California Exit Tax Explained: What Actually Happens When You Leave California

California exit tax explained in plain terms: no statute exists today imposing a tax on the act of leaving California. The phrase “exit tax” gets used loosely to describe several distinct phenomena, and conflating them confuses the analysis. The clearest version of an exit tax would be a one-time wealth levy at departure or an ongoing tax tied specifically to former California residency. Neither exists. What does exist is a combination of residency audit pressure and California-source income taxation that can produce results similar to an exit tax in practice without ever being labeled as one in the statute books.

AB2088 (2020) and SB259 (2023) both proposed something close to an actual exit tax, with annual wealth tax provisions and 10-year tails on former residents. Both bills failed. The political pressure to enact something like this has been consistent for at least five years, and bills get re-introduced in nearly every legislative session. As of the 2026 session, no exit tax statute is on the books, and there is no pending bill with a realistic path to passage. Clients who delayed a California exit waiting for the wealth tax to die have been right so far. Whether they’ll continue to be right indefinitely is unknown.

What’s actually in the code that produces exit-tax-like effects: Cal. Rev. & Tax Code §17041 imposes graduated income tax up to 13.3 percent (plus 1 percent mental health surcharge over $1 million for a marginal rate of 14.3 percent in some brackets) on California residents. §17014 defines residency. §17041(i) imposes tax on non-residents at the same rates but only on California-source income. §17951 defines California-source income for non-residents. §18662 imposes withholding on non-resident pass-through and real estate income. The combination means a former California resident with continuing California connections still files California returns and pays California tax for years after the move.

The most aggressive piece is the FTB residency audit program. The FTB has the budget and the institutional appetite to challenge any departure that looks tax-motivated. The Bragg decision and its progeny establish the legal framework, and the audit playbook is well-developed. A taxpayer who moves to Nevada or Texas while keeping a California primary residence, California family, California medical care, and California social ties is going to lose a residency audit even though the move was nominally documented. The audit isn’t formally an exit tax but functionally claws back any tax savings the move produced.

California exit tax explained from the FTB’s perspective looks like this: they’re applying existing residency and source income rules, not punishing departure. Their position is technically correct. The rules apply equally to taxpayers who move out, taxpayers who never lived in California, and taxpayers who maintain partial connections. The exit-tax framing is a media construction. From the taxpayer’s perspective, the experience is functionally indistinguishable from an exit tax, because the audit triggers, the source-income chasing, and the documentation burden all activate at the moment of departure. The label doesn’t matter to the outcome.

Constitutional limits restrict what California could plausibly enact. Saenz v. Roe (1999) protects the right to travel and likely bars a tax that explicitly targets former residents based on prior residency alone. A wealth tax with a 10-year tail might violate that principle, depending on how the tax is structured and rationalized. The dormant commerce clause restricts states from taxing income earned entirely outside their borders. Apportionment rules under U.S. Supreme Court precedent (Allied-Signal v. Director, 1992; MeadWestvaco v. Illinois, 2008) require a connection between the taxed activity and the taxing state. These limits aren’t absolute, but they’re meaningful.

What might change: the political composition of the California legislature has been stable enough that the wealth tax bills can’t pass but stable enough that they can’t fully die either. A future fiscal crisis (the 2028 recession, the next dot-com unwind, a major federal cut) could create the political conditions for passage. Clients who treat a California exit as a once-and-done decision miss the ongoing planning piece. The right approach is to maintain documentation of the post-move life regularly, treat any California return filings carefully, and refresh the residency analysis annually for the first three to five years after the move.

California exit tax explained also has a federal angle. The federal government has no exit tax on state moves (it has §877A for expatriation from U.S. citizenship, but that’s a different thing). Federal tax on income earned after the state move depends on the residency analysis under each state’s rules, with no federal override. The states fight it out among themselves under their own statutes and rules. The credit for taxes paid to other states under §17041(i) and parallel resident-state provisions prevents most double taxation, but the mechanics of who owes what to whom can take years to resolve in audits.

The Reed Corporation works with HNW clients on California exits regularly. The right framing isn’t “is there an exit tax” but “what happens when I leave and how do I plan for it.” The answers involve residency planning, source-income management, deferred compensation analysis, real estate timing, and documentation strategy. Clients who frame the question correctly get cleaner outcomes than clients who fixate on whether some specific bill passed. California exit tax explained correctly is mostly about understanding the existing framework, not anticipating new statutes that may or may not become law.

