Life insurance for estate planning in California
Most families won’t owe estate tax. What they need is cash at the right moment, a fair split between heirs and a handoff that skips probate. Life insurance does all three, alongside the documents your attorney prepares.
2026 numbers
- Federal estate tax exemption, per person
- $15,000,000
- California estate tax
- None
- Annual gift tax exclusion, per person
- $19,000
Sources: IRS; California State Controller.
What life insurance does in an estate plan
Three jobs, most families need at least one
1. Cash when it’s needed
Funeral costs, debts, the mortgage and taxes come due fast. A death benefit pays within weeks, so heirs don’t have to sell the house or a business in a hurry.
2. A fair split
If one child inherits the house or the family business, a policy can give the others an equal share in cash, without breaking anything up.
3. No probate
Life insurance with a named beneficiary passes outside probate. In California, estates over $208,850 generally go through probate unless assets are in a trust or have beneficiaries.
Worked example
Equalizing an inheritance
Hypothetical: parents own a $900,000 home in Long Beach and $100,000 in savings. Their daughter wants to keep the house; their son lives out of state.
Without insurance, the son gets $100,000 and the daughter gets the house, or the house is sold. With an $800,000 policy naming the son, each child receives $900,000 and the house stays in the family.
Each child’s share
Irrevocable life insurance trust (ILIT)
A trust owns the policy instead of you. The payout stays out of your taxable estate and the trustee follows your rules, for example paying a child over time instead of in a lump sum. It’s useful for larger estates or when heirs are young. Your attorney sets up the trust; we help fund it with the right policy.
Survivorship (second-to-die) life
One policy covers two people and pays after both have died, when estate costs usually come due. Because it insures two lives, premiums are often lower than two separate policies with the same total coverage.
Questions to bring to your estate attorney
- ?How does California community property affect who owns our policies?
- ?Should our trust be the beneficiary, or should we name people directly?
- ?Do our beneficiary forms match our trust and will?
- ?Who should be guardian and trustee for minor children?
- ?Does our estate size make an ILIT worth it?
We don’t give legal advice. We work with your attorney so the insurance fits the plan.
Estate planning FAQ
Does California have an estate tax?+
No. California has not required an estate tax return for deaths on or after January 1, 2005. Only the federal estate tax can apply, and in 2026 it applies only to estates over $15 million per person.
Is life insurance part of my estate?+
For federal estate tax, yes, if you own the policy. That only matters for very large estates. With a named beneficiary, it still passes outside probate.
What is the small estate limit in California?+
$208,850 for deaths on or after April 1, 2025. Below that, heirs can often collect property with a simpler affidavit instead of a full probate case.
Leave cash, not a mess
We’ll review your coverage and beneficiary forms against your estate plan.
[Licensing and disclosure wording: to be added at client review]