Does California have an inheritance tax?

No. California does not have a state inheritance tax or a state estate tax. However, federal estate tax applies to estates exceeding the federal exemption threshold (over $13.61 million per individual in 2024). Heirs should also be aware of potential capital gains tax exposure and property tax reassessments under Proposition 19 when inheriting real property. This is general information only — consult a licensed attorney for advice on your situation.

What is a stepped-up basis and why does it matter for inherited property?

When you inherit property, its tax basis is typically stepped up to its fair market value on the date of the decedent's death. This can significantly reduce capital gains taxes if you later sell the property — you only pay gains above the stepped-up value, not the original purchase price. This is one of the most valuable tax benefits available to heirs of appreciated assets. Tax basis rules are complex — consult a qualified tax professional for your specific situation.

How did Proposition 19 change California property taxes for heirs?

Before Prop 19, effective February 2021, children could inherit a parent's home without triggering a property tax reassessment. Prop 19 eliminated most of this exclusion. Now only children who inherit a primary residence and also use it as their own primary residence may claim a limited exclusion. All other inherited property is generally reassessed to current market value, which can dramatically increase property tax obligations for heirs. Consult a California attorney for planning guidance specific to your situation.

Can I negotiate my IRS tax debt for less than I owe?

Yes. The IRS Offer in Compromise program allows eligible taxpayers to settle their tax debt for less than the full amount owed. Installment agreements allow payment over time. Currently Not Collectible status suspends collection activity for those experiencing financial hardship. Eligibility for each program depends on your specific financial situation and the IRS has strict qualification criteria. This is general information only — not tax or legal advice.

What is the difference between a will and a revocable living trust in California?

A will takes effect only after death and must go through California's probate process, which is public, time-consuming, and can be costly. A revocable living trust allows assets to pass directly to beneficiaries without probate, maintaining privacy and often saving time and money. A trust also provides continuity if you become incapacitated. Estate planning strategies depend on your individual goals — consult a licensed California estate planning attorney.

What happens if I don't file a tax return or pay taxes I owe to the IRS?

Failure to file can result in a penalty of 5% of unpaid tax per month, up to 25%. Failure to pay adds a separate 0.5% per month penalty, and interest compounds daily on unpaid balances. The IRS can file tax liens against your property, levy bank accounts and wages, and seize assets. Acting early to address unfiled returns and unpaid taxes provides significantly more resolution options than waiting. Consult a tax attorney promptly if you have unfiled returns or unpaid liabilities.

Do I need a tax attorney or a CPA for IRS problems?

For routine tax preparation, a CPA or enrolled agent is often sufficient. However, when tax matters involve legal disputes — IRS audits, tax court, liens and levies, estate administration — an attorney provides attorney-client privilege and legal advocacy that a CPA alone cannot offer. Bay Legal PC combines legal and tax expertise to serve California clients with complex tax situations. The right professional depends on your specific needs.

How do I get started with Bay Legal PC for a tax matter?

Bay Legal PC offers free initial consultations for tax, estate, probate, and related legal matters. You can call (650) 668-8000, email intake@baylegal.com, or submit the contact form at BayTax.com. Bay Legal PC serves clients throughout all 58 California counties and offers phone, video, and in-person consultations at their Palo Alto office. Submitting a contact form does not create an attorney-client relationship.

BayTax.com — California Tax Law Resource

In-depth guides on the tax law topics that affect California families, investors, and business owners most.

Estate Planning

Prop 19 & Inherited Property: What California Families Need to Know

Since February 2021, the rules around inheriting California real property have changed dramatically. What changed, what remains, and what families can do now.

Estate Tax · 8 min readRead Full Guide →

IRS Resolution

IRS Offer in Compromise: Who Qualifies and How the Process Works

A step-by-step explanation of the OIC program, the Reasonable Collection Potential calculation, and what to expect during the IRS review period.

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Real Estate

Capital Gains Tax on Inherited California Real Estate: A Plain-English Guide

How the stepped-up basis works, when it applies, and the scenarios where heirs may still owe capital gains tax after selling inherited property.

Property Tax · 10 min readRead Full Guide →

Probate

How California Probate Works — and Why It's a Tax Event

California probate triggers tax obligations, creates public records, and delays asset transfers. Here's what heirs face and what can be done proactively.

Probate Tax · 14 min readRead Full Guide →

IRS Audits

Received an IRS Notice? Here's What Each Type Means

From CP2000 underreporter notices to audit examination letters — what to do, what not to do, and when to get professional representation immediately.

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Business

Selling a California Business: The Tax Implications You Must Understand

Asset sales vs. stock sales, depreciation recapture, goodwill allocation, and California's treatment of business sale proceeds — explained for sellers.

