Author: CPT Team

Can Disabled Veterans Sue to Enforce a Charitable Trust? Key Insights from Powers v. McDonough

Post author By CPT Team
Post date January 14, 2026

Can Disabled Veterans Sue to Enforce a Charitable Trust? Key Insights from Powers v. McDonough

Who This Is For

If you’re a California resident managing a charitable trust, estate plan, or family legacy—or if you’re concerned about protecting vulnerable beneficiaries like veterans, seniors, or disabled individuals—understanding when beneficiaries can enforce trust terms is essential. This landmark Ninth Circuit case clarifies who has the legal right to hold trustees accountable when charitable assets are misused.

What Happened in Powers v. McDonough?

In 2022, a group of unhoused veterans with severe disabilities and mental illnesses sued the U.S. Department of Veterans Affairs (VA) and the Department of Housing and Urban Development (HUD). The veterans sought to restore the West Los Angeles VA Grounds to its original purpose: housing disabled veterans.

The plaintiffs argued that an 1888 deed created a charitable trust and that the VA violated its fiduciary duties by entering commercial leases that failed to primarily benefit veterans. The district court sided with the veterans, but the VA and HUD appealed.

The Ninth Circuit’s Ruling: Special Interest Standing Affirmed

On December 23, 2025, the Ninth Circuit Court of Appeals issued a split decision. While it reversed the lower court’s finding of a breach of charitable trust, it affirmed that the veterans had “special interest standing” to bring the lawsuit.

What Is Special Interest Standing?

Under California law, a charitable trust can be enforced by a person who has a “special interest in the enforcement of the trust.” This legal doctrine balances two competing concerns:

Protecting trustees from frivolous lawsuits by a large, uncertain class of potential beneficiaries
Ensuring charitable trusts are properly managed when the Attorney General lacks the resources or information to intervene

Why Did the Court Grant Standing?

The Ninth Circuit found that the disabled, unhoused veterans had a sufficient special interest because:

The trust’s benefits—supportive housing and healthcare—could mean the difference between life and death for them
The VA had consistently failed to restore the West Los Angeles VA Grounds to its intended use
Despite public awareness of these failures, the Attorney General had not taken steps to enforce the trust

This ruling empowers intended beneficiaries to act when government oversight falls short—a principle that extends beyond veterans to other vulnerable groups protected by charitable trusts.

What This Means for California Families and Trustees

For Estate Planning Clients

If you’re creating a charitable trust as part of your estate plan, this case highlights the importance of:

Clearly defining beneficiaries and trust purposes in your trust documents
Selecting trustees who understand their fiduciary duties
Building in accountability mechanisms to prevent misuse of trust assets

For Trustees and Executors

Trustees of charitable trusts in California should know that:

Intended beneficiaries may have the right to sue if trust assets are mismanaged
Courts will examine whether trust property is being used for its stated charitable purpose
Lack of Attorney General enforcement does not shield trustees from accountability

For Beneficiaries of Trusts

If you believe a charitable trust meant to benefit you or your loved ones is being misused, this case provides a legal pathway to enforce your rights—even without government intervention.

How Can I Protect My Family’s Legacy?

Whether you’re setting up a charitable trust, managing an existing estate, or navigating probate in California, the experienced attorneys at California Probate and Trust, PC can help. We offer:

Free one-hour estate planning consultations to assess your needs
Clear, straightforward guidance on trusts, wills, and fiduciary responsibilities
Compassionate support for California residents protecting their families and legacies

Our team has represented thousands of clients across Sacramento, Fair Oaks, and San Francisco. We understand the complexities of California trust law and can help ensure your charitable intentions are legally protected and properly enforced.

Case Summary: Powers v. McDonough

Case Number: 24-6576
Court: Ninth Circuit Court of Appeals
Filed: December 23, 2025
Key Holding: Intended beneficiaries of a charitable trust with a special interest have standing to sue to enforce the trust
Source: California Lawyers Association – Powers v. McDonough
Full Opinion: Ninth Circuit Opinion PDF

Schedule Your Free Estate Planning Consultation

Don’t wait until it’s too late to protect your family and ensure your legacy is honored. Contact California Probate and Trust, PC today to schedule your no-obligation consultation with one of our experienced estate planning attorneys.

