Latest News

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.

In What Ways Can Charitable Donations Affect My Estate Plan?

In California, the primary focus when considering and implementing an estate plan is preserving your assets and accumulated wealth for the future benefit of your heirs, family, and beneficiaries. However, there are other significant reasons to draft a plan that many families in California embrace: to provide a legacy of philanthropy and the charitable causes you care about.

California’s residents are well known for their generous giving to others, and charitable giving as part of a comprehensive estate plan can continue to benefit the causes you care about after you die.

However, although you desire to help others, you must be aware of all the legalities and develop these plans in concert with your obligations to your family and beneficiaries; this is where a well-versed, experienced, and knowledgeable estate planning lawyer can be an invaluable help in reaching both of these worthy goals.

Additionally, by professionally planning your charitable trust, you may also receive the side benefit of reducing estate taxes.

For example, your qualified and knowledgeable estate planning lawyer could recommend that you leave a significant amount of your retirement assets to charities. These types of assets are commonly taxed the most after death. So, having your estate plan give a part of your retirement assets directly to a charity you care about will also give you and your heirs a possibly significant federal estate tax charitable deduction. This strategic move will lessen estate taxes for your heirs and beneficiaries, and the charity won’t have to pay taxes on your gift.

However, You must note that every estate differs in size and scope, and one way to give to charities may not suit your unique situation; there is no “one size fits all” in proper estate planning.

This is one of the main reasons your professional and experienced estate planning lawyer’s advice and guidance will be invaluable. It will allow you to give to the causes you care about and help those you love to have a sound financial future.

What Types of Trusts Can Benefit My Charities After My Death?

A professional and well-drafted estate plan is strategically designed to provide the means to carry out your precise wishes to distribute your assets. Hence, they benefit your family, business, and the charities you have supported most of your life. Charitable giving can maintain a legacy for you and your surviving family but requires special consideration and planning.

Just a few of the types of charitable giving strategies your skilled lawyer may use are;

• Giving financial (or other types) gifts directly to the causes you care about – This straightforward approach gives your charity immediate help. For example, you could donate cash, assets, securities, and more directly to the charity named. This is a simple transfer and could result in immediate tax benefits.
• By drafting a charitable trust – You can strategically design a charitable trust to benefit your family or heirs financially and the charities you and your family care about.

A professional charitable trust can provide income for your heirs and family in many ways. Still, it can also effectively donate funds, assets, or items (such as vehicles, etc.) to your charity.

For example, a “charitable remainder” trust will give your family income for a specified time. Then, any remaining funds or assets will go to your charities.

• Create a donor-advised funds trust (or DAF) – DAFs allow you to give freely and contribute to a fund and then recommend that specific charity grants be offered at designated times. This is also a simple way to give and yet provides your heirs with immediate tax benefits.
• Set up a private foundation—This is usually done if you have substantial wealth and assets and want to ensure that giving (possibly to multiple charities) is well controlled. A foundation follows exact guidelines for giving and usually involves family or heirs in future philanthropic decision-making.

These are just a few ways to structure your financial and charitable goals. The wise and prudent way to find what’s best for your unique circumstances is to meet with a local, skilled, empathetic, and passionate charitable giving trusts lawyer.

What Are the Two Main Types of Trusts Used for Charitable Giving in California?

Most estate planning lawyers are used to clients wanting to provide for their favored charity. While leaving funds in a Will may be easy, creating a charitable trust may provide benefits before you die.

California, most often, uses two main types of charitable trusts:

• The charitable lead trust – If you draft a charitable lead trust, you will always designate a beneficiary organization or recipient. After this trust has been created, your assets and their value, as well as any dividends generated, will benefit the charity.
• A Charitable Remainder Trust – You must transfer your property (or assets) into the trust’s designated account using a charitable remainder trust. Then, trustees must be named, such as you, another family member, etc., to manage the trust.

Choosing the right financial tool to help your charities at your death can be complex, and trusts are often preferred. But by getting the valuable, well-versed advice of an Elk Grove trusts lawyer, you can be confident that all your options will be made clear to you, and only then can you choose the best way to proceed.

Are There Benefits To Including My Charity In My Estate Plan Using a Trust?

