Cava and Faulkner

Estate planning can be complicated, depending on the size of the estate and the various conditions under which it should be distributed. Often people worry about having an estate go through probate. There are good reasons to be concerned about that. Here’s what you need to know about what happens in probate and when it’s required in the U.S.

What Is Probate?

Probate is a legal process through which a person’s estate is distributed to the heirs. When the testator (person who had a Will drawn up to handle their estate) had a Will in place and named an executor to oversee carrying it out, the Will should be filed in probate, which will oversee the work the executor does and declare the Will completed when all debts are paid and assets distributed.

If someone dies without a Will or any form of estate planning (known as dying intestate), probate becomes the mechanism to distribute the estate (if there is one). That includes assigning guardianship of any minor children. Any assets will go to the closest living family members when someone dies intestate. If there are none, the assets usually go to the state. If the asset owner wants to ensure those assets don’t go to the state, they must set up estate plans.

In the U.S., a Will must be registered with and go through probate. If someone dies intestate and has assets, those assets must also go through probate.

What Are the Pros and Cons of Going Through Probate?

There are pros and cons to going through probate, and sometimes an aspect of probate could be seen as either a pro or a con, depending on the specifics of each estate.

Pros.

• When someone dies intestate, probate will try to distribute the assets as equitably as possible among the remaining family members. It’s a legal process that can help prevent family members from disagreements that could drag estate settlement out over time.
• It’s a legal process that ensures the decedent’s wishes are followed or, in the case of someone dying intestate, it provides a trustworthy process to distribute the estate.
• Probate ensures any outstanding debts or taxes are paid before the estate is distributed, meaning the heirs won’t have those financial burdens ahead of them.
• The information in the Will becomes public knowledge. There are circumstances in which the testator wants the details of their estate to be known publicly (for example, when there are family disagreements and the testator wants to be clear why certain assets were distributed as they were).
• When someone dies with a Will that specifies guardianship of minor children, probate will ensure the guardianship is awarded according to the wishes in the will. Without a Will, probate will determine guardianship, which may still be a better outcome than leaving it up to family members.

Cons.

• Probate takes time and money. Going through probate can take time, even for a simple estate, and the legal costs could come from the estate, meaning reduced assets for the beneficiaries.
• Making a Will public can be a positive, as noted above, but it can also be a negative. Having a Will become public can release family secrets that the testator would have preferred to remain private.
• Probate can be stressful, especially if inheritors disagree about the outcomes. Those disagreements can delay the settling of the estate.

Are There Options to Avoid Going Through Probate?

The estate planning toolkit has many items beyond Wills. Depending on the size and complexity of the estate, it may be possible to avoid going through probate by using some of the other tools that are available.

However, one important exception exists: Guardianship of minor children. The only way to legally assign guardianship is through a Will. That Will would need to go to probate to have the guardianship legally established. Probate would be required to appoint a guardian if no guardian is named.

Creating a trust is one crucial estate planning tool that can allow someone to bypass probate. There are different types of trusts, but in general, a trust contains the assets of the estate and directly distributes them to the beneficiaries rather than going through probate. Because every estate is unique, working with an experienced estate planning attorney is vital to determine if a trust will work for you.

Another possibility for married couples is community property with rights of survivorship. This is a legal agreement by which both parties in the couple agree that their property is fully jointly owned and that when one spouse dies, the other spouse automatically becomes the sole owner of the assets. There are some requirements for this in California, such as the couple living in California and being married at the time the property is acquired. Once a community property agreement is signed, the property can’t revert to being owned by only one spouse without the agreement of both spouses.

What Should I Do if I Need to Begin Estate Planning?

Call Cava & Faulkner at 916-685-1225 for a free consultation. Protecting your assets and ensuring they’re distributed how you want them to be is important to you. Our team of experienced, knowledgeable estate planning lawyers will help you identify everything that’s part of your estate and determine the best way to protect it with one of the many tools in the estate planning toolkit. If you’re interested in avoiding probate, we can guide you through choosing a plan that will allow your inheritors to do that as much as possible.