Call us at (866) 674-1130 or visit cpt.law/contact-us to get started.

Tags California Estate Law, Estate Litigation Prevention

Trusts News

Can Prevailing Defendants Recover Attorney Fees in Elder Abuse Cases? Understanding Gamo v. Merrell

Post author By CPT Team
Post date January 13, 2026

If you’re an executor or personal representative defending an estate against financial elder abuse claims, understanding your rights to recover legal costs is critical. A recent California appellate decision provides crucial clarity on when prevailing defendants can—and cannot—recover attorney fees in these cases.

Who This Matters For

This case is essential reading for:

Executors and personal representatives defending estates against elder abuse allegations
Trustees and fiduciaries facing litigation over financial transactions with elderly parties
Business owners who serve older clients and want to understand their legal exposure
Estate planning attorneys advising clients on risk management strategies

The Key Legal Question: Can Defendants Recover Fees After Winning?

California’s financial elder abuse statute (Welfare and Institutions Code section 15657.5(a)) includes a “unilateral fee provision”—meaning it awards attorney fees to prevailing plaintiffs but not to prevailing defendants. This creates an intentional imbalance designed to encourage victims to file legitimate claims without fear of paying a defendant’s legal bills if they lose.

But what happens when a defendant wins and wants to recover costs associated with discovery disputes? That’s exactly what the California Court of Appeal addressed in Gamo v. Merrell (2025) 113 Cal. App. 5th 656.

The Case: What Happened in Gamo v. Merrell

An 81-year-old man purchased a Maserati and later claimed the dealership promised him a $6,500 trade-in credit but only provided $2,000. He sued for financial elder abuse, fraud, and violations of the Consumers Legal Remedies Act (CLRA).

During discovery, the sellers asked him to admit basic facts—such as that he initialed each page of the contract. He denied or withdrew these admissions. At trial, a jury found in favor of the sellers on all claims.

The sellers then sought approximately $490,000 in attorney fees under two theories:

Cost-of-proof fees under Code of Civil Procedure section 2033.420 for proving facts the plaintiff unreasonably refused to admit
CLRA fees under Civil Code section 1780(e) for defending against a bad faith claim

The trial court denied both requests, ruling that the elder abuse statute’s unilateral fee provision barred all fee recovery.

The Appellate Court’s Groundbreaking Ruling

The Court of Appeal reversed in part, creating an important distinction between different types of attorney fees:

Cost-of-Proof Fees: Allowed

The court held that cost-of-proof fees under CCP section 2033.420 serve a completely different purpose than prevailing party fees:

They don’t reward a party for winning the case
They sanction unreasonable discovery conduct—specifically, refusing to admit facts without any reasonable basis
They encourage efficient litigation by penalizing parties who force opponents to prove undisputed facts
A party can even lose at trial and still recover cost-of-proof fees

The court reasoned that these two statutes can work together without conflict: “Because cost-of-proof fees neither reward the prevailing party nor punish a losing party in a lawsuit, they do not interfere with unilateral fee provisions”.

CLRA Fees: Denied

The court affirmed the denial of CLRA fees, but not on the merits. The sellers failed to provide a separate legal argument explaining why CLRA fees should be treated differently from prevailing party fees. Since they simply referred back to their cost-of-proof argument without addressing the materially different nature of CLRA fees, the court deemed the argument waived.

What This Means for Executors and Personal Representatives

You Can Recover Some Fees—But Strategy Matters

If you’re defending an estate or trust against elder abuse claims, this decision provides a pathway to recover substantial legal costs—but only if you handle discovery correctly:

Serve comprehensive requests for admission early in the case
Focus on undisputed facts that the opposing party should reasonably admit (contract signatures, receipt of documents, basic timeline facts)
Document unreasonable refusals to admit facts that are clearly proven
Track costs separately for proving each disputed fact at trial
File a properly supported motion under CCP section 2033.420 after prevailing

The Limits: What You Cannot Recover

Even after this decision, prevailing defendants still cannot recover:

General attorney fees for successfully defending the elder abuse claim itself
Fees for defending “intertwined” claims that arise from the same transaction
Fees under other statutes unless you provide separate, distinct legal arguments

How Can Executors Protect Themselves from Personal Liability?

