Estate Tax Planning in Ojai

Estate Tax Planning in Ojai

California has no estate tax. The federal estate tax applies above the current exemption, and Ojai has a meaningful population of residents who may be closer to that threshold than they expect. Second-home owners who also own a primary residence elsewhere, creative professionals who have built or inherited significant estates, and retirees who moved to Ojai with substantial accumulated wealth from other careers can all have estate values that warrant federal tax planning. Under the One Big Beautiful Bill Act, the federal exemption is $15 million per person as of 2026 under IRC §2010(c), which keeps most individual Ojai estates outside the tax. But for a married couple with combined valley properties, a business interest, and significant retirement accounts, the math is worth running rather than assuming.

Because California itself imposes no estate or inheritance tax, some Ojai residents assume they have nothing to plan for once they confirm their estate is under the federal number. That assumption misses two things. First, the federal exemption has moved substantially over the past two decades and could move again, so a plan built only around today’s number can be outdated by the time it matters. Second, even estates well under the federal exemption still benefit from planning that reduces income tax exposure for heirs, coordinates beneficiary designations across retirement accounts, and avoids the ancillary probate that catches second-home owners regardless of estate size. Estate tax planning and general estate planning overlap more than people expect.

I am an estate planning attorney serving Ojai and all of Ventura County. I do this work over Zoom or phone and sign in person. For the full planning overview, see estate planning in Ojai.

Adding up an Ojai estate

An Ojai resident with a primary home worth $1 million in Los Angeles, an Ojai valley property worth $1.2 million, a substantial retirement account, a life insurance policy, an art collection with appraised value, and a business interest may have a combined estate of $7 million or more. At current exemption levels, no federal tax on a married couple. But individual estates, and situations where the exemption drops after future legislative changes, can put this kind of estate into tax territory. For values-oriented communities like Ojai, charitable trust structures can reduce estate tax while supporting causes the resident cares about, which is a particularly fitting combination.

Charitable vehicles for Ojai residents

Ojai has a community with strong values orientation, and charitable estate planning strategies are often a good fit here. A charitable remainder trust provides income during the grantor’s lifetime with the remainder going to a designated charity. A charitable lead trust does the reverse: income to charity for a period, then the remainder to family. Both reduce estate tax while achieving philanthropic goals. Donor-advised funds allow contributions during life that qualify for income tax deductions while the actual grant to specific charities can be made over time. These strategies connect to high-net-worth estate planning and asset protection.

The marital deduction and second marriages

Ojai has its share of second marriages and blended families among the retiree population, and the unlimited marital deduction under IRC §2056 defers all federal estate tax on assets passing to a surviving spouse, regardless of the amount. That deferral is valuable, but it is not automatic protection for children from a first marriage. Without a properly structured marital trust, everything can end up in the surviving spouse’s control with no obligation to eventually pass anything to the first spouse’s children. I build the marital deduction into the plan in a way that still protects the interests of children from a prior relationship, rather than treating the deduction as the whole plan.

Step-up in basis and the decision to hold or gift

Property held until death receives a step-up in basis to fair market value under IRC §1014, which erases capital gains tax on appreciation that occurred during the owner’s lifetime. For an Ojai valley property purchased decades ago at a fraction of today’s value, this is often worth more to the family than any lifetime gifting strategy. Gifting the property during life removes it from the taxable estate but carries over the original, lower basis, which can create a large capital gains bill if the children later sell. For most Ojai families whose estates are comfortably under the federal exemption, holding property until death for the step-up is the simpler and often better outcome.

Questions Ojai clients ask

I want to leave my Ojai property to a conservation organization. How does that affect estate tax? A charitable bequest to a qualifying organization reduces the taxable estate by the value of the bequest. No estate tax is paid on assets that pass to qualifying charities. The bequest can be structured as an outright transfer at death or through a charitable trust that provides income during your lifetime.

My art collection has appreciated significantly. What are the estate tax implications? Art is included in your taxable estate at its fair market value at death. Appreciated art that passes at death receives a step-up in basis under IRC §1014, which eliminates capital gains on the appreciation, but the fair market value is still part of the estate for estate tax purposes. Donating art to a qualifying museum or organization removes it from the estate and may provide an income tax deduction.

Is there a benefit to gifting my Ojai property to my children now? Possibly. Gifting removes the property from your taxable estate but uses your lifetime exemption for the gift. The children receive your basis, not a step-up at death, which affects capital gain if they sell. The decision depends on your total estate, your need for income from the property, and whether the tax savings justify losing the step-up.

Does the federal exemption apply per person or per married couple? Per person. Under IRC §2010(c), each spouse has their own $15 million exemption as of 2026, and a properly drafted plan can allow a surviving spouse to use any unused portion of the first spouse’s exemption. Combined with the unlimited marital deduction under IRC §2056, a married couple can generally shelter up to $30 million with the right documents in place.

Talk to Eric or call 805-244-5291. I serve Ojai and all of Ventura County.

For families transferring a home between generations, the Proposition 19 reassessment calculator can estimate the property-tax impact of a parent-child or grandparent-grandchild transfer. For the fuller estate planning picture, see high-net-worth estate planning in Ojai.