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California Probate Estate Planning Trusts

A Beginner’s Guide to Smart and Safe Charitable Giving

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Introduction: Giving with Confidence

Giving to charity should be rewarding, not risky. This guide empowers you to donate with confidence, ensuring your generosity supports legitimate, effective organizations and is shielded from common scams. While the desire to help is commendable, a few simple checks are essential to protect your contribution and your personal information.

1. The 3-Step Vetting Process: Your Pre-Donation Shield

Before making any contribution, execute these three foundational steps to ensure your donation goes to a legitimate and effective cause.

1.1. Verify the Charity’s Official Status

A legitimate charity must be officially registered with government bodies. You must verify its status in two primary ways:

1. Check Registration: Charities that operate and solicit donations in California are required to register with the Secretary of State. This confirms the organization is legally authorized to ask for donations. You can verify an organization’s registration status using the search tool on the California Attorney General’s website (oag.ca.gov/charities), which also provides public filings like IRS forms.

2. Confirm Tax-Exempt Status: For your donation to be tax-deductible, the organization must have tax-exempt status from the IRS, such as a 501(c)(3) classification. This is the step that confirms your donation is tax-deductible. Verify an organization’s official status on the IRS website.

1.2. Assess the Charity’s Impact and Financials

You must understand how a charity uses its funds to advance its mission. Independent evaluation websites provide invaluable, third-party analysis:

  • GuideStar: Use this resource to assess a charity’s stated mission and goals.
  • Charity Navigator: A powerful tool for examining an organization’s financials to determine how much of its money goes toward administrative overhead—including fundraising costs and “thank you gifts” for donors—versus its actual mission-driven projects.

1.3. Consider the Organization’s Track Record

An established history is a strong indicator of a charity’s reliability and effectiveness. Be especially cautious when new organizations emerge after a natural disaster. Before donating, consider whether a brand-new entity truly has the infrastructure and experience to deliver resources effectively, as it will lack the proven history of a more established one.

Completing this proactive research not only helps you choose a worthy charity but also arms you to recognize the tactics used in donation scams.

2. Spotting the Red Flags: How to Avoid Common Scams

Knowing the common tactics scammers use is your best defense against fraudulent appeals.

2.1. Be Wary of High-Pressure Appeals

Phone solicitations are notoriously difficult to verify in the moment. If you are solicited by a telemarketer, take these protective steps:

  • Demand Verification: Ask the caller for the organization’s direct phone number. End the call, then verify that number independently through your own research.
  • Resist Pressure: Never feel pressured to donate immediately. A legitimate charity will welcome your support whenever you choose to give it.
  • Donate Securely: Refuse to share credit card information over the phone. A safer path is to research the charity and donate through a secure method on its official website.

2.2. Look for Deceptive Names and Communications

Scammers create fraudulent organizations that mimic legitimate charities. Watch for subtle signs of deception:

1. Using a name that is visually similar to a real charity (e.g., replacing the letter ‘l’ with the number ‘1’).

2. Using a logo that looks nearly identical to that of a well-known organization.

Additionally, be wary of fraudulent email receipts. Scrutinize them for details that seem “off”—does the letterhead look unprofessional, or if you paid by check, does the check number on the receipt align with your records?

2.3. Be Suspicious of Unusual Payment Requests

Legitimate charities do not ask for donations in certain forms. Be highly suspicious if a solicitor demands payment via:

  • Gift cards
  • Cryptocurrency

Beyond protecting your money from fraud, it is equally important to safeguard your personal identity.

3. Protecting Your Personal Information

Protecting your personal data is just as critical as protecting your financial information when you donate.

3.1. Never Share Your Social Security Number (SSN)

Never disclose your Social Security Number. Legitimate charities will not ask for it. A controversial 2016 IRS proposal that would have allowed charities to collect SSNs was withdrawn, reinforcing that this is not a standard or necessary practice.

3.2. Check the Privacy Policy

Before donating, review the charity’s privacy policy. The California Attorney General recommends this step to verify that the organization does not sell its donor information to other parties.

3.3. Protecting Vulnerable Donors

Trustees, family members, and agents under a power of attorney must be vigilant. Proactively review charitable solicitations received by vulnerable adults and discuss the significant risks of phone solicitations. This can prevent the unwitting disclosure of sensitive personal information or the approval of large, unintended donations.

To put this advice into action, use the following summary as a final checklist.

4. Quick Reference: Key Do’s and Don’ts of Donating

This table synthesizes the most important advice to help you make informed decisions.

✅ Smart Giving: What to Do❌ Red Flags: What to Avoid
Verify a charity’s status on government websites like oag.ca.gov and the IRS website.Giving in to high-pressure phone calls or requests for immediate donations.
Use third-party sites like Charity Navigator to assess a charity’s financials and impact.Donating via unusual methods like gift cards or cryptocurrency.
Consider an organization’s history and track record, especially for new charities.Trusting look-alike names or logos without verifying the organization’s official status.
Protect your personal data by checking the charity’s privacy policy before donating.Providing sensitive personal data like your SSN or donating without verifying the policy.

5. What to Do If You Suspect a Problem

If you believe you have been scammed or have identified fraudulent activity, take these immediate actions to report it.

1. If Scammed: Your first step is to contact your bank immediately to halt any fraudulent transactions and report the incident.

2. Report to the FTC: File a fraud complaint with the Federal Trade Commission (FTC), the nation’s primary consumer protection agency.

3. Report in California: The California Attorney General provides Form CT-9 to report charities you suspect are engaging in fraudulent conduct or failing to comply with state registration requirements. This form allows you to specify how a charity may be committing a wrong (such as wasting or diverting assets) and direct the Attorney General to individuals within the organization or others who may have more information.

## How California Probate and Trust Can Help

If you’re serving as an executor or trustee and need guidance on charitable bequests, asset distribution, or protecting the estate from liability, California Probate and Trust offers experienced legal counsel in probate law and trust administration.

Our Sacramento-based attorneys provide:

  • Free consultations to assess your specific situation
  • Clear guidance on fiduciary duties and charitable giving requirements
  • Protection from personal liability during estate administration

Schedule your free consultation today by visiting cpt.law or calling (866) 674-1130.

Source: Original content adapted from charitable giving guidance materials. For verification resources, visit the California Attorney General’s Registry of Charitable Trusts at oag.ca.gov/charities.

Categories
Estate Planning California Probate Trusts

Can I Be Disqualified as Executor Before I’m Even Appointed? What the Estate of Bodmann Case Means for You

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If you’ve been named as an executor in a loved one’s will, you might think your role begins once the court officially appoints you. But a recent California appellate decision proves that what you do before your appointment can disqualify you entirely—even if you were specifically chosen by the person who passed away.

Who This Article Is For

This guide is essential reading for:

  • Executors and personal representatives who have been named in a will but haven’t yet been appointed by the court
  • Family members navigating estate disputes after a loved one’s death
  • Anyone managing estate assets during the critical period between death and formal appointment

If you’re feeling overwhelmed by your legal duties—listing assets, paying debts, handling tax disputes—and want to avoid personal liability, this article will show you the exact pitfalls to avoid.

The Critical Mistake That Cost One Nominee Everything: Estate of Bodmann (2025)

In the 2025 case Estate of Bodmann, a California appellate court upheld a trial court’s decision to disqualify a nominated executor based entirely on his conduct before he was officially appointed. The nominee, Tom, was one of seven children named as co-executors in his father’s handwritten will. Despite being explicitly chosen by his father, Tom was barred from serving because of actions he took while waiting for court approval.

