Cava and Faulkner

Many people are familiar with the concept of drawing up a will to plan for estate succession. But wills aren’t the only type of estate planning tool available. Trusts are another way to plan for the future. In some cases, they act as a replacement for a will, while in other cases, they work together with a will. Each estate is unique. Here’s what to know about trusts in California.

What Is a Trust?

A trust is a financial arrangement in which a third party (known as a trustee) manages assets held for beneficiaries. The estate owner (known as a trustor) transfers the assets to the trust. While this is similar to a will in that the named beneficiaries will ultimately receive the assets, there are some significant differences.

Trusts don’t go through probate, unlike many wills. Probate is a public process, so the terms of the will, how it’s distributed, and to whom becomes part of the public record. Because trusts don’t go through probate, it’s a private matter.

Trusts can often distribute assets more quickly than a will can because of being able to avoid probate.

It’s possible in some cases that using a trust will reduce court fees and other estate costs and potentially reduce estate taxes.

What Types of Trusts Are Available in California?

There are many different types of trusts in California, all with different benefits and nuances. This is not a comprehensive list but includes many of the most commonly used trusts. If you’re unsure which of these might work for you or have needs that don’t appear to be met with any of these, contact an experienced estate planning attorney to learn what other options might be available.

Revocable Trust

A revocable trust (sometimes referred to as a living trust) is one in which the trustor can continue to manage and change throughout their life. Once the trustor passes, the beneficiaries receive the assets assigned to them without going through probate court. But as long as the trustor is living and competent, they can make changes to the trust.

The beneficiaries will receive none of the assets until the trustor passes away.

Irrevocable Trust

When a trustor sets up an irrevocable trust, they lose the ability to revoke the trust if they change their mind later. That can seem like a disadvantage, but there are advantages to irrevocable or revocable. These are often used for long-term care and retirement planning, as once the assets are transferred to the trust, they can’t be included as assets or income when determining whether or not the trustor is eligible for Medicaid.

Life Insurance Trust

This irrevocable trust allows any life insurance assets to be passed to beneficiaries after the trustor’s death without activating any estate taxes.

While a life insurance policy will ask for named beneficiaries, they may have to pay taxes without this type of trust.

Special Needs Trust

This type of trust is used for people with disabilities. It can be an essential part of protecting their future, as when set up correctly, the person with disabilities can receive funds from the trust without it counting against them when determining Medicare or Medicaid (or other government support) eligibility.

Charitable Trust

When someone would like to leave some or all of their assets to a nonprofit organization, a charitable trust is an excellent mechanism to do so. There are multiple ways to create this type of trust, including the possibility of allowing interest-only disbursements for a period of time before the bulk of the assets are transferred.

Generation-Skipping Trust

As the name implies, this is a trust designed to ensure assets go to grandchildren rather than children. If set up correctly, this type of trust may keep the trust assets to remain untaxed.

Bypass Trust

Married couples frequently use this. Each spouse sets up a revocable (living) trust, and each specifies that if the assets of one will pass to the other’s trust upon the trustor’s death. This usually makes the assets safe from gift or estate taxes as it’s passed to the surviving spouse.

Pet Trust

This is an increasingly popular option that allows pet owners to arrange in advance for their pets to be cared for if something should happen to the original owner. The trust can provide funds for the pet’s needs (food, veterinary care) and often includes a stipend for the person caring for the pet.

Is There Something a Trust Can’t Do?

While there are many things different trusts can do, there’s one crucial thing that none of them are able to handle, and that’s assigning guardianship of a minor child. This is a situation in which having both a trust and a will may be the best solution.

Only a will can legally name a guardian for orphaned minor children. Without a will, the courts will name a guardian, who may or may not be someone the parent would have wanted.

What Should I Do if I Need to Set Up a Trust?

Call Cava & Faulkner at 916-685-1225 for a free consultation. Because there are multiple types of trusts available, each with its own pros and cons, working with experienced, knowledgeable estate planning attorneys can help you through the decision process of what’s best for you and your estate. We understand how important it is for you to ensure your estate is handled precisely as you want it to be.

