When it comes to planning your estate in California, we talk a lot about wills, trusts, and beneficiaries. But another key factor that can dramatically influence your estate plan are asset limits. 

What Are Asset Limits?

In estate planning, “asset limits” are thresholds that determine how your estate is handled after you pass away. Asset limits can affect everything from whether your estate has to go through probate, to whether it’s subject to estate tax, or how your long-term care is paid for. Essentially, asset limits help decide:

• Whether your estate qualifies for simplified probate procedures
• If you or a loved one are eligible for public programs
• What tools (like trusts or gifting strategies) might be best for your unique situation

These limits are especially important in California, where property values are high. Probate can be particularly time-consuming and expensive, and estate tax concerns may arise for higher-value estates.

Asset Limits and California Probate

One of the most common questions we hear is: “Can I avoid probate if my estate is small?” The answer often hinges on whether your assets fall below California’s small estate threshold.

As of 2024, California law allows estates valued at $184,500 or less (excluding certain types of property) to use a simplified probate process. This means that if your estate is under this limit, your heirs can often avoid full probate court by using the small estate affidavit procedure, saving time, money, and stress. 

Which Assets Count Toward the Asset Limit?

Here’s the catch: not all assets count toward this limit. For example, assets that pass outside of probate—such as life insurance with named beneficiaries, jointly owned property, or assets held in a living trust—are not included in that $184,500 calculation. Only probate assets count, which typically means property that is solely in your name without a beneficiary designation.

When calculating estate value for probate or estate tax purposes, assets are typically assessed at their fair market value on the date of death.

Asset Limits and Medi-Cal (California’s Medicaid)

Asset limits also come into play if you’re planning for long-term care and want to qualify for Medi-Cal, California’s Medicaid program. Medi-Cal has strict asset limits for eligibility. Generally, an individual applicant must have less than $2,000 in countable assets (though some assets, like a primary residence or one vehicle, may be exempt).

If you or a loved one is considering long-term care, this is where smart estate planning becomes essential. Tools like irrevocable trusts, gifting strategies, or converting countable assets into exempt ones can help you qualify for benefits without jeopardizing your financial well-being or that of your family.

How to Navigate Asset Limits

So, how do you work around asset limits while protecting your legacy? There are several strategies our estate planning lawyer can provide to help clients make the most of their estate plans:

• Revocable Living Trusts: These allow your assets to bypass probate entirely, no matter the value of your estate. This means you won’t have to worry about the $184,500 asset limit if your property is titled in the name of the trust.
• Medi-Cal Planning: If nursing home care is in your future or for a loved one, our Palm Springs estate lawyer can create a tailored plan that protects assets while remaining within the program’s eligibility limits.
• Gifting During Lifetime: By gradually giving assets to loved ones before your death, you can reduce the overall size of your estate and potentially minimize exposure to estate tax. But be sure you understand gift tax rules (see below).

Gift Tax Rules

Gift tax is applied when you give assets to another person without receiving something of equal value in return. Many people gift assets during their lifetime to stay below the federal estate tax exemption limit (sometimes called the “death tax”). This can help reduce or eliminate estate taxes owed when they pass away. 

As of 2025, you can give up to $18,000 per recipient per year (adjusted for inflation) without triggering gift tax or needing to file a gift tax return. Spouses can combine this for a total of $36,000 per person per year. If you give more than the annual limit, it counts against your lifetime exemption (currently over $13 million federally). Once you exceed that, gift taxes (up to 40%) may apply. Additionally, some gifts may create future consequences regarding income taxes for the recipient, especially if the gifted asset has appreciated significantly.

Asset Limits and Estate Tax Planning

If your estate exceeds the small estate threshold by even a small margin, your loved ones may be forced into California probate, with all the delays and costs that come with it. Many strategies—such as portability of the estate tax exemption between spouses—can also help ensure a surviving spouse isn’t burdened with unexpected tax or probate issues. 

Asset limits also intersect with estate tax planning—especially for individuals with large estates. Proactive planning can help you protect more of your wealth for the next generation when you have a taxable estate.

If your estate’s value exceeds the exemption threshold, your executor may need to file a federal estate tax return, which can be a complex and time-sensitive process. Whether or not your estate exceeds the estate tax exemption often depends on the fair market value of real estate, investments, and other high-value assets.

Depending on how your estate is structured, your heirs could face a combination of estate and income taxes, particularly if your assets include taxable investment or retirement accounts. With the right guidance and strategies, you can take control of your financial future and leave a well-organized legacy.

How to Make an Estate Plan

At Best Coast Estate Law, P.C., our experienced estate planning lawyer makes estate planning clear, concise, and effective for California families. Whether you’re navigating probate thresholds or trying to qualify for Medi-Cal to deal with medical expenses, our experienced team will help you build a plan that meets your goals and honors your wishes.

If you’re ready to take the next step, schedule a consultation today. Planning today means peace of mind tomorrow.

Happy planning!