What Did Tom Do Wrong?

Tom’s disqualifying actions included:

  • Making “very specific demands” about how the family’s insurance business should be operated
  • Creating a unilateral “email policy” and giving detailed instructions to his stepmother, Heather, who was helping run the business
  • Publicly identifying himself as “CEO of the insurance business” without any legal authority
  • Behaving in ways that caused insurance carriers to refuse to work with him
  • Contributing to the business’s dramatic decline—annual revenue dropped from over $100,000 to approximately $25,000

Why the Court’s Decision Matters to You

Tom argued that he couldn’t be disqualified for mismanagement under California Probate Code § 8502 because that law only applies to executors who have already been appointed. The appellate court rejected this argument decisively.

The court pointed to a 1988 amendment to Probate Code § 8402, which made it clear: the same grounds that can be used to remove an appointed executor can also be used to disqualify a nominee before appointment. The court reasoned:

“…so too would it be wasteful to require a court to appoint a named executor who had already mismanaged an estate while acting on a belief that he had authority to manage it, simply because he had not yet been appointed and had thus not truly had authority.”

What You Must Know: You Have NO Legal Authority Before Appointment

The most dangerous misconception for nominated executors is believing that being named in a will gives them immediate authority. It doesn’t.

Critical Facts:

  • A nomination in a will is merely a proposal to the court—not a grant of power
  • You have no legal authority to act on behalf of the estate until the court formally appoints you
  • You cannot legally manage assets, direct employees or beneficiaries, access bank accounts, operate a business, or enter contracts for the estate
  • Authority is only granted when the court issues Letters of Administration or Letters Testamentary

How Can I Avoid Disqualification? Three Essential Guidelines

1. Adopt a “Preservation, Not Management” Mindset

Your role before appointment is to preserve estate assets, not manage them. This distinction is crucial.

Acceptable preservation activities include:

  • Securing physical property (like changing locks on a vacant house)
  • Collecting mail
  • Identifying bills that need to be paid (without paying them from estate funds)

Unacceptable management activities include:

  • Issuing directives to business employees
  • Attempting to access or control financial accounts
  • Selling assets
  • Making strategic business decisions

2. Communicate Cooperatively, Never Dictate

Tom’s confrontational emails were a major factor in his disqualification. The court specifically cited “serious frictions between Tom and Heather” as evidence he couldn’t administer the estate fairly.

Best practices for communication:

  • Adopt a tone of deference and respect—you are not yet in charge
  • Frame any ideas as “helpful suggestions” or questions for group discussion, never as “policies” or “demands”
  • Share information openly and collaboratively with all interested parties

3. Never Destroy Asset Value Through Your Actions

Courts will heavily scrutinize any nominee whose conduct damages estate assets. In Bodmann, the court drew a direct line between Tom’s antagonistic behavior and the insurance business’s 75% revenue decline. If your actions can be shown to have caused quantifiable financial loss, disqualification becomes highly likely.

What If My Family’s Estate Has a Business? Special Considerations

The Bodmann case involved a family insurance business, which created unique challenges. Dan Bodmann had clearly intended for his daughter Andrea to take over the business while continuing to employ his wife Heather. However, he died before formalizing this plan, leaving a power vacuum that Tom attempted to fill—with disastrous results.

If your loved one owned a business, proactive planning is critical:

  • Structure the business as an LLC or corporation rather than a sole proprietorship to provide a clear governance framework
  • Create detailed operating instructions for what happens immediately after death, including naming an interim manager
  • Establish a formal valuation mechanism to prevent disputes
  • Execute a binding buy-sell agreement or purchase option for the designated successor

The Problem with Multiple Co-Executors

Dan Bodmann’s holographic will named all seven children as co-executors—a structure the court implicitly recognized as “inherently unworkable”. This arrangement guaranteed conflict and administrative paralysis.

Better alternatives include:

  • Appointing a single trusted individual with the right temperament and skills
  • Naming a neutral party not entangled in immediate family dynamics
  • Nominating a professional private fiduciary whose impartiality and expertise can navigate complex or high-conflict estates

Real-World Impact: The Cost of Getting It Wrong

The Bodmann estate underwent an eleven-day trial just to determine who should serve as executor. This level of litigation represents:

  • Tens of thousands of dollars in legal fees drained from the estate
  • Years of delay in distributing assets to beneficiaries
  • Irreparable damage to family relationships
  • Substantial destruction of the primary estate asset (the business)

All of this could have been avoided with proper guidance during the critical post-death, pre-appointment period.

What Should I Do If I’ve Been Named as Executor?

The period between death and formal appointment is “fraught with legal risk and uncertainty”. The consequences of missteps are severe—you can lose your right to serve entirely, even if the person who died specifically wanted you in that role.

Your immediate action steps:

  • Consult with an experienced probate attorney before taking any actions related to the estate
  • Understand the precise boundaries of what you can and cannot do
  • Focus exclusively on preservation, not management
  • Communicate cooperatively with all beneficiaries and interested parties
  • Document everything, but take no unilateral actions

How California Probate and Trust Can Help You Navigate This Critical Period

At California Probate and Trust, our certified estate planning specialists understand the complex legal landscape that nominated executors must navigate. We’ve represented thousands of clients in Sacramento, Fair Oaks, and San Francisco, guiding them through probate administration and trust management with clarity and compassion.

Our probate law attorneys provide:

  • Immediate guidance for nominated executors on what you can and cannot do before appointment
  • Strategic counsel to avoid disqualification based on the latest case law
  • Expert representation in contested probate proceedings
  • Comprehensive estate planning to ensure your own estate doesn’t face these challenges

We offer free consultations to assess your specific situation and develop a clear action plan tailored to your needs and budget.

Protect Your Right to Serve—Schedule Your Free Consultation Today

Don’t let well-intentioned but legally problematic actions cost you the right to fulfill your loved one’s wishes. The Estate of Bodmann decisionmakes clear that courts will disqualify nominees who overstep their authority, damage estate assets, or foster conflict—even before formal appointment.

Contact California Probate and Trust now:

Your story and your family matter. Let our experienced probate attorneys help you navigate this critical period with confidence, protecting both your eligibility to serve and the estate you’ve been entrusted to manage.

Source: Analysis based on Estate of Bodmann (2025) appellate decision regarding pre-appointment executor disqualification under California Probate Code §§ 8402 and 8502.

 

Categories
Estate Planning Trusts

Revisiting SLATs in 2025: Expanding Opportunities and Evolving Uses

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If you’re a business owner or professional with significant assets, you need more than a basic estate plan. You need strategies that protect your business operations, shield your wealth from creditors, and ensure your family maintains access to resources—even if you become incapacitated or pass away. One increasingly versatile tool that addresses these concerns is the Spousal Lifetime Access Trust (SLAT).

As we move into 2026 with new tax legislation increasing the federal estate tax exemption to $15 million per person, the focus of SLAT planning is shifting from urgent estate tax reduction to broader wealth protection strategies. This evolution makes SLATs particularly relevant for business owners and professionals seeking asset protection and income tax planning.

What Is a Spousal Lifetime Access Trust (SLAT)?

