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Can You Establish a Trust for Your Pet?

Pets are like family members, and it is recommended that you consider what will happen to them when you’re no longer around to take care of them. Incorporating a trust for them in your estate plan is an effective way to put your mind at ease.

You’ll have peace knowing that the pet’s needs will be taken care of if you become incapacitated or after your demise.

Estate planning lawyers in California explain that a trust is a legal document that holds money and assets for the beneficiaries. It’s a viable option for preparing for your pet’s care because you can’t leave cash, property, or life insurance money directly to an animal. Consult skilled legal experts for legal insights on how pet trusts work and how to set up one.

How Can I Establish a Pet Trust?

Establishing a trust entails designating a grantor, trustee, and beneficiaries. As the trust’s creator, you’re the grantor who will fund it and provide instructions on its management and execution. Experienced Elk Grove trust attorneys can help you draft the document and guide you in the correct trust terms to make it enforceable.

• Appoint a caretaker and trustee: Choose a caretaker who will take over the care of your pet. Look for someone who loves your pet and is willing to take on the responsibility. It’s also advisable to choose a financially responsible trustee to oversee the financial aspects of the trust.
• Provide detailed care instructions: Specify your wishes regarding the pet’s diet, exercise, medical needs, and social interactions.
• Fund the trust: Ensure you fund the trust sufficiently to cover the pet’s expected living expenses and medical costs. The amount varies depending on the type of pet and can be significant if your pet is a thoroughbred horse.
• Specify the distribution of the remaining funds: You must also decide what will happen to the funds after your pet’s death. They can be donated to a charity, allocated to another fund, or returned to the estate.

You can appoint yourself person as the trustee of the pet trust and hold the role throughout your lifetime. Since the trust’s purpose is to care for your pet after your demise, ensure you appoint a successor trustee who will implement the instructions in the trust and make payments to the people taking care of your pet.

Your pet is the trust’s beneficiary, but you need someone to act on its behalf to implement the instructions and ensure the funds are used for their intended purpose.

Types of Pet Trusts

You have three primary options for planning for your pet’s care after your demise through a trust. Trust lawyers in Elk Grove can help you evaluate the one that best serves your wishes concerning your pet from among the following:

• Traditional trust: It allows you to appoint a caregiver, name a trustee, and give instructions for the pet’s care. You can fund the trust with life insurance and name the trustee as the beneficiary. A portion of the life insurance policy can go to the pet trust and the remainder to other beneficiaries, such as your children.
• Statutory pet trust: You can provide simple instructions in your Will, indicating how much money you have set aside in the trust for your pet’s care. The probate court
• will designate someone to manage the trust. The downside of this type of trust is that you can’t leave detailed instructions for the pet’s care.
• Pet protection agreement: A pet protection agreement is a do-it-yourself trust you can create with the help of skilled estate planning lawyers in Elk Grove. It enables you to spell out specific instructions for your pet’s care. You and the pet guardian must sign it to make it legally binding.

What are Some Factors to Consider When Using Life Insurance for Your Pet Trust?

If you choose to use life insurance to fund your pet trust, let your trust lawyers in Elk Grove help you decide the type of policy that makes the most sense based on your age and your pet’s age:

• Term life insurance: You can specify the number of years your term insurance will cover you for, such as 10, 20, or 30. If you’re likely to outlive your pet and want coverage if you die prematurely, consider a term life policy.
• Permanent life insurance: If your pet is likely to outlive you, consider obtaining a permanent life insurance policy that covers your entire life span. However, the option is more expensive than term insurance.

What Are the Benefits of Establishing a Pet Trust?

A pet trust is a legally binding entity and many pet owners prefer it over other planning strategies because it has the following potential benefits:

• You can appoint a trustee and name a caretaker to be responsible for your pet’s care
• You can give detailed instructions to your pet caregiver, including food, toys, medical care, emergency treatment, regular check-ups, end-of-life care, and sleeping arrangements
• A pet trust is legally enforceable
• You can design your pet trust to meet your pet’s individual needs
• It becomes effective upon your demise or when you can no longer care for the pet. The pet’s caregiver doesn’t need to wait for probate to get funding
• A pet trust can be hard to challenge during probate
• You can update the trust over time depending on your pet’s changing needs

A Skilled Trust Lawyer Providing Legal Counsel on Pet Trusts

Establishing a pet trust can be an effective way to plan for the care of your pet after your demise. You can create different types of pet trusts depending on your pet’s needs and preferences. Skilled trust lawyers in Elk Grove can help you evaluate your options.

