Cava and Faulkner

Creating a will is an essential part of estate planning. With your will, you determine how your assets will be distributed after your death. However, determining who receives what isn’t the only important of making a will legally binding–you also need a trusted executor. Without that, the will may not be carried out as you wish. Here’s what you need to know about selecting an executor.

What Does an Executor Do?

Many people think an executor is a person who distributes the estate according to the specifications in the deceased’s will. That’s true, but that’s not all that an executor does. Depending on the size of the estate, they can have many other responsibilities, including:

• Filing a copy of the will with the
  court.
• Notifying all relevant organizations of the death, including credit card companies, banks, and government agencies such as the Veterans Administration or the Social  Security Administration. Note: Many funeral homes will notify Social Security, but the executor should follow up to ensure this is done.
• Set up and manage a bank account for the estate to handle incoming deposits and disburse funds, such as bills that are still owed. Then the executor can pay the estate’s debts and taxes.
• Provide a detailed inventory of assets and their values to the court (required in California).
• Maintain property until it’s distributed or sold. This includes the upkeep of things like homes, cars, etc.
• Oversee the distribution of the assets according to the terms of the will.

Who Can Legally Be an Executor in California?

There are two significant requirements for who can be named executor of a will in California: They must be at least 18 years old, and they must be deemed of sound mind (in other words, a court wouldn’t find them mentally incapacitated).

While some states don’t allow convicted felons to serve as executors, California has no such restriction. However, the state’s courts have the right to question the validity of anyone appointed as executor and assign a new one if they find the estate is mismanaged due to negligence or deliberate actions that violate the will.
Also, unlike other states, California doesn’t prohibit people from other states from becoming executors. However, if the estate is large or complex, having someone local makes more sense, as they’ll need to be on hand for court hearings and other in-person activities.

It’s important to understand that an executor doesn’t have to be just one person, or just individuals. If there are no individuals you feel can manage your estate in your absence, you could also name an attorney or accountant, or even a bank.

What Else Should I Consider When Choosing an Executor for My Will?

Once you’ve created a list of candidates that adheres to California’s requirements (above), the process becomes more individualized. There are several considerations when selecting the right person (or, in some cases, organization).

• Choose someone reliable and responsible. Basically, you’re trusting this person with all your worldly goods. You need to have faith that they will execute your wishes the way you want them to, not how they think you should have.
• Look for someone whose own finances are in good shape. Someone struggling financially might be tempted to take advantage of the executorial role and manipulate the estate to their benefit.
• Find someone who’s highly organized and able to meet deadlines. Large, complicated estates require someone capable of organizing them. In addition, California can have deadlines that must be met, so the executor needs to organize their efforts in such a way as to meet those deadlines.
• Think twice about family. While many people turn to family members as executors, this can be fraught, especially if there are family members who don’t get along. Emotions can run high and lead to dissent and disputes. Those can drag the estate distribution out much longer than necessary and potentially end up costing a lot more, meaning some of the assets are spent on legal fees rather than being disbursed to heirs.
• Consider having someone younger than you be the executor. While there are no guarantees about how long someone will live, choosing a younger executor at least provides the possibility that they won’t die before you do.
• It can be someone named in the will. This is often the case. However, if you’re leaving all of the estate (or a significant portion of it ) to one person, it’s better to have someone else as executor.
• Discuss the role of the executor with the person you want. You may think you’ve found the perfect executor, but they, in turn may feel they’re not up to the responsibility. Having a discussion before finalizing the will is key to avoiding problems later.

Do Executors Get Paid in California?

California law provides compensation for people acting as executors, entitling them to the following:

• 4% of the total value of the estate up to the first $100,000
• 3% of the second $100,000
• 2% on the following $800,000
• 1% on the following $9 million
• 5% on the following $15 million

The courts also determine a reasonable amount for any estate valued at more than $25 million.

What Should I Do if I Need Help Choosing an Executor for My Will?

Call us at 916-685-1225 for a free consultation. Our team of experienced, knowledgeable attorneys can walk you through the considerations at stake in your estate and its disposal. We will ask questions that will identify both potential positives and negatives for any candidates to be your executor. Choosing an executor for the will can be a complicated, sometimes emotional process, and we’ll guide you through it thoroughly and compassionately.

A major reason people want to do estate planning is to protect their hard-earned assets, whether for themselves or their loved ones. A frequent concern is the possibility that there will either be issues with creditors/legal judgments and settlements or a bankruptcy situation for both the estate holder or the heirs, or divorce for the heirs. Wanting to protect the estate from those types of claims is essential, and it’s a form of protection not offered with individual retirement accounts (IRAs). One way to do that is through a private retirement plan (PRP), a program held under California state creditor law. It’s a unique form of estate planning that
offers many safeguards other forms of estate planning do not. Here’s what you need to know.

What Does a PRP Protect?

It protects the named assets by exempting them from liens and seizures, whether due to bankruptcy or lawsuit settlements. It can also safeguard heirs by keeping the inheritance out of community property in marriage. Then, if the couple divorces, the spouse will not be entitled to the inheritance, which they could be otherwise.

