How OBBBA’s $15M Exemption Reshapes San Diego Estates
Estate planning San Diego families pursued before July 2025 looks very different today. The One Big Beautiful Bill Act (OBBBA), signed by President Trump on July 4, 2025, made the federal estate-and-gift-tax exemption $15 million per person ($30 million per married couple) permanent, effective January 1, 2026, indexed for inflation. This replaces the prior sunset that would have rolled the exemption back to roughly $7 million. For California attorneys advising coastal clients, it is the biggest federal tax shift in a decade.
California has no state estate tax — repealed in 1982 — so San Diego residents face only the federal regime. Above $15 million, the top federal rate remains 40%. Most middle-market estates now sit below the bar, so the conversation shifts from tax shelters to probate avoidance, basis planning, and family governance. The IRS estate and gift tax guidance tracks the indexed thresholds and Form 706 rules.
San Diego homeowners often cross the $750,000 formal-probate threshold once a La Jolla or Mission Hills property is counted. Local lawyers in San Diego are fielding more questions about whether irrevocable trusts still make sense; for most, the answer is no, but the case for a revocable living trust is stronger than ever. Browse the estate planning attorneys on ReachAttorneys to compare credentials and fees.
Common Estate Planning San Diego Cases
- Revocable living trusts — the workhorse instrument for homeowners who want to keep their estates out of California probate court.
- Irrevocable trusts (ILITs, GRATs) — still relevant for ultra-high-net-worth families above the $15M/$30M threshold, especially biotech and tech founders along the I-5 corridor.
- Pour-over wills — the safety net that sweeps forgotten assets into the living trust at death.
- Community-property planning under California law — structuring title so both halves of a marital estate qualify for the full step-up in basis.
- Trust administration and probate avoidance — successor-trustee guidance, asset retitling, and Heggstad petitions when funding was missed.
- Business-succession planning — buy-sell agreements and family limited partnerships for craft-brewery, life-sciences, and defense-contractor founders.
California Probate Code and the San Diego Superior Court
California’s small-estate affidavit threshold is $184,500 under Probate Code §890. Estates above roughly $750,000 in non-trust assets typically require formal probate, and contested matters can stretch beyond the 9–18 month norm. Community property rules treat marital assets as jointly owned — and California is one of nine community-property states where both halves receive a stepped-up basis at the first spouse’s death.
Formal filings move through the San Diego County Superior Court Probate Division at the Madge Bradley Building downtown. Statutory attorney fees follow the sliding scale in Probate Code §10810: 4% of the first $100,000, 3% of the next, and so on. A $1.5 million estate generates roughly $28,000 in statutory fees alone — which is why a funded living trust pays for itself.
Did you know? The IRS reported that only about 3,200 federal estate tax returns owed any tax in fiscal year 2024, when the exemption was $13.61 million per person. Under OBBBA’s permanent $15M threshold, that figure is expected to drop further — meaning fewer than 0.1% of US deaths now trigger federal estate tax (Source: IRS SOI estate tax statistics).
The new $15M permanent exemption changes the irrevocable-trust calculus for almost everyone below the threshold. Strategies once sold as tax shelters — irrevocable life insurance trusts, GRATs, and dynasty trusts — now serve mostly creditor-protection and generation-skipping goals rather than estate-tax mitigation. For families with $5M–$15M in net worth, the priority pivots to revocable trusts, basis planning, and clean beneficiary designations.
| Estate Value Tier | Probate Path | Federal Tax Status (2026 OBBBA) | Recommended Tools |
|---|---|---|---|
| Under $184,500 | Small-estate affidavit, no court filing | No federal estate tax | Will + beneficiary designations |
| $184,500 – $750K | Spousal property petition or simplified procedure | No federal estate tax | Revocable living trust + pour-over will |
| $750K – $15M | Formal probate if no trust; trust avoids it | No federal estate tax (under exemption) | Funded living trust, healthcare directive, durable POA |
| Over $15M | Trust-based; Form 706 required | 40% above exemption | ILIT, GRAT, dynasty trust, lifetime gifting |
What an Estate Planning Attorney San Diego Families Hire Should Do
A competent estate planning attorney San Diego residents retain handles four core deliverables. First, trust drafting and funding — drafting the revocable living trust and retitling deeds, brokerage accounts, and business interests into the trust’s name. An unfunded trust is a notarized paperweight.
Second, tax planning under the new $15M permanent exemption: lifetime-gift coordination, annual exclusion gifting ($19,000 per donee in 2026), and Form 709 reporting. For ultra-high-net-worth families, ILITs and SLATs remain in play with a cleaner long-term horizon now that the cliff is gone.
Third, healthcare directives and powers of attorney. California’s Advance Health Care Directive (Probate Code §4701) plus a durable financial POA are mandatory. Without them, a family member must petition for conservatorship — a $15,000+ court process the documents would have avoided.
Fourth, fiduciary tax returns — Form 706 when the estate exceeds $15M or when DSUE portability is elected, and Form 709 for taxable lifetime gifts. The San Diego County Bar Association Lawyer Referral and Information Service is a solid first stop for vetted introductions.
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Frequently Asked Questions
Does the new $15M federal exemption apply to San Diego residents?
Yes. OBBBA sets the federal exemption at $15M per person ($30M per couple) on January 1, 2026, and California has no state estate tax, so only the federal layer applies.
Do middle-class San Diego families still need a living trust?
Almost always. A single San Diego home easily crosses the $750K probate threshold, and statutory fees on a $1.5M estate run about $28,000 — a funded revocable trust avoids that.
How does California community property affect basis step-up?
California is a community-property state, so both halves of qualifying marital assets receive a stepped-up basis at the first spouse’s death — wiping out decades of capital gains on a long-held home.
Do same-sex spouses get the same $15M exemption?
Yes. Since Windsor (2013) and Obergefell (2015), married same-sex couples receive identical federal treatment — unlimited marital deduction, DSUE portability, and the full $30M combined threshold.
What do San Diego estate planning attorneys typically charge?
Flat-fee revocable trust packages in San Diego generally run $2,500–$5,000 for a single person and $3,500–$7,500 for couples. Complex plans involving ILITs, family LLCs, or business succession are billed hourly at $400–$650.
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Disclaimer: This article is for informational purposes only and does not constitute legal advice. Consult a qualified attorney for guidance on your specific situation.
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