The best defense is proactive estate planning and administration that minimizes litigation risk:

Maintain impeccable records of all transactions involving elderly beneficiaries or parties
Obtain written acknowledgments and contemporaneous documentation
Consider trust provisions that address potential disputes before they arise
Work with experienced probate counsel who understand discovery strategy and fee recovery options

Precedents That Shaped This Decision

The court analyzed several key California cases to reach its conclusion:

Carver I & II: Established that unilateral fee provisions override bilateral contractual fee agreements for overlapping claims
Wood v. Santa Monica Escrow Co.: Applied this reasoning to financial elder abuse cases, barring contractual fees for intertwined tort claims
Richmond: Held that different statutes with different purposes can coexist—the Cartwright Act’s unilateral provision doesn’t bar anti-SLAPP fees because they serve non-conflicting goals

The Gamo court extended the Richmond reasoning to cost-of-proof fees, emphasizing that harmonizing statutes with distinct purposes serves the public interest.

What Happens Next in This Case?

The case has been remanded to the trial court to determine whether the sellers are actually entitled to cost-of-proof fees under the factual circumstances. The trial court must now evaluate:

Whether the plaintiff’s refusal to admit specific facts was unreasonable
Whether the sellers ultimately proved those facts at trial
What expenses were reasonably incurred in proving each disputed fact
Whether the requested fee amount is reasonable

Practical Takeaways for Estate Administration

For executors and personal representatives managing estates and facing potential litigation:

Discovery is now a cost-recovery opportunity. Well-crafted requests for admission can shift the financial burden back to plaintiffs who refuse to admit basic facts.
Document everything. The ability to prove what you spent proving each fact is essential to recovering cost-of-proof fees.
Understand what’s protected and what’s not. You still can’t recover general defense fees, but you can recover discovery sanction fees.
Don’t assume all fee requests are the same. Each statutory basis for fees requires its own legal analysis and argument.

How California Probate and Trust Can Help

At California Probate and Trust, our experienced probate and trust administration attorneys help executors and personal representatives navigate complex litigation while protecting estates from unnecessary losses. We understand how to:

Defend estates against financial elder abuse allegations
Implement strategic discovery practices that position you for cost recovery
Minimize your personal liability as an executor or trustee
Recover appropriate fees and costs when you prevail

If you’re an executor facing litigation or concerned about potential claims, don’t wait until you’re in the middle of a lawsuit to develop your strategy.

Schedule Your Free Consultation Today

Our estate planning and probate attorneys offer free consultations to help you understand your legal obligations and protect yourself from personal liability. Whether you’re dealing with an active dispute or want to implement preventive measures, we’re here to provide the experienced guidance you need.

Contact California Probate and Trust today to discuss your situation with a qualified probate attorney who understands the complexities of elder abuse litigation and cost recovery.

Source: Gamo v. Merrell (2025) 113 Cal. App. 5th 656, Filed August 14, 2025, Fourth District, Division Three. Full case details available at California Lawyers Association.

Tags Estate Litigation Prevention, Executor Selection, Trust Administration

Estate Planning California Probate News

Rob and Michele Reiner Tragedy: What Families Need to Know About Estate Planning After Unexpected Loss

Post author By CPT Team
Post date January 13, 2026

The tragic deaths of acclaimed film director Rob Reiner and his wife Michele Singer Reiner have shocked the entertainment community and brought attention to critical estate planning issues that every California family should understand. According to The Guardian, the Los Angeles County Medical Examiner confirmed that both Rob and Michele Reiner died from multiple sharp force injuries, with the manner of death ruled as homicide on December 14, 2025.