A SLAT is an irrevocable trust where one spouse transfers assets for the benefit of the other spouse and potentially descendants. When properly structured, these assets are removed from your taxable estate and protected from creditors, while still allowing indirect access through distributions to your spouse.

Why Business Owners Should Consider SLATs in 2026

With the reduced urgency around estate tax planning due to higher exemptions, SLATs are evolving to serve three primary objectives for business owners and professionals:

  • Asset Protection: Shield business assets, investments, and personal wealth from potential creditors, lawsuits, or business liabilities
  • Income Tax Savings: Properly structured nongrantor SLATs can provide meaningful state income tax benefits, particularly for high-income professionals
  • Business Continuity: Ensure your family maintains access to resources that support business operations and personal needs if you become incapacitated

Three Types of SLATs: Which Is Right for Your Business?

1. Completed Gift SLAT: Traditional Estate Tax Planning

Best for: High-net-worth business owners exceeding the $15 million exemption threshold

In this structure, you transfer assets to an irrevocable trust that removes them from your taxable estate while shielding them from creditors. The trust is taxed as a grantor trust, meaning you pay income taxes on the trust’s earnings without it being treated as an additional gift, allowing assets to grow tax-free.

Real-world application: A successful professional with a $20 million estate transfers $5 million in appreciated business interests to a SLAT, removing future appreciation from estate taxation while maintaining indirect access through spousal distributions.

2. Incomplete Gift SLAT: Maximum Asset Protection

Best for: Business owners prioritizing creditor protection over estate tax savings

With upcoming tax changes making estate taxes less relevant for most families, incomplete gift SLATs are gaining popularity for asset protection planning. You transfer assets to the trust but retain certain powers (such as veto rights over distributions), making the gift “incomplete” for tax purposes while still providing robust asset protection under state law.

Real-world application: A physician facing potential malpractice exposure transfers investment accounts to an incomplete gift SLAT, protecting those assets while maintaining control and keeping them in the estate for step-up in basis benefits.

3. Completed Gift Nongrantor SLAT: Income Tax Planning Strategy

Best for: High-income professionals in high-tax states seeking income tax savings

This structure is established in a jurisdiction without state income tax and is intentionally designed to avoid grantor trust status. Distributions to your spouse require consent of an adverse party, and the trust must avoid creating a nexus with high-tax states like California.

Real-world application: A California-based business owner generating significant passive income establishes a nongrantor SLAT in Nevada, potentially saving substantial state income taxes annually while still maintaining family access to trust assets.

Critical Risks Every Business Owner Must Understand

The Reciprocal Trust Doctrine

If spouses create substantially similar SLATs for each other, the IRS may “uncross” them and treat each spouse as retaining ownership, defeating the estate tax benefits. Solution: Ensure each spouse’s SLAT has distinct terms and beneficiaries.

Implied Agreement Concerns

If you transfer most of your liquid wealth to a SLAT without retaining sufficient assets for personal expenses, the IRS may argue an implied agreement exists that you expected to benefit from the trust, potentially including assets back in your estate under IRC Section 2036(a).

No Step-Up in Basis

Assets in a completed gift SLAT don’t receive a step-up in basis at death, potentially creating capital gains tax liability for beneficiaries. This can be mitigated by including a power of substitution in the trust document.

Divorce Considerations

Without specific provisions, you could lose all access to trust assets after divorce while remaining liable for income taxes if structured as a grantor trust. Business owners should address this scenario explicitly in trust documents.

How SLATs Complement Your Durable Power of Attorney

While a Durable Power of Attorney (DPOA) ensures someone can manage your business operations and financial affairs if you become incapacitated, a SLAT provides an additional layer of protection by moving assets into a protected structure that continues operating independently of your capacity. Together, these tools create comprehensive business continuity and wealth protection.

Is a SLAT Right for Your Business and Family?

SLATs remain a flexible and powerful tool when thoughtfully structured for your specific goals. The key is understanding which type of SLAT aligns with your priorities:

  • If estate tax reduction is still your primary concern: Completed Gift SLAT
  • If asset protection from creditors is your focus: Incomplete Gift SLAT
  • If income tax savings matter most: Nongrantor Completed Gift SLAT

What remains essential is thoughtful design, precise implementation, and ongoing administration. Modern SLATs demand not only technical accuracy but also strategic foresight tailored to your unique business and family situation.

Protect Your Business Legacy with California Probate and Trust

At California Probate and Trust, PC, our certified estate planning specialists understand the unique challenges facing business owners and professionals. We’ve helped thousands of clients from our Sacramento, Fair Oaks, and San Francisco offices develop comprehensive asset protection strategies that safeguard their businesses and families.

Schedule your free consultation today to discuss whether a SLAT or other asset protection structure is right for your situation. Our experienced attorneys will take the time to understand your business, family dynamics, and financial goals to create a personalized plan that protects what you’ve built.

Call (866) 674-1130 or visit cpt.law/contact-us to claim your free estate planning consultation.

Source: Revisiting SLATs in 2025: Expanding Opportunities and Evolving Uses by Christina M. Chan, CEB Articles

Categories
Long Term Care Planning California Probate News

How the New Medi-Cal Asset Transfer Rules Impact Your Long-Term Care Planning in 2026

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If you or a loved one may need nursing home care or assisted living in California, understanding the new Medi-Cal asset transfer rules is critical to protecting your family’s financial security. The California Department of Health Care Services (DHCS) recently issued crucial guidance that changes how asset transfers are evaluated when applying for Medi-Cal coverage for long-term care.

Who This Impacts

This guidance is essential for:

  • Seniors planning for potential nursing home or assisted living care
  • Adult children helping parents navigate long-term care costs
  • Anyone who transferred assets between 2023-2025 and may need Medi-Cal coverage
  • Families concerned about preserving inheritance while qualifying for benefits

What Changed: The Return of Asset Limits

On January 1, 2026, Medi-Cal reinstated asset limits for long-term care eligibility after a two-year pause. According to All-County Welfare Directors Letter 25-18(published October 9, 2025), DHCS will now review asset transfers using a 30-month lookback period from your application date.

The Key Rule You Need to Know

Here’s what makes this guidance unique: transfers made between January 1, 2024 and December 31, 2025 are NOT disqualifying, even though they fall within the lookback period. This creates a significant planning opportunity that many families don’t realize exists.

How Asset Transfer Penalties Work Now

The rules vary depending on when you apply for Medi-Cal:

Applications from January 2025 through January 2026

  • DHCS reviews transfers made before January 1, 2024
  • The review period decreases each month
  • Example: A January 2026 application only looks back 6 months (July-December 2023)

Applications from February 2026 through June 2026

  • DHCS reviews two periods: pre-2024 transfers AND post-2025 transfers
  • Example: A May 2026 application reviews November-December 2023 and January-April 2026

Applications from July 2026 onward

  • The review period for post-2025 transfers gradually increases
  • Example: A July 2026 application reviews January-June 2026 (6 months)
  • Example: A January 2027 application reviews all of 2026 (12 months)

Real-World Planning Questions This Answers

“My mother gave money to her grandchildren in 2024. Will this affect her Medi-Cal eligibility?”

No. Gifts made during 2024-2025 are protected under this guidance.

“I’m helping my father apply for Medi-Cal in March 2026. What transfers will be reviewed?”

DHCS will review transfers from September-December 2023 and January-February 2026.

