're alive but incapacitated. Without it, your family has to file for conservatorship — expensive, invasive, slow.
4. Advance Health Care Directive
States your wishes for end-of-life medical care and names a healthcare proxy. CA-specific form is free on the AG website.
5. Updated Beneficiary Designations
IRAs, 401(k)s, pensions, life insurance, annuities, and bank accounts (via POD) transfer outside the trust by beneficiary form. These override your will. Most expensive estate planning mistake: beneficiary form still names an ex-spouse, or worse, "estate."
California Probate Fees (Statutory)
| Estate Size | Attorney Fee | Executor Fee | Total |
|---|---|---|---|
| $500,000 | $13,000 | $13,000 | $26,000 |
| $1,000,000 | $23,000 | $23,000 | $46,000 |
| $2,000,000 | $33,000 | $33,000 | $66,000 |
| $5,000,000 | $61,000 | $61,000 | $122,000 |
| $10,000,000 | $111,000 | $111,000 | $222,000 |
Statutory fees per CA Probate Code §10810. Both attorney and executor get the same fee based on gross (not net) estate value — so mortgages don't reduce the calculation.
Federal Estate Tax
In 2026 the federal exemption is $13.99 million per individual ($27.98M per couple with proper portability filing). Above those thresholds, the federal rate is 40%. Most CA families don't owe federal estate tax — but the Tax Cuts and Jobs Act sunsets January 1, 2026, dropping the exemption back to approximately $7M/individual. Families with $7–$14M should be actively planning now.
Step-Up Basis
When you die, taxable assets (brokerage, real estate) get a step-up in cost basis to fair market value on date of death. Your heirs sell immediately and pay zero capital gains tax. This is the single biggest reason to hold appreciated assets until death rather than selling and paying 20%+ gains tax in life.
Beneficiary Designation Hierarchy
| Asset Type | Where It Goes | Override? |
|---|---|---|
| 401(k) / 403(b) | Beneficiary form | Overrides will + trust |
| IRA / Roth IRA | Beneficiary form | Overrides will + trust |
| Life insurance | Beneficiary form | Overrides will + trust |
| Pension survivor benefit | Form filed at retirement | Irreversible once elected |
| Bank/brokerage POD/TOD | Form on file | Overrides will |
| Real estate deeded to trust | Trust terms | Avoids probate |
| Real estate held individually | Will | Goes through probate |
The SECURE Act Trap (IRAs to Kids)
Before 2020 an adult child could inherit an IRA and stretch withdrawals over their lifetime (huge tax benefit). The SECURE Act killed this: non-spouse beneficiaries now must drain inherited IRAs within 10 years. For a $500K IRA left to a 50-year-old child earning $150K, this can push them into the 32%+ bracket for a decade.
Fixes: Roth conversions during life (tax-free to heirs); charitable remainder trusts; leave IRA to spouse and brokerage to kids; multi-generational permanent life insurance (hybrid life/LTC structures) as a tax-free death benefit.
Trust Structures Worth Knowing
- Revocable Living Trust (RLT): foundation for 99% of families.
- Irrevocable Life Insurance Trust (ILIT): keeps life insurance proceeds out of your taxable estate — useful for high-net-worth families above the exemption.
- Special Needs Trust: for a child with a disability, preserves Medi-Cal / SSI eligibility.
- Dynasty Trust: multi-generational wealth transfer, GST-tax exempt, popular in Nevada and South Dakota (not CA).
- Charitable Remainder Trust (CRT): convert appreciated stock into lifetime income with a charitable gift at death.
Get your estate plan stress-tested.
We'll walk through your current trust, beneficiary forms, and insurance policies in one 45-minute session. Most clients find 3–5 things that need updating — an ex on the 401(k) form, a trust unfunded since 2008, a primary residence never retitled.
Capital Wealth is not a law firm and does not provide legal advice. Estate planning documents should be drafted by a licensed California estate attorney. We coordinate with your attorney and CPA to integrate financial strategy with legal structure.