Yes — even if you already have an estate plan, recent and impending estate planning law changes make it wise to review and possibly update your documents with experienced counsel. In many cases, an existing plan may not automatically adapt to new tax thresholds, shifting rules, or state-level changes — and that could yield avoidable surprises.
At the law firm of Kavesh, Minor & Otis, our California estate planning lawyers often counsel clients who believed their plans were “set and forget.” In practice, estate planning is dynamic — and understanding how estate planning law changes and evolving estate tax rules might affect you is essential to ensuring your plan continues to accomplish your wishes.
Recent and Upcoming Changes in Estate Tax and Estate Planning Law
To understand whether you need to worry, it helps first to understand what’s changing. While many clients focus on California-level rules, most changes are at the federal level — although state-level shifts (especially in California real property law) also matter.
Federal Estate & Gift Tax Changes
The most significant developments in estate tax rules in recent years center on the so-called “sunset” of the enhanced exemption amount established under the Tax Cuts and Jobs Act (TCJA), and new legislation enacted more recently.
- Under current law, the federal lifetime estate and gift tax exemption is $13,990,000 per person (for 2025). (SmartAsset)
- Without legislative action, that exemption is scheduled to revert (or “sunset”) to pre-TCJA levels (roughly $7 million, indexed for inflation) beginning January 1, 2026. (IRS)
- However, new legislation — the “One Big Beautiful Bill Act” (OBBBA) — passed in mid-2025 makes a permanent increase in the estate and gift tax basic exclusion amount, pushing it to $15,000,000 per person starting in 2026, with future indexing for inflation. (Frost Brown Todd)
- That said, the more generous exemption is not guaranteed forever — future Congresses and administrations could reverse these changes. (Frost Brown Todd)
- The federal gift tax annual exclusion (the amount you can give to any person each year without it reducing your lifetime exemption) increased from $18,000 to $19,000 for 2025. (Law Offices of Daniel A. Hunt)
- On the administrative side, the IRS has extended the use of e-signatures for estate and gift tax forms through October 31, 2025. (IRS)
- Also, the user fee for requesting IRS Letter 627 (Estate Tax Closing Letter) has been reduced from $67 to $56 as of May 2025. (IRS)
In short: the federal estate and gift tax regime is in flux, with a currently high exemption that could remain or be cut depending on legislative action. That makes timing, strategy, and regular review especially important.
California-Specific Changes and Real Property Rules
While California does not currently impose its own estate tax or inheritance tax, there are still California-specific laws that can affect estate planning, especially as it relates to real property. (Define Financial)
- Under Proposition 19, which took effect in 2021, limits on the transfer of property tax assessments (i.e. “base year value transfers”) for inherited property took hold. That means heirs may not always retain favorable property tax assessments when inheriting real property. (California State Board of Equalization)
- In 2025, the California State Board of Equalization increased the intergenerational transfer exclusion amount under Proposition 19 by 2.15%, from about $1,022,600 to $1,044,586 for transfers between February 16, 2025 and February 15, 2027. (Law Stein Anderson, LLP)
- Proposed state legislation — for example, California Senate Bill 378 — has been floated in past years to impose a state-level gift, estate, and generation-skipping transfer tax in California, but as of now, nothing has been enacted or implemented. (McDowall Cotter Attorneys at Law)
Thus, though California has no direct estate tax now, changes in real property law or new legislation remain possible, and they could influence estate and tax planning for California residents.
Will These Changes Affect Someone with an Existing Estate Plan?
Now that you know what’s changing, you likely wonder: “Does this affect me, given that I already have a trust, will, or other estate plan?” The answer is: it depends — but for many people (especially those with larger or more complex estates), the answer is yes, it can matter.
Here are key considerations:
1. Exemption Levels and Tax Exposure
If your estate is well below current and projected thresholds, the changes may not affect you immediately. However:
- If your estate (including anticipated appreciation, retirement accounts, real property, business interests, etc.) is near or exceeds the current exemption ($13.99 million), the impending shift in exemption levels means that your window of opportunity for favorable planning is limited.
- For those who used a large portion of their lifetime exemption via prior gifts, the change to $15 million in 2026 may give some breathing room — but if the exemption were to revert downward, earlier planning may help. (Frost Brown Todd)
- Even for estates currently under the exemption, tax planning is not only about crossing the threshold; it also involves minimizing taxes on appreciation, income, and ensuring the right structure to maximize benefit of deductions and credits.
Thus, existing plans built to rely on old thresholds may need adjustment to take advantage of or hedge against future changes.
2. Fixed Terms, Outdated Provisions, and “Static” Documents
Many estate planning documents are drafted with fixed figures or assumptions. Over time, those fixed assumptions can become outdated:
- Trusts may have formulas that refer to a specific exemption amount or taxable threshold; if that number changes, the allocation or distribution mechanism might not operate as intended.
- Will provisions referencing tax or exemption thresholds may no longer make sense in light of new numbers.
- Language governing how excess assets pass into certain sub-trusts, or how to “sweep” assets if tax rules change, might be missing or inadequate.
- Documents often omit catch-up or “backstop” provisions that allow flexibility under changing tax regimes.
Even a well-crafted document drafted years ago could become misaligned with present or future law.
3. Timing and Use-It-Or-Lose-It Opportunities
When new or higher exemptions are in force, an estate planning attorney can help you max out or use gifts, trusts, or other techniques to take advantage of the higher allowances before they might diminish or sunset.