When someone dies before drawing up a will that specifies how they want their estate handled, that’s known as dying intestate. Without a will, it’s up to the court to determine how any assets will be distributed and to whom. Here’s what you need to know.

What Happens When Someone Dies Without a Will in California?

Precisely what happens when someone dies intestate in California depends on a number of factors, as every case is unique. However, in general, an estate owned by someone who died intestate must go through California’s probate court, as specified in California’s intestate succession law.

That means the court, rather than the deceased, determines how the estate will be distributed. If the deceased had no assets, this isn’t a problem. But if there were assets, they must be registered with the probate court.

Another critical factor in not having a will applies if there were minor children who were orphaned by the death of the intestate person. A will provides a legal process to assign guardianship to the children as chosen by the deceased. If there’s no will, the probate court has the responsibility of choosing a legal guardian for the children.

How Does Probate Court Determine How to Distribute an Estate When There’s No Will?

California’s intestate succession law is specific about how assets will be distributed, and the emphasis is on surviving family members, with the caveat that survivors must outlive the deceased for at least five days (120 hours) in order to be eligible for the inheritance. The court prioritizes the family tree in this order.

• Spouse or registered domestic partner. This person will receive all the community property and half of the separate property (the difference between community and separate property is explained below). However, if the spouses were legally separated at the time of one’s death, the surviving spouse is no longer eligible for any inheritance.
• Children. Usually, children will receive half of the couple’s separate property divided equally among them if there is more than one child. If a child is deceased but has surviving children of their own (which makes them the intestate deceased’s grandchildren), those children will receive that portion of the inheritance.
• Parents. Suppose the deceased has no surviving spouse, registered domestic partner, or children or grandchildren, but they do have surviving parents. In that case, those parents will receive the assets of the estate divided equally between them.
• Siblings, nieces, and nephews. If none of the family members listed above are alive, any siblings and their offspring will receive the assets. The siblings receive the assets first, but if one or more siblings are deceased but have surviving children (nieces and nephews), those children receive the sibling’s portion.
• Grandparents or descendants of grandparents. If none of the family members listed above are alive, any remaining grandparents or their descendants are eligible to receive the estate.
• Distant relatives. If all of the above are deceased, the California probate code allows the court to try and determine if there are more distant relatives (second and third cousins, etc.) that are surviving to award the estate to.
• No surviving family members (as far as can be known). When this happens, the estate is taken by the state of California.

The bottom line is that someone who dies intestate will have their assets given only to family members. If the estate owner doesn’t want family members to have the assets or wants to give some of the assets to friends or organizations such as nonprofits, the only way to ensure that happens is to draw up a legal will. No friends or organizations can receive any part of the estate without a will.

What Is Community Property and Separate Property in California?

As noted above, the court will examine assets to see which ones were community versus separate property for spouses. That’s an important distinction. Here’s how California law views property in a marriage.

Community property (sometimes called marital property). This is basically any assets acquired by the couple during the marriage, whether it’s real estate, bank accounts, investments, etc. When someone dies intestate but has several assets that were jointly owned, the spouse automatically receives those assets without having to go through probate. It’s important to note that some gifts and inheritances may not be considered community property. If there’s uncertainty as to whether or not a specific gift or inheritance is considered community or separate property, it’s advisable to work with an experienced estate planning attorney.

Separate property. Each party in a marriage may have had assets that they owned before the marriage, including real estate or bank accounts. That’s considered separate from the marriage, as are most gifts or inheritances that arrive during the marriage, as long as they’re directed to one spouse only. These are considered separate as long as they weren’t rolled into the community property. Once a couple has legally separated, any assets they acquire from the point of separation are also considered separate.

What Should I Do if I Need to Begin Drafting a Will?

Call Cava & Faulkner at 916-685-1225 for a free consultation. Our team of experienced, knowledgeable estate planning attorneys understands how important it is to ensure your wishes are followed after your death. A will is a vital tool for helping that to happen. There may be other tools, such as trusts and powers of attorney, that can also help, but a will is a great place to start.