The Devastating Details: What Happened to Rob and Michele Reiner

The Reiners’ bodies were discovered at their Brentwood, Los Angeles home after their daughter Romy went to check on them. Their son Nick Reiner was arrested the same day and has been charged with two counts of first-degree murder and use of a dangerous weapon.

During his court appearance on December 17, Nick Reiner appeared shackled and wearing a suicide prevention vest, speaking only once to acknowledge his understanding of his right to a speedy trial. He is scheduled to return to court for arraignment on January 7, 2026.

The couple’s children, Romy and Jake, released a heartbreaking statement: “Words cannot even begin to describe the unimaginable pain we are experiencing every moment of the day. The horrific and devastating loss of our parents, Rob and Michele Reiner, is something that no one should ever experience. They weren’t just our parents; they were our best friends”.

What Happens to an Estate When Death Occurs Unexpectedly?

The sudden loss of the Reiners raises urgent questions that many California families face when tragedy strikes without warning:

What happens if someone dies without a will in California? When a person dies intestate (without a valid will), California’s intestacy laws determine how assets are distributed—often not according to what the deceased would have wanted.
Who manages the estate when there’s no executor named? Family members must petition the court to become the estate administrator, a process that can be complex and time-consuming during an already difficult period.
How do you protect minor children’s inheritance? Without proper estate planning, guardianship proceedings may be necessary to ensure children’s financial interests are protected.
What if family members disagree about estate administration? Disputes among heirs can delay probate and create lasting family rifts when there’s no clear estate plan in place.

California Intestacy Laws: How the State Distributes Assets Without a Will

When a California resident dies without a will, the state’s intestacy statutes dictate asset distribution based on family relationships:

If married with children, the spouse typically receives one-half to all community property, depending on circumstances
Separate property is divided between the spouse and children according to specific formulas
Without a spouse, children inherit equally
If no spouse or children exist, assets pass to parents, then siblings, then more distant relatives

This automatic distribution may not reflect the deceased’s actual wishes and can create unexpected complications for families.

The Critical Role of Probate Administration in Tragic Circumstances

Following an unexpected death—particularly one involving criminal circumstances—families face additional legal complexities:

Estate administration during ongoing criminal proceedings can be complicated by evidence holds, asset freezes, or delays in death certificate issuance
Slayer statutes prevent individuals convicted of murdering a decedent from inheriting from that person’s estate, requiring careful legal navigation
Asset protection for surviving family members may require immediate court intervention to prevent estate depletion
Creditor claims and estate debts must be properly handled even when families are grieving

Protecting Minor Heirs: Guardianship and Trust Administration

When parents die unexpectedly, minor children face both emotional trauma and financial vulnerability. Without proper estate planning:

Courts must appoint guardians for minor children, which may not align with parents’ preferences
Inheritance may be held in court-supervised custodial accounts until children reach age 18
No provisions exist for educational expenses, healthcare needs, or other support beyond basic maintenance
Children may receive substantial assets at 18 without preparation or guidance

Proper estate planning with trusts can ensure children receive financial support according to parents’ wishes while protecting assets until children are mature enough to manage them responsibly.

How California Families Can Prevent Estate Administration Chaos

The Reiner tragedy underscores why comprehensive estate planning is essential for every California family, regardless of age or wealth:

Create a comprehensive will or trust that clearly expresses your wishes for asset distribution and names trusted individuals to carry them out
Designate guardians for minor children to ensure they’re cared for by people you trust if tragedy strikes
Establish trusts for asset protection that provide for heirs while protecting inheritances from creditors, divorce, or mismanagement
Name successor trustees and executors who can step in if your first choices are unable to serve
Review and update estate plans regularly, especially after major life events like births, deaths, marriages, or divorces

When You Need Experienced California Probate and Estate Planning Counsel

Families facing unexpected loss need compassionate, experienced legal guidance to navigate probate administration, estate disputes, and guardianship proceedings. Whether you’re:

Dealing with the sudden death of a loved one who died without a will
Facing complex probate administration in criminal circumstances
Seeking guardianship for minor children who’ve lost their parents
Need to protect your own family with comprehensive estate planning

California Probate and Trust has represented thousands of clients across Sacramento, Fair Oaks, and San Francisco with estate planning and probate matters. Our certified estate planning specialists understand the emotional and legal complexities families face during life’s most difficult moments.