A person’s will is a vital document that has the power to distribute their estate according to their wishes rather than the wants of others around them. Because it’s such a valuable document, having more than one copy of it is a good idea. Asking your attorney to keep a copy is recommended. Read on to learn more.

Do Lawyers Keep Original Copies of Wills?

Lawyers must keep original wills if their clients ask them to and the lawyer agrees. In some cases, an attorney may charge a small fee to do so, although not all do. Suppose they’ve agreed to keep the will. In that case, California law stipulates that they must keep the documents in a safe, vault, safe deposit box, or another secure place where “it will be reasonably protected against loss or destruction.”

How Long Should My Attorney Keep My Original Will in California?

However, some California bar associations have created guidance for their members which, while not binding, can set expectations. If an attorney wants to destroy documents, ethically, they need to make every effort to reach the client and allow them to take them rather than have the lawyer destroy them. Lawyers are also advised not to destroy any documents that could still be pertinent in future court cases, such as the will of someone not yet deceased.

Couldn’t I Just Keep My Will in My Safe Deposit Box at the Bank?

You can, but it can slow the process of accessing the will for your inheritors. If you jointly own the safe deposit box with another person, the other person can immediately access it. If your name is the only one on the account, but someone has the key, that person would need to provide the key, a copy of the deceased’s death certificate, and proof of the access seeker’s identity.

Another possibility is that a personal representative (or executor) or trustee of the estate can access the safe deposit box if they have copies of the estate planning documents that show they’ve officially been designated in those capacities. That can be harder to do if the only copy of the will is in the safe deposit box.

What if My Attorney Dies Before I Do?

This is something that’s important to discuss upfront with your estate planning attorney before it can happen. Your lawyer should have plans for record retention and notification, whether operating as a single attorney in their privately owned office or one of many in a large law firm. They may have already designated another attorney to handle their records on their death or in larger firms, which other team members will handle it.

Your attorney should be able to detail those kinds of plans for you. However, there’s something important you need to consider long-term: Keeping your attorney up to date with current addresses and methods of communication. Sometimes people have few legal needs once they’ve drawn up a will. But if they move and the lawyer can’t find them–or equally importantly, the family can’t find the name of the lawyer–the estate could go to, and the court could determine distribution rather than the will guiding them.

Can I Do a Digital Will?

While seemingly everything can be done online today, California (and many other states) does not recognize a digital will as valid. Wills must be papers signed by the estate owner and witnessed in person, then notarized. Is this going to change? It’s likely to happen someday. But currently, paper wills are the only wills accepted in California. That also means that video or audio recordings of wills are not considered valid.

Where Are Good Places to Safely Store Wills?

There are many, and having more than one copy is a good idea so they’re not hard to access. Your attorney is an excellent start, as they’re experienced in safe and secure document retention. A safe deposit is a good backup. If you want to store one copy in your home, consider purchasing a fire- and waterproof safe to lock it up in.

Wherever you decide to store your will, it’s crucial that others know the locations. That includes your spouse or partner if you have one, the executor of the will, and the will’s beneficiaries.

Who Should Be Named Executor?

Many people choose their spouse, and that can work well. But the key factor in designating an executor is trust. Will that person carry out the will according to your wishes? It’s also good to find someone detail-oriented and preferably local, as they may need to appear in court or visit the estate’s physical properties.

What Should I Do if I Want to Begin Developing My Will?

Call Cava & Faulkner at 916-685-1225 for a free consultation. Our team of experienced, knowledgeable estate planning attorneys can guide you through the process, whether it’s a simple will or a highly complex one. We can ensure that your wishes are clarified and detailed so they can effectively go through as you want. We can also help determine the best person or persons to be the executor. Call us today for more information about developing your will.