The assets in the trust, including any earnings, gains, and future values, are safe while accumulating. Depending on the size of the estate and the assets within, the PRP may be able to take advantage of several tax benefits as well, which could conceivably offset the cost of setting it up. This is especially true for business owners.

When Should I Begin Developing a PRP?

There are situations when people face an unexpected financial problem, such as a lawsuit with a large settlement, and they want to put their assets in a PRP at that point to protect them. For example, a surgeon could face a malpractice lawsuit that could far exceed what his insurance covers. However, one criteria for the PRP to be legal and successful is that it’s done primarily for retirement benefits, not to evade creditors and judgments. That’s why a PRP should be set up as early as possible while there’s no pending financial problem on the horizon. By the time the surgeon faces the lawsuit, it’s too late.

Note that if the estate holder passes away before creating a PRP and the estate goes to a married inheritor, it may be too late for the inheritor to define it as a PRP.

Also, understand that this is a long-term planning tool. While it has many shorter-term benefits, it is structured specifically for retirement. If you have cash reserves you think you need before retirement, you may want to think about keeping those out of the PRP. Our team of attorneys is happy to discuss the specifics of your situation to come up with the best plan for you.

How Is a PRP Constructed?

This is a complex plan that requires having a knowledgeable professional to ensure it’s drawn up correctly. A big part of the PRP is setting up a private retirement trust. Assets are brought into that trust and retitled to indicate they’re assets specifically to be used for retirement.

Not every asset can be contained in a private retirement trust, but many can be, whether cash or property. The key is that the trust should hold things that will be used during retirement. Things like rental properties must be excluded. But funds from existing IRAs can. Unlike other retirement plans, PRPs can be funded with private business stock and LLC member interests.

That PRP is constructed so that you can continue adding to it, just as you’d add to any other retirement program. One of the additional benefits of the PRP is that contributions to it aren’t tax deductible, so there’s no maximum limit on contributions. However, the PRP plan needs to detail the need for retirement savings, so if much more significant contributions are made than what’s required, that could raise questions. That’s why it’s critical to have an experienced estate planning professional involved in developing the PRP, especially the plan.

What’s Required to Have a PRP?

As noted above, one thing that will be examined is whether or not the estate holder is trying to avoid creditors somehow. If that’s the case, the trust may not be able to be created; a prime example of why setting this up while there are no conflicts at hand is strongly recommended.

The PRP needs to have a detailed plan that outlines the assets and how they’ll be used in retirement. Courts will look closely at this plan to ensure it’s not a precursor to hiding funds from upcoming litigation but instead appears to be a diligently considered plan for when retirement may take place and what will likely be needed. A plan needs to be presented from every person named in the trust.

Beyond that, the trust must have an independent trustee and an independent plan administrator. There are many professionals in California who can fulfill those roles.

Finally, a PRP is only valid in California. If you plan to move out of state before or during retirement, the PRP will no longer hold legally.

What Should I Do if I Need a PRP?

Call us at 916-685-1225 for a free consultation. Our team of experienced, knowledgeable attorneys can walk you through the rules and requirements to ensure your estate is protected from creditors and lawsuits for you and your heirs. Because of the complexity of PRPs and the need to have them in place before any crisis arises, getting started as soon as possible is highly recommended. It’s a good idea to plan for the worst, even if you hope it never happens.

In California, if you possess a power of attorney for another individual, you, the agent, have the legal right to act on behalf of the other individual known as the “principal.” Generally, power of attorney is delegated to an agent when the principal cannot make decisions relating to legal, financial, or health issues.

The principal has the option to determine the scope and limitations of a power of attorney. If you would like more information regarding power of attorney in California, contact the law offices of Cava and Faulkner of Elk Grove, CA, and ask to schedule a free consultation.

What are the Different Types of Power of Attorney in California?

Several different types of power of attorney available in California can be chosen based on your specific needs. The options are as follows:

• General Power of Attorney: This is California’s most inclusive power of attorney. This allows you to designate an agent, also known as an attorney-in-fact. This allows your agent to have all of the legal rights and powers that you possess. However, if you become incapacitated, this type of power of attorney is no longer valid.
• Durable Power of Attorney: This type of power of attorney has the lasting capacity to stay in effect even if you do become incapacitated and can no longer make your own decisions.
• Special or Limited Power of Attorney: The scope of this type of power of attorney is extremely limited and is typically used in order for your agent to make decisions for you if you are unavailable. For instance, you may be out of the country but need to have legal documents signed on your behalf. Once the need is met, a power of attorney is no longer in force.
• Springing Power of Attorney: A springing power of attorney’s legal authority only goes into effect when certain conditions are met, such as when medical professionals determine that the principal can no longer make healthcare decisions for themselves.

When Should I Consider Making a Power of Attorney?

Many individuals make the mistake of waiting until it is too late to consider making a power of attorney. If you become incapacitated, you would no longer be able to make the decision to appoint an agent to act on your behalf. Although it may be difficult to consider, planning ahead for the future is one of the best ways that you can protect your interests should the need arise at a later time.

Can I Have More Than One Power of Attorney?