The benefits of leaving a legacy of giving are probably evident to you. Additionally, there can be significant financial benefits, but they are based on your estate’s scope and size.

Just a few of the benefits to you and your heirs may include;

• Tax benefits that could be significant – Charitable giving usually results in major tax advantages, such as income tax deductions, estate tax savings, and avoiding capital gains taxes. Your lawyer will plan your charitable activities to capitalize on these tax benefits while supporting your philanthropic causes.
• Maintaining your family’s values – For many California residents, philanthropy is a lifelong, fulfilling occupation. Continuing this legacy after you pass can maintain a time-honored tradition and leave a valued family legacy.
• Continuing your family’s legacy – Including charitable giving in your estate plan will help foster unity and shared values. Allowing your loved ones to continue following your proud legacy will instill a sense of purpose and responsibility in managing family wealth and benefiting others.

The benefits of charitable giving through trusts are usually a sound decision for you and your family. But always remember that consulting and discussing the overall picture with an Elk Grove charitable giving lawyer is critical to the entire process.

I Need More Information About Charitable Giving In My Estate Plan; How Should I Proceed?

Charitable giving is a worthy and prudent item to include in your estate plan, and some specific types of trusts can be intrinsically a wise and mindful way to reach your goals. However, every estate, financial, and familial situation differs. Therefore, obtaining the personalized estate planning guidance you must have is critical.

The trust lawyers at Cava & Faulkner Attorneys & Counselors at Law have the expertise and resources to fully explain this highly complex subject matter so that you are clear on all your options. Call them today at 916-685-1225 for a free consultation, and they will answer all your questions and concerns.

What Is a Special Needs Trust, and Can It Protect My Special Needs Loved Ones?

If you’re concerned about your special needs children or loved ones after you’re gone, understanding special needs trusts in California can be crucial for safeguarding the future of your loved ones with disabilities.

A special needs trust combines asset protection and estate planning. This combination helps ensure the long-term support of your loved one but doesn’t usually jeopardize the government benefits they may be receiving, such as Medicaid and SSI.

Special needs trusts (aka SNTs) in California are uniquely designed to benefit children and family members with disabilities and hold some somewhat unique combined characteristics, such as;

• Protection of assets for your loved one – Any assets held in a special needs trust do not count towards the beneficiary’s asset limits when applying for or receiving government benefits.
• Allowance of discretionary spending if necessary – The trustees have the power and authority to allow discretionary distributions to assist the beneficiary’s needs beyond what their government benefits may cover.
• More flexibility in their use – SNTs can be designed to meet the beneficiary’s unique requirements. This ensures more personalized support for your disabled loved ones’ needs.

All in all, a special needs trust can be a valuable and powerful legal tool that can be uniquely drafted to protect your special needs family member if you become incapacitated or die. However, SNTs are legally complex documents, and if you are considering an SNT, the help of a conscientious, knowledgeable, and experienced special needs lawyer is mandatory.

Does a Special Needs Trust Differ from a CalABLE Account?

California does attempt to give loved ones living with disabilities and their families varying options to deal with their future care, and a CalABLE account is one of them.

Having a CalABLE account may sometimes help with future planning for your disabled family members, but there are limitations on the scope and use of these accounts.

Suppose your disabled family member receives Medi-Cal benefits. In that case, a CalABLE account provides some tax-advantaged savings and allows your special needs family member to save up to $16,000 per year and up to $529,000 in their lifetime without losing their Medi-Cal benefits.

A CalABLE account is essentially a tax-advantaged savings account that earns interest for your disabled loved one. This interest is tax-free and does not count as income when applying for benefits.

So, your disabled family member can save for the future and disability-related expenses, but it doesn’t jeopardize their government benefits.

However, if you’re considering a CalABLE account, it’s still prudent to discuss all your goals and financial plans with a local, empathetic, and knowledgeable estate planning law team. CalABLE accounts may be suited to some situations but not to others. For example, a special needs trust is commonly significantly more financially flexible and can be uniquely designed to the specific needs and circumstances of your particular special needs family member.

Can A Special Needs Trust Help to Maximize My Disabled Family Member’s Benefits?