There are several powerful tools in the estate planning toolkit, among them wills and powers of attorney. But there can be confusion about what each does, if people need just one or both, and if one has power over the other. Read on for what you need to know.

What Is a Power of Attorney?

A power of attorney (POA) is a legal document that can allow someone to make financial or medical decisions on your behalf when drawn up correctly. There are several different kinds of POAs. Some go into effect as soon as they’re signed and witnessed, even when the person drawing them up is still alive. These are especially useful for business transactions, such as when someone wants to sell or buy property in another state without actually traveling there. They can appoint someone to handle the transaction on their behalf through a POA.

There are other types of POAs that are designed to go into effect when the person who had them drawn up becomes incapacitated and can no longer make decisions for themselves. These are often used for medical situations where someone wants to specify treatments and medications they would or wouldn’t want, especially at the end of life.

What Is a Will?

A will is a different type of legal document from a POA. It’s designed for the person who owned the estate (known as the testator) to clarify what should be done with the estate after the testator passes. A will can also be used to name minor children or pets’ guardians. Without a will, the estate would go to court after the estate owner dies. The court determines how the assets will be distributed and, if applicable, who will become responsible for any minor children or pets. What the court chooses could significantly differ from what the testator would have wanted.

When drawing up a will, the testator should name an executor. That person will be responsible for ensuring the estate is appropriately closed out, including paying any outstanding bills or taxes; distributing the assets according to the will’s terms; and guiding the will through to handle any remaining matters, including guardianship.

What Is a Living Will?

A living will is an advanced health care directive in California. It’s a document that has both a POA and a will. The purpose of this document is to allow someone to specify the medical treatments and medications they do or don’t want should they become incapacitated. The POA portion of the directive names the person who will enforce the directive.

Can the POA Override a Will?

In a general sense, no, a POA cannot override or change a will. One thing they can do is establish a trust. But they can’t write or rewrite a will.

A POA also cannot override the work of the will’s executor. That’s because the POA and the executor are activated at different points in the estate. The POA will work while the testator is still alive, although the testator is likely incapacitated (except in specific business types of POAs). Once the testator has died, the POA no longer has any authority. In contrast, the executor cannot act until the testator has passed away.

Can the Same Person Act as POA and Executor?

Yes. It’s not uncommon for one spouse to choose the other spouse to act in both roles. But in other cases, different people are named as POA and executors. Depending on the size and complexity of the estate, sometimes more than one person is named as POA or executor.

How Do I Choose Someone to be POA or Executor?

The criteria for either are essentially the same. It’s essential that you find people you can have open, honest discussions with about your wishes and believe they will follow your wishes. Trust is key. While relying on family members is common, sometimes there’s a situation where the person naming the POA or executor has reason to doubt the family member will fulfill their wishes. In those cases, it’s best to choose someone else.

While POAs and executors don’t have to be in the same state, it’s helpful if they are. There may be court hearings or other events and meetings that may need to be held in person. If the executor is in charge of maintaining property such as real estate, being local and able to check on the safety and security of the property regularly is a plus. POAs and executors should also be detail-oriented and capable of multitasking. They should be financially sound so as to remove any concerns about conflict of interest.

When it comes to advanced medical directives, the POA should thoroughly understand the testator’s wishes regarding medical interventions. But not only do they need to understand them, they also need to be willing to advocate for them. It’s possible that they will have to stand up to medical professionals who have other ideas. It’s also possible that they’ll have to deal with family members who want different outcomes.

What Should I Do if I Need Help Setting Up a Power of Attorney and/or Will?

Call us at 916-685-1225 for a free consultation. Every estate is different and has unique needs. We can help you determine what’s best for your estate and help you develop a plan that will provide ease of mind, knowing your wishes will be honored and your estate distributed according to your plans.

