California estate planning for married couples in this range looks different than it did even five years ago. If your estate falls somewhere between $1 million and $10 million, you're in an interesting spot.
You're not wealthy enough that estate tax is the first thing on your mind. But you're not so small that you can get away with a will and a handshake. You have real assets, real exposure, and real decisions to make.
This guide is for you.
We work with California families in this range every day, from the couple in Roseville with a paid-off home and a $1.2 million 401(k) to the San Diego business owner with a commercial property and grown kids from two marriages. The details vary. The core issues don't.
Here's what you need to know in 2026.
A few things changed heading into 2026, and they affect your planning.
The federal estate tax exemption went up. As of January 1, 2026, the federal estate tax exemption is $15,000,000 per person, or $30,000,000 for a married couple. That's a permanent change under the One Big Beautiful Bill. If your estate is under $10 million, federal estate tax is not your problem right now. That may change in the future, but for now, you can set it aside.
California has no state estate tax. There is no California inheritance tax. No California estate tax. When your assets pass to your heirs, the state is not taking a cut at death. This is one area where California is actually friendlier than people expect...for now...fingers crossed.
Capital gains tax is the real threat. California taxes capital gains as ordinary income, up to 13.3%. Add the federal rate, and a highly appreciated asset can cost your heirs 33 cents on the dollar or more when they sell. This is where families in the $1M–$10M range get hurt. Not estate tax. Capital gains.
Keep that in mind as we go through the rest of this.
If you own real property in California and you don't have a living trust, your estate will go through probate when you die. Probate is a court process. It's public, it's slow, and it's expensive. California probate fees are set by statute and are calculated on the gross value of the estate, not the net. A $1,500,000 house with a $900,000 mortgage generates fees based on $1,500,000, of which the executor and attorney fees alone would be $56,000. California probate is bad: expensive, time-consuming, and public.
A living trust avoids probate entirely. Your successor trustee takes over when you die, distributes assets according to your instructions, and never sets foot in a courthouse. It's faster, private, and dramatically cheaper for your family. While there are other ways to avoid probate without a living trust, a living trust, in most cases, is far and away the most efficient and effective way to avoid probate.
For families in the $1M–$10M range, a living trust isn't optional. It's the foundation everything else is built on.
If you already have a living trust, great. But when did you last look at it? If it's more than five years old, there's a reasonable chance it has provisions that no longer make sense, beneficiary designations that are out of date, or assets that were never transferred into it. A trust that isn't properly funded doesn't avoid probate.
If your living trust was drafted before 2011, there's a good chance it has an A/B trust structure built in. This is also called a bypass trust or credit shelter trust. At the time, it was standard practice. It made sense given the old estate tax rules.
Today, for most families in the $1M–$10M range, it's a liability.
Here's the short version of why. When the first spouse dies, the A/B trust automatically splits the estate into two separate trusts. Half the assets go into an irrevocable bypass trust. Those assets are locked in. And when the surviving spouse eventually dies, the assets in the bypass trust do not get a step-up in tax basis.
That's the problem. The step-up in basis is one of the most valuable things your heirs can receive. If your parents paid $200,000 for a home now worth $2,000,000, a full step-up means your heirs inherit at the $2,000,000 value. They can sell it and owe nothing in capital gains. Without the step-up, they pay capital gains on decades of appreciation.
An A/B trust structure can cost your kids hundreds of thousands of dollars in unnecessary taxes.
If your trust has this structure and your spouse is still alive, the fix is usually straightforward. You amend the trust to eliminate the mandatory bypass provision and add a portability clause instead. The surviving spouse then files IRS Form 706 after the first spouse dies to claim the deceased spouse's unused exemption. Both exemptions preserved, no bypass trust required.
If your spouse has already passed and the bypass trust is already funded, you have fewer options, but you're not necessarily stuck. We wrote a full post on that here.
If you own California real property and you plan to pass it to your children, Proposition 19 matters.
Before Prop 19, parents could transfer their home and even other properties to their children, and the children would keep the parents' low assessed value for property tax purposes, regardless of the home's current market value. That was a huge benefit in a state where homes have appreciated 300% - 400% or more in 30 years.
Prop 19 changed that. Since February 2021, a child who inherits a parent's home only keeps the low assessed value if they move into the home as their primary residence within one year. And even then, there's a cap. If the market value exceeds the assessed value by more than $1,000,000, the excess gets reassessed.
For families in the $1M–$10M range with appreciated real estate, this is a meaningful issue. A rental property or vacation home passed to your kids will almost certainly trigger a full reassessment. That's a higher property tax bill every year, forever.
