Estate Tax Planning in Hidden Hills

Estate Tax Planning in Hidden Hills

At Hidden Hills wealth levels, federal estate tax planning is a primary issue, not a hypothetical concern. No California estate tax exists. The federal tax, however, applies above the federal exemption, and Hidden Hills estates frequently exceed that exemption by a significant margin. A $15 million estate that is not planned for properly can face a federal estate tax liability of several million dollars, payable in cash within nine months of death.

I am an estate planning attorney serving Hidden Hills and the surrounding area. I do this work over Zoom or phone and sign in person. Hidden Hills is in Los Angeles County, and court proceedings go through the LA County Superior Court. For the full estate planning overview, see the Hidden Hills estate planning page.

The strategies that work at Hidden Hills wealth levels

A spousal lifetime access trust removes assets from both spouses’ taxable estates while the surviving spouse retains access. For unmarried clients, other irrevocable trust structures accomplish similar goals. A grantor retained annuity trust transfers appreciated assets out of the estate at a reduced gift tax cost. An irrevocable life insurance trust removes life insurance death benefits from the taxable estate entirely. Annual gifting programs use the annual exclusion to transfer wealth steadily. For clients with entertainment industry assets, intellectual property, or business interests, valuation discounts on those interests can reduce the taxable estate. The common thread: all of these work better when implemented early and when assets are at lower values. Waiting until the estate is clearly over the threshold means missing the most efficient planning opportunities.

Entertainment and business asset valuation

Entertainment company interests, intellectual property rights, and closely held business interests in Hidden Hills require careful, asset-specific valuation for estate tax purposes. The IRS scrutinizes these valuations, and a well-supported appraisal from a qualified appraiser in the relevant asset category is essential. Valuation discounts for minority interests and lack of marketability can reduce the taxable value below the face economic value of the asset. Getting the valuation right both reduces the tax and protects against IRS challenges. This connects to high-net-worth estate planning and asset protection at the same level.

How the federal exemption, marital deduction, and stepped-up basis actually work

IRC §2010(c) sets the applicable exclusion amount at $15 million per person for 2026 under the One Big Beautiful Bill Act, so a married couple can shelter up to $30 million with proper planning, including electing portability so the first spouse’s unused exemption carries over to the survivor. IRC §2056 provides an unlimited marital deduction for property passing to a surviving spouse who is a U.S. citizen, which defers the tax rather than eliminating it, since the combined estate is taxed at the second death. IRC §1014 gives most inherited assets a stepped-up basis to fair market value at death, which is why holding appreciated assets until death for income tax purposes can conflict with strategies that move assets out of the estate early for estate tax purposes. Balancing those two goals, minimizing estate tax exposure while preserving basis step-up where it matters, is a core part of what I design for Hidden Hills estates.

Questions Hidden Hills clients ask

The estate tax on my projected estate is enormous. Is there a way to substantially reduce it? Yes, with sufficient lead time. The combination of irrevocable trusts, annual gifting programs, life insurance trust structures, and properly valued business interest transfers can significantly reduce the taxable estate. How much depends on your specific assets, your income needs, and how much time there is to implement the strategies. I will give you an honest assessment of what is realistic at the consultation.

My estate includes image rights and intellectual property. How is that valued? Image rights and intellectual property are valued based on expected future income streams, comparable transactions, and other market-based methods. The valuation methodology needs to be well-documented and defensible. For entertainers and athletes, image rights can be a very significant estate asset.

Can charitable giving reduce my estate tax? Yes. Assets that pass to qualifying charitable organizations are excluded from the taxable estate. Charitable trusts that provide income during life with the remainder going to charity can reduce estate tax while providing current income. For Hidden Hills residents with philanthropic goals, charitable planning and estate tax planning work together well.

If I leave everything to my spouse, does that avoid estate tax entirely? It defers the tax, it does not eliminate it. IRC §2056’s unlimited marital deduction means no tax is due at the first spouse’s death on property passing outright to a citizen spouse, but the combined estate is taxed at the surviving spouse’s death unless further planning, such as a spousal lifetime access trust or the deceased spouse’s unused exemption, is put in place.

Should I hold onto appreciated assets or move them out of my estate now? It depends on the asset and the numbers. IRC §1014 gives most assets a stepped-up basis at death, eliminating built-in capital gain, so moving a highly appreciated asset out of the estate early can save estate tax but sacrifice that basis step-up. I model both outcomes before recommending which assets to transfer and which to hold.

Talk to Eric or call 805-244-5291. I serve Hidden Hills and the surrounding area. See also high-net-worth estate planning and living trust planning.