Beyond the headline question, California exit tax explained also touches on community property nuances that catch married couples. California is one of nine community property states, which means assets acquired during marriage are typically jointly owned regardless of title. When a married couple moves out of California, the community property characterization can persist for assets accumulated during California residency, creating mixed-state property issues that complicate later sales, estate planning, and divorce. The FTB tracks community property classifications via the §17041 framework and can take aggressive positions on whether income from these assets remains California-source after the move.

The interaction with federal §1245 and §1250 recapture rules on California real estate adds another dimension that the exit tax conversation often overlooks. A former resident who sells California real estate after the move faces California source income on the gain plus recapture of any prior depreciation deductions claimed during the California residency period. The recapture portion is California-source ordinary income, not capital gain, and is taxed at California’s full ordinary rates up to 13.3 percent. For taxpayers with significant California rental portfolios accumulated during residency, the eventual sale recapture can rival the underlying capital gain in tax cost. We model this exposure for clients before recommending a sale strategy.

California exit tax explained without covering the FTB residency audit misses the practical reality of leaving California. The audit is the mechanism. Without it, the residency rules would be unenforceable. The FTB has built an audit operation with hundreds of staff dedicated to residency determinations, sophisticated data matching against IRS records, and access to commercial databases that track where taxpayers spend their time. The audit selection isn’t random for high-income taxpayers; it’s targeted based on departure indicators that the FTB has refined over decades.

Common audit triggers: filing a part-year California return for the year of departure, especially when the W-2 shows California wages followed by a non-California address; selling California real estate as a non-resident, which generates Form 593 withholding and a corresponding tax return; receiving a K-1 from a California pass-through entity while reporting a non-California address; the IRS data share showing California-resident filing status historically and then a sudden state change; a Form 540NR with significant California-source income; or simply being a known high-net-worth individual whose departure was reported in the press or in professional networks.

The audit itself starts with a letter from the FTB requesting documentation. The first request is usually broad: a year-by-year reconciliation of the taxpayer’s California connections, copies of leases and deeds, employment records, business records, banking records, family information, social organization memberships, and travel records. The taxpayer has 30 days to respond, though extensions are routinely granted. The auditor uses the response to build a position on whether the taxpayer was a California resident during the year(s) under audit.

The 19-factor test guides the analysis but doesn’t strictly bound it. The factors include the location of the taxpayer’s principal place of business, the location of real estate ownership, the location of cars and personal property, the location of bank accounts, the location of insurance policies, the location of medical and dental providers, the location of children’s schools, the location of social and religious organizations, the location of voter registration, the location of vehicle registration, the location of professional licenses, the location of telephone and internet services, the location of where mail goes, the days spent in California versus other states, and the location of where the taxpayer files federal tax returns.

California exit tax explained as an audit process means understanding that the auditor builds a narrative. The taxpayer’s job is to build a competing narrative supported by documentation. The factors don’t add up arithmetically; they get weighed qualitatively. A taxpayer who has six factors pointing to California and five pointing to Texas can still win the audit if the California factors are weak (vacation home, occasional visits, minor accounts) and the Texas factors are strong (primary residence, business operations, family location). The conversation is about substance, not check-the-box arithmetic.

The Bragg decision (2003) is the framework that most residency cases get tested against. The State Board of Equalization found that Bragg remained a California resident despite documented relocation to Nevada because his “closest connections” remained in California. The closest-connections test weighs the totality of facts and looks for where the taxpayer’s life is most heavily anchored. Bragg had business operations in California, professional relationships in California, and significant California real estate. His Nevada home was secondary to his California life. The decision sets a high bar for taxpayers who keep substantial California ties.

Documentation strategy for the audit: every day matters. The first year of non-residency is the highest-risk period because the FTB looks at whether the move was real or cosmetic. We recommend a daily location log, with documentation of where the taxpayer slept each night, where they worked each day, where they ate dinner, and where they conducted business. Credit card records, cell phone tower data, social media posts, and bank transactions all create geographic data points. The auditor will pull these data points if needed; building them proactively into a defensible file is far cheaper than reconstructing later.

