New Update: Healthcare Costs Increasing by Over 60% in Some States. Will you be impacted?

Estate Planning in Los Angeles: What Every University of Missouri Employee Should Know About Real Estate and Legacy

'Rising costs, evolving property tax rules, and liquidity pressures mean that investors should consider Los Angeles real estate as part of their larger retirement and estate strategy, rather than as a standalone asset. I encourage University of Missouri employees to regularly reassess how home ownership aligns with long-term cash flow, legacy goals, and overall financial flexibility.' – Michael Corgiat, a representative of The Retirement Group, a division of Wealth Enhancement.

'In today’s Los Angeles housing environment, University of Missouri employees should evaluate real estate through the lens of liquidity, long-term risk, and generational planning rather than relying solely on past appreciation. Thoughtful coordination between housing decisions and retirement objectives can create greater clarity and flexibility.' – Brent Wolf, a representative of The Retirement Group, a division of Wealth Enhancement.

In this article, we will discuss:

How rising costs and shifting market conditions have changed the financial landscape for Los Angeles homeowners.
What today’s inheritance and property tax rules mean for families passing real estate to the next generation.
How liquidity, insurance, and long-term planning may influence real estate decisions for University of Missouri employees.

Owning a home in California, particularly in Los Angeles, was once seen as a clear path to wealth. You made a purchase, waited, and appreciation seemed to do most of the heavy lifting. As a result, many University of Missouri employees who built careers in Southern California have long considered real estate a central part of their long-term financial planning.

The math has shifted.

From the Westside to the San Gabriel Valley to the South Bay, families across Los Angeles are experiencing a very different housing environment than they did just a few decades ago. While property holdings still typically continue to appreciate, rising costs in other areas may be chipping away at the financial foundations. The good news is that meaningful financial opportunities still exist for University of Missouri employees willing to engage in proactive retirement and legacy planning.

Here are some things to consider if you currently own property in Los Angeles or expect to pass it on to the next generation.

Appreciation Still Tells a Story—But Context Matters

A family could have bought a home in Torrance or Pasadena for under $300,000 in the late 1990s or early 2000s. ¹ Today, that same property may be worth between $1.5 million and $2 million. ² As of 2026, the median home price in Los Angeles County was $950,000. ³ On paper, that represents significant accumulated value. However, today’s landscape looks different than in the past:

- A 3% mortgage rate is no longer typical. Freddie Mac reports that 30-year fixed mortgage rates have averaged well above 6% in recent years. ⁴
- Property insurance costs have risen substantially, with several insurers limiting new policies in California.
- Proposition 13 limits property taxes for long-term owners but resets upon sale.
- Los Angeles renovation costs rank among the highest nationwide. ⁵
- Maintaining an older home can cost tens of thousands annually depending on condition and location.

For University of Missouri employees, appreciation alone is no longer sufficient reason to hold real estate. Decisions now involve long-term planning, risk assessment, tax considerations, and liquidity analysis.

The Inheritance Formula Has Changed

Many families assume inheriting a Los Angeles property is automatically beneficial. Financially, it can be—but the calculations are more complex today.

Under Proposition 19, children who inherit a primary residence must meet certain requirements to limit property tax reassessment. ⁶ They generally must:

- Occupy the home as their primary residence.
- File for the homeowner’s exemption within one year of the transfer.
- Stay within specific assessed value limits.
If they move out, property taxes will reset to market value. California’s statewide property tax rate averages approximately 1% of assessed value (plus local assessments). ⁷ On a $2 million Los Angeles home, that could mean annual property taxes of $20,000 or more.

For adult children who already own homes elsewhere, retaining inherited property in Los Angeles County can become financially demanding. As a result, properties originally intended to remain in the family are frequently sold.

Property Taxes: The Quiet Divide

Proposition 13 has created two very different homeowner experiences in Los Angeles. A couple who purchased a home in 1995 now worth $1.8 million may pay a fraction of what a new buyer would pay in property taxes. Although California limits annual assessed value increases to 2% under Proposition 13, a buyer purchasing the same home today would pay property taxes based on current market value.

Economists often refer to this dynamic as the “lock-in effect,” where homeowners remain in place due to tax advantages tied to long-held property. From a planning standpoint, this often leads to:

- Reduced housing mobility.
- Wealth concentrated heavily in real estate.
- Reluctance to downsize during retirement.

For many University of Missouri retirees, the emotional and financial aspects of homeownership become closely connected.

