Estate Planning: Why The Living Trust is Truly a Do or Die Proposition

Imagine inheriting a home from your parents in California, a property they bought decades ago for a fraction of today’s price. That home is not just a legacy; it’s a treasure trove of opportunity—and here’s why.

California law gifts heirs with a "step-up in basis." Translation: the tax basis of the property gets "stepped up" to its current market value at the time of inheritance. If your parents bought the house for $100,000, but it's now worth $1 million, you inherit it as if you bought it for $1 million.

Why does this matter? Because when you sell the property, you only pay capital gains tax on the difference between the sale price and that stepped-up value. In this video I discuss more about the huge importance of living trusts when it comes to estate planning.