The simple answer is yes, it can in most cases. Most special needs trusts offer significant and valuable benefits in planning for the care of your special needs family member from both a legal and personal aspect. This commonly makes them a useful tool for families with members who have disabilities.

Just some of the legal benefits and protections are;

• An SNT will preserve their government benefits – One of the main advantages of an SNT is the ability to hold assets without affecting a beneficiary’s eligibility for government or state programs.
• Specific asset management and protection – SNTs are legally secure and help to manage and protect your disabled family members’ assets. This significantly helps to ensure that these assets are used appropriately and only for the benefit of the beneficiary.

Some of an SNTs personal advantages are;

• The assurance of long-term care – A professionally drafted and executed SNT ensures the beneficiary will have access to resources for their care and well-being well into the future.
• Enhancements in quality of life – SNTs can supplement government benefits and provide additional resources to beneficiaries to improve their quality of life. The SNT can provide resources for educational opportunities, personal care necessities, recreational activities, and much more.

Of course, every situation and set of circumstances differ, and these are complex documents designed to work in the future to benefit your special needs loved one for years to come. Therefore, they must be strategically drafted to meet, at times, very specific needs. Thus, a complete and detailed discussion and plan should be ironed out with a skilled professional specialist in these valuable legal tools.

Are There Different Types of Special Needs Trusts?

The area of the law that deals with special needs trusts and planning is a complex and specialized area of the law.

You know that if you have a family member with special needs, protecting them if you die or become incapacitated is always a vexing problem on your mind.

However, by obtaining the proper professional advice and utilizing an SNT, you can protect your loved one and provide them with a higher quality of life.

There are various types of special needs trusts available in California; however, the two most common are;

• The First Party Special Needs Trust – This SNT is drafted by a parent, grandparent, legal guardian, or the Court to benefit a family member with special needs. The Trust must be funded with funds owned by the person with the disability. This type of SNT is subject to payback provisions. This means that when the beneficiary dies, an appointed trustee must use any of the remaining trust assets to repay the state of California for all benefits they provided.
• A third-party special needs trust (SNT) is funded with another person’s assets, not the beneficiaries. It is the most common SNT used by parents or relatives to provide for a child with a disability. This type of trust is not subject to any payback provision.

With the professional help of a well-versed estate plan lawyer, a special needs trust can provide a well-designed and detailed framework for proper medical care and asset management and protect your family members’ assets from creditors and financial predators.

I Want More Information About Special Needs Trusts; How Should I Proceed?

Planning for the future of your special needs child or another family member can seem daunting. However, by obtaining the proper and most current information possible from a skilled, highly experienced, and empathetic special needs planning lawyer, you can be sure your special needs loved ones’ future is sound and secure.

The well-versed special needs planning lawyers at Cava & Faulkner have a long, compassionate, and effective track record of assisting Californian families in giving their special needs family members a long, happy, and fulfilling life.

Call them today at 916-831-7565 for a free consultation on your case. They will work tirelessly to put this constant, nagging worry behind you.

What Is a Power of Attorney, and Why Do I Need One?

As you enter your thirties or forties, you see that anyone’s life, young or old, can change quickly. Let’s say you’re a young father and get into a car accident on the way to work; you now could be unable to handle your affairs.

This is why setting up a power of attorney so a trusted friend, relative, or professional can make these decisions for you is wise, prudent, and smart.

Any power of attorney (or POA) gives one or more trusted individuals the power to act on your behalf as your attorney-in-fact when you can’t do so; for example, during an illness, accident, or mental trauma.

There are specific powers of attorney, and some only authorize limited powers, but others can cover a wide range of issues, such as financial matters, health decisions, real estate transactions, and more.

For example, let’s say you cannot manage your financial affairs; a financial power of attorney can appoint someone to manage these matters and ensure they’re handled following your precise wishes, plans, and goals.

However, there are limitations, and if you are killed, your power of attorney will no longer remain valid or legally binding. Upon your death, other legal issues will arise, and usually, a trustee or executor of your will now execute all aspects of the estate plans you previously created.

By consulting with a skilled, experienced power of attorney lawyer, you can explain all the details of your unique situation, and your lawyer will provide all the legal options that a professionally drafted, detailed power of attorney may offer to resolve your concerns and put your mind at ease.