Cava & Faulkner hosts dedicated trust lawyers who can help you with your estate planning needs. We can guide you in creating a comprehensive estate plan that incorporates your property, children, and pets. Our team can provide legal counsel if you have concerns about establishing a pet trust. Call us at 916-813-7565 to schedule a FREE case assessment.

What is the Impact of Estate Taxes?

Your estate will be exposed to estate taxes upon your demise before the assets therein can be distributed to your beneficiaries. The Internal Revenue Service (IRS) highlights that estate tax is taxable on the “right to transfer property at death,” which sometimes leads people to refer to it as a “death tax.”

One significant impact of estate taxes is that they reduce the overall value of your estate that your beneficiaries can inherit. Estate taxes can also complicate the transfer process, especially if your heirs are not conversant with inheritance laws in California. Estate planning lawyers in Elk Grove recommend implementing a few strategies that can effectively reduce estate taxes.

With proper planning and execution of the following plans, you can maximize the wealth you leave behind and ensure a smoother transfer of assets:

Consider Marital Transfers

Lifetime gifts and bequests in a Will are not subject to estate taxes if you transfer them to a surviving spouse. The only exception is if your spouse is not a U.S. citizen. The tax exemption that comes with transferring your marital assets to your spouse can defer payments due to the IRS. While the exemption may not eliminate estate taxes, it puts off the tax bill the estate may face.

After the second spouse’s demise, the taxes owed on the entire estate become due, including the assets transferred upon the first spouse’s death. Consult extensively with skilled California tax planning attorneys to thoroughly evaluate if this is a viable option for the type of assets on your estate plan and how it will affect your beneficiaries in the long run.

Gifting Family Members and Minors

The law allows married couples to give away a specific amount in tax-free gifts to other people who could be family members. Each spouse can donate this amount separately each year to reduce the value of their taxable assets to benefit the intended beneficiaries.

Under federal laws, you could also give tax-free gifts to minors up to a specific amount:

• According to the Uniform Gifts to Minors Act (UGMA), you can gift minors with financial assets such as cash and securities even if the minors don’t have a formal trust or guardianship
• The Uniform Transfers to Minors Act expands the UGMA and allows the gift of real property and financial assets to minors.

Gifting family members and minors ensures more of your assets go to your loved ones rather than estate taxes. What you give as gifts is not counted as part of your estate.

Charitable Giving

Donating to charitable ventures you care about can be a source of fulfillment. Additionally, it can be an effective means of tax planning in the year you’re donating while potentially lowering the value of your estate. You can donate to a donor-advised fund (DAF) and itemize deductions on your annual income tax return for the year you contributed.

Tax planning lawyers in California explain that from an estate tax viewpoint, assets left to a qualified charity upon your demise are deducted from your taxable estate. Consider donating long-term appreciated securities such as bonds, stocks, and mutual fund shares held for a year or more and deduct their fair market value without paying capital gains tax.

Designate Beneficiaries

Designating beneficiaries on different types of assets is probably the smoothest way to transfer property. Retirement plan assets such as 401(k)s and IRAs allow you to designate one or more beneficiaries, and the process is simple with the guidance of experienced tax planning lawyers in California.

Without beneficiaries, the IRS requires that inherited retirement accounts be distributed on an accelerated basis that could extend to five years and result in increased tax liabilities. The beneficiary you designate on these accounts takes precedence over anyone you name in your Will.

Buy Life Insurance

Life insurance benefits are tax-free and paid directly to one or more beneficiaries. The beneficiary can be a specific person or a trust, and the beneficiary could use the proceeds to pay off existing debts owed on the estate or funeral expenses. Without the proceeds, your estate executor would probably have to sell your property to offset the bills, reducing the inheritance for your loved ones.

With life insurance, your estate can pay the taxes on your capital gains and income unless the estate is substantial. Once you buy life insurance, you can name one or more beneficiaries in the policy and change them without their consent unless the designation is irrevocable.

Set Up a Trust

Tax planning attorneys in California recommend setting up a trust in your estate to avoid estate taxes. The document distributes your assets to beneficiaries by transferring them to a trustee. Unlike Wills, trusts are exempted from the probate court process. With the help of your Elk Grove estate planning attorneys, you can consider setting up the following types of trusts:

• Marital trusts
• Irrevocable life insurance trust
• Qualified personal residence trust
• Charitable lead trusts
• Charitable remainder trusts
• Grantor-retained annuity trusts
• Asset protection trusts
• Dynasty trusts
• Bypass trusts
• Land trusts

Consult with knowledgeable estate planning attorneys for an overview of each type, the potential benefits, and the downsides, if any. With this information, you can make a plan from an informed viewpoint.