If a significant part of your estate is in IRAs or 401(k)s, the SECURE Act changes from 2019 and 2020 are still catching people off guard.
Under the old rules, a non-spouse beneficiary who inherited an IRA could stretch distributions over their lifetime. That spread out the income and the taxes over decades.
That's gone. Under the current rules, most non-spouse beneficiaries have to empty an inherited IRA within 10 years of the owner's death. And the IRS has clarified that if the original owner had already started required minimum distributions, the beneficiary also has to take annual distributions during that 10-year window.
For a family in the $1M–$10M range with $500,000 to $1.5 million in retirement accounts, this creates a real tax planning problem. Your kids may be in their peak earning years when they inherit. Forced distributions on top of their regular income could push them into the highest federal and California brackets.
There are strategies worth knowing about. Some of these include: 1) Naming your favorite charity as a beneficiary of your retirement plan. Charities don't pay income tax, so unlike your children, who would only receive after-tax retirement distributions, the charity gets 100%; 2) Naming a charitable remainder trust (CRT) as a partial beneficiary can spread out distributions and provide income; 3) Qualified charitable distributions (QCDs) let you give directly from your IRA to charity starting at age 70-1/2, reducing the account balance without it ever hitting your taxable income.
None of this is automatic. It requires planning.
Estate planning is mostly about what happens when you die. But the documents that govern what happens if you're incapacitated are just as important, and people skip them constantly.
A durable power of attorney lets someone you trust manage your finances if you can't. Without one, your family may have to go to court for a conservatorship just to pay your bills or manage your investment accounts. That's expensive, slow, and public.
An advance healthcare directive tells your doctors what you want if you can't speak for yourself, and names someone to make medical decisions for you. Without one, your family may disagree about your care, and hospitals tend to default to the most aggressive treatment options.
Both documents should be part of every estate plan.
If you have minor children, your living trust should name a guardian and hold assets in trust for your kids until they're old enough to manage money responsibly. "Old enough" is your call. A lot of parents land on 25 or 30. Some prefer staggered distributions (a third at 25, half the remainder at 30, the rest at 35). Whatever you decide, it should be intentional.
If your kids are adults, the question is different. Do you want to leave assets outright, or in trust? Leaving assets in a continuing trust after your death provides significant protection against divorce, lawsuits, and creditors. It also lets you impose conditions if you have concerns about a particular child's situation. We recommend asset protection trust provisions for children's inheritance for most of our clients.
There's no right answer. But there should be a deliberate one.
This is worth its own section, because a lot of California families don't realize this is an option.
We do the entire estate planning process virtually, over Zoom. Every step, from the initial consultation to reviewing your draft documents to the signing appointment, can be done without leaving your home. The signing appointment is conducted by a remote online notary, which is fully authorized under California law.
For families outside our office locations, this matters a lot. We have clients in Sacramento, the Bay Area, Los Angeles, Fresno, Truckee, and everywhere in between. Many of them came to us specifically because they didn't want to drive 45 minutes to an estate planning attorney's office and sit in a waiting room.
The process works like this:
The result is exactly the same as if you'd come into our El Dorado Hills or Roseville office. The documents are the same. The quality is the same. The price is the same. The only difference is you stayed home.
If you've been putting off estate planning because it feels like a hassle, this is your excuse gone. Here is our latest article on virtual estate planning.
We charge flat fees. And we publish our fees. No hourly billing, no surprise invoices.
For most married couples in the $1M–$10M range, a complete estate plan, including a living trust, pour-over wills, powers of attorney, healthcare directives, and a deed for your California home, runs between $3,000 and $4,000. More complex situations cost more. But you'll know the price before you start.
We also answer post-signing questions at no charge. If you get a letter from a title company six months after signing and you're not sure what to do, you call us. No bill.
Do I need a living trust if my estate is under $10 million? Yes, if you own California real property. Probate applies based on asset type, not estate size.
Does California have an estate tax? No. California has no state estate tax and no inheritance tax.
Can I do my estate planning virtually in California? Yes. Remote online notarization is fully authorized under California law.
If your estate is somewhere between $1 million and $10 million, the planning that matters most in 2026 is:
None of this is rocket science. But it does require actually doing it.
We can help. Start with a free 15-minute call. No pressure, no sales pitch. Just a conversation about where you are and whether we're a good fit.
We serve families in person at our El Dorado Hills, Roseville, San Diego, and San Luis Obispo offices, and virtually from anywhere in California.