If the audit concludes against the taxpayer, the FTB issues a Notice of Proposed Assessment (NPA) that the taxpayer can protest within 60 days. The protest process can run 12 to 24 months and may include hearings before the FTB’s Protest Section and eventually the Office of Tax Appeals (formerly the State Board of Equalization). Appeals to OTA are heard by a three-judge panel and can take another year to resolve. Beyond OTA, judicial appeal to California Superior Court is possible but rare. Most cases resolve at protest or at OTA. The legal fees for a serious residency case can run $50,000 to $250,000 depending on the complexity and the stakes.

The Reed Corporation has handled California residency audits where the eventual settlement was $0 (taxpayer won cleanly) and audits where the settlement was 60 to 80 percent of the original assessment. The variable is documentation quality and the substance of the move. Clean moves with thorough documentation win or settle favorably. Cosmetic moves with weak documentation lose. California exit tax explained ultimately turns on this audit process, because the residency rules are the mechanism that converts a California departure into either a clean exit or a multi-year fight with the FTB.

California exit tax explained from the audit defense perspective also requires understanding the FTB’s use of third-party data sources beyond what most taxpayers anticipate. The FTB has subscriptions to commercial location-tracking databases, real estate transaction databases, and corporate registration databases across all 50 states. The auditor can pull a taxpayer’s complete real estate history, vehicle registrations, professional license filings, and business entity registrations nationally without ever asking the taxpayer for the information. The taxpayer’s documentation strategy needs to account for what the FTB already knows, not just what the taxpayer chooses to disclose.

The Office of Tax Appeals (OTA) process for contested residency audits operates very differently from a typical court proceeding. The three-judge panel hears evidence, considers written briefs from both sides, and issues written decisions that become precedential. OTA decisions are published and create informal guidance for future cases. Recent OTA decisions on residency have generally favored the FTB when the taxpayer maintained substantial California ties, and have favored the taxpayer when the move was well-documented and the California connections were clearly secondary. The OTA process takes 12 to 18 months on average and costs the taxpayer $25,000 to $100,000 in legal fees, depending on case complexity and witness needs.

California exit tax explained also requires understanding source-income taxation, which doesn’t end at the state line. California taxes non-residents on California-source income under §17041(i), at the same rates as residents but limited to the California-source portion. The source rules under §17951 through §17955 define what counts as California-source. The categories that catch most departing taxpayers are California real estate income, California-based pass-through income, deferred compensation attributable to California services, and gain on the sale of California real estate.

California real estate generates California-source income forever, until sold. Rental income from a California property goes on Schedule E and flows to Form 540NR. The depreciation, expenses, and interest deductions reduce the net California-source income, but the gross numbers can be large. A former California resident with a $5 million rental portfolio in California generates substantial source income for as long as the portfolio is held. When the portfolio is eventually sold, the gain is California-source capital gain, taxed at California’s ordinary rates (no preferential capital gains treatment at the state level).

Pass-through entity income is the second major category. A California-based S-corporation, LLC, or partnership generates California-source income for its owners based on the entity’s California activities. The K-1 reports the California-source portion, and the non-resident owner picks up that income on Form 540NR. Withholding under §18662 at 7 percent on distributions to non-resident owners credits against the eventual tax. For owners of California operating businesses (medical practices, law firms, real estate funds), the source income can be substantial and the §540NR filing is essentially mandatory for as long as the ownership continues.

Deferred compensation creates one of the most complex source-income issues. RSUs that vest after the move are sourced based on the workdays during the vesting period. If the taxpayer worked 1,200 days during the four-year vesting period of an RSU grant, and 800 of those days were in California (before the move) and 400 were in Texas (after the move), 66.7 percent of the RSU value at vest is California-source income. The same logic applies to stock options that exercise after the move, NQDC plans that distribute after the move, and bonus payments that pay out after the move based on prior-year California service.

California exit tax explained from a planning angle means timing the deferred comp piece carefully. A taxpayer with $3 million of unvested RSUs at the moment of departure faces a meaningful California tax exposure as those RSUs vest over the next four years. The exposure can sometimes be reduced by accelerating vesting before the move (if the employer permits) or by structuring the departure to make the most of post-move workdays in the vesting period. The choices depend on employer cooperation and individual facts.

Wages for work physically performed in California after the move are California-source. A non-resident who flies into California for a business trip and works there for three days generates California-source income for those three days. The amount is small for most travelers but can add up for executives who continue to have business in California. The FTB’s threshold for de minimis travel is forgiving in practice (occasional short visits don’t typically trigger source income reporting), but a non-resident who spends 60 working days per year in California generates real California-source income that requires Form 540NR reporting.

