Estate Tax Planning Attorney in West Hills

Estate Tax Planning Attorney in West Hills

The general framework is on estate tax planning in California. Most West Hills households will not owe federal estate tax, and California has none.

There is one issue that comes up here more than in the surrounding neighborhoods, because so many families here are planning across three generations at once.

The tax nobody has heard of

The generation-skipping transfer tax is a separate federal tax on transfers that skip a generation, most commonly a gift or bequest to a grandchild while the child is still living. It exists to stop families avoiding a round of estate tax by passing wealth down two levels at once.

It is separate from the estate tax and has its own exemption, and the important practical point is that allocating that exemption is not automatic in every situation. Where a trust is involved, allocation is a reporting question that has to be handled deliberately rather than assumed.

For families comfortably below the thresholds this is academic. For families anywhere near them, a plan that leaves shares to grandchildren without anybody thinking about generation-skipping is a plan with an unexamined exposure in it.

Skipping a generation on purpose, and by accident

Families here skip a generation for good reasons: a child who is financially secure and would rather the money went to their own children, or a child whose circumstances make a direct inheritance unwise.

It also happens by accident, usually through a beneficiary designation naming a grandchild on an account, set up years ago and never revisited. The accidental version is the one that causes trouble, because nobody has considered either the tax treatment or the fact that a minor cannot receive the money at all.

Where skipping is deliberate, it should be done through a trust rather than outright, so the timing is controlled and the exemption question is handled at the point it can still be handled. Where it is accidental, the fix is usually a beneficiary designation review, which costs nothing and is the single most under-done task in estate planning.

Where portability matters

For 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 that filing because nothing appears due, and lose it permanently.

Questions West Hills clients ask

We want to leave something directly to our grandchildren. Is there a tax? Potentially, and it is a separate one from the estate tax. The generation-skipping transfer tax applies to transfers that skip a generation, and it has its own exemption whose allocation is not automatic in every situation. Below the thresholds it is academic, but near them it needs handling deliberately.

Can we leave something to a grandchild who is still a child? You can, but not outright, because a minor cannot receive it. Left directly, it goes to a court guardianship and is handed over at 18. Through a trust you control both the timing and the terms, and the generation-skipping question gets handled at the same time.

Do we owe federal estate tax? Almost certainly not. The exemption is $15 million per person in 2026 and California has no estate tax of its own. Very few West Hills households are anywhere near it.

What is portability? It lets a surviving spouse use the deceased spouse’s unused federal exemption, but only if a federal estate tax return is filed at the first death to elect it, even when nothing is owed.

So what should we actually spend money on? Making sure the trust is funded, deciding at what ages the next generation receives anything, protecting those shares from divorce and creditors, and keeping beneficiary designations current. That is where the value is at this level.

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

For the general framework, see estate tax planning in California. For the planning that actually helps most families here, see living trusts in West Hills.