“Can I still do estate planning if I might need nursing home care soon?”

Yes, but timing matters. The 30-month lookback periodmeans strategic planning should happen well before you anticipate needing care.

Why This Matters for Your Family’s Legacy

Without proper planning, long-term care costs can quickly deplete life savings meant for your spouse or children. California nursing homes average $8,000-$12,000 per month, and most families exhaust their resources within two years. Understanding these transfer rules helps you:

  • Protect assets for your spouse’s financial security
  • Preserve inheritance for children and grandchildren
  • Avoid penalties that delay Medi-Cal coverage when you need it most
  • Make informed decisions about gifting and estate transfers

The Reference Chart You Need

DHCS included a detailed reference chart in All County Welfare Director’s Letter 25-18that shows exactly which months will be reviewed based on your application date. This chart is an essential tool for anyone planning long-term care strategies.

Expert Guidance Makes the Difference

The intersection of Medi-Cal eligibility, asset protection, and estate planning requires specialized knowledge. At California Probate and Trust, our certified estate planning specialists have helped thousands of California families navigate these complex rules while protecting what they’ve spent a lifetime building.

We understand that planning for long-term care means confronting difficult realities about aging and health. Our compassionate approach provides clarity during uncertain times, helping you make informed decisions that protect both your care needs and your family’s financial future.

Take Action Now

The new Medi-Cal asset transfer rules create both opportunities and risks. Whether you’re planning ahead or facing an immediate need for long-term care, professional guidance can mean the difference between preserving your legacy and losing it to care costs.

California Probate and Trust offers a free one-hour consultation to review your situation and develop a personalized strategy. Our team will help you understand:

  • How the lookback period applies to your specific timeline
  • Which assets are protected and which are vulnerable
  • Strategies to preserve your estate while ensuring care coverage
  • How to coordinate Medi-Cal planning with your overall estate plan

Schedule Your Free Consultation

Don’t let confusion about Medi-Cal rules put your family’s financial security at risk. Contact California Probate and Trust today at (866) 674-1130 or visit cpt.law/contact-us to schedule your free consultation with an experienced estate planning attorney.

Source: California Department of Health Care Services, All-County Welfare Directors Letter 25-18, October 9, 2025

Categories
Estate Planning Trusts

What the Estate of Galli Case Teaches About Intrafamily Loans

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Understanding Your Legal Responsibilities When Family Loans Become Estate Issues

If you’ve been named as an executor or personal representative in a will, you may face unexpected challenges when dealing with intrafamily loans. A recent Tax Court case, Estate of Galli v. Commissioner, provides critical guidance on how to avoid personal liability and tax disputes when administering estates that include loans between family members.

Who This Guide Is For

This article is specifically designed for:

  • Executors and personal representatives who are managing estates with intrafamily loan arrangements
  • Family members who have made or received loans from relatives and want to protect their estate planning
  • Anyone concerned about whether family financial transfers will be treated as loans or gifts by the IRS

The Problem: When Are Family Loans Actually Gifts?

As an executor, one of your most challenging responsibilities is determining whether money transferred between family members constitutes a legitimate loan or a gift. This distinction matters because:

  • Gifts may trigger gift tax obligations and reporting requirements
  • Mischaracterized loans can lead to estate valuation disputes with the IRS
  • Executors can face personal liability for incorrect tax treatment

The IRS presumes all intrafamily transfers are gifts unless you can prove otherwise. This presumption puts the burden of proof squarely on executors and families to demonstrate that a bona fide loan existed.

Real-World Example: The Estate of Galli Case

In the Estate of Galli case, Barbara Galli lent $2.3 million to her son Stephen. When Barbara died, the IRS challenged whether this was truly a loan or a disguised gift. The Tax Court ultimately ruled in favor of the estate, but only because the family had meticulously documented the transaction.

What the Galli family did right:

  • Created a formal written promissory note with clear terms
  • Charged interest at the applicable federal rate (1.01%)
  • Established a fixed 9-year repayment term
  • Stephen made annual interest payments in 2014, 2015, and 2016
  • Barbara reported the interest as taxable income on her tax returns

Even with this documentation, the IRS still challenged the loan’s legitimacy, arguing it was unsecured and lacked commercial comparability. However, the court found that charging interest at the AFR and maintaining consistent payment and reporting practices were sufficient to establish a bona fide debtor-creditor relationship.

Contrasting Case: When Family Loans Fail IRS Scrutiny

The Estate of Bolles case demonstrates what happens when intrafamily loans lack proper documentation. Mary made numerous advances to her son Peter, who was experiencing financial distress. The court ruled these were gifts, not loans, because:

  • No formal promissory notes existed
  • No collateral secured the advances
  • Interest and principal payments were inconsistent
  • Peter lacked the financial capacity to repay
  • No meaningful enforcement of repayment occurred

The absence of these formalities, combined with Peter’s insolvency, led the court to conclude the transfers were gifts.

How Can Executors Determine If a Family Transfer Is a Loan?

Courts examine multiple factors when determining whether intrafamily transfers are loans or gifts. As an executor, you should evaluate whether:

  • A written promissory note or evidence of indebtedness exists
  • Interest was charged on the loan
  • Security or collateral was provided
  • A fixed maturity date was established
  • Demands for repayment were made
  • The borrower had the ability to repay
  • Actual repayments were made
  • Records reflect the transaction as a loan (not a gift)
  • Federal tax reporting treated the arrangement as a loan

No single factor is determinative—courts look at the totality of circumstances. However, documentation and consistent conduct aligned with loan treatment are critical.

What Are the Key Lessons for Executors and Families?

Both the Galli and Bolles cases provide essential guidance for protecting estates from IRS challenges:

1. Documentation is absolutely critical

Written loan agreements with clear terms strongly support loan treatment. Maintain accurate records showing the loan as an asset of the lender and a liability of the borrower to demonstrate intent.

2. Actions must reflect intent

Regular payments and enforcement of repayment obligations help convey the parties’ intent to create a legally enforceable debt. Sporadic or missed payments undermine loan characterization.

3. Borrower insolvency is a significant red flag

A loan is difficult to sustain if repayment was unrealistic from the beginning. If the borrower clearly cannot repay, the IRS will likely treat the transfer as a gift.

4. Consistent tax reporting strengthens your position

Regular interest payments and reporting such payments as income both support the transaction as a loan. Inconsistent reporting raises red flags.

How to Protect Your Estate from IRS Challenges

Intrafamily loans must be structured and administered to resemble arm’s-length commercial transactions. As an executor or someone creating an estate plan, you should:

  • Work with experienced estate planning attorneys to draft proper loan documentation
  • Ensure interest rates meet or exceed the applicable federal rate
  • Establish realistic repayment terms based on the borrower’s financial capacity
  • Maintain detailed records of all payments and communications
  • Report interest income consistently on tax returns
  • Consider securing loans with collateral when possible

The importance of careful planning, proper documentation, and compliance with loan terms cannot be overstated when seeking favorable tax treatment.

Get Expert Guidance for Probate and Trust Administration

If you’ve been named as an executor or personal representative and are facing questions about intrafamily loans, estate valuation, or potential tax disputes, you don’t have to navigate these complex issues alone.

