Estate Tax Planning Attorney in Tarzana

Estate Tax Planning Attorney in Tarzana

Almost nobody in Tarzana has a federal estate tax problem. California has no estate tax, and the federal exemption is $15 million per person in 2026. If that is genuinely your situation, the statewide page covers it.

The tax question that does affect Tarzana households, and affects a lot of them, is capital gains on property held for decades.

Basis is the number that matters

If you bought a Tarzana property in 1978 for $95,000 and it is worth $1,300,000 now, the gain is enormous. What happens to that gain depends entirely on how the property passes.

Assets generally receive a stepped-up basis at death, meaning the new basis is the value at the date of death. A child who inherits and sells shortly afterward may owe little or no capital gains tax, because the built-in gain effectively disappears at death.

If you instead give the property to your child during your lifetime, they generally take your basis. The 1978 number follows the property. When they sell, they owe tax on the entire gain since 1978. On a Tarzana property held since the seventies that difference can run into hundreds of thousands of dollars.

The well-meant transfer that costs the most

The most expensive thing I see is a parent adding a child to title, or deeding the house outright, to keep it simple or to avoid probate. It does avoid probate. It also transfers basis, forfeits part or all of the step-up, and can trigger a property tax reassessment.

A funded trust achieves the probate goal without any of that, because the transfer happens at death rather than during life. If someone has already suggested putting a child on title, get advice before doing it. It is one of the few estate planning mistakes that is close to impossible to unwind.

This interacts with property tax as well, so the deed you sign to solve one problem can create two others. That is why the sequence matters more than the paperwork.

Where portability still applies

For the small number of households near the federal exemption, unused exemption transfers to a surviving spouse only if a federal estate tax return is filed at the first death to elect it, even where nothing is owed. Families skip it because nothing appears due and lose it permanently.

Questions Tarzana clients ask

Do we owe estate tax? Almost certainly not. California has no estate tax and the federal exemption is $15 million per person in 2026. Very few Tarzana households come near it.

Should I put my daughter on the deed now? Usually not, and it is one of the more expensive mistakes available. It transfers your basis to her, forfeits part or all of the step-up at death, and can trigger a property tax reassessment. A funded trust achieves the probate goal without any of that.

What is a stepped-up basis? Assets generally get a new basis equal to their value at the date of death. A child inheriting a long-held Tarzana property and selling soon after may owe little or no capital gains tax. A child who received it as a lifetime gift takes your original basis and owes tax on the whole gain.

We already added a child to title. Can it be undone? Sometimes partially, and it depends on when and how it was done. It is worth looking at rather than assuming, but this is one of the few mistakes that is close to irreversible, so get advice quickly.

What about portability? It only matters near the federal exemption, and it requires a federal estate tax return at the first death to elect it, even where nothing is owed. Families skip that filing and lose it.

Talk to Eric or call 805-244-5291. I serve Tarzana and the surrounding San Fernando Valley communities.

For the statewide version, see estate tax planning in California. For the tool that solves the probate problem without the basis cost, see living trusts in Tarzana, and check the property tax side with the Proposition 19 calculator.