Estate Tax Planning in San Diego: Keep More of What You Built
Most California families won't owe federal estate tax — but for those who will, the exposure is significant, and the window to act closes at death. I help San Diego clients identify their estate tax risk early and put legal structures in place now, while there's still time to do something about it.
Who Actually Faces an Estate Tax Liability?
The federal estate tax applies to taxable estates exceeding the exemption threshold, which for 2024 is $13.61 million per individual ($27.22 million for married couples using portability). California imposes no separate state estate tax. That means most families are not in the crosshairs — but several categories of clients genuinely are, and they often don't realize it until they run the numbers.
You may have meaningful estate tax exposure if:
- Your combined assets — real estate, retirement accounts, business interests, life insurance, and investments — approach or exceed the federal exemption
- You own appreciated San Diego real estate, particularly in La Jolla, Coronado, or Point Loma, where property values have compounded significantly over decades
- You hold a closely held business or professional practice with substantial equity
- You carry large life insurance policies whose death benefit would push your taxable estate over the threshold
- The current elevated exemption sunsets after 2025, which under current law would drop the per-person exemption to approximately $7 million (inflation-adjusted)
That last point matters. Clients whose estates sit between $7 million and $13 million are in a planning window right now that may close at the end of 2025.
What Happens to the Exemption After 2025?
The Tax Cuts and Jobs Act of 2017 nearly doubled the federal estate and gift tax exemption on a temporary basis. Unless Congress acts, those provisions expire December 31, 2025, and the exemption reverts to its pre-2018 level — estimated at roughly $7 million per person after inflation adjustments. For married couples, that's approximately $14 million combined, down from over $27 million today.
This sunset creates urgency for clients in the middle range. Gifts made before the exemption drops lock in today's higher threshold under IRS anti-clawback regulations. Waiting means potentially losing millions in transfer capacity that cannot be recovered. Estate tax planning San Diego clients need right now is not about avoiding a tax that doesn't apply — it's about using a legal window before it closes.
Strategies I Use to Reduce Estate Tax Exposure
Effective estate tax planning is not a single document — it's a coordinated set of structures that work together. Depending on your situation, I may recommend one or more of the following approaches:
- Annual gifting: The annual gift tax exclusion allows you to transfer $18,000 per recipient per year (2024 figure) without touching your lifetime exemption. For a couple with multiple children and grandchildren, this adds up quickly over time.
- Irrevocable life insurance trusts (ILITs): Life insurance proceeds are includable in your taxable estate if you own the policy. An ILIT removes the policy from your estate while preserving the death benefit for your heirs.
- Spousal lifetime access trusts (SLATs): A SLAT allows one spouse to gift assets into an irrevocable trust for the other spouse's benefit, removing the assets from the taxable estate while retaining indirect access.
- Charitable planning: Charitable remainder trusts, charitable lead trusts, and direct bequests can reduce estate size while accomplishing philanthropic goals.
- Irrevocable trusts: Certain irrevocable structures — GRATs, QPRTs, and others — transfer appreciation out of the estate at reduced gift-tax cost.
- Coordinated trust funding: A living trust alone does not reduce estate taxes, but it is often the foundation on which tax-reducing strategies are layered.
For a deeper look at irrevocable trust structures, see the irrevocable trusts page on this site.
How This Works With Your Existing Estate Plan
Estate tax planning does not exist in isolation. If you already have a revocable living trust, powers of attorney, and healthcare directives in place, those documents form the foundation — but they don't, by themselves, address estate tax. I review your existing plan in full before recommending any tax-oriented structure, because the right answer depends on what you already have, what your assets are, and what you want to accomplish.
For clients who don't yet have a foundational plan, I typically build the estate planning documents and the tax strategy together, so everything is coordinated from the start. You can learn more about the full planning process on the estate planning pillar page.
Why Solo Representation Matters in Tax-Sensitive Planning
Estate tax strategies involve legal structures, financial projections, and ongoing administration — and small errors in drafting or funding can undermine years of planning. When you work with me, I handle every aspect of your matter personally. There are no associates reviewing your documents, no paralegals drafting your trust language, and no handoffs once your plan is in place. I know your situation because I built it.
I also offer annual no-charge check-ins for existing clients. Tax law changes — exemption amounts adjust, new strategies emerge, and family circumstances shift. Your estate plan should reflect your current situation, not the one you had when you first signed the documents.
Estate Tax Planning Questions
Does California have its own estate tax?
No. California repealed its estate tax in 1982 and has not reinstated one. Your estate tax exposure, if any, is entirely at the federal level. That said, California's high property values mean that many San Diego families are closer to the federal threshold than they realize, particularly when real estate, retirement accounts, and life insurance are counted together.What is the federal estate tax exemption for 2024?
The federal estate tax exemption is $13.61 million per individual for 2024. Married couples can effectively double this to $27.22 million through portability, which allows a surviving spouse to use the deceased spouse's unused exemption. The exemption is scheduled to drop significantly after December 31, 2025, unless Congress extends the current law.If my estate is under the exemption today, do I need to do anything?
Possibly. If the exemption drops at the end of 2025 as currently scheduled, estates that are comfortably below the threshold today may be exposed in the future — particularly if your assets continue to appreciate. The more important question is whether you have a coordinated estate plan that would allow your family to use the exemption efficiently, including portability elections and proper trust structure for married couples.Can I use gifts to reduce my taxable estate?
Yes. The annual gift tax exclusion ($18,000 per recipient in 2024) allows you to transfer assets out of your estate each year without using any of your lifetime exemption. Larger gifts are also possible and may be advisable before the 2025 exemption sunset — but they require careful coordination with your overall plan to avoid unintended consequences.How much does estate tax planning cost?
The cost depends on the complexity of your situation and the structures involved. A foundational estate plan with tax-coordinated trust language costs less than a multi-entity strategy involving irrevocable trusts and charitable vehicles. I discuss fees transparently during your free initial consultation, so you know what you're looking at before committing to anything.
Start With a Free Consultation
If your estate may be approaching the federal threshold — or if you're uncertain where you stand — the right first step is a straightforward conversation. I offer free, no-obligation consultations to San Diego families at every stage of the planning process. We'll look at your assets, your goals, and your timeline, and I'll give you an honest assessment of whether estate tax planning belongs in your picture.