If someone has funds in a bank account and passes away, there are a number of different outcomes depending on the circumstances under which the person planned for the future of their estate. Read on for what you need to know.

What Happens to the Funds in a Bank Account Once the Account’s Owner Dies?

Bank accounts can be set up in different ways. How they’re set up impacts what happens when the account’s owner dies. Here are some of the different scenarios.

• Individual accounts. If there’s only one owner named on the bank account, the funds in the account will probably have to go through probate unless there’s a beneficiary named (see below for more information).
• Joint or co-ownership. In this situation, the account is owned by two or more people (for example, two spouses). If the account is fully shared by all owners, then the surviving owners become the full owners of the assets in it, and there’s no need for probate. If the account is set up so that the owners are only partial owners, they’ll retain what they previously owned, and the rest will have to go through legal channels to be distributed to beneficiaries (heirs, etc.).
• Payable on death (POD) or transfer on death (TOD) bank accounts. These are bank accounts that may be individually owned, but they name a beneficiary to whom the assets will be distributed when the owner passes away. They’re usually not subject to probate. The person named as a beneficiary in the POD or TOD would need to bring their identification and the owner’s death certificate to the bank in question to receive the funds.

What Happens to Bank Accounts if Someone Dies Intestate?

When someone dies without a will that dictates how their estate (assets and debts) should be handled and distributed, that’s known as dying intestate. If the deceased didn’t have a joint account owner or named beneficiary for their bank accounts, that complicates the process of distributing assets. In California, those bank accounts will likely have to go through probate. Probate is when assets are distributed through probate court. It’s a public process, so details of the bank accounts and who (and to whom) they’re distributed become part of the public record.

If the deceased were married at the time of death, all of what’s considered community property in California would go to the surviving spouse. That’s anything, including bank accounts, that was acquired during the marriage. So if the deceased had an individual bank account and made contributions to that account while married, it’s considered community property and will go to the spouse.

Anything that’s not community property–for example, a bank account owned prior to the marriage that had no activity during the marriage–the spouse will receive all the funds in the bank account if the deceased had no other surviving close family members, including children, grandchildren, parents, siblings, nieces or nephews. If there is one surviving close family member, the account funds will be divided evenly between them and the spouse. If there is more than one surviving close family member, the spouse will receive one-third of the accounts while the other family members divide the remaining two-thirds.

If the deceased were not married at the time of death, any surviving children of the deceased would divide the account funds among them. If the deceased had a child that died before the deceased but had surviving grandchildren, the grandchildren would receive their parent’s portion of the funds.

If there is no spouse or close family members, the courts will determine how the funds are to be distributed. The estate may not have to go through probate if it is small enough.

Are There Any Other Ways to Protect the Funds in a Bank Account?

Besides naming a TOD or POD beneficiary to the bank account, there are other legal methods for the account owner to ensure the funds in the bank accounts go to the beneficiaries of their choosing.

Wills. Drawing up a will is one of the most common ways. Having a detailed will that specifies precisely who receives the funds from the account (and if there are multiple inheritors, what portion each is entitled to) will smooth the process for the beneficiaries. Depending on the size and complexity of the estate, the will may or may not have to go through the public probate process.

Trusts. It’s also possible to set up a trust that takes on ownership of the bank account. Multiple types of trusts are available, and it’s advisable to work with an experienced asset protection attorney to determine the right kind of trust for your situation and beneficiaries. These are especially useful for larger estates, as in most instances, they allow the estate to bypass probate. That means the distribution process will likely take less time and money, and it allows the estate to be settled privately, not publicly, as it would if it went through probate.

What Should I Do if I Want to Protect My Bank Accounts?

Call Cava & Faulkner at 916-685-1225 for a free consultation. As discussed in this article, there are many ways you can protect your bank accounts and ensure your assets are distributed as you want them to be. Every estate is unique, and we’ll help you develop a plan that best fits your needs, protecting your assets and making it as simple as possible for your beneficiaries to receive what you want them to have.

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.