The Great Wealth Transfer: planning for your family’s next chapter

A historic transfer—not a guaranteed inheritance

Cerulli’s December 2024 research projects approximately $124 trillion in U.S. wealth transfers through 2048. About $105 trillion is projected to reach heirs and $18 trillion charities; the published figures are rounded. Nearly $100 trillion is expected to come from Baby Boomers and older generations combined. That makes this a decades-long planning story, not a single event happening this year.

Millennials are projected to receive the largest generational share over the full period—about $46 trillion—but Gen X is expected to inherit more in the first decade. Spouses, other generations and charitable organizations are also part of the story. These national forecasts do not tell us how much any particular family will receive, when it will arrive, or how Newport Beach home prices will respond.

Care costs, longevity, market changes and a parent’s own priorities can all change the outcome. Positioning yourself well starts with a plan that works without an inheritance. Treat a potential future transfer as a conversation to prepare for, not money already available for a down payment.

Start with the life you want to protect

For a parent, the first question may be whether the current home still supports daily life. For an adult child, it may be whether to buy nearby, help with a move, or eventually manage a rental. Neither decision begins with a tax technique. It begins with housing needs, retirement resources, health, relationships and the amount of responsibility each person wants.

A coastal home can carry both financial and emotional weight. One sibling may want to keep it; another may need liquidity. A useful conversation separates those preferences from ownership rights and actual carrying costs. Do not assume equal ownership creates equal willingness to pay for insurance, repairs or management.

Invite the people whose decisions matter, with the owner’s permission. Keep the conversation respectful and avoid making a future inheritance a condition of family support. A documented process for discussing choices can be more valuable than a rushed agreement about a sale price.

• What must remain available for the current owner’s living and care needs?
• Who wants to live in, manage or sell each property?
• What happens if one family member wants to exit shared ownership?
• Which decisions need a written agreement prepared by counsel?

Give your advisers a clear property picture

Before deciding to sell, gift or retain a home, assemble a property inventory: ownership and title documents, loan balances, insurance, property-tax bills, leases, available improvement records and known maintenance needs. Keep sensitive documents in your adviser’s secure process rather than an online inquiry form.

A real estate review can help distinguish likely market value from assessed value and explain how condition, location and current competing inventory affect a potential sale. Your CPA may need historical cost and improvement records; an attorney may need the deed and trust documents. These professionals answer different questions, and one estimate cannot substitute for all of them.

Ask for scenarios rather than a single verdict: sell now, retain as a residence, rent under a realistic operating budget, or evaluate a family buyout. Compare estimated proceeds, cash needs, uncertainty and practical obligations. An appraisal or legal determination may be needed beyond a broker’s market perspective.

Estate and gift rules: significant allowances, specific conditions

Under current federal law, the basic estate-and-gift exclusion is $15 million per individual in 2026. This is a shared lifetime gift-and-estate allowance, not separate $15 million amounts for each. Prior taxable gifts matter. A married couple’s potential combined allowance is not automatic: preserving a deceased spouse’s unused exclusion generally requires an estate-tax return electing portability.

The 2026 annual gift exclusion is $19,000 per donor, per recipient, generally for gifts of present interests. Two spouses can potentially give a combined $38,000 to one recipient. Going over the annual limit can require a gift-tax return and use lifetime exclusion without necessarily creating an immediate tax bill; gift splitting can also require reporting.

These rules are reasons to coordinate with advisers, not invitations to transfer a deed immediately. Ownership changes can affect control, financing, income-tax basis and California property taxes. Families below the federal estate threshold still need estate planning, because authority, beneficiary instructions, liquidity and property management are not solved by an exemption.

An inherited home and a gifted home can have different tax outcomes

Inherited real estate generally receives an income-tax basis equal to fair market value at death, or an applicable elected alternate valuation. People often call this a step-up, but it can be a step-down. A later sale can still create taxable gain. The basis rule does not generally depend on federal estate tax being owed.

A lifetime gift generally carries the donor’s adjusted basis for calculating gain, with special rules when value is below basis. Giving a highly appreciated home today can therefore have a different result from inheriting it later. A trust by itself does not establish eligibility for an inherited basis adjustment; the specific ownership and estate treatment matter.