If I Set Up a Power of Attorney, What Vital Factors Must I Consider?

Of course, the first thing to do is to obtain a thorough consultation with a qualified and knowledgeable power of attorney law team. Your meticulous and empathetic law team will help you determine precisely what you wish to accomplish with your POA and also provide the best type that suits your unique needs.

That said, one of the most critical decisions you must make is who will be assigned the responsibilities of being your attorney-in-fact; this job can be stressful and time-consuming and is not a good fit for everyone.

Then, before you decide who will manage your affairs, discuss this duty thoroughly with them and ensure they are able and willing to do the job.

Most relatives, etc., you speak to may wish to help but might be the wrong person to manage your affairs for the following common reasons;

• They are too busy to do the job – Most people have lots to do today, and taking on the additional tasks involved in adequately managing their affairs could be overwhelming.
• They are willing but unable to do the job—Being placed in this position, they must be experts at paying attention to details. If they are unhealthy or disorganized, they probably will not do an excellent job of managing your money, assets, etc.
• They are indifferent or don’t care – Managing your affairs is serious, and if your attorney-in-fact doesn’t care enough, they’re unlikely to notice poor care, abuse, financial issues, etc.

These are only a few reasons that choosing the right attorney is critical to this vital process.

Also, it is wise to have a backup agent if your primary agent becomes unavailable. Once a well-drafted and detailed POA is in place, how well it’s implemented becomes the most critical factor. This is why you may consider using your estate planning lawyer as your “attorney, in fact;” as a professional, they’ll know what must be done and ensure all your directives are carried out according to your precise specifications.

In California, What Are Some Of the Requirements For a POA?

Every state has different legal rules to draft and legally enforce your POA. So, to create a legally valid power of attorney in California, the document must meet some basic requirements, such as;

• You, as the principal, must be at least 18 years old.
• You must hold the mental capacity to fully understand your POA and its legal consequences and ramifications.
• Your agent, who will manage your POA, must also be 18 years old and have the mental capacity to understand and manage the duties demanded by the POA.
• Your POA must be appropriately executed, such as needing to be signed by a notary public, and usually have two competent witnesses
• If your POA contains real estate transactions that must be done, it must be notarized and possibly have other legal stipulations.
• If you are in a nursing home and have a medical POA, it needs to be witnessed by an ombudsman (or patient advocate) in addition to the notary and other directives.

Each POA differs, and so may the rules and legal requirements it must have; this is the most significant reason to have the guidance of a skilled and professional California power of attorney law team.

Are There Various Types of POAs, and How Do I Know Which to Use?

This is another vital factor you must get right so the POA you draft does exactly what you want it to do. For this reason, there are various options for a California power of attorney, such as;

• An advance health care directive – This is usually a classic medical POA that allows your agent to manage health care decisions on your behalf and a living will that outlines your wishes and preferences regarding medical treatment.
• A durable POA – This is one of the most valuable powers of attorney, as it remains effective even if you (as the principal) are incapacitated and unable to make your own decisions. However, it also must include specific legal terminology to be effective.
• Limited POA – This standard financial power of attorney gives your agent authority over particular duties for a limited time.
• General POA – Usually a financial power of attorney that allows your agent broad authority in managing your financial and business affairs.

Once again, every situation and the POA that must be used to manage it correctly differs. Therefore, the professional advice and guidance of an empathetic and thorough power of attorney lawyer is mandatory.

I Need Advice on Drafting a Power of Attorney; How Should I Proceed?

A power of attorney is a powerful and highly effective legal tool as long as it’s drafted to your precise specifications, allowing it to solve the issues you address and nothing more.

It also must be in place before you lose your ability to think or function adequately to manage your affairs. It also requires a person or professional you trust who will faithfully and dutifully carry out their responsibilities on your behalf.

The law firm of Cava & Faulkner has a long, successful, and empathetic history of drafting and creating powers of attorney that meet your specific needs and ensure that all your precise wishes are carried out. Call them today at 916-831-7565 for a free consultation on your particular needs and concerns. They will use their substantial knowledge of California POAs to make sure your family and affairs are cared for if you become incapacitated.

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.