California Probate and Trust, PC specializes in helping executors fulfill their legal duties while avoiding personal liability. Our experienced probate attorneys understand the nuances of cases like Estate of Galli and can help you:

  • Evaluate whether family financial transfers qualify as loans or gifts
  • Prepare proper documentation to support estate valuations
  • Navigate IRS challenges and estate tax disputes
  • Protect yourself from personal liability as an executor
  • Ensure compliance with California probate law requirements

Schedule your free consultation today by calling (866) 674-1130 or visiting cpt.law/contact-us. Our compassionate team will walk you through your responsibilities and develop a strategy to protect both the estate and your interests as executor.

Source: Original content based on “Holiday Generosity or Enforceable Loan? Intrafamily Transfers in Light of Estate of Galli” published January 5, 2026. Legal analysis derived from Estate of Galli v. Commissioner (T.C. No. 7003-20 and 7005-20) and Estate of Bolles (T.C. Memo 2020-71, affirmed, (9th Cir. 2024) No. 22-70192).

Categories
Estate Planning Trusts

Is Your Estate Disaster-Ready? A Critical Guide for Business Owners and Professionals

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For business owners and professionals who have built substantial wealth through property ownership, investments, and business operations, estate planning goes beyond simply having documents in place. As recent disasters—from Hurricane Katrina’s 20-year legacyto the devastating Los Angeles wildfires—have demonstrated, the estates you’ve worked to build can be compromised or lost entirely without proper disaster preparedness integrated into your estate plan.

This comprehensive guide addresses critical questions: How can you protect your business operations if you become incapacitated? Is your property adequately insured to rebuild after a catastrophe? Will your trust and power of attorney documents function properly when disaster strikes?

Why Business Owners Need Disaster-Ready Estate Plans

Business owners and professionals face unique vulnerabilities when disaster strikes. Unlike traditional employees, your income, investments, and family wealth are often tied directly to property assets and business operations that can be devastated by catastrophic events. Without proper planning, a single disaster can:

  • Halt business operations indefinitely if you’re incapacitated and lack a proper Durable Power of Attorney (DPOA)
  • Destroy generational wealth if property is underinsured
  • Create administrative nightmares if trusts aren’t properly named on insurance policies
  • Result in permanent loss of critical business and estate documents

The Hidden Danger: Is Your Property Underinsured?

One of the most overlooked risks in estate planning is property underinsurance. As housing prices and reconstruction costs rise, many homeowners discover too late that their insurance coverage falls dramatically short of actual replacement costs.

What business owners need to know:

  • Insurance replacement cost estimates often lag behind actual rebuilding costs. Annual letters from insurers stating replacement cost coverage may not reflect current construction expenses in your market.
  • Mortgage-free properties may lack adequate coverage. Many families who’ve paid off mortgages have reduced or eliminated homeowner’s insurance, exposing substantial assets to total loss.
  • Standard policies may exclude catastrophic events. Depending on your location, floods and fires may require separate coverage that your current policy doesn’t include.

California-specific solutions for high-risk areas:

  • The California Department of Insurance provides assessment tools to evaluate whether supplemental flood insurance is appropriate for your property
  • The California FAIR Plan offers insurance options for homeowners in high fire-risk areas where traditional insurers have declined coverage
  • Difference in Conditions (DIC) policies can supplement FAIR Plan coverage to include water damage, theft, and liability protection—creating comprehensive coverage comparable to traditional policies

Critical Trust Administration Issue: Is Your Trust Properly Named on Insurance Policies?

For business owners who have transferred property into trusts for estate planning purposes, a critical—and often overlooked—issue can create devastating delays and complications during disasters: failing to properly name the trust on homeowner’s insurance policies.

The problem: When a trust is not listed as a named or additional insured on a homeowner’s policy, insurance companies will issue claim checks directly to the settlor/homeowner rather than the trust. This creates multiple problems:

  • If the homeowner is hospitalized or incapacitated, they may be unable to cash checks or coordinate repairs
  • If the homeowner dies, trustees must navigate complex processes (Probate Code section 13100 Affidavit or Heggstad petition) to get checks reissued, causing significant delays
  • Delays in accessing insurance proceeds can allow initial damage to worsen—turning a water heater leak into extensive mold damage
  • Insurance companies may deny coverage entirely if they weren’t notified about the property’s transfer to a trust

Best practice for business owners: When you record a trust transfer deed, immediately update your homeowner’s insurance policy to list the trust as either a named insured or additional insured, and notify your mortgage holder.

Potential complication: Some mortgage holders may mistakenly treat a trust transfer as a sale and attempt to invoke due-on-sale clauses. However, you’re protected under the Garn-St. Germain Act, which specifically allows transfers to revocable trusts without triggering such clauses.

The Durable Power of Attorney: Your Business Continuity Safeguard

For business owners and professionals, a Durable Power of Attorney (DPOA) is not just an estate planning document—it’s a critical business continuity tool. If you become incapacitated due to injury, illness, or disaster-related circumstances, a properly drafted DPOA ensures that:

  • Someone you trust can manage business operations, sign contracts, and make investment decisions
  • Your agent can coordinate insurance claims and property repairs on your behalf
  • Business accounts remain accessible and operational
  • Time-sensitive business decisions can proceed without court intervention

Without a DPOA, your family or business partners may face costly and time-consuming conservatorship proceedings to gain authority to act on your behalf—potentially crippling business operations during a critical period.

Document Backup: Protecting Your Estate Planning Infrastructure

Physical disasters can destroy the very documents that protect your estate and enable your plans to function. Business owners should maintain secure cloud backups of:

  • All estate planning documents (trusts, wills, powers of attorney, advance healthcare directives)
  • Historical insurance policy documentation—particularly important if you’ve changed insurers
  • Property deeds and title documents
  • Business formation documents and operating agreements
  • Key contracts and financial records

If physical records are destroyed in a disaster, digital backups ensure you can still produce necessary documentation to insurance companies, courts, and other parties.

Comprehensive Disaster Preparedness Resources

For additional steps to determine if your estate is disaster-ready and access planning resources, visit https://www.ready.gov/september.

Take Action: Schedule Your Free Estate Planning Consultation

Don’t wait until disaster strikes to discover gaps in your estate plan. California Probate and Trust specializes in comprehensive estate planning for business owners and professionals, including:

  • Durable Power of Attorney tailored to business continuity needs
  • Trust administration review to ensure proper insurance policy naming
  • Asset protection structures that safeguard your wealth across multiple scenarios
  • Comprehensive estate plans that account for catastrophic risk

We offer FREE one-hour consultations to assess your current situation and identify vulnerabilities in your disaster preparedness and estate planning. Our experienced attorneys serve clients throughout California from offices in Fair Oaks, Sacramento, and San Francisco.

Contact California Probate and Trust today at (866) 674-1130 or visit cpt.law to schedule your free consultation.

Protect what you’ve built. Secure your family’s future. Ensure your business continuity—even in the face of disaster.

Source: Original article published September 18, 2025 by Jennifer E. Dean. © The Regents of the University of California, 2026.

Categories
Estate Planning California Probate

California Probate Law Changes 2026: What Executors and Personal Representatives Must Know About New Notice Requirements

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If you’ve been named as an executor or personal representative in California, you’re facing new legal obligations starting January 1, 2026. Understanding these changes is critical to avoid personal liability and fulfill your fiduciary duties properly.

What Changed in California Probate Law?

