Estate Tax Planning Attorney in Calabasas

Estate Tax Planning Attorney in Calabasas

Most people who ask about estate tax do not have an estate tax problem. California repealed its own estate tax and the federal exemption is $15 million per person in 2026, so for the large majority of Calabasas families the planning is about probate, control and privacy rather than tax.

The households actually exposed here tend to look the same: several properties, one or more operating businesses, and everything held through entities that have appreciated substantially since they were set up.

Entities are where the valuation argument happens

When an estate holds a membership interest rather than a building, the taxable value is the value of the interest, and that is not simply a share of the underlying assets. A minority interest carries no control, and an interest nobody can readily sell carries no ready market. Both are grounds for a discount, and together they can reduce the reported value substantially.

These discounts are legitimate and well established. They are also heavily scrutinized, and they depend on the operating agreement actually restricting control and transfer in the way the appraisal assumes. An agreement drafted loosely, or ignored in practice, undercuts the position.

So the estate tax work in Calabasas is usually not a new structure. It is making sure the structures that already exist are drafted and operated in a way that supports the valuation, and getting a defensible appraisal from someone who does this work rather than a general practitioner.

Portability, and why families lose it

When the first spouse dies, unused federal exemption can transfer to the survivor. It is not automatic. A federal estate tax return has to be filed at the first death to elect it, even where nothing is owed and the estate is far below the threshold at the time.

Families skip that filing because nothing appears due. The cost lands at the second death, when the survivor’s estate has grown past a single exemption and the first spouse’s unused amount is gone. On Calabasas property and business interests, that growth is not theoretical.

Moving appreciation out before it happens

The most effective planning moves future growth outside the estate rather than trying to reduce what is already there. Gifts of minority interests, grantor trusts that freeze value, and sales to those trusts all do versions of this, and they work best when applied to an asset expected to appreciate.

None of it is worth doing for an estate comfortably under the exemption. The most common answer in Calabasas is that you have a probate and control problem rather than a tax one, and that the money is better spent on the structure than on the tax planning.

How far a Calabasas home is from the $15 million line

The typical Calabasas home is worth $1,688,461 (Zillow Home Value Index, August 2026), which is about 11% of a single federal exemption. The federal basic exclusion amount is $15,000,000 for 2026 under 26 U.S.C. § 2010(c)(3), and the rate on the amount over $1,000,000 of taxable estate is 40 percent under § 2001(c). The table shows how many typical homes it takes to reach the line.

Measure	Amount
Typical Calabasas home	$1,688,461
That home as a share of one $15,000,000 exemption	11.3%
Typical homes to reach one exemption	8.9
Typical homes to reach two exemptions ($30,000,000)	17.8

A household owning a home, a few rentals and a company can still sit below those lines. The exposed estates are the ones that cross them with appreciated property. California has no estate or inheritance tax, so nothing is owed to the state, and a return filed with the IRS is the only estate tax filing.

The return counts more than the house. Life insurance you own, retirement accounts, the rentals and any entity interests at their appraised value all go into the total. Families who assumed only real estate mattered are often surprised, so list everything owned before deciding whether tax is in play. For a Calabasas household well under the line, nothing is owed and no estate tax return is needed, and the work goes to structure instead.

The tax Calabasas families do pay: capital gains, and how the step-up removes it

For most Calabasas owners the real tax is on gain, not on the estate. Property acquired from a decedent takes a basis equal to its fair market value at the date of death under 26 U.S.C. § 1014(a)(1). That treatment reaches property held in a revocable trust, which § 1014(b)(2) counts as property acquired from the decedent.

Here is the arithmetic on an illustrative house. Say the family bought in the late 1990s for $600,000, and it’s worth the typical $1,688,461 at death. The child who inherits takes a basis of $1,688,461, so a sale at that price produces no gain. The unrealized $1,088,461 is never taxed. If the child sold six months later at $1,750,000, the taxable gain would be $61,539, measured from the stepped-up basis. The same house given to the child during life comes out differently. Under 26 U.S.C. § 1015(a), a gift generally carries the donor’s basis, so the child would inherit the $600,000 basis along with the house.

That’s why deeding the home to children to shrink an estate that isn’t near the exemption is rarely a good idea. The income tax cost of giving up the step-up is usually bigger than any estate tax saved, and it’s a cost that shows up years later at sale. The step-up in basis and community property step-up pages have the spousal wrinkle.

What gets filed, and where

A federal estate tax return is due within nine months after the date of death under 26 U.S.C. § 6075(a). It goes to the IRS, not to Los Angeles County, and it’s the filing that elects portability. Nothing goes to Sacramento for an estate tax, because the state doesn’t have one.

Any assets outside a trust still go through probate first. Under Los Angeles Superior Court Local Rule 4.3(a), Calabasas probates are filed and heard at the Stanley Mosk Courthouse, 111 N. Hill St., Los Angeles. The estate tax return and the probate run on separate clocks, and a return can be due while the court case is still open. The estate tax calculator figures should be checked against the entity valuations before either deadline gets close.

Questions Calabasas clients ask

Does California tax estates?

No. There is no California estate tax and no inheritance tax. The only exposure is federal, and the exemption is $15 million per person in 2026.

Our house and the rentals total about $6 million. Is that a problem?

Not a federal estate tax problem on those numbers. It is very likely a probate, control and liability problem, which is a different and usually more productive conversation.

How do valuation discounts work?

The taxable asset is the interest in the entity, not a slice of the property. A minority interest lacks control and is hard to sell, and both support a discount. They depend on the operating agreement actually restricting control and transfer, and on a defensible appraisal.

What is portability and how is it lost?

It lets a surviving spouse use the deceased spouse’s unused federal exemption, and it must be elected on a federal estate tax return filed at the first death. Families skip that filing because nothing is owed, and the exemption is then gone.

Will the exemption change?

It has moved repeatedly and is set by legislation. A plan that only works at one exemption level is fragile, so build for the level in force and keep the structure adjustable.

Would a $12 million Calabasas estate owe federal estate tax?

Not for a death in 2026. The basic exclusion amount is $15,000,000 for 2026, and a married couple who elect portability can carry an unused exclusion to the survivor. A $12 million estate would still face a probate, control and income tax analysis, which is usually where the real money is.

Does the step-up in basis apply to a house held in my living trust?

Yes, for a revocable trust. Section 1014(b)(2) treats property transferred in trust with a power reserved to revoke it as acquired from the decedent, so the house gets a new basis at death. An irrevocable trust is different, and the answer depends on whether the property is in the gross estate.

When is the federal estate tax return due?

Nine months after the date of death, under 26 U.S.C. § 6075(a). Families lose portability by missing this filing when nothing seems to be owed.