A Skilled Estate Planning Lawyer Helping You Minimize Estate Taxes

Estate taxes reduce the assets your heirs can receive after your demise. Luckily, skilled tax planning lawyers in Elk Grove can help you implement various strategies to minimize estate taxes and preserve a more significant portion of the wealth for posterity.

Cava & Faulkner is an estate planning law firm with dedicated tax planning lawyers in Elk Grove. We can help you optimize your tax situation to protect your assets and ensure you have substantial assets to pass on to your loved ones without legal complications. Call us at 916-813-7565 to schedule a FREE consultation.

What is a Healthcare Directive and Who Needs It?

A healthcare directive is a legal document expressing your healthcare preference. It works by allowing you to designate authority to someone who will make medical and healthcare decisions on your behalf if you become incapacitated. Healthcare directives in Elk Grove explain that healthcare directives generally serve three functions:

• They feature a healthcare power of Attorney, also known as a Durable Power of Attorney, which authorizes a trusted person to make decisions on your behalf if you cannot communicate or make decisions for yourself.
• ·A privacy authorization under the Health Insurance Portability and Accountability Act (HIPAA)that allows healthcare providers to share confidential medical information with the agent you appoint.

Anyone can benefit from a healthcare directive, and estate planning lawyers recommend incorporating it into your estate plan. If drafted and executed correctly, it can ensure your needs and preferences are implemented when you can no longer voice them.

What Are the Benefits of a Healthcare Directive?

A healthcare directive is a simple document, and skilled California HIPAA lawyers can guide you in drafting it to ensure it is enforceable. With the document in place, you can enjoy the following benefits:

• Your loved ones will know beyond doubt what you want if you become incapacitated, taking a huge burden off your burden
• Your wishes will be in writing for everyone to see, hence minimizing stress and confusion while promoting peace among your family members

What Are HIPAA Regulations?

HIPAA authorizations give healthcare professionals and health insurance companies your consent to release protected health information about you to designated parties. Without authorization, doctors and healthcare professionals directly involved in your healthcare cannot legally share your medical information in ways that violate the regulations.

However, medical professionals may not need explicit authorization to share your medical information with other professionals directly involved in your treatment. HIPAA attorneys in California recommend signing a HIPAA authorization to give consent to your healthcare providers to disclose your medical condition to a specific party.

Elements and Role of HIPAA Authorization

A HIPAA Authorization contains specific essential elements such as the following:

• The authorized person
• A description of the protected health information to be disclosed
• The person who should receive the information
• An expiration date
• The reason or purpose of the disclosure

While HIPAA permits the sharing of private medical information, it doesn’t mandate it. It also doesn’t specify a timeline for disclosing protected health information (PHI), but appropriate measures must be taken to ensure the safe transmission of information.

Before creating a healthcare directive, it is crucial to engage in open discussions with your loved ones, potential agents, and healthcare providers. These conversations can increase the likelihood that your wishes, fears, and preferences will be reflected accurately, enabling effective decision-making on your behalf. HIPAA attorneys in Elk Grove can provide legal guidance.

What is the Interaction Between Healthcare Directives and HIPAA?

HIPAA is a privacy rule that protects individually identifiable health data stored or transmitted by a covered entity. The information can be in any form, such as oral, paper, or electronic. The privacy rule protects information, including demographic data, related to:

• Your past, present, and future physical or mental health
• The healthcare services provided to you
• Your past, present, or future payments related to healthcare services

Any information that can help identify you or for which there are reasonable grounds to believe it can be used to identify you should be protected. That includes your name, birth date, address, and Social Security Number. However, the privacy rule excludes employment records that a covered entity keeps in its capacity as an employer.

What Types of Healthcare Directives Can Be Impacted By HIPAA Regulations?

Healthcare directives come in many formats, enabling you to retain as much control as possible over healthcare decisions even when you can’t make them yourself. Their validity depends on state laws, so it’s crucial to understand the various requirements when creating them. Elk Grove healthcare directive lawyers can help you evaluate your options when drafting the following:

• A Durable Power of Attorney: It is a medical Power of Attorney that enables your appointed agent to make decisions on your behalf. However, a doctor’s certification attesting to your inability to make medical decisions on your own is necessary.
• Organ and tissue donation: You can specify your wishes for organ and tissue donation after your demise.