Two significant pieces of legislation—AB 1521(the Judiciary Omnibus Bill) and AB 565—have fundamentally altered probate notice requirements in California. These changes took effect on January 1, 2026, and apply to all estates with letters issued on or after that date.

Critical New Requirement: Notice to Department of Child Support Services

As a personal representative, you now have a fourth mandatory notice requirement under California Probate Code section 9202. Here’s what you need to know:

  • Who must receive notice: The Director of the Department of Child Support Services (DCSS)
  • When it applies: If you know or have reason to believe the deceased had an existing child support obligation before death
  • Time limit for claims: DCSS has four months from the date of notice to file claims against the estate
  • Significance: This is the first major addition to these notice provisions since 2007

Important distinction: Unlike some other notice requirements, this provision applies only to child support obligations of the decedent themselves—not their heirs or beneficiaries.

What Are the Other Required Notices?

In addition to the new DCSS requirement, personal representatives must continue providing notice to:

  1. Department of Health Care Services
  2. Director of the Victim Compensation Board
  3. Franchise Tax Board

All four notices must be served upon issuance of letters to a personal representative.

Streamlined Trust and Estate Administration: Changes to Probate Code Section 15804

AB 565 repealed and recast Probate Code section 15804, creating new efficiencies for executors and trustees dealing with contingent beneficiaries.

What Does This Mean for You as an Executor?

Previously, dealing with contingent interests often required appointing a guardian ad litem (GAL), adding complexity and delay to estate proceedings. The new law addresses this by:

  • Allowing class representation: Living members of certain beneficiary classes can now represent and bind other potential class members
  • Reducing procedural hurdles: This should eliminate many GAL appointments that were previously necessary
  • Providing clear authority: The statute specifies who can and cannot bind class members

Who Can Represent and Bind Beneficiaries?

The revised statute clarifies representation authority in common fiduciary relationships:

  • Parents may represent minor children and subsequently born children (if no GAL appointed)
  • Conservators may represent conservatees
  • Guardians of the estate may represent wards
  • Agents with proper authority may represent principals
  • Trustees may represent trust beneficiaries
  • Personal representatives may represent estates
  • Persons with substantially identical interests may represent other unrepresented persons

Important Limitations on Representation

A class member cannot be bound when:

  • The class member and representative have a conflict of interest regarding the matter
  • A settlor is attempting modification or termination of an irrevocable trust

How Do These Changes Protect You From Personal Liability?

AB 565 includes important protections for fiduciaries:

  • Consent mechanism: Creates a process for parties to consent to representation
  • Limited liability: Reduces a fiduciary’s liability when relying on representation made under the new section
  • Clear procedures: Provides specific guidance on proper representation, reducing the risk of procedural errors

What Should You Do Now?

If you’re serving as an executor or personal representative in California:

  1. Update your procedures immediately to include the new DCSS notice requirement for applicable estates
  2. Review contingent beneficiary situations to determine whether the new representation rules apply to your case
  3. Consult with experienced probate counsel to ensure you’re meeting all current legal obligations
  4. Document your notice efforts carefully to protect yourself from future liability claims

Remember: The four-month deadline for DCSS claims begins when you provide proper notice. Missing this notice requirement could extend your exposure to claims indefinitely.

Get Expert Guidance on California Probate Administration

Navigating California’s evolving probate laws requires specialized knowledge and attention to detail. At California Probate & Trust, our certified estate planning specialists help executors and personal representatives fulfill their legal duties while avoiding costly mistakes and personal liability.

Our probate administration services include:

  • Complete guidance through all required notice procedures
  • Asset identification and inventory preparation
  • Creditor claim management and debt resolution
  • Tax compliance and dispute resolution
  • Distribution planning and implementation

We’ve represented thousands of clients across California from our offices in Fair Oaks, Sacramento, and San Francisco. Our compassionate approach ensures you understand each step of the process while we handle the complex legal requirements.

Schedule your FREE consultation today: Contact California Probate & Trust or call (866) 674-1130 to discuss your specific situation with an experienced probate attorney.

Don’t let new probate requirements put you at risk. Get the expert support you need to fulfill your duties confidently and protect yourself from personal liability.

Source: Original analysis based on AB 1521 (Judiciary Omnibus Bill) and AB 565, effective January 1, 2026. For complete legislative text, visit the California Legislative Information website.

Categories
California Probate Estate Planning News

How California Estate Planning Attorneys Navigate Complex Ethical Rules: A Guide for Seniors and Families

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For seniors planning their legacy, families managing estate transitions, and anyone seeking trustworthy legal guidance in California

When you’re preparing advance healthcare directives, creating a living will, or establishing a comprehensive estate plan, understanding the ethical standards your attorney must follow can give you confidence that your wishes will be protected. California estate planning attorneys operate under some of the most complex ethical rules in the nation—rules designed specifically to safeguard your interests during one of life’s most sensitive planning processes.

Why Ethical Standards Matter for Your Estate Plan

Estate planning is uniquely personal. Unlike other legal services, it involves long-term relationships, multiple family members, and decisions that will impact your loved ones for generations. The ethical framework governing California estate planning attorneys exists to ensure that:

  • Your confidential information remains protected
  • No conflicts of interest compromise your plan
  • Your attorney has the expertise across multiple legal disciplines—from tax law to elder care
  • Your wishes are documented and executed competently

The Foundation: California’s Unique Ethical Rules

California attorneys follow rules that are distinct from other states. The California Rules of Professional Conduct, combined with multiple state codes including the Business & Professions Code, Probate Code, and Evidence Code, create a comprehensive framework. These rules were most recently revised in November 2018 to align more closely with national standards while maintaining California’s distinctive protections.

What This Means for Seniors and Families: Key Protections

1. Your Confidentiality Is Nearly Absolute

California law requires attorneys to “maintain inviolate the confidence, and at every peril to himself or herself to preserve the secrets, of his or her client”. This duty is broader than you might expect—it covers not just what you say, but all information related to your representation, including observations about your health or capacity.

Real-world scenario: If you’re working with an attorney on advance healthcare directives and discuss family dynamics or health concerns, that information cannot be shared with other family members without your explicit written permission.

2. Conflicts of Interest Are Carefully Managed

Estate planning often involves multiple family members—spouses creating joint plans, parents and adult children, or business partners. California rules require attorneys to obtain informed written consent when representing multiple clients to avoid “hidden” conflicts that can arise over time.

Common questions answered:

  • Can one attorney represent both spouses? Yes, through joint representation, but only with full disclosure that no information will be confidential between spouses regarding the estate plan.
  • What if my attorney previously represented another family member? This creates a potential conflict that must be disclosed and resolved with written consent.
  • Can my attorney also serve as my executor or trustee? While permitted, this creates significant conflict-of-interest challenges and restrictions on dual compensation.

3. Special Protections for Clients with Diminished Capacity

For seniors concerned about cognitive changes or family members worried about undue influence, California has specific guidance. Attorneys must balance respecting your autonomy with protecting you from potential harm.

California ethics opinions require attorneys to conduct extended private interviews and maintain detailed records when capacity questions arise. However, California prioritizes confidentiality—attorneys generally cannot initiate protective actions like conservatorship proceedings without your consent.

4. Your Attorney Cannot Be a Beneficiary

Strict rules prevent attorneys from drafting documents that give themselves or their relatives substantial gifts from your estate. Any such gift is automatically void unless you consult an independent attorney who provides a Certificate of Independent Review. This protects you from potential exploitation.