Ask a CPA and attorney to review both paths before signing transfer documents. A qualified date-of-death valuation and retained records may become important. The aim is an informed decision consistent with the owner’s goals—not a blanket claim that holding until death or gifting now is always better.

California’s Proposition 19 is a separate conversation

Income-tax basis and California property-tax assessed value are different systems. A federal inherited-basis adjustment does not preserve a parent’s property-tax assessment. Under Proposition 19, covered parent-child transfers on or after February 16, 2021 generally need to involve the parent’s principal residence becoming a qualifying child’s principal residence to receive the family-home exclusion. Family farms have separate rules.

Ordinary inherited rentals and second homes do not receive that family-home exclusion. The homeowner’s or disabled-veteran’s exemption generally must be claimed within one year, and exclusion-claim deadlines also apply. Occupancy, timing and the actual transfer structure deserve review with the county assessor and qualified counsel.

For transfers from February 16, 2025 through February 15, 2027, the applicable value threshold is the factored base-year value plus $1,044,586—not a simple $1 million home-price ceiling. Value above the threshold can increase taxable value rather than necessarily causing full market-value reassessment. Have the assessor explain the calculation for the specific home before building a budget around the old tax bill.

Selling, renting or exchanging: compare the actual rules

A qualifying principal-residence sale may exclude up to $250,000 of gain, or $500,000 for qualifying married couples filing jointly. These are exclusions of gain, not sale proceeds. Ownership and use generally must each total two years during the five years before the sale, and other limits apply. An inherited home does not automatically qualify just because a parent lived there.

For qualifying investment or business real property, a Section 1031 exchange can defer certain gain. It is not a universal tax-free sale: personal residences and property held primarily for sale do not qualify. In a typical deferred exchange, identification is due within 45 days and acquisition within the earlier of 180 days or the applicable tax-return deadline, including extensions. Receiving or controlling proceeds can defeat deferral.

Discuss an exchange before listing or closing, with a qualified intermediary and tax adviser. Simply selling an inherited house and buying another does not automatically qualify. If renting is the alternative, model vacancies, management, maintenance, insurance and reassessment—not just gross rent. The right choice must work as a property decision as well as a tax scenario.

Retirement accounts do not follow the same property rules

An inheritance may combine a home with retirement accounts, cash and other assets. Many non-spouse designated beneficiaries of retirement accounts must empty the account by the end of the tenth year after the owner’s death. Exceptions apply, including different options for spouses and other eligible designated beneficiaries.

For beneficiaries under the ten-year rule, annual distributions generally are also required if the owner died on or after the required beginning date; those regulatory requirements apply beginning in 2025. Traditional-account withdrawals are generally taxable except for any nontaxable portion, and inherited Roth treatment differs. Retirement accounts should not be described as receiving the same basis adjustment as inherited real estate.

Coordinate distribution planning with expected housing expenses and other income through your financial adviser and CPA. Avoid assuming that an account balance equals immediately spendable after-tax cash, or that withdrawing everything at once is the best way to fund a family property purchase.

A practical family planning agenda

A good first meeting does not need to resolve every decision. It should establish what is known, what needs professional review and who is responsible for the next step. Keep a dated summary and revisit it when family circumstances, laws or property plans change.

Michael and his team can discuss the real estate side: neighborhoods, potential pricing, preparation, buying options and the trade-offs between keeping and selling a home. Your estate attorney handles legal documents and authority; your CPA reviews taxes; your financial adviser connects the choices to your broader financial plan. Involve your existing advisers rather than assuming one team can replace them.

Whether you are a Baby Boomer considering your next chapter, a Millennial buying for a growing family, or part of another generation managing inherited property, the strongest position is clarity. Start the conversation while there is time to compare choices—not only when a deadline makes the decision for you.

• Clarify ownership, decision-making authority and beneficiary instructions with counsel.
• Compare realistic property scenarios and estimated carrying costs.
• Review basis, gift reporting and property-tax consequences before a transfer.
• Identify liquidity needs and a process for any family buyout.
• Agree on a next meeting with the appropriate qualified advisers.