2026 Real Estate Estate Plan Guide

Short answer: A basic will does not protect a rental portfolio. In California, probate is required once an estate’s probate assets exceed $208,850 gross value (Prob. Code § 13100), a threshold most investors clear with a single duplex. The fix is a properly funded revocable living trust that holds title to your properties, the right ownership structure on each one, and a plan for how Proposition 19 will treat any transfer to your children.

Why does a rental portfolio need more than a will?

A will by itself does not avoid probate. It only takes effect once a court validates it, and every property titled in your individual name at death becomes part of that court process, whether you left detailed instructions or not.

The cost adds up fast on a portfolio. California’s statutory probate fee schedule pays the executor and the estate’s attorney the same amount, calculated on the gross value of the estate without subtracting the mortgage (Prob. Code § 10800(b)). On a $1,000,000 estate, the schedule produces $23,000 for the executor and another $23,000 for the attorney, or $46,000 in ordinary fees before court costs or bond (Prob. Code §§ 10800, 10810). A few Ventura County rental properties can clear that number without much trying. Running your own portfolio through a probate cost estimate makes the exposure concrete.

Probate also takes time. Most California probate cases run 9 to 18 months from the date the court appoints a personal representative, and your properties sit inside that process the entire time, which complicates refinancing, selling, or even routine repairs.

How should I hold title to keep properties out of probate?

Joint tenancy avoids probate for the surviving co-owner, but only for that one property and only between the named joint tenants. A limited liability company can separate a property’s liability from your personal assets, but the LLC membership interest itself still needs to pass somewhere without probate, usually by assigning it into a trust. A funded revocable living trust is the tool built for this: title moves into the trust’s name while you are alive, you keep full control as trustee, and whatever is properly retitled into the trust skips probate entirely. A trust that is never funded, meaning the deeds were never actually recorded into the trust’s name, does nothing for the properties left out of it.

How a married couple holds title also decides the children’s tax bill when they eventually sell. Inherited property generally gets a step up in basis to fair market value as of the date of death (IRC section 1014). Hold a rental as California community property, and both halves of the property step up when the first spouse dies, not just the deceased spouse’s half. Hold the identical property in joint tenancy instead, and only the deceased spouse’s half steps up, leaving the survivor’s built-in gain exposed (IRC section 1014(b)(6)). On a property that has appreciated for fifteen or twenty years, that distinction is often worth more than any other single choice in the plan.

What happens to the property tax base when I pass rental property to my kids?

Proposition 19 narrowed the parent-child exclusion that used to let real property pass to children without a reassessment. The old blanket exclusion under former Proposition 58 is repealed for transfers occurring after February 15, 2021. Under the current rule, keeping a parent’s lower assessed value requires the child to move into the property as a principal residence within one year of the transfer and file for the homeowners’ exemption, and the exclusion is capped at the property’s factored base year value plus $1,044,586 for transfers between February 16, 2025 and February 15, 2027 (Cal. Const. art. XIII A, section 2.1; Rev. and Tax. Code section 63.2). A rental unit your child does not move into gets reassessed to full market value at the transfer.

Putting a property into a revocable living trust does not change any of this. Reassessment turns on the parent-child exclusion rules, occupancy and the homeowners’ exemption filing, not on whether title sits in a trust. Investors who assumed the trust itself would shelter a rental from reassessment are usually surprised at this step, and it is worth running the numbers on each property before deciding whether to gift it, sell it, or leave it in the estate.

Does a trust protect the portfolio from taxes or from creditors?

A revocable living trust is a probate-avoidance and management tool, not a tax shelter and not asset protection. It does not reduce income tax, property tax, or estate tax, and California has no state estate tax or state inheritance tax (Rev. and Tax. Code section 13301). At the federal level, the 2026 exemption is $15,000,000 per person, or $30,000,000 for a married couple (IRC section 2010(c)). Most investors in Ventura and Los Angeles Counties will never owe federal estate tax on the real estate alone, but the trust provides no liability protection by itself. Separating individual properties into one or more LLCs, with the membership interest then assigned into the trust, is the more common way to wall off liability from a single property while still keeping everything out of probate.

What if I become unable to manage the properties myself?

A rental portfolio needs a plan for incapacity as much as it needs a plan for death. A durable power of attorney lets someone you choose step in and sign leases, handle a refinance, or deal with a tenant or property manager if you cannot. A health care directive handles medical decisions separately. Neither document takes away your control while you are able to manage things yourself. Both only activate when needed, and both should be prepared as part of the same engagement that sets up the trust, not as an afterthought once something has already gone wrong.

Figures verified July 2026.

What to do next

Pull a list of every property you own and how title is currently held, then check which ones are actually funded into a trust versus still sitting in your individual name. If any are held in joint tenancy, community property, or an LLC you have not looked at in years, that is worth a conversation with an estate planning attorney before you decide how the next transfer should happen.