Competency Requirements: Why Multidisciplinary Knowledge Matters

Effective estate planning for seniors requires expertise across multiple areas:

  • Probate and trust law
  • Federal and state taxation
  • Elder law and government assistance programs (crucial for Medi-Cal planning)
  • Marital property laws
  • Technology considerations, including cryptocurrency, NFTs, and secure digital communication

California requires attorneys to maintain this competency or associate with specialists when needed. This ensures your plan addresses all relevant considerations, from tax efficiency to healthcare decision-making.

New Reporting Requirements: Enhanced Accountability

As of August 1, 2023, California attorneys must report credible evidence of another lawyer’s misconduct. For you, this means increased accountability—if your attorney discovers issues with a previous attorney’s work on your estate plan, there are now formal mechanisms for addressing these problems.

Consequences That Protect You

When attorneys violate these ethical rules, they face serious consequences:

  • State Bar discipline, ranging from probation to disbarment
  • Malpractice liability, with courts recognizing that ethical violations demonstrate breach of the attorney’s duty of care
  • Invalidation of estate plans—in extreme cases, conflicts of interest can cause wills or trusts to be set aside entirely

What to Look for in Your Estate Planning Attorney

Based on these ethical requirements, here’s how to identify an attorney who will protect your interests:

Essential Documentation

  • Detailed engagement letter that clearly identifies you as the client, defines the scope of representation, and explains any waivers regarding confidentiality or conflicts
  • Written fee agreement as required by California law for services exceeding $1,000
  • Clear communication about what services are included (and excluded) from your estate plan

Questions to Ask

  • “How do you handle confidentiality when multiple family members are involved?”
  • “What areas of law do you practice, and do you consult specialists for tax or elder law issues?”
  • “How do you stay current on changes in estate planning law and technology?”
  • “What is your policy on serving as executor or trustee for clients?”

Why California Probate and Trust Emphasizes Ethical Excellence

At California Probate and Trust, our approach is built on these ethical foundations. With thousands of clients served across our Fair Oaks, Sacramento, and San Francisco offices, we understand that seniors and families need more than technical expertise—they need attorneys who prioritize transparency, avoid conflicts, and maintain the highest standards of confidentiality.

Our free consultations allow us to clearly define our relationship with you from the start, ensuring you understand who we represent, what we’ll do, and how your information will be protected. This meticulous approach to documentation and client communication isn’t just good practice—it’s the ethical requirement that protects your legacy.

Taking the Next Step

Understanding the ethical framework governing California estate planning attorneys empowers you to make informed decisions about your legacy. Whether you’re preparing advance healthcare directives, establishing a living trust, or creating a comprehensive estate plan, these rules ensure your attorney works solely in your interest.

When you’re ready to discuss your estate planning needs, look for attorneys who demonstrate these ethical commitments through clear documentation, transparent communication, and genuine expertise across the multidisciplinary areas that impact your plan.

Source: Ethical Considerations in California Estate Planning – A comprehensive analysis of the California Rules of Professional Conduct, Business & Professions Code, and Probate Code as they apply to estate planning practice.

Schedule your free consultation with experienced California estate planning attorneys who understand both the legal requirements and the ethical obligations that protect your family’s future.

Categories
California Probate Estate Planning News

California’s New Guardianship Law: What Parents Need to Know About AB 495

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If you’re a parent in California who worries about what would happen to your children if you were suddenly unable to care for them—due to military deployment, serious illness, or an immigration issue—a new law offers important protections you should understand.

What is California Assembly Bill 495?

Effective January 1, 2026, California Assembly Bill 495 expands your options for protecting your children through joint parent-nonparent guardianships. This law amends Probate Code sections 1502 and 2105 to allow custodial parents to share legal guardianship with a trusted person they nominate when they become “temporarily unavailable.”

How Does This Help Parents with Minor Children?

Before this law, joint guardianships were only available to terminally ill parents. Now, if you face temporary unavailability due to circumstances like military service, incarceration, serious medical conditions, or immigration-related issues, you can designate a guardian while retaining your parental rights and authority.

This matters because nearly half of all children in California have at least one immigrant parent. When a parent is detained, deported, or otherwise unavailable, children can lose access to school enrollment, medical care, and stable housing simply because their emergency caregiver lacks legal authority.

What Problems Does AB 495 Solve?

Under the previous system, families facing temporary crises often had to make impossible choices:

  • Placing children into foster care to ensure they receive proper care
  • Giving up parental rights entirely through complicated permanent guardianship processes
  • Leaving children with caregivers who lack legal authority to make critical decisions

The new law eliminates these painful dilemmas by creating a middle ground that keeps families together while providing legal protections.

How Can I Set Up a Joint Guardianship Under AB 495?

Here’s what you need to know about the process:

1. Who Qualifies?

You must be a custodial parent—meaning you have sole legal and physical custody, or you’re the parent with whom the child primarily resides if no custody order exists.

2. What Forms Do I Need?

  • Execute a Nomination of Guardian (Judicial Council Form GC-211)
  • File a Petition for Appointment of Guardian of Minor (Judicial Council Form GC-210)

3. What About the Other Parent?

If there’s a non-custodial parent, their consent should be obtained. A court cannot approve the joint guardianship over their objection unless it finds that custody with that parent would harm the child.

What Are the Key Benefits of This Law?

Enhanced Confidentiality

All court records, petitions, orders, and documents related to these guardianships are confidential and cannot be disclosed to law enforcement or immigration agencies without a specific court order. This protection is critical for families navigating immigration concerns.

Shared Decision-Making Authority

Both you and your nominated guardian must agree before exercising any legal power over your child. This ensures you retain authority over major decisions even when temporarily unavailable, and can prevent actions you don’t approve of.

Easy Termination Process

When your period of unavailability ends, you can petition to terminate the guardianship, and it’s legally presumed that termination is in your child’s best interest. This streamlined process makes it simple to resume full custody.

Real-World Example: Military Deployment

Consider a single parent facing combat deployment. Under the old law, they could nominate a guardian, but once appointed, that guardian had full authority—the deployed parent couldn’t prevent decisions they disagreed with without a court order.

Under AB 495, the deployed parent remains a joint guardian. They retain authority over key decisions about their child’s education, healthcare, and upbringing. When they return from deployment, they can quickly terminate the guardianship and resume normal parenting.

What Are the Concerns About This Law?

Some organizations, including the California Family Council, have raised concerns that the law could grant authority to unvetted adults and potentially open doors to abuse. These concerns underscore the importance of carefully selecting your nominated guardian and working with experienced legal counsel to ensure proper safeguards.

Questions That Remain Unanswered

One significant question is whether courts will allow joint appointments when the condition creating unavailability is imminent but hasn’t yet occurred. As courts interpret this new law, clarity on this and other practical questions will emerge.

How Estate Planning Attorneys Can Help

AB 495 creates valuable new planning tools for parents who want to protect their children before a crisis occurs. An experienced estate planning attorney can help you:

  • Determine if joint guardianship is right for your family situation
  • Select an appropriate guardian and prepare backup options
  • Complete the necessary legal forms correctly
  • Understand how this fits into your broader estate plan, including wills and trusts
  • Ensure your guardianship provisions align with your custody arrangements

California Probate and Trust has helped thousands of clients from offices in Fair Oaks, Sacramento, and San Francisco protect what matters most—their families. Our certified estate planning specialists understand the complexities of guardianship law and can guide you through every step of the process.

