Best wishes to clients and friends as we enter 2025.
We enter 2025 aware that many of our friends and clients face uncertainty about the road ahead. We especially express our deepest concern and condolence to those affected by the Southern California wildfires. In case helpful, some Los Angeles County resource links are provided below.
Our office meanwhile enters 2025 maintaining continuity in our work within a new formal structure. After 28 years of sole proprietorship, Laurie Shigekuni has entered a business partnership with two attorney colleagues: Kevin (Kao Wei) Mo and Sako (Sakurako) Yasuda. Sako is a graduate of Santa Clara University School of Law and is fluent in Japanese. Kevin is a graduate of UC College of the Law, San Francisco (formerly UC Hastings), and is fluent in Mandarin Chinese. The new firm is Cal Estate Planning, PC. Our staff and contacts are the same as before. We invite clients to continue working with the new business under the same terms as before, but it is each client’s choice whether to do so. In a spirit of wrapping unfinished business and making fresh starts, we especially would be glad to hear from clients who began estate plans but have put them on hold to consider their decisions. Please contact us for an appointment if you are ready to move forward on an existing project.
Tax & benefits numbers for 2025:
The federal lifetime combined estate and gift tax threshold for taxpayers who die in 2025 will be $13,990,000. The gift tax exclusion in 2025 will be $19,000 per year, per donor, per recipient. Unless Congress changes the law (which it may), the estate and gift tax exclusion amount is scheduled to drop in 2026. The currently scheduled 2026 reduction would be to a level still well above $5 million that is unlikely to affect most taxpayers, though more fortunate households may want to plan accordingly.
Since the start of 2024, Medi-Cal has been evaluating Californians’ eligibility for long-term care coverage without imposing any limit on the assets that a consumer may have – although the old strict limits do still apply to consumers’ monthly income. Federal health programs face uncertain futures under the new administration, but as of this writing we are not aware of any change to the asset cap rules.
Some significant California health and retirement benefit numbers for 2025 are posted in state ACWDL letters 24-12, 24-14, 24-15, 25-01 and 25-02. A key income eligibility threshold for many (not all) public health care programs is 138% of the federal poverty level. For Medi-Cal, that amount is set for 2025 at $1801/month for a single person or $2433/month for a couple. The “Minimum Monthly Maintenance Needs Allowance" (MMMNA) will rise to $3,948 per month in 2025 for spouses of Medi-Cal long-term care consumers. Although California as of 2024 stopped counting assets such as savings for Medi-Cal long-term care eligibility, the MMMNA still matters because it affects how married couples' monthly incomes (not assets) are counted.
CTA compliance is voluntary for now.
Federal "beneficial ownership" reporting deadlines for small businesses under the Corporate Transparency Act (CTA) are suspended due to current court injunctions, according to alerts posted by the U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN) at FinCEN.gov/boi. As of this writing, the most recently posted alert on the site, dated January 24, 2025, said the Supreme Court had granted a stay against one of the injunctions holding back this requirement, but it said a second injunction "still remains in place". The posted update still began with this text:
"In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports."
Prior to the court orders, people who have “substantial control,” or who own or control at least 25%, of a company operating in the U.S., including an LLC, would have faced a January 1, 2025 deadline to place personal identity and contact information on file with FinCEN. That January 1, 2025 deadline would have applied to businesses created before 2024. Deadlines would have been 90 days past the effective date of creation or registration for businesses created during 2024, or 30 days past creation or registration for businesses created in 2025 or after. It remains uncertain what registrations and deadlines will be definitely required. Notices are posted extending the deadlines for some businesses affected by specified hurricanes.
AB 2016 revives a quicker succession process for some family residences.
California’s new Assembly Bill 2016, effective for deaths that occur on or after April 1, 2025, will allow heirs and beneficiaries to transfer a deceased person’s primary residence by a relatively simple court petition, not a full probate proceeding, if its value was no more than $750,000. Otherwise, probate will still be required to settle a deceased person’s estate if $184,500 or more in value remains to transfer to heirs or beneficiaries under intestate succession or a will, only if this value is not instead transferred by non-probate mechanisms such as a trust, beneficiary listings, or joint tenancy or community property survivorship rights. The new law could reduce administration costs where a decedent had few assets other than a house. However, the California Probate Referee Association has suggested it might lead to more frequent disputes among families or with creditors. A few questions about the new law’s application remain to be sorted out, including how it may affect small-value properties that are not primary residences.
Property tax news & reminders:
The Board of Equalization (BOE) posted new FAQ guidance in December on rules allowing over-55, disabled or disaster-harmed Californians to transfer the advantage of an existing low property tax assessment to a new primary residence. The guidance is in Letter to Assessors 2024/044.
In May 2024, the State Supreme Court’s ruling in Prang v. LA County AAB tightened the definition in Rev. & Taxation Code § 62(a)(2) of a transfer exempted from reassessment because proportions of ownership remained the same. Families creating LLCs or updating family partnership structures may want to review the BOE’s LTA 2024/038.
Reminder: To qualify for an exclusion from reassessment under Proposition 19, it isn't enough to fit the general description of a person who receives a principal residence from a parent or child (or grandparent or grandchild, in some cases), who also plans to live in the property. To avoid potentially heavy charges for back taxes, the eligible transferee must submit a homeowner’s tax exemption form within one year after the transfer. For an inheritance, this means within a year after the death.
SB 520, effective October 11, 2023, defines circumstances (including misfortune or calamity) where a property can still count as the personal residence of a homeowner who is physically absent. The law offers some protections for elders who live away from home to receive care but who intend to return home. An important caution, however, is that an absent homeowner can lose "personal residence" status for property tax purposes if the property is rented to a tenant who does not meet the definition of a close family member in 26 U.S.C. 267(c)(4). See LTA 2024/007.
Southern CA recovery links:
Many state and federal resources relevant to the Southern California fires are linked from www.ca.gov/LAfires/. See also the disaster Web pages of the City of Los Angeles and LA County (includes maps assessing damage to many individual properties affected by the Palisades and Eaton fires), and, on property tax relief, the LA County Assessor. (More details in the LA Assessor's Jan. 13 email announcement on relief measures. Future Assessor announcements may be available here.) The state Board of Equalization has posted its own broadly applicable disaster relief information page regarding property tax relief. As of January 10, 2025 the IRS posted an opening summary of federal disaster tax relief resources for Southern Californians, including an announcement pushing back some deadlines for certain affected taxpayers. The Governor's office announced some corresponding state-level postponements and other relief. Medi-Cal applicants and consumers may want to refer to the state-level MEDIL 25-02 notice reminding county Medi-Cal programs of several existing disaster relief protections and MEDIL 25-03 with more reminders plus limited relief from benefit discontinuances in Los Angeles and Ventura counties. Since disaster relief measures are often changeable, it's best to keep checking for new announcements.
The firm of Cal Estate Planning, PC, formed by partners Laurie Shigekuni, Sako Yasuda and Kevin Mo in 2024, focuses on estate planning, probate, and trust administration matters. Ms. Shigekuni has been in estate planning practice since 1996. Ms. Yasuda and Mr. Mo are attorneys previously with Ms. Shigekuni's firm. Our team includes three more staff attorneys, a JD graduate, and other skilled staff.
This material is general information, not legal advice. It is not a substitute for consultation with an attorney. No attorney-client relationship is created by this newsletter. Any writing about tax law above is not intended to be used, nor can it be used, to avoid penalties that may be imposed under the Internal Revenue Code. ©2024-2025.