Estate planning gives you the opportunity to manage and distribute your assets in a way that maximizes the usefulness of those assets. Most people equate estate planning with having a will, but a will is just the beginning of your estate planning options. Trusts offer greater benefits than a will alone. There are many different types of trusts designed for many different purposes.

An irrevocable trust is a particular type of trust that allows for tax planning and asset protection opportunities.

How Does an Irrevocable Trust Work?

With any trust, a trustee is named who controls assets and manages them until they are distributed to beneficiaries. Trust assets bypass probate. One of the main differences between a revocable trust and an irrevocable trust is that a revocable trust can be modified or dissolved at any time. An irrevocable trust is much harder to change and typically requires the approval of all beneficiaries before it can be modified.

A last will and testament and other estate planning instruments allow a person to decide in advance how their assets will be distributed to heirs. The decisions contained in a person's estate plans are deeply personal, and most people think long and hard about how they want their assets to be divided among their loved ones or other beneficiaries. Consequently, it is crucial that any will, trust, or other estate planning document represent an individual's true intentions. When a person suffers from dementia or another illness that affects cognition, this is particularly important.

In order for a will to be legally valid, the person making it must have testamentary capacity. Testamentary capacity is a legal concept that ensures that an individual's estate planning decisions are being made by someone who is mentally competent.

California Law Regarding Testamentary Capacity

In California, a testator (the person writing the will) must have a "sound mind" in order to make a valid will. In other words, the person must be able to think clearly and make decisions. Generally speaking, the testator must:

An estate plan is essential for everyone. For many, the primary purpose of creating such a plan is to ensure that their finances and assets are distributed according to their wishes when they pass away. But there are other reasons to create an estate plan besides money. Here are four of them.

Reason #1: Privacy Concerns

In many states, probate court proceedings are matters of public record. This means that any documents filed in connection with a probate case could be available for anyone to view. Such documents generally include wills and other estate planning tools that might contain sensitive information about your finances or private family matters. With an effective estate plan and the strategic use of various trusts, you may be able to avoid probate court altogether, thereby keeping your affairs private.

Reason #2: Providing for Minor Children

If you have children who are not yet adults, it is important that you have a plan in place should something happen to you and/or your spouse. In such a situation, the court would need to determine who will assume the legal guardianship of your children until they reach adulthood. Your estate plan can clearly designate who these guardians should be and provide directions on how assets should be used for their benefit while they are minors. Technically, this last part is a little about money, but caring for your children is about much more than financial assets.

When a person passes away, it is not uncommon for heirs, beneficiaries, family members, or other interested parties to become suspicious of the decedent’s estate planning decisions. In some cases, a deceased person may have been subject to undue influence just before their passing—an act that can invalidate the will and any other affected estate planning documents. But what is undue influence? And how can you prove that your loved one was unduly influenced? Let's find out.

Understanding Undue Influence

In the realm of estate planning, undue influence refers to when someone manipulates another person into making decisions they would not normally make. This manipulation can be emotional, psychological, physical, or financial. It often occurs in instances where an elderly person or someone who is not mentally sound is taken advantage of by another party who wishes to gain control over their estate. In many cases, the victim may not even understand the implications of the decision they are making until after they have signed the document. If the person is manipulated, forced, or tricked into adding or removing certain provisions or beneficiaries, challenging the document could lead to the whole thing being invalidated by the court.

It is important to understand that the law allows for a spouse, family members, and loved ones to offer their input when a person is creating their estate plan. This is not usually considered undue influence, provided that such input takes the form of reasonable opinions, conversations, and calculations. If, however, a caretaker or a single family member cuts the person off from other family and friends or threatens to withhold care, undue influence could be an issue.

It can be incredibly challenging to plan for a time when you are not around to care for your loved ones. However, facing this reality by creating an estate plan is one of the most selfless actions you can take. This is especially true if you have a child, sibling, or another close loved one who has a serious disability. If you have been responsible for caring for a loved one who cannot care for himself or herself, you may want to find a way of providing for him or her after you pass away. One way to do just this is through an estate planning tool called a special needs trust, also known as a supplemental needs trust.

Planning for the Care of a Loved One with Special Needs

A special needs trust or supplemental needs trust is an estate planning instrument that can be critically important to individuals who provide care for a disabled loved one. This instrument works by allowing the individual to place funds in the trust, which can then be used for the future care of their disabled loved one. A special needs trust allows you to put aside money for your loved one without affecting the disabled person’s eligibility for government assistance programs. Special needs trusts can be funded through gifts and inheritances or a lump-sum settlement. Without a special needs trust, money left to your loved one could potentially disqualify him or her from certain government aid programs.

Leaving Money to a Loved One Could Increase His or Her Available Assets Too Much

A substantial portion of government-funded aid is distributed to individuals under a certain income level. For example, Medicaid, Supplemental Security Income, and housing subsidies all have income criteria that a person must meet in order to qualify for financial assistance. If you leave money to your disabled loved one without the appropriate estate planning instrument, it could be counted toward their assets. If the funds are substantial, this money could bump your loved one’s income up to a level that makes them ineligible for programs with income or asset limits.