Short answer: In 2026, an individual can pass up to $15,000,000 free of federal estate and gift tax, and a married couple up to $30,000,000, under the exemption set by Internal Revenue Code § 2010(c) and made permanent by the One Big Beautiful Bill Act (P.L. 119-21, § 70106). California adds no separate estate or inheritance tax on top of that, under California Revenue and Taxation Code § 13301. For most high-net-worth families in Ventura and Los Angeles Counties, the planning problem is not a tax that will never apply to them. It is making sure lifetime gifts, portability elections, and trust structure actually move wealth the way they intend.
How much can a high-net-worth family in California pass on tax-free?
The federal exemption is $15,000,000 per person for 2026, or $30,000,000 for a married couple, under Internal Revenue Code § 2010(c). California has no state estate tax and no state inheritance tax, under California Revenue and Taxation Code § 13301. That combination means a California family can have a large estate, real property, a business, and investment accounts, and still owe nothing to the state or the IRS on transfer, as long as the total stays under the federal number. Families above that threshold need a plan built around lifetime gifting and the marital deduction, not around avoiding a tax bracket that does not exist for smaller estates.
What happens to my exemption if my spouse dies first?
Portability lets a surviving spouse add the deceased spouse’s unused federal exemption, called the DSUE, to their own. That only happens if the first spouse’s executor files an IRS Form 706 and affirmatively elects portability, even when no tax is due and a Form 706 would not otherwise be required. Skipping that filing after the first death can permanently waste part of the couple’s combined $30,000,000 exemption. If the filing was missed, the executor generally has up to five years from the date of death to file a late Form 706 and make the portability election, under Rev. Proc. 2022-32. That five-year window is a real second chance, but it depends on someone catching the missed election before it closes.
Should I give assets away now or leave them at death?
Each spouse can give $19,000 per recipient per year without touching the lifetime exemption or filing anything, or $38,000 per recipient if a married couple elects to split gifts. Gifts above that amount require an IRS Form 709, but generally trigger no tax owed until cumulative lifetime gifts exceed the $15,000,000 exemption, under Internal Revenue Code §§ 2010(c) and 2503(b). Direct payments of tuition or medical bills, made straight to the school or provider, are unlimited and do not count as gifts at all, under Internal Revenue Code § 2503(e). A donor can also front-load five years of annual exclusions into a 529 plan at once, up to $95,000 per beneficiary in 2026, or $190,000 for a married couple, by electing on Form 709 to spread the gift over five years.
Gifting is not free of tradeoffs. A gift of an appreciated asset carries over the donor’s original basis to the recipient, so the built-in gain becomes taxable when the recipient eventually sells. Property left at death generally gets a step-up in basis to fair market value on the date of death instead, under Internal Revenue Code § 1014. For California community property, both halves of an asset step up in basis when the first spouse dies, not just the deceased spouse’s half, under Internal Revenue Code § 1014(b)(6). Under joint tenancy, only the deceased spouse’s half gets that step-up. That difference alone changes whether a family home or a concentrated stock position should move by gift, by trust, or stay put until death.
Does a living trust reduce estate or income taxes?
No. A revocable living trust does not reduce income tax, property tax, or estate tax. California has no state estate tax to reduce in the first place, under California Revenue and Taxation Code § 13301, and a revocable trust is disregarded for federal income tax purposes while the grantor is alive. What a properly funded trust does is keep administration private and out of probate court, and let a high-net-worth family control timing and conditions on distributions to the next generation. For a married couple, the unlimited marital deduction lets one spouse leave any amount to the other free of tax, under Internal Revenue Code § 2056(a). A QTIP marital trust is one way to use that deduction while still controlling where the assets go after the surviving spouse dies, under Internal Revenue Code § 2056(b)(7).
None of this replaces a properly drafted revocable living trust as the foundation of the plan. The tax mechanics above only work correctly if the trust, the beneficiary designations, and the gift documentation are coordinated, not handled piecemeal.
Figures verified July 2026.
What to do next
If your estate is anywhere near the $15,000,000 individual or $30,000,000 married exemption, or you are planning lifetime gifts above the annual exclusion, get the numbers and the paperwork checked before you sign anything, not after. Talk with an estate planning attorney about whether a portability election was filed after a spouse’s death, whether your estate plan still matches current exemption levels, and whether gifting or holding an asset until death makes more sense given its basis.
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