California-source intangible income is generally not taxable to non-residents. Dividends from California-based companies, interest from California banks, capital gains from California stock (not real estate), and royalties from California intellectual property generally don’t trigger California-source income for non-resident individuals. The intangible carve-out is one of the major advantages of being a non-resident. California can tax the underlying business that generates the dividend or interest, but the recipient of the payment is taxed based on residency, not the source of the income (with limited exceptions for closely-held entities).

Reporting California-source income as a non-resident requires Form 540NR (California Non-Resident or Part-Year Resident Income Tax Return). The form is similar to the resident Form 540 but allocates income between California-source and total. The taxpayer pays California tax on the California-source portion. The federal return is unaffected (federal taxes worldwide income regardless of state of residence). Coordinating the federal, California, and new-state returns requires careful work for the first few years after the move, especially for taxpayers with complex pass-through and deferred compensation income.

The Reed Corporation handles 540NR filings for HNW clients regularly. The mechanics are well-defined but the documentation requirements are significant. We see source-income issues most often with executives carrying substantial deferred compensation from California employers, with real estate owners whose California portfolio represents a major asset, and with pass-through owners whose California entities continue to generate K-1 income. California exit tax explained in source-income terms is less dramatic than the dead wealth tax bills but ultimately more important to the day-to-day tax exposure of former California residents.

California exit tax explained also extends to retirement account distributions for taxpayers who established California-based qualified retirement plans during their residency. Federal law generally protects retirement distributions from state-source taxation under 4 U.S.C. §114 (the Pension Source Tax Act of 1996), which prevents states from taxing retirement income paid to non-residents based solely on where the income was earned. California honors this federal preemption, so 401(k), IRA, and pension distributions to former California residents are not California-source income, even if the contributions were made during California residency. This is one of the few clean exits from California’s source-income net.

Stock options and other equity compensation carry more complex sourcing rules under FTB Pub 1004 and the workday-allocation framework. Non-qualified stock options (NSOs) exercised after the move generate California-source income to the extent of California workdays during the period from grant to exercise. Incentive stock options (ISOs) follow similar workday allocation if the holding period requirements are met. The calculations can run several pages for an executive with multiple grant dates and complex vesting schedules, but the underlying mechanic is consistent: workdays during the relevant period determine the California-source portion. Documenting workday locations during the grant-to-exercise period is essential and often gets reconstructed years later when the option is exercised.

California exit tax explained as a planning exercise comes down to establishing non-residency cleanly enough to avoid audit attention or to win the audit if it comes. The FTB’s audit triggers are well-known, and avoiding them isn’t always possible (selling a California home, receiving California K-1s, vesting California RSUs all generate audit signals automatically). But the substance of the move and the quality of the documentation determine whether the audit becomes a quick win or a multi-year fight. The clients who do best are those who treat the move as a serious life change rather than a tax maneuver.

Step one: sell the California primary residence. This is the single strongest signal that the taxpayer has actually left. A California primary residence retained after the move creates persistent audit risk because it conflicts with the claim of intent to leave permanently. A California vacation home is acceptable in most cases but should be a clear secondary residence, not the taxpayer’s largest residential asset. We recommend selling the California primary residence within 12 months of the planned move, ideally before the move so the move happens to a new full-time residence in the destination state.

Step two: establish a new full-time residence in the destination state. The new residence should be the taxpayer’s primary home, with the lease or deed in the taxpayer’s name, the utilities in the taxpayer’s name, and the size and features consistent with a primary residence. A short-term rental or a small condo doesn’t read as a primary residence for an HNW client who previously had a $5 million California home. The substance has to match the claim. The FTB looks at residence quality as one indicator of intent.

California exit tax explained for documentation purposes means building a real-time file of the move. Move date, packing records, moving company invoices, address change notifications (USPS, banks, credit cards, professional services, magazines), driver’s license issuance in the new state, voter registration in the new state, vehicle registration transfer, professional license transfer (where applicable), medical and dental provider establishment in the new state, club memberships canceled in California and established in the new state. The file gets thick fast, and that’s the point. Reconstruction is much harder than real-time documentation.