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Client Reviews

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Bay Legal PC serves California families with estate planning, living trusts, probate, IRS matters, and real estate tax law.

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Estate Planning · Trusts

"We had an excellent experience working with Bay Legal to draft our trust, will, and power of attorney documents. We were on a tight deadline, needing everything finalized within a week, and Sivendra was incredibly prompt in his responses. His efficiency and clear communication made what could have been a stressful situation very smooth and straightforward."

Sanjay C.Estate Planning · Google Review

Probate · Inheritance

"I consulted with Sivendra Maraj on an inheritance and probate matter. He was well-prepared and knowledgeable, quickly identified the key issues, and provided insightful legal advice sensitive to both the business and financial context. I appreciated his patient, friendly manner and would not hesitate to work with him and Bay Legal on future matters."

Colin B.Probate · Google Review

"After meeting with a few other legal companies, I was lucky to be assigned Attorney Sivendra Maraj at Bay Legal — it's been a very positive experience. From day one, he took the time to understand my situation and laid out a clear, actionable plan. He's highly communicative — quick to answer questions, provide thoughtful insights, and leads with compassion."

Kiersten A.Estate Planning · Google Review

Living Trust

"I had a great experience with Bay Legal from the moment I requested their services for a living trust. Fast, reliable, approachable, pleasant. They answered all my questions — and many follow-up questions — and provided all the clarifications and guidance as many times as I needed. I have already and will continue to recommend them to everyone I know."

TatjanaLiving Trust · Google Review

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Tracy S.Estate Planning · Google Review

"My experience with Bay Legal was fantastic. I entered the meeting with limited knowledge and Sivendra Maraj spent time to understand my situation and explained the probate process thoroughly. He clearly has a passion for probate law. I highly recommend him."

James G.Probate · Google Review

Trust Administration

"I called Bay Legal to inquire about Trust Beneficiary Representation. Sivendra demonstrated professionalism, integrity, and a deep understanding of Trust Law. He listened to my concerns, was extremely patient, and clearly explained the Trust Administration process. I highly recommend Sivendra Maraj and Bay Legal to any trust beneficiary seeking knowledgeable support."

Gloria G.Trust Administration · Google Review

"I met with Agnes Martin to discuss estate planning. She is incredibly knowledgeable, which impressed me. What mattered more, though, was that she took her time to explain the entire process with me and answered every question that I had. She is thorough and clearly an expert — I am so glad that I found her."

Jeff J.Estate Planning · Google Review

Reviews sourced from Google. Individual results may vary. Past results do not guarantee similar outcomes in your matter.

When Tax Questions
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Your Estate Plan Is
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Behind on Taxes?
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Jayson Elliott, Esq.

What Happens to Taxes
When Someone Dies?

Federal Estate Tax

Property Tax Reassessment

Capital Gains & Stepped-Up Basis

Estate Income During Probate

Frequently Asked Tax Questions

California Tax Law Resources

Prop 19 & Inherited Property: What California Families Need to Know

IRS Offer in Compromise: Who Qualifies and How the Process Works

Capital Gains Tax on Inherited California Real Estate: A Plain-English Guide

How California Probate Works — and Why It's a Tax Event

Received an IRS Notice? Here's What Each Type Means

Selling a California Business: The Tax Implications You Must Understand

★ 4.8 · 371 Google Reviews

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When Tax QuestionsMeet Legal Answers

California Tax Law Practice Areas

Estate Planning & Taxes

Probate & Tax Implications

Real Estate & Taxes

IRS Tax Resolution

IRS Audits & Appeals

Business & Tax Planning

Your Estate Plan IsYour Tax Plan

Behind on Taxes?You Have Options.

Jayson Elliott, Esq.

What Happens to TaxesWhen Someone Dies?

Federal Estate Tax

Property Tax Reassessment

Capital Gains & Stepped-Up Basis

Estate Income During Probate

Frequently Asked Tax Questions

California Tax Law Resources

Prop 19 & Inherited Property: What California Families Need to Know

IRS Offer in Compromise: Who Qualifies and How the Process Works

Capital Gains Tax on Inherited California Real Estate: A Plain-English Guide

How California Probate Works — and Why It's a Tax Event

Received an IRS Notice? Here's What Each Type Means

Selling a California Business: The Tax Implications You Must Understand

★ 4.8 · 371 Google Reviews

Ready to Talk to an Attorney?

Talk to Bay Legal PC

✓ Message Received

When Tax Questions
Meet Legal Answers

Your Estate Plan Is
Your Tax Plan

Behind on Taxes?
You Have Options.

What Happens to Taxes
When Someone Dies?