Protect Your Family’s Future Today

Don’t leave your family’s future to chance or state intestacy laws. California Probate and Trust offers free estate planning consultations to help you understand your options and create a plan that protects those you love.

Schedule your free consultation today:

Call (866) 674-1130
Visit cpt.law/contact-us

Our compassionate team will walk you through every step of the estate planning process, from simple wills to complex trusts, ensuring your family is protected no matter what the future holds.

—

Source: The Guardian – Rob and Michele Reiner’s Cause of Death Released by Medical Examiner

Tags Avoiding Probate, Estate Litigation Prevention, Probate Process

Estate Planning California Probate Trusts

How to Avoid Hiring a Private Fiduciary: Smart Strategies to Limit Estate Representative Powers and Preserve Your Family’s Wealth

Post author By CPT Team
Post date January 12, 2026

How to Avoid Hiring a Private Fiduciary: Smart Strategies to Limit Estate Representative Powers and Preserve Your Family’s Wealth

Published January 12, 2026 | Original Source: CEB Articles

Who This Guide Is For

If you’re a parent with minor children planning your estate, you face a unique challenge: How do you ensure your children’s inheritance is protected if disagreements arise among your chosen representatives or beneficiaries? This guide shows you practical, court-approved methods to avoid costly private fiduciaries while maintaining family harmony and protecting your estate assets.

The Problem: When Family Disagreements Lead to Expensive Solutions

When heirs or beneficiaries distrust each other or question who should manage an estate, attorneys often recommend hiring a private fiduciary—a neutral third party who manages the estate. While this solves the trust problem, it comes with significant costs that reduce what your children ultimately receive.

However, California probate law offers a better solution: strategically limiting your personal representative’s powers to address specific concerns without the expense of a private fiduciary.

Understanding Your Options: Three Levels of Estate Representative Authority

Under California’s Independent Administration of Estates Act (IAEA), personal representatives can operate with three different levels of authority:

1. Full IAEA Authority (The Default Option)

This is the standard authorization unless your will specifically prohibits it. With full authority, your representative can handle most estate tasks independently, but must still get court approval for:

Personal representative and attorney compensation

Account settlements

Preliminary and final distributions

Selling estate property to the representative or their attorney

Handling claims involving the representative or their attorney

2. Limited IAEA Authority (The Middle Ground)

This option requires court supervision specifically for real estate transactions, including:

Sales and exchanges of real property

Granting options to purchase real property

Borrowing money secured by real estate

3. No IAEA Authority (Maximum Court Oversight)

This provides the most restrictions, requiring court approval for investments, withdrawals of funds, and property sales—essentially preventing any significant action without judicial review.

Real-World Solutions: How California Families Avoid Private Fiduciaries

Scenario 1: Protecting a Rental Property During Estate Administration

Consider this common situation: Your estate includes a rental home that will eventually go to one group of beneficiaries, while other assets go to your children. The property needs ongoing maintenance, but beneficiaries worry the executor might make decisions favoring one side—either installing expensive upgrades or choosing the cheapest possible repairs.

The Solution: Request the court to require your executor to obtain approval (via Notice of Proposed Action) before making non-emergency repairs, alterations, or modifications to the property. This gives all beneficiaries visibility and input without the ongoing cost of a private fiduciary.

Scenario 2: Preventing Insider Real Estate Deals

If you’re concerned that your chosen representative might have conflicts of interest in real estate transactions—perhaps they work in the industry and could manipulate sales—you can request limited IAEA authority. This requires court confirmation of any property sale, including the possibility of competitive overbids at the confirmation hearing.