A power of attorney (POA) is an important planning tool. There are different types, and it’s a good idea to understand the differences before drawing one up. A financial POA can be useful for financial matters large or small. The person authorizing the POA controls how much authority the POA has and for how long. Here’s what you need to know.

What Is a Financial Power of Attorney?

A financial POA is a legal document by which you can assign another person the authority to handle some or all of your financial concerns. That person is referred to as the POA or the agent, while the person assigning the authority is the principal.

There are two different times in a person’s life when a financial POA can be valuable. One is while the principal is still in full mental capacity, but needs assistance with financial or business dealings. One example would be a real estate transaction that takes place in a state other than the one the principal resides in. They could name a POA in that state who could oversee and sign paperwork conducting the sale or purchase of real estate in the principal’s absence.

Another situation in which a financial POA is valuable is if the principal suddenly becomes incapacitated. They would have to have set up the POA before becoming incapacitated, but if it’s drawn up ahead of time and ready to go, the agent can step in quickly and take care of the financial concerns for the principal when they’re not able to. That might involve paying bills, collecting government benefits, and watching over investments, among other tasks.

What Kinds of Financial POAs Are Available in California?

There are three types of financial POAs that can be used in California.

• General POA. A general POA gives the agent authority to make the same types of financial decisions the principal can. One exception to that is the agent cannot give themselves money or property that belongs to the principal. It’s a good one to use when you need to have someone able to manage all of your financial affairs. However, unless specified in the POA, the general POA no longer exists if the principal becomes incapacitated. For that, the POA must also be a durable POA (see below).
• Limited POA. This is a good type of POA to use if you have only certain situations you want the agent to handle, such as the out-of-state real estate transaction given as an example above. A limited POA allows the principal to very narrowly grant authority to the agent. As with the general POA, a limited POA stops existing if the principal becomes incapacitated, unless it’s designed as a durable POA.
• Durable POA. When either the general or limited POA is drawn up with terms specifying that it’s durable, it continues to exist and award authority to the agent if the principal is incapacitated. Without specific legal language, the POA is not durable.

Understand that no matter the type of POA, once the principal dies, the agent loses all authority. Sometimes people believe that a durable POA acts like a will or trust, but it does not. Having a POA but no will or trust means the estate will go through, and the courts will determine how assets are distributed.

Do I Need an Attorney to Draw up a POA?

Technically, it’s possible to draw up a POA on your own. However, if it doesn’t strictly align with legal guidelines, someone could challenge it in court and potentially have the agent removed. California requires specific language to make a POA durable. It’s advisable to work with an experienced POA attorney to ensure your specific needs are met and your wishes will be honored.

How Do I Get a Financial POA in California?

First you need to identify what you need your financial POA for and how broad the powers given to the agent should be. Discussing this with an attorney can help clarify what those needs are and the best way to make sure they’re filled.

An attorney can also guide you through the process of determining how best to choose an agent to represent you. This is a serious consideration. If the agent isn’t someone you can fully trust to follow your wishes, and you provide them with durable powers, you could become temporarily incapacitated and have your estate taken advantage of.

Once the document is drawn up and approved by the principal, the principal must either sign it themselves or ask someone else to do it while the principal watches. Then the document must either be notarized or signed by at least two adult witnesses. Note that the named agent cannot be a witness or sign for the principal.

Can I Change My POA?

Yes. If you’re not incapacitated, you can revoke the POA or change the agent or terms of the POA at any time, as long as you still follow the requirements for signatures and witnesses.

What Should I Do if I Need Help Setting Up a Financial Power of Attorney?

Call Cava & Faulkner at 916-685-1225 for a free consultation. Our knowledgeable, experienced estate planning attorneys can guide you through the process and help you determine the best way to protect your interests, whether it’s a quick, one-time business transaction or more comprehensive protection of your finances in case of your incapacitation. We can also advise you on selecting the person to be your POA.

