Estate Planning for HNW in Westlake

Short answer – For a Westlake Village family with a large estate, the planning questions are federal estate tax, income tax basis, and the property tax on the house. The federal basic exclusion amount is $15,000,000 per person for 2026 (26 U.S.C. §2010(c)(3)(A)), and the top rate above it is 40 percent (26 U.S.C. §2001(c)). California imposes no estate, inheritance, or gift tax of its own (Rev. & Tax. Code §13301), so the work is getting the federal rules and Prop 19 right.

High-net-worth planning keeps the same revocable trust at the center and adds decisions about portability, life insurance ownership, lifetime gifts, basis, and who runs the business after you. Each of those decisions has a statute behind it and a deadline that can be missed.

Law verified against 26 U.S.C. §§664, 1014, 1015, 2001, 2010, 2035, 2042, 2056, 2503, 2631, 6075 and 6151, Rev. Proc. 2022-32, Rev. Proc. 2025-32, Rev. & Tax. Code §§13301 and 63.2, Prob. Code §§37, 5000, 6401 and 7051, and Fam. Code §297.5, 2026. General information only, not legal advice for your situation.

The estate tax bill comes due nine months after death

An estate made up of real estate and a closely held business can have a large tax bill and little cash. The estate tax return is due nine months after death (26 U.S.C. §6075(a)), and the tax is due when the return is due, without regard to any filing extension (26 U.S.C. §6151(a)). Liquidity planning is part of the job.

Plans built around the 2026 “sunset” that was expected under prior law should be reviewed, because that drop didn’t happen. The basic exclusion amount is $15,000,000 for 2026, and it’s indexed for inflation for deaths after 2026 (26 U.S.C. §2010(c)(3)). The generation-skipping transfer exemption equals the same figure (26 U.S.C. §2631(c)).

Portability has to be elected on a return, with late relief only for some estates

Property passing to a surviving spouse is deducted from the taxable estate (26 U.S.C. §2056(a)). For a married couple, the first estate tax usually isn’t due until the second death.

Portability isn’t automatic. It lets the surviving spouse use the deceased spouse’s unused exclusion, but the executor has to file an estate tax return that computes the unused amount and elects portability, and the election can’t be made on a late return (26 U.S.C. §2010(c)(5)(A)). For estates that weren’t otherwise required to file, Rev. Proc. 2022-32 allows a late election on a Form 706 filed on or before the fifth anniversary of death. Estates that were required to file don’t get that relief. I explain the filing in estate tax portability in California.

Life insurance you own counts toward the taxable estate

A $5,000,000 policy you own adds $5,000,000 to your estate. Life insurance proceeds are included in your gross estate if you held any incident of ownership in the policy at death (26 U.S.C. §2042(2)).

The usual fix is an irrevocable life insurance trust that owns the policy. Moving an existing policy into it carries a three-year risk: if you die within three years, the proceeds come back into your estate (26 U.S.C. §2035(a)).

Giving away a house or stock bought decades ago can cost your children more in capital gains tax than it saves in estate tax

Larger gifts use part of your $15,000,000 exclusion, and in 2026 you can give $19,000 to any person without it counting as a taxable gift (26 U.S.C. §2503(b); Rev. Proc. 2025-32, §4.42).

Property you give away keeps your basis in the recipient’s hands (26 U.S.C. §1015(a)). Property that passes at death generally takes a basis equal to fair market value at death (26 U.S.C. §1014(a)). For a house or stock bought decades ago, giving it away can cost your children more in capital gains tax than it saves in estate tax. For appreciated property, holding it until death is often the better answer for an estate under the exclusion. See stepped-up basis in a California trust.

Prop 19 and the family home: what a child has to do within a year

Under Prop 19, a parent-to-child transfer of the parent’s principal residence can avoid reassessment only if the home becomes the child’s principal residence within one year and the child files for the homeowners’ or disabled veterans’ exemption within a year (Rev. & Tax. Code §63.2(a)(1)(A), (B)). Even then, if the home’s market value is at or above the parent’s taxable value plus $1,000,000, the excess is added to the new taxable value (Rev. & Tax. Code §63.2(d)).

For a home bought decades ago, where market value sits far above the assessed value, the excess over the cap raises the child’s new taxable value. A rental or second home gets no parent-child exclusion at all, because the exclusion covers only a principal residence or a family farm (Rev. & Tax. Code §63.2(a)). My Prop 19 planning page covers the options.

The county line decides where the claim and any probate go

The City of Westlake Village is in Los Angeles County. The original Westlake Village community straddles the Los Angeles-Ventura county line, and its Ventura County side was annexed into the City of Thousand Oaks in 1968 and 1972. A Prop 19 parent-child exclusion claim is filed with the county assessor (Rev. & Tax. Code §63.2(b)), so the claim goes to Los Angeles County or Ventura County depending on where the house sits. If a probate is needed, it’s opened in the county where the decedent was domiciled (Prob. Code §7051). Ventura County probate matters are heard at the Juvenile Justice Center, 4353 E. Vineyard Avenue, Oxnard, usually Courtroom J6.

The trusts that carry out the plan

• Revocable living trust. The base of the plan. It avoids probate and handles incapacity. It doesn’t reduce estate tax. See living trust attorney.
• Marital and bypass trusts. Used with the marital deduction to control where assets go after the second death, which matters in a blended family.
• Irrevocable life insurance trust. Keeps policy proceeds out of both spouses’ estates.
• Dynasty trusts. Assets allocated the generation-skipping transfer exemption can pass to grandchildren and later generations without a second transfer tax (26 U.S.C. §2631).
• Charitable remainder trusts. Pay income to you or your family for a term, then pass to charity. The payout has to fall between 5 and 50 percent of the trust’s initial value each year for an annuity trust (26 U.S.C. §664(d)(1)(A)).

A closely held business needs a funded buy-sell agreement and a clear successor

A closely held business is illiquid at the moment the estate needs cash. The core of the plan is a funded buy-sell agreement and a clear successor. See business succession planning in Westlake Village.

Unmarried partners and blended families

A partner you never married or registered with the Secretary of State (Prob. Code §37(a)) gets nothing unless your documents provide for them. California’s intestacy rules give a share to a surviving spouse (Prob. Code §6401), and a surviving registered domestic partner has the same rights as a widow or widower (Fam. Code §297.5(c)). In a second marriage, the trust has to balance a current spouse against children from a prior marriage, and the default rules rarely do that the way you’d want.

Keeping the plan current

Review the plan after a marriage, divorce, birth, sale of a business, or change in the tax law. Check beneficiary designations on retirement accounts and life insurance at the same time, because those pass under the designation, outside the trust (Prob. Code §5000(a)). For a broader look at the issues, see high-net-worth estate planning in California.

Working with me from Westlake Village

I work with Westlake Village clients by phone and Zoom, and a mobile notary comes to your home for signing. Work at this level is built for each family and quoted in writing before any drafting starts. More on local planning is on my Westlake Village estate planning page.