USA – CALIFORNIA Trends and Developments Contributed by: Jennifer Jordan McCall, Paul Fraidenburgh, Alexandria Marx and Maria Williams, Pillsbury Winthrop Shaw Pittman LLP
Pillsbury Winthrop Shaw Pittman LLP 2550 Hanover Street, Palo Alto, CA 94304-1115 USA Tel: +1 650 233 4046 Email: jmccall@pillsburylaw.com Web: www.pillsburylaw.com
Federal S . 4196 – Strengthen Social Security by Taxing Dynastic Wealth Act Introduced on 25 March 2026, the Senate Finance Committee will return estate, gift, and generation- skipping transfer tax rules to 2009 levels, including reducing the estate tax basic exclusion amount to USD3.5 million. It will also use estate and gift tax rev - enue as part of the Social Security Trust Fund funding structure beginning after 1 January 2027. Federal H . R . 1 / P . L . 119 - 21 – estate and gift tax exemption changes effective in 2026 Although enacted before the six-month window, the 2026 effective change is significant: the statute sets the federal estate and gift tax exemption at USD15 million for 2026, indexed for inflation thereafter. The relevant H.R. 1 text amended IRC Section 2010 (c) (3) to substitute USD15 million and made the change applicable to estates of decedents dying and gifts made after 31 December 2025. California AB 565 – representation of trust beneficiaries AB 565 was chaptered on 14 July 2025 and became effective on 1 January 2026. It rewrites Probate Code Section 15804 to permit broader virtual representation in trust matters, including representation by certain fiduciaries and persons with substantially identical interests, subject to conflict-of-interest limits. This is a major California trust-administration change because notice to an authorised representative can bind repre - sented persons, including minors, incapacitated per - sons, unborn persons, and persons whose identity or location is not reasonably ascertainable.
Strategic Issues in High Net Worth Litigation and Dispute Resolution Recent legislative developments The One Big Beautiful Bill Act ( OBBBA ) The One Big Beautiful Bill Act, enacted in 2025, has started to generate litigation in 2026. In Juggler Dave and Friends , LLC v United States , —- Fed. Cl. —— (2026), the Court of Federal Claims upheld the OBBBA’s retroactive deadline for claiming employee retention credits, finding it had a curative and reme - dial purpose consistent with due process. The OBB - BA also amended various tax provisions, and the IRS released 2026 inflation adjustments incorporat - ing OBBBA amendments, including the annual gift tax exclusion of USD19,000 per donee for 2026. The OBBBA’s impact on the estate and gift tax exemp - tion – and whether it permanently extended or modi - fied the elevated TCJA exemption levels – remains a critical planning consideration for private wealth practitioners. Note that California has not adopted all provisions of the OBBBA, such as bonus depreciation, so care must be exercised in planning. See Form FTB 3885F, page 2. California SB 1288 – property : nonprobate transfer of ownership This bill, introduced on 20 February 2026 and amend - ed on 8 June 2026, will amend California Probate Code Section 5507 and add Section 5510.5 regard - ing nonprobate transfer of securities, including notice to beneficiaries and limits on what a registering enti - ty may require before securities transfer. It will also specify that nonprofit corporations, charitable trusts and 501 (c)(3) entities may be beneficiaries under the relevant beneficiary-form statute.
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