A Skilled Healthcare Directive Attorney Providing Legal Guidance on HIPAA Regulations

Healthcare directives and HIPAA regulations play crucial roles in healthcare decision-making and privacy protection. While directives help you retain control over your healthcare needs and preferences if you become incapacitated, HIPAA regulations protect your confidential health information, and understanding them is crucial to promoting effective healthcare decision-making.

Skilled Elk Grove healthcare directive and HIPAA lawyers at Cava & Faulkner can provide more legal insights into healthcare directives as part of your estate plan. Our team can help you draft the various legal documents while ensuring they are HIPAA-compliant to make them enforceable. Call us at 916-831-7565 to schedule a FREE case assessment.

What Is the Difference Between Trusts and Wills?

Wills and trusts are key components for estate planning, and both ensure that the assets listed in either reach their intended beneficiaries after the original asset owner’s death. But there are some key differences.

• Wills don’t go into effect until the estate owner passes, while trusts are usually live as soon as the creators sign the trust and the assets are transferred.
• Wills usually need to go through probate (a public process) while trusts don’t.
• Wills aren’t activated if the estate owner becomes incapacitated somehow, only after their death. Trusts are active once funded.

How Do I Choose Between a Will and a Trust?

The answer to that is: It depends on various factors, including the size and complexity of your estate and your relationship to your beneficiaries. That said, it’s crucial to understand that this doesn’t have to be an either/or situation; often, estates use both wills and trusts to accomplish their goals. That’s because each has pros and cons, or things one can do that the other can’t.

Pros and Cons of Wills

Pros:

• A will is more likely to ensure your wishes are granted than dying without a will, known as dying intestate. In the latter situation, the courts will determine the distribution of assets and only consider family members. If you want some assets to go to nonfamily members or charitable organizations, having a will is vital.
• A will is the best legal mechanism for assigning legal guardianship to any minors orphaned by your death. Note that trusts have no authority regarding guardianship of minors. If a will doesn’t exist or specify a guardian, the court will determine who the guardian will be, for better or worse. 
• A will can include your funeral preferences.

Cons:

• A will is not a private document. When the estate owner passes away, it will likely need to go through probate court, which is public. This means anyone could learn the value of the estate and the terms of the will. 
• A will may have more significant tax implications than a trust. There are many variables affecting that. 
• A will is often subject to creditors’ demands, meaning the estate may be allocated to pay off debts rather than to hand down to beneficiaries.

Pros and Cons of Trusts

There are multiple types of trusts, each with its own set of pros and cons. If you’re considering using a trust (and there are many good reasons to do so), it’s highly recommended that you work with an experienced estate planning attorney to find the trust(s) that best fits your needs. 

Pros:

• Trusts are private and usually don’t go through probate court. That means the general public has no access to any information about it. 
• Depending on the types or sizes of the trust, there may be positive tax implications. 
• Depending on the type of trust, the assets held in it may be exempt from creditors’ claims or lawsuits, making them popular with people whose careers frequently lead to litigation (doctors, lawyers, etc.). 

Cons:

• As noted above, a trust can’t legally mandate guardianship of orphaned minors. That may only be done through a will. 
• A trust can’t provide funeral preferences. 

Because of the pros and cons of each, it’s common for individuals to create both a will and trust for  a complete estate plan. That helps ensure the estate is well-planned, covering many bases and creating some privacy for the owner where necessary. 

Can a Will or a Trust Be Challenged in Court?

It’s possible for either, although it doesn’t happen frequently. Similar grounds could be used to challenge a will or a trust. In general, the person challenging either must have some logical grounds to do so, not just be annoyed that they didn’t get what they thought they should. Only those who have an interest in the assets are allowed to challenge, meaning anyone who is named as a beneficiary, is the heir of the deceased, or creditors (but again, some types of trusts are exempt from creditors). The reasons someone can contest a will or a trust include:

• Lack of mental capacity. If the person whose assets are addressed in the will or trust was deemed not of sound mental capacity, the assets may not be distributed according to their wishes. This may include someone who struggles with dementia or alcoholism/drug problems.
• Suffered undue influence or fraud. Sometimes, others take advantage of the elderly and convince them to change their will or trust to benefit the swindler rather than the honest beneficiaries. Court challenges can help determine if this was the case or, as also happens at times if the will was forged.
• Multiple wills. This may occur when someone dies while updating their estate plan. In many cases, the court will go with the most recent version.
• Invalid will or trust. If the will or trust is not written, signed by its maker in the presence of two witnesses who aren’t named in the estate plan, and signed by the witnesses, the plan may be invalid. 

