Leveraging California’s New Solar Mandates in an Estate Plan
California continues to lead the nation in clean energy initiatives, and its solar mandate is a basis of that effort. The latest update to the mandate, effective in 2025, strengthens the original 2020 solar requirements. If you own residential real estate in California or plan to develop property in the future, understanding how this law fits into your estate planning strategy is critical. Whether passing down a home, creating a trust, or preparing for a future sale, the 2025 solar mandate can directly impact your property.
What Does the 2025 Solar Mandate Require?
The 2025 update to California’s solar mandate requires most new residential construction to include a solar photovoltaic (PV) system. This applies to single-family homes and low-rise multifamily buildings up to three stories, including duplexes and triplexes. The updated mandate builds on the 2020 requirement and strongly emphasizes solar and battery storage to promote energy independence and grid reliability.
Under the 2025 energy code, new homes must include a rooftop solar PV system, be sized to meet the home’s projected electricity usage, incorporate battery storage in specific regions, and comply with tighter energy efficiency standards. If you’re planning new construction in California, you’ll likely need to comply with this law.
Why This Matters for Estate Planning
Residential solar systems are long-term investments that affect the property’s valuation, future costs, and management needs. When these systems become mandatory for new construction, they also become an unavoidable part of any estate plan that includes real property.
With solar panels now required on most new residential builds, and often paired with battery storage, estate plans must account for the added technology and maintenance needs. How the system is financed, whether through purchase, lease, or property-assessed clean energy (PACE) financing, also affects how heirs and beneficiaries manage or inherit the property. Available tax credits and property tax exclusions tied to solar can shape estate and income tax outcomes. Addressing these factors in your estate plan helps ensure a smooth transfer of assets and preserves the financial benefits of solar investment for future generations.
Address Solar Financing and Ownership Structures
How you finance your solar system plays a key role in estate planning, determining how the system is treated during asset transfer. If the system is purchased outright, it becomes part of the real property and passes along with it, including any warranties and maintenance responsibilities. If the system is under a lease or a Power Purchase Agreement (PPA), a third party retains ownership, and monthly payments typically continue. These contracts may need to be reviewed or renegotiated by your heirs. Your estate plan should spell out how solar-related obligations will be managed. Giving your executor or trustee the authority to communicate with lenders, assume or settle financing agreements, and make decisions that preserve the property’s value and usability is also essential.
Incorporate Solar and Battery Assets into a Trust
Placing a property with a solar energy system into a revocable or irrevocable trust can simplify estate administration and help avoid probate delays. A properly structured trust manages the real estate and addresses the solar system and any related contracts or warranties. It should clearly state that the trust owns the solar panels and battery storage, grants the trustee authority to maintain, finance, or transfer the system, and provides ongoing maintenance and warranty management instructions. Including guidance on whether the property should be sold or retained with the solar and battery systems intact ensures that decisions align with your intentions. Using a trust makes distributing assets fairly among beneficiaries easier, mainly when the property includes high-value improvements like renewable energy installations.
Anticipate Future Upgrades or Replacements
Battery systems typically have a shorter lifespan than panels, often around 10–15 years. Plan for this when considering whether the property should be held long-term or sold. If your estate plan leaves the home to children or other heirs, allocating funds for system upgrades or replacements in a separate account or trust provision may be helpful.
Take Advantage of the Solar Property Tax Exclusion
A valuable financial tool available to California homeowners who install solar is the Solar Property Tax Exclusion. Under California law, most physical improvements to a home trigger a reassessment of the property’s value. This often leads to higher property taxes based on the increased market value. When you install a qualifying solar energy system, the added value is excluded from reassessment.
This exclusion is not a tax exemption or rebate. It’s a new construction exclusion, meaning that the solar system is not considered a taxable improvement. As a result, the county assessor does not add its market value to your property’s assessment, keeping your tax bill the same.
This exclusion can improve the long-term financial return of a solar investment. It also benefits your heirs by lowering the base property tax when the property is transferred, sold, or inherited. If your estate includes solar-equipped properties, make sure your estate plan documents reflect how this tax exclusion plays into the property’s overall valuation and tax exposure. An estate planning attorney can help structure your plan to protect this benefit across generations.
Secure Your Legacy and Your Investment in Solar
Planning your estate just got more complex. With California’s 2025 solar mandate and new rules around battery storage and energy efficiency, your property isn’t just a home; it’s a long-term energy asset. Whether installing solar, passing down a newly built home, or managing solar financing agreements, your estate plan needs to keep up. The Singh Law Firm will ensure that overlooked solar details don’t create future legal headaches. Schedule a free consultation today by calling 510-901-5375 in Silicon Valley or 818-658-2174 in Los Angeles. Build an estate plan that’s as forward-thinking as your home.
