Yes, a South Bay estate can face federal estate taxes, particularly when highly appreciated coastal real estate is combined with retirement accounts, investments, and other assets — though under current law, the value needed to trigger the tax is higher than many people assume. Many South Bay homeowners who don’t consider themselves wealthy are still surprised to discover how much their estate is actually worth once everything is added up.
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How a Modest Purchase Can Become a Large Estate
A home purchased decades ago for a relatively modest amount in today’s terms may now be worth several million dollars. When you add retirement accounts, investments, life insurance, rental properties, business interests, and other assets, the total value of an estate may be substantially greater than the owner realizes.
How the Federal Estate Tax Works
The federal estate tax is based on the fair market value of the assets a person owns at death — not the value at the time they were purchased, and not today’s value if it’s measured years before death. Under current federal law, following the 2025 One Big Beautiful Bill Act, the federal estate and gift tax exemption is $15 million per individual, or $30 million for a married couple, for 2026, indexed for inflation in future years. Amounts above the exemption are generally taxed at a top rate of 40%.
This exemption is far higher than it was in past years, which means fewer estates are subject to federal estate tax today than under prior law. However, the exemption amount has changed more than once over the past two decades, and it can change again. Decades of past and future appreciation in a Manhattan Beach, Palos Verdes, Hermosa Beach, Redondo Beach, or other coastal property — combined with retirement accounts, investments, and other holdings — can still push a high-value estate, particularly that of an unmarried individual or a couple with substantial combined assets, closer to or above the exemption amount over time.
A Living Trust Alone Does Not Remove Assets From Your Taxable Estate
Simply placing a highly appreciated home into a standard living trust does not remove its value from your taxable estate. A revocable living trust is designed primarily to avoid probate and provide for management during incapacity — it does not, by itself, reduce estate tax exposure. However, there are more advanced lifetime estate planning strategies that, when appropriate and implemented early enough, may significantly reduce or even eliminate estate taxes. Learn more about why high-value homes and investment properties often require more sophisticated planning.
Why We Recommend a Periodic Estate Checkup
Because property values, portfolios, and tax laws all change over time, this is one reason we invite our clients in for a free checkup meeting every three years, to periodically calculate the current and projected value of the entire estate and consider further estate tax planning as needed.
Frequently Asked Questions About Estate Taxes
How much money triggers federal estate tax in 2026?
For 2026, the federal estate and gift tax exemption is $15 million per individual, or $30 million for a married couple, following the 2025 One Big Beautiful Bill Act. Estates above the exemption are generally taxed at a top rate of 40% on the excess. This amount is indexed for inflation and subject to change under future legislation.
Does California have its own estate tax?
No. California does not currently impose a separate state estate or inheritance tax. Estate tax exposure for California residents generally comes from the federal estate tax alone.
If my home is in a living trust, is its value excluded from my taxable estate?
No. A standard revocable living trust does not remove the value of an asset from your taxable estate. More advanced planning strategies, implemented well in advance, may be needed to reduce estate tax exposure.
How often should I have my estate’s value reviewed?
We recommend a checkup at least every three years, since property values, investment portfolios, and estate tax laws can all change meaningfully over that time.
Find Out Where Your Estate Stands
Kavesh, Minor & Otis helps South Bay families calculate the current and projected value of their estate and determine whether advanced estate tax planning makes sense. Learn more about the firm’s estate planning services, or read more about how estate tax works and strategies that may help reduce estate taxes.