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

Call Cava & Faulkner at 916-685-1225 for a free consultation. Every estate is unique. It’s best to work with experienced, knowledgeable estate planning attorneys who can go through the specifics of your estate to help determine what tactics and tools could have the best results for your estate and beneficiaries. We understand how vital it is to you to come up with a plan that meets your needs and wishes as closely as possible.

What Happens to International Property in a U.S. Estate Plan?

Not surprisingly, many high-net-worth families have property in other countries that they want to account for when they plan their estates. This situation is not to be undertaken lightly because it involves laws outside of California and the U.S. Any laws pertaining to estate planning, tax laws, and property transfer in the country where the property is located must be identified and followed, or the estate plan (or that part of it) may be invalid.

Accounting for California property can be complicated enough when estate planning, not to mention property in other U.S. states. Adding properties elsewhere makes it even more so. What comes into play is not just the ownership and tax implications but other aspects, such as the nationality of the owner (whether they are U.S. citizens, have dual citizenship with another country, or live in California but are foreign nationals).

Unfortunately, sometimes people think that if the property is in another country, they don’t have to worry about it when estate planning. That’s far from the trust, as many have learned the hard way. The U.S. takes estate planning, tax implications, and inheritances seriously, and so do many other locales.

Does Owning Property in Multiple Countries Cause a Need for Multiple Wills?

That depends on many of the factors described above, but yes, it’s possible that more than one will could be needed to protect all international property fully. Depending on the other countries involved, one will might be enough, but it’s highly advisable to work with an experienced estate planning attorney to determine what’s the right approach for your estate.

If multiple wills appear to be the best approach, having your U.S. attorney coordinate with counsel from other countries might be valuable to ensure all requirements and laws are followed. There’s also the possibility of having wills drawn up in the other countries’ primary languages, which could help ease the distribution of assets and probate-type procedures.

However, it’s vital to understand that when multiple wills are involved, it’s crucial that they be in sync with each other and follow the rules of each country, or some of them could be found invalid. In some cases, the foreign property can be dealt with as a supplemental will (such as a codicil to the first will). In other cases, carefully wording each will to clearly refer to other wills can avoid problems with wills being declared invalid.

What Is Ancillary Probate?

Ancillary probate is the term for the proceedings that may be needed when probate happens across more than one jurisdiction, such as owning property in states or countries other than where the estate owner lived. Technically, the property in those other locations is under the jurisdiction of that location, not of the U.S. home.

This can cause increased time and expenses for the beneficiaries, as multiple attorneys may need to be hired, a will’s executor will have more work to do (and if they’re being paid, they’ll earn more), and the different courts involved may not agree with each other on how the property should be distributed to the inheritors.

Is It Possible to Transfer Foreign Properties into a U.S. Trust?

It’s possible, but considerable research and time are required to verify whether every country involved recognizes trusts. Many countries don’t. Suppose the foreign property in one of those countries is placed into a U.S. trust. In that case, it can cause problems, including higher taxes or difficulties, with the ownership of the foreign property transferred to the beneficiary named in the trust.

What About Using a Foreign Trust?

Some countries offer foreign trusts. Those trusts aren’t subject to U.S. jurisdiction. However, they do offer the opportunity to use a trust, which is often a less time-consuming and costly way to transfer property to beneficiaries. They can bypass probate court and possibly offer some tax savings. They also offer better protection against creditors and other claimants to the estate. They may also offer protection from divorce claims, civil actions, or forced or false inheritance claims. That isn’t necessarily because foreign laws protect the trust from claims but because the cost and difficulty of pursuing legal measures outside the U.S. can be prohibitive. It’s also good to know that some countries are willing to enforce criminal cases and convictions from the U.S. if they involve a trust.

There are downsides and concerns to foreign trusts as well. U.S. trusts are protected by U.S. laws that don’t apply in other countries, so there may be little legal recourse if something happens to the foreign trust. Government stability is another significant factor. Anytime a country undergoes a change in government, relevant laws may change, and not always for the better.

Foreign trusts may also be subject to taxes, including from the IRS. These are all situations that should be discussed with your estate planning attorney.

What Should I Do if I Own Property in Multiple Countries and Need to Begin Estate Planning?

Call Cava & Faulkner at 916-685-1225 for a free consultation. International properties can add a layer of complexity to an already complex estate. Our team of experienced, knowledgeable estate planning attorneys can go through your property holdings to identify what countries are involved and what laws might be applicable. These are situations that require the utmost attention to detail, and our firm will endeavor to ensure every detail is accounted for.

