LEGALLY Avoid Taxes When Gifting California Estate to Children!

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(0:00) Building a successful California real estate portfolio is just the beginning – protecting it for your children requires strategic California estate planning. Without proper planning, your California assets could face 12-18 months in probate court, costing tens of thousands in fees. California probate is notoriously expensive and time-consuming, with some California families waiting over two years just for clear title to their family home.

(0:50) California Proposition 19 has dramatically changed the landscape for California estate planning. Transferring California property to children can now trigger full property tax reassessment, potentially increasing your $3,000 California tax bill to $15,000+ annually. This makes proper California estate planning more critical than ever for preserving your family's California real estate legacy.

(1:21) The new federal estate tax exemption of $15 million per person starting in 2026 is a game-changer for high net worth California families. However, even with higher exemptions, strategic California estate planning remains essential. Irrevocable trusts, LLC structures, and gifting strategies still play powerful roles in California asset protection and multi-generational wealth preservation.

(2:29) For most California real estate owners, the revocable living trust forms the foundation of effective California estate planning. Properly funding your California properties in a revocable trust allows your family to bypass California probate entirely. Your successor trustee can distribute California assets privately and efficiently, saving significant time and money while avoiding the public California probate process.

(3:10) The tax advantages of California estate planning through revocable trusts are often overlooked. Assets receive a "step-up in cost basis" at death, adjusting the tax basis to fair market value. For California property purchased at $300,000 and now worth $1.5 million, this step-up can eliminate substantial capital gains taxes, saving California heirs hundreds of thousands of dollars.

(3:50) California joint trusts require careful drafting to maximize tax benefits. Many California estate planning documents include rigid bypass provisions that prevent the second step-up in basis when the surviving spouse dies. Including a testamentary general power of appointment formula clause in your California estate planning can preserve this valuable second basis adjustment.

(5:04) California LLC planning provides crucial asset protection for real estate investors. While forming an LLC doesn't guarantee immunity from California lawsuits, it creates important legal barriers between personal assets and California business properties. However, California property owners can still face personal liability if they're actively managing properties without proper delegation structures.

(5:52) California LLCs offer dual protection benefits for estate planning purposes. They guard against inside liability from California property issues (tenant accidents, dangerous conditions) and outside liability claims unrelated to the California real estate. This makes LLC structures essential components of comprehensive California estate planning strategies.

(7:18) California estate planning benefits extend beyond asset protection when using LLCs. Your trust can own LLC membership interests instead of direct California property ownership. When you pass away, children inherit the LLC through your California estate planning trust, bypassing probate while maintaining streamlined ownership without updating leases or notifying California tenants.

(9:29) California Proposition 19 fundamentally changed parent-child property tax exclusions. No California estate planning document – whether living trust or will – can automatically prevent reassessment when California real estate transfers between generations. Understanding these limitations is crucial for effective California estate planning strategies.

(10:01) To qualify for California Proposition 19 exclusions, children must move into the inherited California home as their principal residence within one year. Even then, California protection is limited to $1 million of value above current assessed value, making advanced California estate planning techniques increasingly important for substantial real estate portfolios.

Ready to protect your California real estate legacy? Contact our California estate planning experts today to develop a comprehensive strategy tailored to your family's needs.
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