2026 California Estate Law Changes

Most years, the estate planning headlines amount to nothing. 2026 is not one of those years. Four changes took effect, at the federal and California level, and none of them are proposals or talk. They are law right now, and each one touches something real: your taxes, your eligibility for long-term care benefits, or what your family faces after you die.

The Federal Estate and Gift Tax Exclusion Jumped to $15 Million

For 2026, the federal estate and gift tax exclusion rose to $15,000,000 per person, up from $13,990,000 in 2025. The 2025 One Big Beautiful Bill Act (Public Law 119-21) amended Internal Revenue Code §2010(c)(3) to set that number and made it permanent, with inflation adjustments going forward. The IRS confirmed the 2026 figures in Revenue Procedure 2025-32.

That law replaced a very different future. Under the old rule from the 2017 Tax Cuts and Jobs Act, the exclusion was scheduled to roughly cut in half on January 1, 2026, down to about $7 million. The 2025 law canceled that cut before it ever happened.

The annual gift tax exclusion holds at $19,000 per recipient for 2026, the same as 2025. You can give that much to as many people as you like each year without it counting against your lifetime exclusion or requiring a gift tax return.

What it means for you: almost no California family owes federal estate tax anymore. A married couple can now pass up to $30,000,000 free of federal estate tax. If your net worth is nowhere near that number, the tax reason for a trust just got weaker.

Don’t stop reading there, though. A higher exclusion is not the same as not needing a plan. The tax bill was never the main reason most of my clients have a living trust. The real reason is California probate: the court process your family goes through after you die if your assets aren’t titled in a trust. Probate here runs on statutory fees tied to the size of your estate, takes a year or more in most counties, and becomes a public court file anyone can pull. And a trust earns its keep while you’re alive too, in a way that has nothing to do with taxes: if you lose capacity to manage your own affairs, a properly funded trust lets your successor trustee step in without a conservatorship proceeding. None of that changed on January 1.

Medi-Cal Brought Back the Asset Test

Effective January 1, 2026, California reinstated the asset limit for Medi-Cal’s non-MAGI programs: Long-Term Care Medi-Cal (the program that pays for nursing home care), Aged, Blind, and Disabled Medi-Cal, Share-of-Cost Medi-Cal, and the Medicare Savings Programs. The change came through AB 116 §59, part of the 2025-26 state health budget.

The new limit is $130,000 in countable assets for an individual, plus $65,000 for each additional household member, which works out to $195,000 for a married couple. Anyone applying or renewing coverage will need to document their assets starting at their first renewal in 2026.

Here’s the part worth sitting with. California eliminated this asset test entirely on January 1, 2024. For about two years, you could qualify for Medi-Cal long-term care no matter how much you owned, as long as your income qualified. That window is closed. The test is back, and it applies to the very programs families lean on when a parent needs a nursing home. (SSI-linked Medi-Cal runs on a separate track and keeps its own $2,000 asset limit, unchanged.)

The asset test governs whether you qualify for benefits while you’re alive. A separate rule governs what the state can take back after you die, and that rule has not changed. Since SB 833 took effect for deaths on or after January 1, 2017, California law (Welfare and Institutions Code §14009.5) limits Medi-Cal estate recovery to your probate estate. Assets that never pass through probate, because they’re already titled in a fully funded revocable living trust, are outside estate recovery’s reach.

Keep those two rules separate in your head. I watch clients conflate them constantly. A revocable living trust does not hide your assets from Medi-Cal when you apply for benefits; the state still counts what’s in the trust toward that $130,000 or $195,000 limit. What the trust protects is what’s left after you die, because the state’s recovery claim can only reach your probate estate. If your house and accounts are already in the trust, there is no probate estate for the state to file a claim against.

If you or a spouse might need long-term care in the next several years, it’s worth a conversation about how your assets are titled well before you’re filling out a Medi-Cal application under the new asset test. I go deeper into this on my page covering Medi-Cal and your living trust under the 2026 rules, if this section raises more questions than it answers.

California’s Small-Estate Thresholds Went Up

For deaths on or after April 1, 2025, AB 2016 raised California’s small-estate thresholds. The small-estate affidavit, a sworn form that lets an heir collect personal property (bank accounts, vehicles, personal belongings) without opening a full probate case, now covers estates up to $208,850, up from $184,500.

AB 2016 also created something new for a decedent’s California primary residence: a simplified court petition, short of a full probate case, for a home worth up to $750,000. It applies only to the decedent’s principal residence in California, requires filing a petition with the Superior Court, and carries a mandatory six-month wait before the court will act on it. Simpler than full probate, yes. A do-nothing shortcut, no. You still go to court.

Both thresholds are set to adjust again every three years, with the next increase scheduled for April 1, 2028.

What it means for you: if a family member dies without a trust, more estates now qualify to skip formal probate for personal property, and a modest single home has a faster path than full probate offered before. But “faster than probate” still means court paperwork, a waiting period, and, for the home, a judge’s involvement. It is not the same as having a trust in place before death, which avoids court entirely.

What This Does Not Change

California still has no state estate tax and no inheritance tax. That has not changed, and nothing in the 2026 changes touches it. Your California estate is only exposed to tax at the federal level, and as covered above, that threshold is now $15,000,000 per person.

A higher federal number does not mean you can skip planning. Most of what a trust protects your family from in California has nothing to do with taxes: probate cost, probate delay, probate becoming a public record, and what happens if you lose capacity before you die. A trust still avoids probate. That was true in 2025 and it’s true now.

Frequently Asked Questions

The federal exclusion is $15 million now. Do I still need an estate plan?

Yes. The federal exclusion determines whether you owe estate tax to the IRS. It has nothing to do with whether your family goes through California probate, how long that takes, what it costs, or who manages your affairs if you become incapacitated. Those are the problems a trust solves, and none of them moved in 2026.

Will the Medi-Cal asset test affect my 2026 application or renewal?

If you’re applying for or renewing Long-Term Care Medi-Cal, Aged, Blind, and Disabled Medi-Cal, Share-of-Cost Medi-Cal, or a Medicare Savings Program, yes. As of January 1, 2026, you’ll need to document countable assets against the $130,000 individual or $195,000 couple limit starting at your first 2026 renewal. SSI-linked Medi-Cal keeps its separate $2,000 limit.

Does California have a state estate tax?

No. California has never had a state estate tax, and it has no inheritance tax either. That remains unchanged as of 2026.

Can a living trust protect my house from Medi-Cal after I die?

It can protect against estate recovery, which is the state’s claim against your probate estate after death. Since 2017, California law limits that recovery to assets that go through probate. Assets held in a fully funded trust don’t go through probate, so they generally fall outside that recovery claim. What a trust does not do is make those same assets invisible while you’re alive and applying for Medi-Cal benefits; they’re still counted toward the asset limit during your lifetime.

Where this leaves you

If any of this touches your situation, the next step is a conversation, not a guess. I offer a no-cost 30-minute call, by phone or video, to talk through where you stand and whether anything here changes what your plan should look like. Call (805) 244-5291 to set it up.

Related reading: What to do when someone dies in California · Medi-Cal and your living trust: the 2026 rules · Estate planning after divorce · Estate planning in Santa Barbara County

This article is for general information only, not legal advice. Figures and thresholds are current as of 2026 and are subject to change. Consult an attorney about your specific situation.