If you own property in California but reside in another state or country, it's important to understand the unique estate planning considerations that come with owning real estate in the Golden State. California's laws differ from those in other states, and these differences can have a significant impact on your estate plan—especially if you plan to leave your property to heirs or beneficiaries.

In this article, we'll discuss the key estate planning issues non-residents should address when they own property in California, ensuring that their assets are properly managed, passed on, and taxed according to both California and federal laws.

1. California Probate Process: What You Need to Know

One of the most critical issues for non-residents owning property in California is the state's probate process. California law requires that real property located in the state be handled through California probate, regardless of the decedent's state of residence. This means that if you pass away and your estate plan isn't structured properly, your California property may go through probate in California courts.

Avoiding California Probate: The most effective way to avoid California probate is by placing your real property into a Living Trust. When your property is titled in the name of your trust, it bypasses the probate process and can be transferred directly to your beneficiaries after your death. Keep in mind that this is only applicable if the property is titled in the trust's name before your passing. Consulting with an estate planning attorney to ensure proper titling and alignment with your overall estate plan is crucial.

2. Estate Taxes: Understanding California's Estate Tax Laws

California does not impose a state estate tax or inheritance tax, making it more tax-friendly for non-residents. However, federal estate taxes may still apply, especially if your estate exceeds the federal estate tax exemption threshold, which is over $12 million as of 2025. This means that, for large estates, federal estate taxes could be a consideration for your beneficiaries.

What You Can Do:

• Establishing a revocable living trust can help streamline the transfer of your California property and potentially reduce estate tax exposure.

• An AB trust (also known as a bypass trust) can also be beneficial for married couples looking to maximize their estate tax exemptions and avoid unnecessary taxes.

Working with an estate planning attorney familiar with both California and federal tax laws is important to minimize tax liabilities.

3. Foreign Property Ownership: Managing Assets from Abroad

If you're a non-resident owning California property while living abroad, there are additional considerations. International estate planning issues can arise when your assets span multiple jurisdictions. California property, for example, may be subject to California laws, but if you live outside the U.S., your home country's laws will likely come into play as well.

How to Handle Foreign Ownership:

• Consult with professionals who understand both California and your country's estate laws. An attorney with international experience can help navigate the complexities of cross-border inheritance laws, which might include varying rules for property distribution.

• Multiple Wills: It's not uncommon for individuals with assets in different countries to have multiple wills. One will may govern the distribution of property in California, and another may deal with assets in your home country. Properly drafting these documents is crucial to avoid conflict between jurisdictions.

4. Non-Resident Inheritance and Trust Laws in California

California law offers a variety of ways to plan for the distribution of your estate, but non-residents must be especially cautious when drafting wills and trusts for California property. As mentioned earlier, if you own property in California, that property must be included in a California-specific estate plan to avoid probate.

Additionally, California's Probate Code and Trust Code may have different rules than your home state, especially when it comes to trust administration, taxation, and who is eligible to inherit under California law. A well-drafted living trust is particularly important if you want to ensure that your California property is passed on according to your wishes without complications.

Key Estate Planning Tools for Non-Residents:

• Living Trust: This remains one of the most effective tools for bypassing California probate and ensuring your property is transferred to your beneficiaries with minimal delay or tax burdens.

• Pour-Over Will: Often paired with a living trust, this will can ensure that any property not already transferred into the trust is properly included and administered under the trust's terms.

5. Property Management During Incapacity

If you own property in California and are planning for the possibility of future incapacity (due to illness, injury, or cognitive decline), it's important to address how the property will be managed in your estate plan. Durable Powers of Attorney and Advance Health Care Directives are essential tools for non-residents who may be unable to manage their California property due to incapacity.

These legal documents allow you to designate an agent to make decisions on your behalf regarding your property, financial matters, and healthcare, ensuring that your California real estate is managed according to your wishes even if you are unable to act yourself.

Final Thoughts

Owning property in California as a non-resident comes with specific estate planning challenges that should be addressed to ensure that your assets are properly protected and transferred to your beneficiaries according to your wishes. From avoiding California probate to understanding tax laws and managing cross-border inheritance issues, it's essential to consult with an experienced estate planning attorney who is familiar with both California and international laws.

By establishing a comprehensive estate plan that takes into account California's unique legal requirements, you can ensure that your property is handled in the most efficient and effective way possible—no matter where you live.

LEGAL DISCLAIMER

This article is intended for general informational purposes only. Any legal analysis or other content should not be construed as legal or professional advice or as a substitute for such advice. No attorney-client or confidential relationship is formed by the transmission of this information. If you require legal or professional advice, please contact an attorney or other suitable professional advisor. The choice of an attorney or other professional is an important decision and should not be based solely upon advertisements and blog postings.