Risk and Insurance Are Now Major Factors

Earthquake exposure, wildfire risk, and tightening insurance markets have also changed property cost structures in Southern California.

In recent years, several major insurers paused or limited new homeowner policies in California. ⁸ Even where insurance is available, premiums in high-risk areas have increased substantially. ⁸

In light of these factors, owning property in Los Angeles is no longer viewed as a low volatility asset. Like any major investment, it carries ongoing costs and regional risks that must be evaluated carefully.

Liquidity Matters More Than Ever

Many Los Angeles homeowners are “house rich, cash flow tight.” Despite significant home equity, families may still feel financially constrained. Retirement income planning, health care expenses, college costs, and multigenerational support all require accessible capital—something a home does not easily provide.

Unlike a diversified investment portfolio, a home:

- Does not generate consistent income
- Cannot be partially sold
- Requires ongoing maintenance
- May take months to sell

From a planning standpoint, it is important to determine whether the home supports your long-term financial objectives or primarily serves as a legacy and emotional anchor.

Capital Gains: A Limited Advantage

Homeowners may exclude up to $250,000 (single) or $500,000 (married filing jointly) of capital gains when selling a primary residence. ⁹

However, decades of appreciation in Los Angeles can exceed these limits quickly. If a home purchased for $400,000 is sold for $2 million, that creates a $1.6 million gain. After applying the exclusion, a significant taxable amount may remain.

Coordinating sale timing with a broader tax strategy can make a meaningful difference.

Has Homeownership Lost Its Appeal?

Not entirely—but the advantages are no longer automatic.

Los Angeles real estate can still offer:

- Long-term appreciation potential
- Housing cost stability for long-term owners
- Emotional and legacy value
- The ability to build equity over time

What has changed is the level of planning required:

- Estate plan coordination

- Understanding Proposition 19

- Liquidity planning

- Risk evaluation

- Tax review before transferring or gifting property

What was once a simple “buy and hold” decision has evolved into a more detailed financial strategy.

Planning Ahead

If you own property in Los Angeles or intend to pass it to your children, consider:

- Will your children realistically live in the home?

- Have you calculated potential reassessed property taxes?

- Does real estate represent too much of your net worth?

- Would selling during your lifetime provide greater flexibility?

- Is your property title aligned with your trust and estate plan?

For some families, keeping the property remains appropriate. For others, converting equity and diversifying assets may better support retirement income, intergenerational wealth objectives, or charitable planning.

Final Thoughts

California real estate has a long history of appreciation and opportunity. That remains true in Los Angeles—but the financial landscape is more complex than it once was.

Homeownership today involves understanding cash flow, tax exposure, policy changes, insurance risk, and family dynamics. For University of Missouri employees approaching retirement or already retired, these factors can influence estate planning outcomes.

The advantages are still there—but they require careful planning.

If you are evaluating how your Los Angeles property fits into your broader retirement and estate plan, it may be time to revisit the numbers.

You can get retirement planning assistance from The Retirement Group. Give us a call at (800) 900-5867 to learn more.

Featured Video

Articles you may find interesting:

Sources:

1. Patch. ' Home Prices Have Nearly Tripled In LA Since 2000: Report ,' by Kat Schuster. April 4, 2022.

2. Zillow. ' Pasadena, CA Housing Market ,' January 31, 2026.

3. Federal Reserve Bank of St. Louis (FRED). ' Housing Inventory: Median Listing Price in Los Angeles County, CA ,' February 6, 2026.

4. Freddie Mac. “Primary Mortgage Market Survey® (PMMS®) Archives.” Freddie Mac , 2026, https://www.freddiemac.com/pmms/pmms_archives .

5. House Beautiful. ' Experts Say Renovations Are the Most Expensive in These States ,' by Sarah Lyon. Feb. 14, 2025.

6. Fennemore Law. ' California Proposition 19's Impact on Estate Planning and Gifting of Real Property ,' by Judith Tang. Feb. 17, 2025.

7. reAlpha. ' California Property Tax (2026): Rates, Prop 13 & Cost ,' by Daniel Ares. Feb. 2, 2026.

8. Kiplinger. ' California's Home Insurance Crisis: Rising Risks, Soaring Costs and Limited Options ,' by Carla Ayers. Jan. 16, 2025.

9. IRS. ' Topic no. 701, Sale of your home. ' Jan. 22, 2026.

How does the eligibility criteria for the Defined Benefit Retirement Plan at the University of Missouri System differ for Level One and Level Two members, particularly in regard to their hire or rehire dates?

