What If I Have Homes in Temecula and Another State

Lillian discovered a handwritten codicil tucked inside a photo album, altering her estate plan. It looked valid, but her daughter, Emily, recalled Lillian signing it while vacationing in Arizona, not California. Now, Emily faces a legal battle—and potentially $5,000 in legal fees—to prove the Arizona signature is enforceable in California probate, even though Lillian primarily resided in Temecula. This situation highlights a surprisingly common complication for clients with multiple residences: determining domicile and how it impacts the validity of estate planning documents.

The core issue isn’t just having homes in multiple states; it’s establishing legal domicile. Domicile isn’t about where you simply spend time. It’s your true, fixed, and permanent home – the place you intend to return to, even when absent. California, with its unique property laws and tax implications, requires careful consideration when you maintain residences elsewhere. We routinely guide clients through these nuances, ensuring their estate plans are rock-solid, regardless of their travel habits.

A frequent misconception is that simply spending less than 183 days in California automatically terminates residency; that’s not accurate. The Franchise Tax Board (FTB) uses the “Closest Connection” test (evaluating 19 factors like your primary doctor and social ties) to determine domicile. This is critical because your domicile dictates which state’s laws govern the probate of your will and the payment of any estate taxes.

But let’s drill down on the specifics of real estate. If Lillian’s Arizona property was relatively modest – say, under $69,625 – a Small Estate Affidavit might have been used to transfer it directly, bypassing probate entirely. However, this is strictly for real property below that threshold and typically applies to things like timeshares or vacant land. For her primary residence in Temecula, particularly if it’s valued up to $750,000, AB 2016 (Probate Code § 13151) provides a streamlined process through a Petition for Succession. This Petition requires a Judge’s Order and differs significantly from a simple affidavit. Furthermore, to qualify for AB 2016, Lillian’s other non-real estate assets (cash, stocks, etc.) would generally need to remain below the separate $208,850 Small Estate limit.

The complexities extend to tax implications as well. As a CPA as well as an attorney, I’m uniquely positioned to address these issues. If Lillian sold the Arizona property, the difference between the sale price and her cost basis would be subject to capital gains tax. Establishing the correct cost basis – the original purchase price plus improvements – is vital. Maintaining meticulous records of these expenses is crucial, and a stepped-up basis is available upon death, potentially reducing capital gains liabilities for her heirs. This is why having a financial professional involved from the outset is invaluable.

Furthermore, the One Big Beautiful Bill Act (OBBBA), which permanently increased the Federal Estate Tax Exemption to $15 million per person effective January 1, 2026, provides some relief, but California’s estate planning still requires careful attention, especially with out-of-state property. We ensure our clients understand how to leverage these federal exemptions while complying with California law.

Planning also requires careful consideration of business assets. If Lillian owned a business, the location of your business—or more accurately, where it’s legally domiciled—can have substantial tax consequences. Under updated Regulation Section 25136-2 (effective Jan 1, 2026), California sources asset management fees based on the domicile of the underlying investors, not the fund itself. Therefore, even if you relocate, your business may still be subject to California taxes depending on the investor base.

I’ve been practicing estate planning and as a CPA for over 35 years here in Temecula, and I’ve seen countless situations where seemingly minor details – like the location of a signature or the ownership of a second home – can derail an otherwise well-intentioned estate plan. That’s why we focus on proactive planning, addressing potential issues before they arise, and ensuring your wishes are honored, regardless of where you own property. The FTB will use Form 4600 (Residency Questionnaire) to scrutinize your life, including the location of your dentist, the registration of your pets, and where you keep your safe deposit boxes.

How do probate courts in California evaluate intent when a will is challenged?

In California, a last will and testament operates within a probate system that emphasizes intent, clarity, and procedural compliance. When properly drafted, a will does more than distribute property—it creates legally enforceable instructions that guide courts, fiduciaries, and beneficiaries through administration with fewer disputes and less uncertainty.

• Planning: Review estate planning regularly.
• Validation: Check legal requirements.
• Parties: Update testator details.

For California residents, understanding how intent, authority, and compliance interact is one of the most effective ways to protect family harmony and estate integrity. A will that anticipates probate scrutiny is far more likely to be honored as written and far less likely to become the source of unnecessary conflict.

Controlling Legal Standards for Establishing Domicile and Residency

• Residency Guidelines: FTB Pub 1031 (Guidelines for Determining Resident Status)
  This is the primary resource for the “Closest Connection” test. In 2026, it details how the FTB evaluates 19 factors—including the location of your healthcare providers and social ties—to determine if your presence in the state is “permanent” or merely “transitory.”
• Voter Registration: California Secretary of State – Voter Registration
  Updating your voting address is a critical indicator of intent. For the June 2, 2026, Primary Election, the deadline to register online is May 18, 2026. This serves as a public declaration of your primary home.
• Federal Estate Tax: IRS Estate Tax Overview
  While domicile determines state tax, this resource outlines federal guidelines. It reflects the permanent federal estate tax exemption of $15 million per person ($30 million for couples), effective Jan 1, 2026.
• Proof of Residency: California DMV – REAL ID Checklist
  Since the federal enforcement deadline passed in 2025, a REAL ID is mandatory for domestic flights. This page lists the specific residency documents (e.g., utility bills, tax returns) that the state accepts as proof of a permanent California address.