Short answer – Most Ventura County families owe no estate tax. California has none, and the federal basic exclusion is $15,000,000 per person for 2026, and a surviving spouse can add the unused exclusion of the first spouse to die through a portability election. The exclusion is in 26 U.S.C. §2010(c)(3), and portability in 26 U.S.C. §2010(c)(4), (5)(A). For families whose wealth will keep compounding past the exclusion for generations, a dynasty trust funded with generation-skipping transfer tax exemption keeps the assets out of each generation’s taxable estate.
The top federal estate tax rate is 40 percent, and it applies only to the part of a taxable estate above the exclusion, so a family over the line pays 40 percent on the excess only (26 U.S.C. §2001(c)).
Ventura County families face the federal tax only, and only above the line
California’s estate tax is zero, so a Ventura County resident’s exposure is federal only. California defines its estate tax as the federal credit for state death taxes attributable to California property (Rev. & Tax. Code §13302), and Congress repealed that credit (26 U.S.C. §2011). More detail is in California estate tax in 2026.
The federal exclusion is $15,000,000 per person, and the 40 percent tax reaches only what’s above it. The older scheduled drop to roughly half that amount no longer applies, so a plan built around a 2026 sunset should be reviewed. The figure is written into 26 U.S.C. §2010(c)(3) and, for deaths after 2026, indexed for inflation. Check your own exposure with the estate tax calculator.
A married couple reaches $30,000,000 only if someone files
Two $15,000,000 exclusions can cover $30,000,000 through portability, and only if someone files. The survivor can use the first spouse’s unused exclusion only if the first spouse’s executor files a timely estate tax return that computes the amount and elects portability (26 U.S.C. §2010(c)(5)(A)). A surviving spouse’s exclusion includes the deceased spouse’s unused exclusion amount (26 U.S.C. §2010(c)(2), (4)).
For estates that weren’t otherwise required to file, the election can be made on a complete Form 706 filed on or before the fifth anniversary of the death. Past that date, the unused exclusion is generally lost. The return is marked at the top as filed under Rev. Proc. 2022-32. See estate tax portability in California.
If a federal return is required, the tax is due when the return is due, nine months after death, so an estate that needs more time to file still has to pay on that date (26 U.S.C. §6075(a) and 26 U.S.C. §6151(a)).
Life insurance is what most often pushes an estate over the line
Life insurance is the asset that most often pushes an estate over the line, because a $6,000,000 policy you own is a $6,000,000 estate asset. The death benefit is in your gross estate if it’s payable to your executor, or if you held any incident of ownership in the policy at death (26 U.S.C. §2042).
An irrevocable life insurance trust that owns the policy is the standard fix. Moving an existing policy into one carries a three-year rule: if you transfer the policy and die within three years, it’s pulled back into your estate (26 U.S.C. §2035(a)). See do I need an irrevocable life insurance trust.
A family nowhere near the line still has an income tax basis question
For a family nowhere near $15,000,000, the question that matters is income tax basis. Property inherited at death generally takes a basis equal to its value at the date of death, which wipes out the built-in capital gain (26 U.S.C. §1014(a)). For married couples in California, the surviving spouse’s half of community property also gets that adjustment when at least half the community interest was included in the decedent’s estate (26 U.S.C. §1014(b)(6)).
For a family whose main asset is Ventura County real estate bought decades ago, gifting it during life can create a capital gains bill that holding it until death would have erased. Property given away during life keeps the donor’s basis in the recipient’s hands (26 U.S.C. §1015(a)). See stepped-up basis and your trust. The property tax side of leaving a house to your children is governed by Proposition 19, which is a separate question.
A dynasty trust, for wealth that keeps compounding past the line
A dynasty trust is built to hold assets for children, grandchildren, and later generations without an estate tax at each death, and the benefit only exists for a family whose wealth will keep compounding past the exclusion. Each person has a generation-skipping transfer tax exemption equal to the basic exclusion amount (26 U.S.C. §2631(c)), which can be allocated to a trust (26 U.S.C. §§2631(a), 2632). Transfers covered by the exemption bear no GST tax, and transfers that aren’t are taxed at the maximum estate tax rate (26 U.S.C. §2641). And trust property isn’t in a beneficiary’s gross estate unless the beneficiary holds a general power of appointment over it (26 U.S.C. §2041(a)(2)), so a properly drafted trust skips each generation’s estate tax.
How long a dynasty trust can last in California depends on the Uniform Statutory Rule Against Perpetuities, which California follows. A nonvested interest is valid if it’s certain to vest or terminate within 21 years after the death of someone alive when it was created, or if it does vest or terminate within 90 years (Prob. Code §21205). A California trust generally has to finish its work within that window. The trust I describe below runs 90 years for that reason. More on the structure in the benefits of a dynasty trust in California.