Step three: change all professional and personal connections to the new state. This includes the CPA (we relocate ourselves to coordinate), the attorney, the financial advisor, the primary care physician, the dentist, the optometrist, the dermatologist, the children’s schools, the hairdresser, the personal trainer, the dry cleaner. Trivial items individually but powerful collectively. The FTB auditor adds up all the small data points to determine where the taxpayer’s life is centered. Each item that points to the new state strengthens the case; each that points back to California weakens it.

Step four: limit California time to less than 45 days per year. This isn’t a hard statutory threshold but is the practical ceiling we recommend. The 546-day employment-purpose safe harbor allows up to 45 California days per taxable year, and the FTB treats anything beyond that with skepticism. Tracking California days requires a daily location log, ideally backed by credit card and cell phone records. The FTB can pull cell phone tower data via subpoena in serious cases, so the records are not theoretical. A non-resident claim with 80 days in California is going to face hard questioning.

Step five: handle California-source income carefully. Continuing pass-through income from a California entity is acceptable (it’s a normal continuation of business), but the entity’s operations should remain in California with the taxpayer as a passive or limited-active owner. Continuing to work in California (flying back for in-person meetings frequently) creates source income and audit signals. If California work is unavoidable, document each trip carefully and report the source income consistently on Form 540NR. Inconsistent reporting (claiming non-residency but underreporting California workdays) is the fastest way to lose an audit.

California exit tax explained in audit-defense terms means anticipating the questions and having the answers ready. The FTB will ask why the move happened, when the move happened, where the taxpayer slept each night, what California business continues, and how the taxpayer can prove the new residence is real. Having clean answers backed by documentation is the difference between a quick audit closure and a multi-year fight. The cost of preparing the documentation file proactively is trivial compared to the cost of defending an audit reactively, and the certainty of outcome is much higher.

The Reed Corporation handles California exit planning regularly for HNW clients. The typical engagement runs 12 to 18 months and involves residency planning, source-income analysis, deferred compensation modeling, real estate timing, and documentation strategy. Clients who follow the process get clean moves with minimal audit risk. Clients who try to do it quickly without professional support often run into trouble with the FTB later. The state has the institutional patience to wait years before opening an audit on a departure that looked suspicious. Planning for that timeline is essential, and clients who do it right end up with the tax savings the move promised plus the peace of mind of knowing the documentation will hold up.

California exit tax explained for clients with school-age children deserves specific attention. The location of the children’s school is one of the strongest residency indicators the FTB weights. A taxpayer who claims Texas residency while their children attend California schools faces an uphill battle in any audit. The conventional approach for families with children is to time the move with the school year, with children starting school in the new state at the beginning of an academic year. Mid-year moves with continued California school enrollment create persistent residency questions until the children fully transfer.

The professional and business networks question matters more than most taxpayers realize. The FTB looks at where the taxpayer’s professional networks are centered, where their business deals get done, where their key advisors are located, and where their industry presence is most visible. For a HNW client whose business depends on California-centered networks (tech executives, entertainment industry, certain professional services), terminating those connections cleanly is harder than terminating residential connections. Some clients maintain California professional involvement through directorships, advisory roles, or board positions while claiming non-residency, and the FTB sometimes treats these connections as residency indicators depending on the time commitment and compensation involved. We work with clients to evaluate which professional ties are worth maintaining and which need to be severed for clean residency change.

California exit tax explained as a forward-looking question means thinking through what happens if AB2088 or SB259 (or a successor bill) eventually passes. The 10-year tail provision is the most threatening piece for taxpayers who have already moved or who are planning to move soon. If California enacts a wealth tax that taxes former residents on their California-attributable wealth for 10 years post-departure, the move calculus changes significantly. The legal and constitutional questions become real, and the planning approach shifts from improving the existing framework to protecting against the new one.

The constitutional analysis isn’t settled. Saenz v. Roe (1999) protects the right to travel and bars states from imposing penalties on new arrivals based on their out-of-state origins. The reverse principle (penalizing former residents based on prior California residency) is less clearly established but arguably violates the same constitutional principle. The Supreme Court would likely review any 10-year tail provision under heightened scrutiny because it directly affects the right to interstate movement. Lower courts have been mixed on similar questions. The outcome of constitutional challenges to a hypothetical California wealth tax is genuinely uncertain.