Under California law, you are permitted to have more than one power of attorney to represent your interests. For example, you may choose to designate a separate agent to make your healthcare, financial, or legal decisions. These various powers of attorney can each be determined by your set of specific needs. An experienced estate planning attorney can help you make a decision as to how you should best proceed.

Do You Need a Lawyer to Get a Power of Attorney in California?

California law does not require individuals to hire an attorney to obtain a power of attorney (POA) to manage their affairs. However, because power of attorney documents pertain to legal affairs such as managing finances and healthcare decisions, it is a sound idea to consult with an attorney before making any decisions.

A power of attorney document grants the agent, the individual you designate to manage your affairs, the legal authority to carry out transactions on your behalf without asking your permission to do so beforehand. Therefore, it is wise to consult with an attorney in advance to understand the scope of the document that you intend to sign in order to protect your interests.

How Do I Establish a Power of Attorney on My Own?

The first thing that you will need is a power of attorney form. You can find an official form offered by the state of California online. This form allows you to choose what type of POA you would like to have. For example, you may choose a healthcare power of attorney or financial power of attorney legal document.

In order to create a legally valid power of attorney document, you and your agent need to both need to be adults and considered to be of sound mind. You must also have witnesses or a notary present.

If you plan to create a POA document without an attorney, then you need to remember the following:

• Your agent cannot also be one of your witnesses or the notary
• Your witnesses cannot be your healthcare provider, an employee of your healthcare provider, or any individual related to the healthcare provider

Can I Assign My Spouse to be My Durable Power of Attorney?

A durable power of attorney document allows your agent to manage and carry out your financial affairs in the event that you are unwilling or unable to do so for yourself. If you desire your spouse to be your durable power of attorney, then they must sign a power of attorney document in your presence. This must be done in front of a notary. If signing before a notary is not possible, then you are also permitted to sign in front of at least two witnesses who are mentally capable of providing sworn testimony should the need arise.

Can a Family Member be a Witness for a Power of Attorney?

Texas law does permit a family member to be a witness on a power of attorney document. Of course, it is worth mentioning again that in order for a POA to be valid, the document must be signed by two witnesses.

Although the law does permit a family member to be a witness, one piece of sound legal advice is that it is always best to have disinterested parties act as a witness for legal documents. This often helps to avoid conflict or disputes at a later time.

Can an Attorney Advise Me About Composing a Power of Attorney on My Own?

If you would like to know more information about composing a power of attorney, you are welcome to call our law offices of Cava and Faulkner at 916-685-1225. We will be happy to schedule a free consultation in order to answer any questions that you may have.

When Should I Consult With an Attorney About Making a Power of Attorney?

One of the best steps that you can take to protect both yourself and your family is to consult with an attorney as soon as possible about the various power of attorney options that are available. Waiting until a crisis occurs is usually too late, and the State of California could end up appointing someone to make decisions for you.

Contact the law offices of Cava and Faulkner by calling (979) 596-4088 and ask to schedule a free consultation as soon as possible.

Being named Power of Attorney in California is a huge responsibility. Power of Attorney for another individual grants you the authority to make various financial, healthcare, and estate planning decisions.

With that in mind, California has specific legal requirements that every individual must abide by in order to qualify for this duty. These requirements have been established to protect the individual who you will be representing to ensure that their best interests and needs are met by your acting as their legal representative.

Contact the law offices of Cava and Faulkner of Elk Grove, CA, to schedule a free consultation.

What is Power of Attorney?

In California, power of attorney, also known as POA, entitles you to act as a personal representative for another person to make decisions on their behalf. Power of Attorney can be limited to a specific area, such as the authority to make medical decisions, or can cover a wide variety of areas such as finances, healthcare, and other areas specifically outlined in the paperwork that grants legal power of attorney.

What Requirements Need to be Met in Order to Become Power of Attorney?

Due to the serious nature of this obligation, the individual that a person chooses to be their power of attorney must be able to meet specific requirements. The individual must meet what is known as the “capacity to contract,” which means that they have the mental capacity to comprehend the duties and responsibilities associated with the tasks that they will be required to perform, such as:

• Manage and understand financial resources
• Resist undue influence from others
• Resist fraud or the temptation to use financial resources for their own benefit.

How Does Power of Attorney Go Into Effect?

For a power of attorney to be legal in California, the POA forms must meet specific legal requirements such as:

You must sign the document. If you are unable to sign, then another person must witness it for you.

• The agent and the witnesses must be at least 18 years of age
• The document must also be signed by at least two other adults.
• The agent is not permitted to be one of the witnesses.
• The power of attorney document must be notarized

Can I Revoke the Power of Attorney?

If you are the principal or individual who has created the POA, you have the legal ability to revoke it if and when you wish to do so. Revoking a power of attorney is simply ending the legal agreement that gave another person the legal authority to act on your behalf. Often the situation that required the power of attorney ends, and as a result, the legal agreement is no longer needed.

The individual named as a power of attorney, also called the agent, does not have to approve the cancellation. If you have more questions related to assigning an individual to be a power of attorney, contact Cava and Faulkner of Elk Grove, CA, by calling 916-685-1225 to schedule a free consultation. We will be happy to answer any questions that you may have and discuss your legal options.