Why These Strategies Work for Parents Planning Estates

These targeted restrictions accomplish several goals critical for parents with minor children:

Cost Savings: Avoiding private fiduciary fees means more money remains in your estate for your children’s care and education

Flexibility: Courts can modify representative powers even after appointment if concerns arise later

Peace of Mind: Specific limitations address real concerns without creating unnecessary bureaucracy

Family Harmony: Transparency requirements reduce suspicion and conflict among beneficiaries

Key Takeaways for Estate Planning

Private fiduciaries aren’t your only option when family members distrust each other

California law allows you to customize your representative’s authority level

Strategic restrictions can address specific concerns while preserving estate value

Courts can modify powers both initially and after appointment

The right limitations protect your children’s inheritance without excessive costs

Protect Your Children’s Future with Expert Estate Planning

Creating an estate plan that balances protection, cost-efficiency, and family harmony requires experienced legal guidance. At California Probate & Trust, our certified estate planning specialists have helped thousands of California families design customized plans that protect their children and preserve their wealth for generations.

Don’t leave your children’s financial security to chance or let family disagreements erode their inheritance. Schedule your free consultation today to discuss:

Guardianship provisions that protect your minor children

Trust structures that preserve assets for your children’s future

Strategic authority limitations that prevent costly disputes

Comprehensive plans tailored to your family’s unique dynamics

Schedule Your Free Estate Planning Consultation at CPT.Law

California Probate & Trust serves families throughout Sacramento, Fair Oaks, and San Francisco with compassionate, expert estate planning services. Call (866) 674-1130 or visit cpt.law to get started.

Tags Avoiding Probate, Estate Litigation Prevention, Executor Selection

Estate Planning California Probate Trusts

How California Authors Can Protect Their Creative Works After Death: Essential Guidance for Executors and Families

Post author By CPT Team
Post date January 12, 2026

If you’ve been named executor of an author’s estate in California—or you’re an author planning your legacy—you’re dealing with complexities that go far beyond standard probate. Managing intellectual property rights, protecting unfinished manuscripts, and ensuring decades of future copyright income requires specialized legal knowledge that most California residents don’t encounter until it’s urgently needed.

This guide provides California-based executors, authors, and families with actionable strategies to protect creative works through proper estate planning—helping you avoid costly mistakes and family disputes while preserving your loved one’s literary legacy.

Who Needs This Information Right Now

This article directly answers questions for:

California executors and personal representatives suddenly responsible for managing estates containing novels, screenplays, journals, or other copyrighted creative works

Authors and content creators in California asking “how can I make sure my books continue generating income for my family after I’m gone?”

Family members of California authors worried about protecting their loved one’s unpublished manuscripts and creative reputation

Literary estate managers seeking the best tools for trust-based copyright protection under California law

Why Copyright Protection in California Estate Planning Is Critical

When a California author dies, their creative works remain valuable assets for decades. Copyrights generate ongoing royalties, licensing fees, and adaptation rights that can provide substantial income to families. Yet without clear estate planning directives, California executors frequently face:

Legal uncertainty about which works can be published, adapted, or licensed

Family conflicts over handling unfinished manuscripts or controversial materials

Loss of control over how the author’s creative works are commercialized or represented

Personal liability risk for making decisions that contradict the deceased author’s documented wishes

Complicated California and federal tax implications without proper advance planning

Understanding Copyright Duration: How Long Will Your Protections Last?

One of the first questions California executors ask is: “How long will these copyrights continue?” The answer depends entirely on when the work was created and how it was originally published.

For Works Created On or After January 1, 1978

Standard protection: Author’s lifetime plus 70 years

Cannot be renewed beyond this period

For collaborative works with multiple authors: 70 years from the last surviving author’s death

For Anonymous or Pseudonymous Works (Created After January 1, 1978)

95 years from first publication date, OR

120 years from creation date (whichever expires first)

Cannot be renewed

For Older Works in First Copyright Term on January 1, 1978

Initial 28 years from first copyright registration date

Can be renewed for an additional 67 years

For Works Already in Renewal Term on October 17, 1998

Total of 95 years from original copyright date

Real-World California Example: How These Copyright Rules Work Together

Consider a California author whose work entered copyright on January 1, 1978. With timely renewal filing, total protection extends 95 years (original 28-year term plus 67-year renewal period). Because this work would also be in its renewal period on October 17, 1998, it automatically qualifies for the 95-year rule measured from the original copyright date—meaning it remains protected until 2073.

