The Wealth Tax: Taxation of Trusts

If a billionaire is the grantor of a trust under California law, the trust assets are attributed directly to that billionaire for wealth tax purposes. The trust is looked through entirely — its assets are treated as if owned directly by the grantor. No planning benefit from a grantor trust structure; the wealth follows the person, not the entity.

Unlike grantor trusts, non-grantor trusts to which a billionaire transferred property in 2025 or 2026 are themselves treated as “applicable trusts” — separate taxpaying entities subject to the wealth tax. If the transfer was in 2026, 100% of the transferred value is included. A 2025 transfer gets a 25% haircut — only 75% is counted.

Dakessian Law monitors California tax legislation and litigation. More to come.