Take Action to Protect Your Children Today

Don’t wait for a crisis to think about who would care for your children if you became temporarily unable to do so. Whether you’re concerned about military deployment, health issues, or other circumstances that could affect your availability, proactive planning gives you control and peace of mind.

Schedule your free estate planning consultation with California Probate and Trust today. Call (866)-674-1130 or visit cpt.law to discuss how AB 495 and other estate planning tools can protect your family’s future. Our compassionate attorneys provide clear, transparent guidance tailored to your unique family dynamics and financial situation.

Your story matters. Your family matters. Let us help you shield those you cherish.

Categories
Estate Planning California Probate Trusts

What Happens When Someone Dies Without a Will? Lessons from Liam Payne’s $50M Estate

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When One Direction star Liam Payne tragically passed away in October 2025 at age 31, he left behind a $50.21 million estate—but no will to direct how it should be distributed. This high-profile case reveals the complex legal challenges families face when a loved one dies intestate (without a will), and why estate planning is essential for protecting your family’s future.

Who This Article Is For

This guide is designed for:

  • Families navigating intestate succession after losing a loved one who died without a will
  • Parents and guardians concerned about protecting minor children’s inheritance rights
  • Unmarried partners who want to understand their legal rights (or lack thereof) in intestate situations
  • Anyone seeking to avoid the court intervention, family disputes, and financial complications that arise from dying without proper estate planning

The $50 Million Problem: What Happened to Liam Payne’s Estate

When Liam Payne died, his estate was initially valued at $59 million. After expenses and debts, approximately $50.21 million remained. Because he died intestate, the court had to step in to manage his estate.

Key outcomes of his intestate death:

  • The court granted administration of his estate to Cheryl Tweedy, his former partner and mother of his eight-year-old son Bear
  • Music lawyer Richard Bray was also named as an administrator
  • Under UK intestacy rules, the money will likely be placed in trust for his son Bear
  • His girlfriend at the time of death, Kate Cassidy, will receive nothing because they were not married or in a civil partnership

Source: News.com.au | Originally reported by The Sun

What Does It Mean to Die Intestate?

Dying intestate means passing away without a legally valid will in place. When this happens, state intestacy laws—not your wishes—determine who inherits your assets and who manages your estate.

Common consequences include:

  • Court intervention: A probate court must appoint an administrator to handle your estate
  • State-mandated distribution: Your assets are distributed according to a legal formula, which may not align with your wishes
  • Exclusion of unmarried partners: Long-term partners who aren’t legally married typically receive nothing
  • Delays and expenses: The probate process becomes more complex, time-consuming, and costly
  • Family disputes: Uncertainty about your wishes can lead to conflict among surviving family members

How California Intestacy Laws Work

While Liam Payne’s estate is governed by UK law, California families face similar challenges under state intestacy statutes. Here’s how California distributes assets when someone dies without a will:

If You’re Survived By:

  • Spouse and no children: Your spouse inherits everything
  • Spouse and one child: Your spouse receives all community property and half of separate property; your child receives the other half of separate property
  • Spouse and multiple children: Your spouse receives all community property and one-third of separate property; children split the remaining two-thirds
  • Children but no spouse: Your children inherit everything equally
  • Parents but no spouse or children: Your parents inherit your estate
  • Siblings but no spouse, children, or parents: Your siblings inherit your estate

Critical note for unmarried couples: Domestic partners who aren’t registered or married have zero inheritance rights under California intestacy law—similar to Kate Cassidy’s situation in the Payne estate.

Real-World Impact: Who Gets Left Out When There’s No Will

The Liam Payne case illustrates a painful reality: without a will, the people you care about most may receive nothing.

Common scenarios where loved ones are excluded:

  • Unmarried life partners (like Kate Cassidy)
  • Stepchildren who weren’t legally adopted
  • Close friends who provided care and support
  • Charitable organizations you wanted to support
  • Business partners or colleagues

  • How to Protect Your Family: Estate Planning Essentials

    The good news? You can avoid the complications, delays, and heartache of intestate succession with proper estate planning.

    Key Estate Planning Documents:

    • Last Will and Testament: Specifies how you want your assets distributed and names guardians for minor children
    • Revocable Living Trust: Allows assets to transfer to beneficiaries without going through probate court
    • Advance Health Care Directive: Designates someone to make medical decisions if you’re incapacitated
    • Durable Power of Attorney: Authorizes someone to manage your financial affairs if you become unable to do so

    Special Considerations for Families with Minor Children

    If you have children under 18, estate planning becomes even more critical. Without proper planning:

    • The court decides who raises your children (guardianship)
    • A court-appointed conservator manages their inheritance until age 18
    • Your children may receive a lump sum at 18 without guidance on managing it

    With a comprehensive estate plan, you can:

    • Name trusted guardians for your children
    • Establish trusts that distribute funds gradually as children mature
    • Provide instructions for education, healthcare, and lifestyle decisions
    • Protect inheritances from creditors, divorces, and poor financial decisions

    When You Need a Probate Attorney: Navigating Intestate Succession

    If you’re dealing with a loved one’s estate where no will exists, you’ll likely need to petition the court for administration rights—just as Cheryl Tweedy did for Liam Payne’s estate.

    A probate attorney can help you:

    • File the necessary court petitions to become estate administrator
    • Navigate complex intestacy statutes and family dynamics
    • Resolve disputes among potential heirs
    • Protect minor children’s inheritance rights
    • Establish guardianships and trusts for underage beneficiaries
    • Minimize estate taxes and administrative expenses
    • Ensure proper asset distribution according to state law

    How Much Does Estate Planning Cost?

    Many people delay estate planning because they assume it’s expensive. In reality, the cost of not having an estate plan far exceeds the investment in creating one.

    Typical costs:

    • Simple will: $300-$1,000
    • Revocable living trust: $1,500-$3,000
    • Comprehensive estate plan: $2,500-$5,000

    Cost of dying intestate:

    • Court fees and probate costs: 3-7% of estate value
    • Attorney fees for intestate administration: Often higher than planned probate
    • Family disputes and litigation: $10,000-$100,000+
    • Lost tax planning opportunities: Potentially hundreds of thousands

    Don’t Leave Your Family’s Future to Chance

    Liam Payne’s estate demonstrates what happens when even wealthy individuals fail to plan. His son will be provided for under UK law, but his girlfriend of several years receives nothing, and the courts—not Liam—made all the decisions about his legacy.

    Your family deserves better.

    Take Action Today: Schedule Your Free Estate Planning Consultation

    At California Probate and Trust, we help families throughout California create comprehensive estate plans that protect what matters most. Whether you need a simple will, a complex trust structure, or help navigating probate after a loved one’s passing, our experienced estate planning attorneys provide:

    • Free one-hour consultations to assess your unique situation
    • Clear, transparent pricing with no hidden fees
    • Compassionate guidance through sensitive family matters
    • Customized solutions for families of all sizes and asset levels
    • Probate administration for intestate estates
    • Guardianship petitions to protect minor children’s interests

    Don’t wait until it’s too late. Contact California Probate and Trust today at (866) 674-1130 or visit cpt.law to schedule your free consultation.

    Your family’s future is too important to leave to chance—or to the state.