The dormant commerce clause also restricts states from taxing income or wealth that has no current connection to the state. A 10-year tail on a former resident who has fully relocated to Texas and has no continuing California ties tests the limits of this principle. Allied-Signal v. Director (1992) and other apportionment cases require a connection between the taxed activity and the taxing state. A 10-year lookback to prior residency might or might not satisfy that connection requirement, depending on how the tax is structured and rationalized.

California exit tax explained in the hypothetical wealth tax scenario means assuming that the constitutional challenge takes years to resolve and the tax is collected in the meantime. Most state taxes apply during litigation, with refunds owed if the taxpayer eventually wins. A former resident facing a wealth tax assessment in 2029 (assuming AB2088’s framework) would owe the tax, pay the tax, and then potentially recover years later if the courts strike it down. The cash flow impact in the meantime is real, and the planning question is how to minimize the assessable wealth during the lookback period.

Pre-move strategies that might help against a future wealth tax: gifting appreciated assets to non-California beneficiaries before the move (using the federal lifetime exemption of $15 million in 2026), establishing irrevocable trusts in non-California jurisdictions before the move (Nevada, Delaware, South Dakota all offer favorable trust law), liquidating concentrated positions before the move and reinvesting in diversified portfolios with lower visibility, and accelerating Roth conversions before the move to lock in current tax rates. None of these is a guaranteed defense, but each reduces the assessable California-attributable wealth.

Post-move strategies that might help: continuing to reduce California ties over the 10-year period to weaken the apportionment basis, investing assets in non-California vehicles to weaken the geographic connection, maintaining strong domicile documentation in the new state to support any constitutional challenge, and avoiding any actions that could be read as continuing California presence. The strategies look similar to good non-residency planning under the existing framework, with extra attention to the long-term documentation file.

California exit tax explained in legal terms means anticipating the litigation. If California enacts a wealth tax with a 10-year tail, multiple taxpayers will challenge it constitutionally. The Pacific Legal Foundation and similar organizations have indicated interest in such challenges. The litigation will likely take five to seven years to reach final resolution at the Supreme Court level. Taxpayers facing assessments during that period need to make decisions about whether to pay and litigate for refund, refuse to pay and litigate the assessment, or settle on whatever terms California offers. Each path has costs and risks.

The political probability of passage is hard to estimate. The bills have failed every year so far, but the underlying political pressure is real and increasing. California faces serious budget pressures from population outflows, federal funding uncertainty, and structural deficit issues. A future legislature with a stronger progressive majority could push something through, particularly during a fiscal crisis. The clients we advise treat the wealth tax as a low-probability but high-impact risk: probably won’t pass, but if it does, the consequences are large. Planning hedges against the risk without overinvesting in defenses that might never matter.

The Reed Corporation tracks California legislative developments closely and updates clients when material bills get introduced. The current advice for HNW clients planning a California exit is to move on the existing framework, document carefully, and structure assets to minimize exposure to a hypothetical future wealth tax. The hedge is essentially free for clients who would do the structuring anyway for other reasons (estate planning, asset protection, federal tax savings). California exit tax explained as a future risk is a planning input but not the primary driver of move decisions today. The existing residency and source-income framework is the immediate concern, and the wealth tax remains a tail risk that may or may not ever materialize.

California exit tax explained as a forward-looking question also intersects with federal estate tax planning. Many HNW clients moving out of California are simultaneously planning around the federal estate tax exemption, which the One Big Beautiful Bill Act set at $15 million per person for 2026 and made permanent and inflation-indexed. There is no scheduled reversion, so the federal deadline that used to drive this planning is gone. What remains is a coordinated strategy where gifts made before the move shift future appreciation out of both California’s reach and the federal estate.

If California enacts a wealth tax with a 10-year tail, the interaction with federal estate planning becomes more complex. Gifts made before the move (out of California reach) might still be partially captured if the wealth tax counts them in the apportionment calculation. Trusts established in non-California jurisdictions (Delaware, Nevada, South Dakota) provide strong protection against future state-level claims but require establishment well before any move. The choice of trust jurisdiction matters; some jurisdictions have stronger asset protection statutes and stronger privacy provisions than others. We coordinate with trust counsel in the destination jurisdiction to set up structures that work both for immediate planning needs and for hypothetical future California wealth tax scenarios. The cost of the structures is modest compared to the protection they provide, and they serve other purposes regardless of whether a wealth tax ever materializes.