While many people understand what a last will and testament are, they don’t always realize a living will is a separate document with different functions. Both are important in estate planning, and both should be carefully located somewhere that’s accessible to the people who will need them. However, a living will has a particular urgency that makes its accessibility even more important. Here’s what you need to know.

What Is a Living Will?

A living will, which is a type of advance medical directive, doesn’t deal with the distribution of assets in an estate the way a traditional last will and testament does. Instead, it’s designed to make known the medical wishes and preferences of the person who draws it up. It’s done so that in the event that that person becomes unable to speak or is unconscious, their wishes are clearly available for medical staff and close family to understand and implement.

Among the issues that can be covered in a living will are:

• Types of medical intervention you would or would not want to be used. That can include treatments such as cardiopulmonary resuscitation (CPR) to restart the heart if it stops beating (either manually or with a device that uses an electric shock).
• Mechanical intervention meant to prolong life. These can include mechanical ventilation to manage breathing, intravenous tube feeding to provide water and nutrients if you’re unable to eat or drink, or dialysis to manage kidney functions when the kidneys are no longer working. You can specify whether or not you want any of these measures taken, and if you do want them, when and for how long you’d want to receive them.
• Medications to treat infections. If you are close to the end of your life, you can stipulate that such medications not be used to prolong life, allowing the infections to run their course.
• Palliative care interventions. These are choices you can make regarding things such as receiving pain medications but not treatment medications, the wish to die at home rather than a hospital or nursing facility, or stopping various invasive tests and treatments. Palliative care is usually designed to keep a person as comfortable as possible while not prolonging their life through extraordinary measures.
• Donation. A living will allows you to specify if you would like to donate organs and tissues or donate your body for scientific study. If you want to donate organs and tissue, it’s a good idea to specify in the living will that you understand that you might be kept alive while the organs and tissues are being collected, otherwise there could be confusion if you’ve otherwise stated you don’t want to be kept alive.

What About Do Not Resuscitate or Do Not Intubate?

Do not resuscitate (DNR) and do not intubate (DNI) orders can be included in a living will, although they don’t have to be. This is something you can discuss with your doctor, who should have the appropriate forms you could fill out. Then the doctor can have them put into your medical records.

Who Will Carry Out My Living Will?

This is an important part of drawing up a living will: The person who will enforce it. Sometimes known as a health care agent, this person is responsible for ensuring your wishes, as specified in the living will, are adhered to by medical teams and by family members. In general, the person you choose must be an adult. It should be someone you trust to understand and carry out your wishes. If you have family members who may be opposed to your wishes, the healthcare agent should be someone who is willing to stand firm and not give in to pressure.

The person you choose doesn’t have to live in California, but they should be able and willing to travel to your bedside if needed. Above all, you should discuss this role in depth with whomever you choose, so they’re aware ahead of time of your wishes and are ready to abide by them.

Where Should I Keep My Living Will?

Given how important a living will is, especially with family members who disagree with your choices, where you keep a living will is nearly as important as having it in the first place. There are multiple places that a living will should be kept with the goal of having it immediately available when the time comes (and that means making multiple copies).

• Your healthcare agent. The person carrying out the will should have a copy.
• Your doctor. They should know your wishes, and they should also ensure the living will is part of all your medical and hospital records.
• Your attorney. In the event that there’s dissent in your family, your attorney should have a legally binding copy.
• In your home or with you. Keep a copy at home and, if possible, with you any time you leave home.
  One place not to keep a copy: Your safety deposit box at a bank. This will not be accessible until you’ve passed and your estate is settled.

What Should I Do if I Need Help Setting Up a Living Will?

Call us at 916-685-1225 for a free consultation. A living will is an important document that can ensure your wishes are honored when you can no longer specify them. It can also reduce stress among family members by not leaving them to decide what they think you would have wanted.

If you have a person with special needs in your life, it’s understandable to worry about what will happen when you can no longer take care of them. That’s why you should consider adding special needs planning along with your routine estate planning. There are specific special needs trusts in California that will protect the person with special needs and provide you with peace of mind. Here’s what you need to know about these trusts, how they differ, and which makes sense for your situation.