Strategic Copyright Extension for Pseudonymous Works: A Powerful Tool California Executors Should Know

Here’s an estate planning strategy that can add decades of copyright protection—but many California executors never learn about it: revealing an author’s true identity can dramatically extend copyright duration.

How This Copyright Extension Strategy Works:

When an author published works under a pen name, standard copyright law provides either 95 years from publication or 120 years from creation date. However, if an executor, trustee, or anyone with legal interest in the copyright discloses the author’s true identity in official Copyright Office records, the protection period switches to the more favorable “life plus 70 years” rule.

California Case Example:

A California author creates a pseudonymous novel in 2000 and passes away in 2060:

Under standard anonymous work rules: Copyright expires in 2095 (if published in 2000) or 2120 (if it remained unpublished)

If the executor reveals the author’s identity in Copyright Office records in 2059: Copyright protection extends to 2130 (death year plus 70 years), adding an extra 35 years of family income and control

This identity disclosure can be made posthumously by California executors, trustees, family members, or any party with documented interest in the copyright—making it a valuable post-death planning tool.

Termination Rights: How California Heirs Can Reclaim Licensed or Transferred Copyrights

If a California author transferred or licensed copyright ownership during their lifetime—perhaps selling film rights or granting publishing licenses—their heirs may have the legal right to terminate those agreements and reclaim full copyright ownership.

Termination Timeline Based on Copyright Date:

Copyrights created on or after January 1, 1978: Termination right becomes available 35 years after the original transfer or license agreement date

Copyrights that existed on January 1, 1978: Termination right begins 56 years after the original copyright registration date

Works already in renewal term on October 27, 1998: Additional termination opportunity after 75 years, covering the final 20 years of copyright protection

This termination right passes automatically by law to the author’s spouse, children, and grandchildren, providing California families with a powerful opportunity to regain control over valuable literary properties and renegotiate more favorable licensing terms.

How California Probate and Trust, PC Protects Author Estates

Managing an author’s estate in California requires both probate expertise and intellectual property knowledge. California Probate and Trust, PC provides comprehensive estate planning and administration services specifically designed for California residents managing creative assets.

Whether you’re facing probate challenges now or planning ahead to protect your family’s future, our team handles both the legal structure and financial management aspects—giving you transparency, family protection, and peace of mind.

Contact California Probate and Trust, PC today for a consultation on protecting your creative legacy or managing an author’s estate.

Source: California Probate and Trust, PC

Tags California Estate Law, Estate Litigation Prevention, Executor Selection

California Probate Estate Planning Trusts

A Beginner’s Guide to Smart and Safe Charitable Giving

Post author By CPT Team
Post date January 6, 2026

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.

Tags California Estate Law, End-Of-Life Planning, Wealth Preservation

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

Post author By CPT Team
Post date January 6, 2026

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:

Call: (866) 674-1130
Visit: Schedule Your Free Consultation
Learn more: cpt.law

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.

Tags Estate Litigation Prevention, Executor Selection, Probate Process

Estate Planning Trusts

Revisiting SLATs in 2025: Expanding Opportunities and Evolving Uses

Post author By CPT Team
Post date January 6, 2026

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

Tags Estate Litigation Prevention, Revocable Trusts, Wealth Preservation

Long Term Care Planning California Probate News

DHCS Provides Long-Awaited Guidance on Asset Transfers After Medi-Cal Test Returns Next Year

Post author By CPT Team
Post date January 6, 2026

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

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

Tags California Estate Law, Estate Litigation Prevention

Estate Planning Trusts

What the Estate of Galli Case Teaches About Intrafamily Loans

Post author By CPT Team
Post date January 6, 2026

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).

Tags Estate Litigation Prevention, Tax Planning, Wealth Preservation

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