AB 2016 and Your Temecula Primary Residence

Dax just received notification that his mother, Eleanor, passed away. He expected a straightforward transfer of her Temecula home to him, but the initial probate estimate came back shockingly high – over $60,000 in legal and court fees. Eleanor had a trust, but a crucial codicil crimefully misplaced during a recent move, meant the trust wasn’t fully funded, triggering probate despite her clear intentions. These unexpected costs are devastating, especially as Dax planned to use the inheritance to start a small business.

Navigating California probate, even with a trust, can be fraught with peril. Many clients assume a trust automatically shields their assets, but that’s not always the case. A missing or improperly executed codicil, as in Dax’s situation, can unravel years of careful planning, leaving families facing substantial financial burdens. It’s a painful lesson about the importance of meticulous estate document management and regular review.

What Does AB 2016 Actually Do for California Homeowners?

Assembly Bill 2016, signed into law in 2022, created a streamlined process for transferring a primary residence to a surviving spouse or child, but it’s not a magic bullet for avoiding probate altogether. This “Primary Residence” petition allows a faster, less expensive transfer than traditional probate, but it’s subject to specific requirements and value limitations. Essentially, it creates a shortcut for qualifying assets, circumventing many of the standard probate steps.

How Does the $750,000 Home Value Cap Impact Temecula Residents?

While AB 2016 is beneficial, it’s crucial to understand the current value cap. For 2026, the simplified petition applies to homes valued up to $750,000. This threshold is not adjusted for inflation, meaning homes appreciating beyond this amount will still require the full probate process. In a market like Temecula, where property values have risen significantly in recent years, many homes now exceed this limit. This is why comprehensive estate planning is paramount—to anticipate such situations and incorporate strategies that address assets exceeding the AB 2016 cap.

Can AB 2016 Be Used With a Trust?

Yes, and this is where careful planning becomes essential. AB 2016 is not a replacement for a trust; rather, it can be used in conjunction with a trust. If a home exceeds the $750,000 limit, the trust should contain a “pour-over” provision directing the property to be handled through the standard trust administration process. Alternatively, a separate, funded sub-trust can be established specifically for the home, allowing for a more streamlined transfer. A properly drafted trust, combined with AB 2016 where applicable, provides maximum flexibility and minimizes probate costs.

What About Proposition 19 and Inherited Property Tax?

Proposition 19 complicates matters significantly. While AB 2016 streamlines the transfer process, Proposition 19 could lead to a substantial property tax reassessment. Under Proposition 19, heirs only keep a parent’s low property tax base if they move into the home as their primary residence within one year. Critically, for 2026, the tax-free ‘basis boost’ is capped at $1,044,586 over the original taxable value; any value exceeding this adjusted cap results in a partial reassessment even if the child moves in. This requires careful consideration, as the tax implications could outweigh the benefits of inheriting the property.

Why a CPA-Attorney Combination Offers Unique Value

After 35+ years practicing as both an Estate Planning Attorney and a Certified Public Accountant in Temecula, I’ve seen firsthand how crucial a combined approach is. My CPA background allows me to proactively address the tax implications of estate planning decisions – like Proposition 19 and potential capital gains – often overlooked by attorneys lacking that financial expertise. Understanding the step-up in basis for inherited assets, proper valuation methods, and minimizing estate taxes is absolutely vital, and I bring that to every client engagement. For deaths occurring on or after April 1, 2025, assets exceeding $208,850 generally trigger full probate. However, per Probate Code § 13050, this calculation MUST exclude all California-registered vehicles (regardless of value), boats, and up to $20,875 in unpaid salary. Furthermore, AB 2016 now allows a simplified ‘Primary Residence’ petition for homes valued up to $750,000, significantly expanding probate shortcuts.

What does a California probate court look for when interpreting testamentary intent?

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.

When a will is drafted with California probate review in mind, it becomes a stabilizing roadmap rather than a source of conflict. Clear intent, proper authority, and compliant execution protect both families and estates.

Controlling Legal Standards Governing California Estate and Asset Transfers

• Probate & Court Procedure:
  California Courts – Wills, Estates, and Probate
  The official judicial branch guide for navigating the probate process; it provides updated 2026 checklists for determining if an estate qualifies for “Summary Probate” under the $208,850 personal property limit or the $750,000 primary residence threshold (AB 2016).
• Property Tax Reassessment (Prop 19):
  California State Board of Equalization (Prop 19)
  The definitive resource for understanding the “Parent-to-Child” reassessment exclusion; it outlines the strict one-year deadline for heirs to move into an inherited home as their primary residence to maintain the parent’s low property tax base.
• Advance Healthcare Planning:
  California Attorney General – Advance Health Care Directive
  Provides the official California statutory form and legal guidelines for appointing a health care agent; this resource emphasizes the necessity of combining a medical power of attorney with a HIPAA release to ensure doctors can communicate with family during an emergency.
• Federal Estate & Gift Tax:
  IRS Estate Tax Guidelines
  The authoritative federal portal for estate and gift tax reporting; this page reflects the permanent exemption of $15 million per person (effective Jan 1, 2026), effectively replacing the previously scheduled Tax Cuts and Jobs Act (TCJA) sunset.
• Digital Asset Access (RUFADAA):
  California RUFADAA Law (Probate Code §§ 870-884)
  Access the full statutory text of the Revised Uniform Fiduciary Access to Digital Assets Act; it explains why executors are legally barred from accessing encrypted accounts, email, or crypto-wallets unless the decedent provided explicit “prior consent” in their estate plan.