What Are Some of the Recent Changes in Tax Law That Affect Estate Planning?

It’s easy to think of tax law as a centuries-old tradition where change is glacially slow. There’s some truth to that, but it’s also true that there have been changes in laws recently that affect estate planning, especially for high-net-worth individuals who are interested in paying as little estate tax as possible. While California itself doesn’t have estate taxes, the federal government has several that can become costly, especially as the laws change over the next year or two. Currently, the federal estate tax starts with estates valued at $13.61 million or higher (for 2024) for individuals or twice that for married couples. 

In the fall of 2023, the IRS announced a program to target high-income earners who are thought not to be compliant in filing and paying taxes. That means scrutiny is increasing for those with high incomes. This comes at a time when the 2017 Tax Cuts and Jobs Act, which doubled the federal estate tax exemption, is set to expire at the end of 2025. Congress could vote to extend the Tax Cuts and Jobs Act, but it’s not clear if they will. If they don’t, the threshold for estate taxes will drop from the minimum $13.61 million or higher listed above and could become as low as $5-6 million per person.  

So it’s worth considering taking specific actions before the Tax Cuts and Jobs Act expires in 2025, if it does.

Consider Creating a Spousal Lifetime Access Trust

A Spousal Lifetime Access Trust (SLAT) is an estate planning tool known as an irrevocable trust. That means assets are placed into the trust’s ownership and can’t be changed once the trust is finalized. The trust is set up to benefit the spouse of the person who set up the trust, who can benefit from the trust even while the original asset owner is still alive. Currently, the amount that can be placed into a SLAT without incurring a gift tax is $13.61 million. The other benefit of a SLAT is that the money placed there reduces the remainder of the couple’s estate, potentially lowering estate taxes on the assets outside the trust. 

Gifts for Children

Another way to potentially bypass steep estate taxes is to transfer assets as gifts to your children or grandchildren. The federal government does have a gift tax, but there are several exceptions. 

It’s essential to understand what the IRS considers a gift, which includes:

• Assets (stocks and bonds, etc.)
• Financial accounts (bank, retirement, or investment)
• Jewelry
• Loans with no or low interest
• Physical property (real estate, vehicle, etc.)

Suppose you’re unsure where your assets fit in terms of being subject to a gift tax. In that case, it’s highly advised to work with an experienced estate planning attorney who can help you identify what is or isn’t a gift and what might be done to avoid estate or gift taxes when transferring it to others. 

Each year, the IRS names the annual gift tax exclusion, an amount that, if not exceeded, can be given as a gift. In 2024, that amount is $18,000 per gift recipient. The amount is doubled if a husband and wife are giving the gift jointly. This is an amount that can be done annually.

However, it’s vital to understand that if the amount exceeds the annual gift, the IRS will view that as reducing the amount available in the lifetime cap (currently $13.61 million). When the lifetime exemption is exceeded, the tax rate could be as high as 40%. It’s best to talk to an experienced attorney about how to manage these gifts with as few repercussions as possible. 

Move Assets into Trusts

The larger the estate, the more likely it is to be subject to estate taxes, which can be sizable and reduce the value of the estate for the inheritors. One tactic to consider is creating a trust. That could allow you to reduce the size of the taxable estate by moving assets into the ownership of the trust rather than the person behind the estate.

However, there is an important consideration that shouldn’t be ignored. There are many types of trusts, with most falling into one of two categories: Revocable and irrevocable. Each comes with its own set of pros and cons.

• Revocable trust. As the term implies, this type of trust may be changed or canceled at any point when the person who created the trust is still living. That clearly provides flexibility, but if the trust generates any income while the creator is still alive, that will be considered taxable income to them.
• Irrevocable trust. This type of trust cannot be changed or canceled once it’s finalized, which can be concerning. However, this type of trust is more likely to be shielded from some or all estate taxes, depending on what’s contained in the trust and its overall value.  

How Can I Learn About Tax Law Changes That May Affect My Estate in California?

Call Cava & Faulkner at 916-685-1225 for a free consultation. Tax law and estate planning are both complex subjects, even more so when they intersect. There are many tactics for handling estate planning while managing taxes. Every estate is unique, and there’s no one-size-fits-all approach to creating an estate plan. Our team of knowledgeable, experienced estate planning attorneys can walk you through your estate and help determine the best approach to protect your assets for the next generation.