What Is a Special Needs Trust?

A special needs trust is an estate planning tool that protects a person with special needs from becoming ineligible for government benefits (such as Medicaid and Supplemental Social Security Income) when they have too many assets.

Because many of these government benefits can greatly enhance someone’s quality of life, being unable to access them can negatively impact them. These are complicated to set up, so working with an experienced special needs trust attorney is highly recommended.

What Is a First-Party Special Needs Trust?

A first-party special needs trust is used for the property owned by the person with special needs. That property includes assets such as damages from lawsuits or personal injuries, inheritances or life insurance payouts, retirement plans, or divorce settlements. If people with special needs own these assets outright, they could become ineligible for government benefits. Transferring them into a first-party special needs trust effectively moves the ownership from the person to the trust, so the person will no longer be denied benefits due to owning these outright.

What Is a Third-Party Special Needs Trust?

Most people think of this type of trust when they think of a trust. It’s set up by someone other than the person with special needs, with the person becoming the beneficiary of the trust. The beneficiary does now own the trust, nor do they have direct access to the assets within it. A trustee oversees the trust and ensures that the assets of the trust aren’t distributed to the beneficiary in such a way that makes them ineligible for government benefits.

For example, giving lump sums of cash to the beneficiary could mean the loss of government benefits. However, the trustee can pay for various things on behalf of the beneficiary, such as hobbies, personal services, classes, pet supplies, computers and related equipment, vacations, or transportation.

What Are the Pros and Cons of a First-Party Special Needs Trust?

Pros:

The person with special needs will, if the trust is set up correctly, not become ineligible for government benefits.

The trust can provide a more comfortable quality of life than it would have with only government benefits.

A trustee is appointed to ensure the trust is operated responsibly and not in a way that would cause the person with special needs to lose government benefits.

Cons:

A first-party trust comes with a payback clause. That means that if the person with special needs passes away before all the assets in the trust are spent, the first thing that happens is that those assets are used to pay back any Medicaid benefits the person received while living.

The trust must be established before the person with special needs reaches age 65. That means that if they receive an inheritance that disqualifies them from government benefits after turning 65, it’s too late to protect the benefits by putting them into a first-party trust.

What Are the Pros and Cons of a Third-Party Special Needs Trust?

Pros:

Because a donor funds them, they rarely involve oversight by a court, especially if the donor is still alive.
A third-party special needs trust has no size limit.

If the person with special needs passes away, the assets in the trust can be inherited by the person’s family members or other designees.
There is no age limit to set up this type of trust.

Cons:

A third-party trust cannot hold any property of a person with special needs. That means that if the person receives a sizable inheritance, they can’t transfer it into the third-party trust. If they’re 65 or older when the inheritance arrives, they also can’t place it into a first-party trust, so they may lose government benefits.

Can a Person with Special Needs Have Both a Special Needs Trust and an ABLE Account?

ABLE accounts, which were created by the Stephen Beck Jr. Achieving a Better Life Experience Act of 2014, are special savings accounts for people with special needs that have tax advantages. Anyone can make deposits to the account, including the trustee of a special needs trust, using post-tax dollars. Any income earned on such accounts is not taxed.

One person can have both a special needs trust and an ABLE account. While they both protect resources, they do it in different ways. What’s important to note is that an ABLE account must be for someone whose disability occurred before the age of 26 and that there are both contribution and account limits.

What Should I Do if I Need Help Setting Up a Special Needs Trust?

Call us at 916-685-1225 for a free consultation. Our team of experienced, knowledgeable estate planning attorneys understands how important it is for you to ensure that the special needs person in your life will be taken care of after you’re gone. We know the California laws and regulations focused on special needs trusts, and we can help guide you through the planning process to protect your loved one.