Estate Planning

1 · What a plan is made of

Most families need most of these.

The trust controls only what is retitled into its name. Signing the documents does not move the house or the brokerage account, and someone has to change the title on each one. When that step gets missed, those assets go through probate as though the trust were never written.

2 · How assets actually pass

Four routes. Only the last one reads the will.

A beneficiary form signed before a divorce and never updated pays the former spouse. A will saying otherwise does not change that. Same for an account still listing a parent, or a sibling named before there were children. These forms sit with the custodian rather than with the attorney, so nobody sees them at the estate planning meeting. They cause more damage than any other part of estate planning, and checking them is ordinary work we do at every account review.

3 · Incapacity, which usually comes first

Estate documents are written for death and used during life.

The durable power of attorney lets a named person handle your money: pay bills, deal with the bank, file a return, sell a car. The advance health care directive names who decides medical questions and records what you want. The successor trustee named in the revocable trust manages what the trust holds. Without those three, someone has to petition a court for a conservatorship before they can do any of it, which is public, takes months, and costs more than the documents would have.

Banks and custodians sometimes refuse a power of attorney they consider too old, so these are worth re-executing every few years. And naming one agent with no successor leaves the family with nobody authorized if that person cannot serve, which matters because the person most likely to be unavailable in a crisis is often the spouse who was in the same car.

4 · Probate in California, and the case on both sides

Probate is the court process that transfers what a will controls. California prices it by statute, on the gross value of the estate.

California Probate Code sections 10800 and 10810. The attorney and the personal representative are each entitled to this amount, so the combined statutory cost is roughly double the schedule. Court filing fees, probate referee appraisal, publication, bond, and extraordinary fees in a contested matter are additional.

The schedule runs on gross value, so a home appraised at $900,000 with a $600,000 mortgage generates fees on $900,000. And because both the attorney and the executor may claim it, a $1,000,000 estate carries roughly $46,000 in statutory fees before anything else. A family member serving as executor can waive their half, and frequently does, since the fee is taxable income to them while an inheritance generally is not.

A revocable trust has limits worth knowing. It works only if assets are retitled into it, it gives no creditor protection, and it saves no tax while you are alive. What it buys is keeping assets out of a process California prices on gross value and conducts in public, and letting a successor trustee take over during incapacity without a court. For a California family owning real estate, that usually settles it. For a family whose assets are mostly retirement accounts with current beneficiary forms, the calculation is closer than it is often presented. California also offers simplified procedures for small estates, including an affidavit for personal property and a separate petition for a primary residence, each below a stated value. Those thresholds adjust for inflation, so confirm the figure for the year of death rather than relying on one published earlier.

5 · Retirement accounts, which follow their own rules

For many families the largest asset they leave is a retirement account. The will does not touch it and the step-up does not reach it.

Since the SECURE Act, most non-spouse beneficiaries must empty an inherited retirement account within ten years of the owner’s death. A narrower group, including a surviving spouse, a minor child of the account owner, someone disabled or chronically ill, and someone not more than ten years younger than the owner, may take distributions over a longer period. Where the owner had already begun required distributions, annual withdrawals are generally required during the ten-year window as well, rather than one payment at the end.

That compresses a lifetime of deferred tax into a decade, often landing in a beneficiary’s highest-earning years, and it changes several decisions the owner makes while alive.

None of these has one answer. They are worked out against the beneficiaries’ brackets, the family’s charitable intent, and the years available to act. Planning for Taxes covers the conversion side.

Distribution rules for inherited retirement accounts are stated as they stand in 2026. This area has changed repeatedly since 2019, the regulations interpreting it were finalized recently, and further change is likely. Confirm the rule in effect before acting on it.

6 · The step-up in basis

For most families the tax question in estate planning is basis, not the estate tax.

Assets owned at death generally receive a new cost basis equal to their value on that date, erasing the capital gain accumulated during life. A rental bought for $200,000 and worth $900,000 can pass to heirs who sell it shortly after and owe little or no capital gains tax. For most families this is the largest tax benefit they will ever receive, and it arrives without anyone doing anything.

California adds to it. Property properly characterized as community property receives a new basis on both halves at the first spouse’s death, rather than only the deceased spouse’s half. Qualifying depends on how an asset is titled and characterized, which the attorney and the CPA determine rather than assume. Basis is also why a lifetime gift of a low-basis asset can cost a family more than it saves, a tension taken up in Estate Planning When the Estate Is Large.

Retirement accounts receive no step-up. Given a choice, appreciated taxable assets are usually the better thing to leave to heirs and pre-tax accounts the better thing to leave to charity, though the right answer depends on what each beneficiary’s tax situation looks like.

7 · Children, and how money reaches young people

Who raises them and who manages what they inherit are two questions.

Guardianship is nominated in the will and confirmed by a court. Nominating the same couple for both roles is common and worth a second thought, since raising children well and managing a portfolio for eighteen years call for different abilities.

How the money arrives matters as much as how much of it there is. Left outright, an inheritance is fully available at eighteen in California, younger than most parents intend. A trust can stage distributions by age, tie them to purposes such as education or a first home, or leave them to a trustee’s judgment. Staging gives certainty and cannot adapt to a life nobody predicted; judgment adapts and depends entirely on the trustee. Naming a minor directly on a retirement account or policy creates its own problem: a custodian will not pay a minor, so the court appoints someone to hold the money, at the family’s expense, and hands it over in full at eighteen anyway.

8 · Giving, during life or at death

Families give for reasons that have nothing to do with tax. Once the decision is made, which asset funds the gift and when it goes decides how much reaches the charity and how much the family keeps.

Appreciated securities given during life generally avoid the capital gains tax a sale would trigger and can produce a deduction, subject to holding period and income-based limits. A qualified charitable distribution lets an IRA owner past a certain age send money straight from the account to a charity. It counts toward the required distribution for the year, and the amount never appears as income on the return, which is worth more than a deduction to someone who does not itemize. A donor-advised fund separates the year of the deduction from the years of the grants. A private foundation offers more control and carries real administrative obligations. Naming a charity as beneficiary of a pre-tax retirement account is often the most tax-efficient bequest available, since the charity pays no income tax on what an heir would.

Which of these fits depends on the size of the gift, on one decision versus a long series of grants, and on how much administration a family wants to carry. Current contribution and distribution figures are in The Tax Numbers.

9 · What makes a plan go stale

Documents are written once and lived with for decades. These are the events that break them.

The refinance is the quiet one. Lenders often require a property to come out of the trust to close, and putting it back is a separate step that depends on somebody remembering.

Where this lands

The documents name who decides and who receives. Titling and beneficiary forms determine whether those names ever apply, and they are the part most likely to be years out of date. California charges for probate on the gross value of an estate, which is what a funded trust avoids. Most people who inherit a retirement account now have ten years to empty it. Basis usually matters more than the estate tax. And every plan has an expiration date it does not print, somewhere around the next marriage, birth, death, move, refinance, or change in the law.