Eligibility Criteria for Level One and Level Two Members: Level One members are employees hired before October 1, 2012, or those rehired before October 1, 2019, who had earned a vested benefit but did not receive a lump sum. Level Two members are those hired or rehired between October 1, 2012, and October 1, 2019, without eligibility for Level One benefits. Employees hired after October 1, 2019, do not accrue service credit under the DB Plan(University of Missouri …).

In what ways do service credits accumulated at the University of Missouri System impact an employee's retirement benefits, and how can employees ensure that they effectively maximize their service credit over the years?

Impact of Service Credits on Retirement Benefits: Service credits are critical in calculating retirement benefits at the University of Missouri System. Employees accumulate service credits based on their years of service, which directly affect their pension calculations. Maximizing service credits involves consistent full-time employment without breaks, as any leave of absence or part-time status may impact the total service credits earned(University of Missouri …)(University of Missouri …).

What are the various options available to employees at the University of Missouri System for receiving their retirement benefits upon reaching normal retirement age, and how do these options influence long-term financial planning for retirement?

Retirement Benefit Options: Upon reaching normal retirement age, employees can choose between a Single Life Annuity or a Joint and Survivor Annuity, both with options for lump-sum payments of 10%, 20%, or 30% of the actuarial present value. These choices influence monthly payout amounts, and selecting a lump sum reduces future monthly benefits proportionally(University of Missouri …).

With respect to the University of Missouri System's Defined Benefit Plan, how are employees' contributions structured, and what implications does this have for their overall retirement savings strategy?

Employee Contributions: Employees contribute 1% of their salary up to $50,000 and 2% for earnings beyond that threshold. This structure helps fund the DB Plan, with the University covering the majority of the cost. Employees need to factor in these contributions as part of their overall retirement savings strategy(University of Missouri …).

How can employees at the University of Missouri System assess their eligibility for early retirement benefits, and what considerations should be taken into account when planning for an early retirement?

Early Retirement Eligibility: Employees may retire early if they meet specific criteria: at least 10 years of service credit for ages 55–60 or at least 5 years of service credit for ages 60–65. Early retirees will receive a reduced benefit to account for the longer payout period(University of Missouri …).

What tax implications should employees of the University of Missouri System be aware of when it comes to distributions from their retirement plans, and how can they effectively navigate these implications?

Tax Implications of Retirement Plan Distributions: Distributions from the University of Missouri System’s DB Plan are subject to federal taxes. Employees can mitigate tax burdens by electing to roll over lump-sum distributions to a qualified retirement account, such as an IRA, to avoid immediate tax liability(University of Missouri …).

What are the policies regarding the continuation of benefits for employees who leave the University of Missouri System, particularly for those who are not vested or are classified as non-vested members?

Non-Vested Employee Policies: Employees who leave the University before vesting in the DB Plan (fewer than 5 years of service) are not eligible for retirement benefits but can receive a refund of their contributions. These non-vested employees must decide whether to receive their refunded contributions as a lump sum or through a rollover to another retirement account(University of Missouri …).

How might changes in employment status, such as taking a leave of absence or returning to work after a break, affect the service credit calculation for an employee at the University of Missouri System?

Impact of Employment Status Changes on Service Credit: Employees who take leaves of absence or return after breaks in employment may experience reductions in service credit. However, certain types of leave, such as military service or medical leave, may allow employees to continue earning service credit(University of Missouri …)(University of Missouri …).

In the event of an employee's death prior to retirement, what benefits are available to their survivors under the University of Missouri System's Defined Benefit Plan, and how can members ensure their wishes are respected?

Survivor Benefits: In the event of an employee’s death before retirement, survivors may be eligible for either a lump sum or monthly payments. Employees can designate beneficiaries to ensure that their wishes are honored, providing financial protection for dependents(University of Missouri …).

How can an employee at the University of Missouri System contact the Human Resources Service Center to obtain personalized assistance regarding their retirement options and any inquiries related to their retirement plan details? These questions require detailed answers and are designed to facilitate a comprehensive understanding of retirement processes and options for employees of the University of Missouri System.

Contacting HR for Assistance: Employees can contact the Human Resources Service Center for personalized assistance regarding their retirement options by emailing hrservicecenter@umsystem.edu or visiting the myHR portal for further details(University of Missouri …).