The Benefits of Having an Estate Plan in California and Upcoming Changes in 2025

An estate plan is so much more than who gets your belongings and assets after you pass. The proper estate plan matters just as much when you fall ill or suffer from an incapacity. It is crucial to have your affairs in order to protect those that depend on you and to avoid outside intervention to manage your affairs. Suppose you get in a car accident and become incapacitated, who will manage your finances and affairs? Who will pay your bills? Take care of your minor children? Run your business? Access your bank accounts? These are the questions and scenarios estate planning attorneys face daily. So why have an estate plan?

1. Avoiding Probate

For starters your assets and loved ones will avoid the incredibly costly, time consuming, and public ordeal of the probate courts. Without a proper estate plan, or just a simple will in place, your assets will need to pass through Probate Court before being distributed to your loved ones. Since your wishes have not been expressed via the terms of your estate plan, your loved ones will be left fighting over your assets, and sometimes even who the guardian shall be for your minor children. Furthermore, California probate fees are set by a statutory schedule. Below is the current fee structure for California Probates:

• 4% on the first $100,000
• 3% on the next $100,000
• 2% on the next $800,000
• 1% on the next $9 million
• 5% on the next $15 million
• For estates exceeding $25 million, court approval is required for the fee

For example, an estate valued at $500,000 could incur a legal charge of around $21,000 – $4,000 on the first $100k, $3,000 on the second $100k, and $14,000 on the remaining $300k.

2. Tax Savings

Estate planning can lead to significant tax savings. A proper estate plan allows strategic use of cost basis step-up, and can avoid large capital gains tax on appreciated assets. Lifetime gifts can reduce the size of the taxable estate, letting assets appreciate tax-free in the hands of beneficiaries.

3. Peace of Mind for Your Family

When you die, you might leave behind a handful of dependents. By creating your estate plan you clear the path for your family by ensuring that they follow your wishes while being able to access and control your assets. For example, your successor Trustee will have authority to sell your property if need be, without unnecessary delays and cost. Most importantly, with a proper and detailed estate plan you will leave no room for ambiguity and bickering.

Changes to Estate Planning Laws in 2025

In 2017, Congress passed the Tax Cuts and Jobs Act, ushering in sweeping changes across the federal tax landscape. One of the notable changes was the lifetime unified credit exemption, which affects estate and gift taxes. This exemption represents the total amount of money you can leave to anyone during your lifetime or at death without incurring estate or gift taxes.

The Act doubled this exemption amount from $5.49 million per person in 2017 to $11.18 million in 2018, and it has continued to increase with inflation, reaching $13.61 million for 2024. This substantial increase has profoundly altered the estate planning landscape for individuals dealing with federal estate taxes.

However, on December 31, 2025, at midnight, the tax code’s updated provisions will expire, drastically altering the tax landscape. The exemption will be halved, estimated to be around $7 to $7.5 million per person, and the estate tax rate will increase to 45%.

Estate planning is not just for the wealthy—it’s a crucial step for everyone. It provides peace of mind, ensures the financial security of your loved ones, and helps avoid potential family disputes. However, with the upcoming changes in 2025, it’s more important than ever to start planning now. Contact us today so that we can help you navigate these changes and set up your estate plan.

Check out this article next

Frequently Asked Questions Before Building Your Custom Home

Frequently Asked Questions Before Building Your Custom Home

San Diego is known for its diverse architectural styles and innovative interior design. With coastal influences and Spanish culture, our homes are reflective of San…

Read Article