Why a Living Trust Still Matters When You Won’t Owe Estate Tax

There is a common misconception that estate planning is something only wealthy families need. Headlines about the federal estate tax reinforce that idea, and the latest news seems to make the case even stronger: the exemption is now $15 million per person, or $30 million for a married couple, and it was made permanent under the law signed in 2025. If your estate is nowhere near those figures, it is fair to wonder whether you need a living trust at all.

The honest answer is that for most California families, a living trust was never about the estate tax in the first place. Only a very small share of estates are ever large enough to owe federal estate tax. The reasons a trust matters for everyone else have to do with probate, privacy, incapacity, and the practical experience your family will have when something happens to you. This article walks through what a living trust actually does for a typical Orange County family, and why “I won’t owe estate tax” is the wrong reason to skip one.

The Estate Tax Is a Non-Issue for Most Families

Let’s put the tax question to rest first. While the federal estate tax maxes out at a staggering 40%, that tax only applies to the portion of an estate that exceeds the exemption. For 2026, that exemption is $15 million per individual and effectively $30 million for a married couple using portability. The exemption is now permanent and indexed for inflation, so it is expected to rise over time rather than fall.

California adds no state estate tax or inheritance tax of its own, so for California residents the federal number is the only threshold that matters. IRS data over recent years has consistently shown that only a small fraction of estates are large enough to file an estate tax return at all, and the expanded exemption narrows that group further. In short, if you are reading this and wondering whether estate tax applies to you, it almost certainly does not.

So if the tax is off the table, why does the planning still matter? Because the hardest parts of settling an estate, and protecting someone during life, have nothing to do with taxes.

Reason One: Avoiding Probate

Probate is the court-supervised process of validating a will, paying debts, and distributing what remains. In California it is known for being slow, public, and expensive. A typical California probate can take well over a year, and statutory fees are calculated as a percentage of the gross value of the estate, not the net. That means a home counts at its full value even if there is a mortgage against it, which can push fees higher than families expect.  A probate on an Orange County home valued at $1,000,000, even with a significant remaining mortgage, will cost the family approximately $50,000 in court fees, legal costs, and other probate expenses.

A properly funded revocable living trust generally allows your assets to pass to your beneficiaries without going through probate at all. Your successor trustee can step in, follow your instructions, and distribute property privately and far more quickly. For a family that owns a home in Orange County, where property values alone often push an estate past the threshold where probate becomes burdensome, this is frequently the single biggest reason to have a trust.

Reason Two: Privacy

Probate is a public court proceeding. The will, the inventory of assets, and the names of beneficiaries can become part of the public record, accessible to anyone who looks. A living trust keeps those details private. For families who value discretion about what they own and who receives it, privacy alone can justify the trust, regardless of estate size.

Reason Three: Planning for Incapacity, Not Just Death

Estate planning is often framed around what happens when you die. Just as important is what happens if you are alive but unable to manage your own affairs after an accident, a stroke, or a diagnosis like dementia. This is where a trust, combined with the right supporting documents, protects you during your lifetime.

A revocable living trust can name a successor trustee who manages trust assets if you become incapacitated, without a court proceeding. Paired with a durable power of attorney for finances and an advance healthcare directive, your plan covers both your money and your medical decisions if you cannot speak for yourself. Without these documents, your family may have to go to court to establish a conservatorship, which is exactly the kind of slow, costly, public process most people hope to avoid.

Reason Four: Protecting the People You Love

A trust does more than transfer assets. It lets you shape how and when your loved ones receive them. A few common examples:

• Minor children. A trust can hold assets for children and release them at ages you choose, rather than handing a young adult a lump sum.
• Blended families. Trust provisions can balance providing for a current spouse with preserving an inheritance for children from a prior relationship.
• Beneficiaries who need support. Assets can be structured to help a loved one who struggles with money management or who has special needs, with appropriate planning.

These protections have nothing to do with the size of the estate. They are about matching your plan to your family’s real circumstances.

Frequently Asked Questions

The Bottom Line

The estate tax exemption is generous, permanent, and irrelevant to most families. That is good news, but it is not a reason to skip planning. A living trust earns its place by sparing your family probate, protecting your privacy, providing for your care if you cannot manage on your own, and shaping how the people you love are provided for. Those reasons hold true whether your estate is worth a few hundred thousand dollars or several million.

Goodman Estate Law

Brett J. Goodman is the founder and lead attorney at Goodman Estate Law, based in Laguna Hills, CA. The firm specializes in Estate Planning, Trust Administration, and Probate, helping individuals and families create or update wills and trusts. With a focus on personalized, compassionate, and professional guidance, Goodman Estate Law ensures clients’ assets and futures are protected during every stage of estate planning.