- Clients who made substantial gifts years ago may want to “top off” or fill in to the new threshold.
- It may make sense to revisit lifetime gifting strategies (e.g., annual gifts, GRATs, sales to grantor trusts) while favorable rules remain.
- A plan review could also identify opportunities to restructure or unwind less efficient trusts as tax dynamics shift.
If your existing plan doesn’t anticipate or take advantage of such opportunities, you may lose potential tax savings.
4. Legislative Risk and Plan Resilience
Because tax laws can change, estate plans should be flexible. A static plan that works under one tax regime may perform poorly under another.
- Provisions allowing option to “decant” or convert trusts may be missing.
- Alternate distribution pathways or “safe harbor” fallback mechanisms may not be built in.
- You may lack triggers or “update clauses” that prompt review or adjustment when thresholds change.
In short: even if your estate plan was sound when drafted, estate planning law changes (and future unknown shifts) can make it less robust over time.
5. State and Real Property Interactions
For California residents, the interplay between Prop. 19, inherited property tax base transfers, and federal estate planning may matter:
- If your plan involves passing real property (e.g. a family home) to children or beneficiaries, the Proposition 19 rules may constrain how the property tax basis adjustment passes.
- If your plan is silent or mismatched to the current or upcoming Prop. 19 regime, unintended property tax consequences could result.
- While there is no California estate tax now, the possibility of future state-level changes means that plans should continue to monitor state legislative developments.
All told, someone with an estate plan should not assume that “everything is fine” forever — especially when tax law is changing.
Why Periodic Reviews with an Estate Planning Lawyer Are Critical (Even for Existing Plans)
Given the flux in tax and estate planning law, here are several reasons why you should have your estate plan reviewed regularly with qualified counsel (such as the estate planning lawyers at Kavesh, Minor & Otis):
- Stay current with law changes. Many estate planning law changes never make headlines. Your attorney monitors developments in Congress, the IRS, and California to catch updates before they unexpectedly affect you.
- Adjust to life changes. Over time, your financial situation, family structure, or goals may change (e.g. new children, divorce, business growth). A periodic review ensures the plan maps to your present reality.
- Optimize tax opportunities. As exemptions, deduction limits, or strategies shift, lawyers can help implement tactics to use or protect wealth within the law.
- Validate consistency among documents. Will, trusts, powers of attorney, and health directives need coherence. A review helps catch inconsistencies or provisions rendered obsolete by tax or statutory changes.
- Mitigate risk and ambiguity. Without review, estates might be exposed to risk from misinterpretation, disputes, or tax surprises. An updated plan can include fallback mechanisms, trust decanting authority, or safe-harbor provisions.
- Guard against legislative reversals. As tax rules shift, a thoughtful attorney can build in flexibility to reoptimize your plan if laws reverse or evolve again.
- Provide peace of mind. You’ll have confidence your plan continues to function as you intended — without unpleasant surprises left unaddressed.
In essence, having an estate plan is not a “one and done” event. It is a living, evolving framework that must adapt as laws, assets, and families change.
Practical Steps You Can Take Now
If you have an existing estate plan, here’s a checklist to guide what you should do in light of estate planning law changes:
- Contact your estate planning attorney (or engage Kavesh, Minor & Otis if you don’t already). Once you do, request a plan review explicitly in light of recent federal changes, the upcoming 2026 sunset/revision, and California real property rules.
- Request a “tax regime stress test.” Ask your attorney to run scenarios under different exemption levels (e.g., $13.99M, $15M, or $7M) and assess how your plan would behave.
- Explore topping off gifts or strategic transfers. If you have unused exemption capacity, consider making additional lifetime gifts or contributions to trusts while favorable rules remain.
- Evaluate trust provisions. Ensure your trusts permit flexibility (e.g. decanting, power to modify, alternative distribution paths) in case law changes.
- Review property tax basis and transfer rules. If your estate plan contemplates real estate transfers, review how Proposition 19 adjustments or limits in California could affect property tax reassessments or transfer eligibility.
- Check for conflicting or outdated provisions. Be on the lookout for language referring to old exemption amounts, tax rules, or invalid assumptions.
- Integrate fallback and update clauses. Request that your plan include periodic review triggers (e.g. every 3–5 years or when tax law changes materially) or mechanisms to automatically adjust.
- Coordinate with tax and financial advisers. Estate planning doesn’t work in a vacuum. Your tax advisor and financial planner should collaborate with your estate lawyer so strategies align with your broader financial goals.
- Stay informed. Ask your attorney to keep you apprised of relevant legislative developments so you can respond proactively instead of reactively.
By taking these steps, you significantly reduce the likelihood that your carefully wrought estate plan becomes misaligned or suboptimal in a shifting legal environment.
Kavesh, Minor & Otis Can Help
If you believe your estate plan is “done,” think again — estate planning law changes, evolving federal and state tax rules, and your own changing circumstances all mean that a “static” plan may no longer serve you optimally. The good news is that reviewing your plan need not be burdensome — but it is essential.
The California estate planning lawyers at Kavesh, Minor & Otis encourage you to treat your estate plan as a living document. Even if your plan was solid when you signed it, recent shifts in estate tax law, the looming 2026 sunset or reversion, and California real property rules under Proposition 19 all make survival reviews more important than ever.
If you’d like to schedule a comprehensive review of your estate plan in light of recent estate planning law changes, we’d be glad to assist in ensuring your plan continues to reflect your goals and protects your family.