What the trust is worth on round numbers
On round numbers, a $5,000,000 gift is worth about twice as much after 90 years in a dynasty trust ($135,000,000) as it is left outright to a child (about $65,400,000), because the outright gift loses $12,000,000 to estate tax at Beth’s death and $33,600,000 at Josh’s. The example assumes a flat $15,000,000 exclusion for everyone (in reality it’s indexed after 2026, which would shrink the tax), no other assets, and a 40 percent rate on everything above the exclusion.
Without a dynasty trust. John dies and leaves $5,000,000 outright to his daughter Sally. That’s well under his exclusion, so no tax. Over 30 years Sally’s inheritance triples to $15,000,000, equal to her exclusion, so again no tax, and it passes to her daughter Beth. Beth’s $15,000,000 triples to $45,000,000. Her exclusion covers $15,000,000, the other $30,000,000 is taxed at 40 percent, and $12,000,000 goes to tax. Beth’s son Josh receives $33,000,000, which triples to $99,000,000. His exclusion covers $15,000,000, the tax on $84,000,000 is $33,600,000, and $65,400,000 passes on. After 90 years, John’s $5,000,000 has become about $65,400,000, roughly 13 times the original gift.
With a dynasty trust. John leaves the same $5,000,000 to a dynasty trust for Sally and her descendants and allocates $5,000,000 of his GST exemption to it. None of the trust is in Sally’s, Beth’s, or Josh’s estate. The $5,000,000 triples three times to $135,000,000 within the 90-year window, 27 times the original gift, with no transfer tax along the way.
| Outright to Sally | Dynasty trust | |
|---|---|---|
| Starting gift from John | $5,000,000 | $5,000,000 |
| Estate tax along the way | Beth’s estate and Josh’s estate are taxed at 40 percent above the $15,000,000 exclusion | None of the trust is in Sally’s, Beth’s, or Josh’s estate |
| Amount after 90 years | About $65,400,000 | $135,000,000 |
| Multiple of the original gift | Roughly 13 times | 27 times |
The gap between $65,400,000 and $135,000,000 is the whole case for a dynasty trust. It only exists for families whose wealth will keep compounding past the exclusion, generation after generation. For everyone else, it’s cost without benefit.
What the trust costs, and when it isn’t worth it
The trust is irrevocable, it needs a trustee and administration for decades, and property you give to it during life keeps your basis rather than getting a new basis at your death (26 U.S.C. §§1014(a), 1015(a)). At $15,000,000 per person, far fewer Ventura County families need one than a decade ago. If you think yours might, the Ventura estate tax planning page is the next step. I handle planning by phone and Zoom, and a mobile notary comes to you for signing.
The page is general information, not legal advice for your situation. Law verified against 26 U.S.C. §§1014, 1015, 2001, 2010, 2035, 2041, 2042, 2631, 2632, 2641, 6075 and 6151, Rev. Proc. 2022-32, Revenue and Taxation Code §13302, and Probate Code §21205, 2026.
Frequently asked questions
Does California have its own estate tax?
No. California’s estate tax is defined as the federal credit for state death taxes attributable to California property (Rev. & Tax. Code §13302).
What is the federal estate tax exclusion for 2026?
$15,000,000 per person. That figure is written into 26 U.S.C. §2010(c)(3), and for deaths after 2026 it’s indexed for inflation.
How does a married couple shelter $30,000,000?
Through portability, and only if someone files. A surviving spouse’s exclusion includes the deceased spouse’s unused exclusion amount (26 U.S.C. §2010(c)(2), (4)), so two $15,000,000 exclusions can cover $30,000,000.
What most often pushes an estate over the line?
Life insurance. The death benefit is in your gross estate if it’s payable to your executor, or if you held any incident of ownership in the policy at death (26 U.S.C. §2042).
If I’m nowhere near $15,000,000, is there anything here for me?
Yes, and it’s income tax basis. Property inherited at death generally takes a basis equal to its value at the date of death (26 U.S.C. §1014(a)), which wipes out the built-in capital gain.
What is a dynasty trust?
A trust built to hold assets for children, grandchildren, and later generations without an estate tax at each death. Two federal rules make it work.
How long can a dynasty trust last in California?
California follows the Uniform Statutory Rule Against Perpetuities. A nonvested interest is valid if it’s certain to vest or terminate within 21 years after the death of someone alive when it was created, or if it does vest or terminate within 90 years (Prob. Code §21205).
How much can a dynasty trust save?
In a simplified example with a flat $15,000,000 exclusion and a 40 percent rate, a $5,000,000 gift grows to $135,000,000 after 90 years in a dynasty trust, against about $65,400,000 when it’s left outright and taxed at each generation.
What are the costs of a dynasty trust?
The trust is irrevocable, it needs a trustee and administration for decades, and property you give to it during life keeps your basis rather than getting a new basis at your death (26 U.S.C. §§1014(a), 1015(a)).
Want a straight read on where you stand?
Talk to Eric. A free 30-minute call, no pitch. He’ll tell you where you’re exposed, what it would cost to fix, and what you can skip.
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