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What are the pros and cons of a California 529? All of us want to give our children the best chance at life. Part of that is trying to ensure that they have as many options open to them as they go out into the world. For many, the hope is that their children will pursue post-secondary education in some form, whether it is a college, trade school, or university. Sometimes, parents want their child to be able to enrol in a particular type of elementary school. In California, one of the financial tools available to save up for a child's education is the 529 plan. What Is the California 529 Plan? The 529 plan is a state-sponsored investment tool through which you can invest funds that will one day go towards future tuition, fees, books, equipment, supplies, and related expenses. The California 529 lets you contribute up to a particular amount every year in each 529 account without affecting the size of your lifetime gift tax exclusion or requiring you to pay federal "gift" taxes. The investment growth from a 529 is tax-free (state and federal). You cannot contribute any more money to the 529 once the account balance hits $529,000, although the balance can still go up due to the growth of investments. The beneficiary is usually a child or grandchild, but can technically be anyone, even you. They don't even have to be part of your family. When it comes time for the beneficiary to go to school, you can withdraw a maximum of $10,000 for each of them annually to pay for qualified expenses without the earnings portion incurring tax liability. If withdrawals go towards expenses that are not qualified, the earnings portion will be considered income and taxed. Additionally, you may have to pay a further 10% in federal tax and 2.5% in state tax. The school can be public or private — or even religious — and does not necessarily have to be located in California. Apprenticeship programs also qualify. Tax laws have recently been amended to include more qualified expenses under the California 529. For example, if you are an individual, you are allowed to gift a maximum of $15,000 per plan per year without incurring a penalty. A couple can gift up to $30,000. Alternatively, you could opt to contribute up to five years' worth ($75,000 for an individual contributor and $150,000 for a couple) in one year — per 529 plan and beneficiary. On the flip side, you will not be allowed to provide any more annual gifts to that person on a tax-free basis for five years. Of course, you could opt to use some of your lifetime gift tax exemption, or see if the amount of the gift tax exclusion goes up. What Are the Benefits of a California 529? Apart from being able to use it for your own continuing education, there are a few key benefits of investing in a 529 plan. They include: More favorable treatment when it comes to federal financial aid , compared to things like a Uniform Gift to Minors Act ("UGMA") or Uniform Transfer to Minors Act ("UTMA") accounts. The latter tools are "student owned", whereas the 529 is technically owned by the parent. Pursuant to the financial aid formula, only around 5.6% of assets held in a 529 — vs. 20% of the money in a custodial account — get counted towards the family's expected monetary college contribution each school year. No additional 10% federal tax to withdraw the same amount as a scholarship received by the beneficiary, even if the money is not going to qualified expenses. While the earnings portion of the withdrawal is taxable as income, the part that is the "return of your principal" is not. That withdrawn money can go into another person's education funds or be used for unrelated financial objectives you might have. You can transfer wealth through a 529 . By contributing to a 529 plan, parents/grandparents decrease the size of their taxable estates (and related tax burdens). Are There Disadvantages With a California 529? There are a handful of downsides associated with a California 529 plan. The contributions to a 529 are not themselves tax deductible in state or federal tax regimes. Any investment growth, however, is not subject to tax liability. You can only have the tax benefits if withdrawing funds for qualified educational expenses. The UGMA and UTMA investments, for example, are trust accounts that are more "flexible" when it comes to withdrawal. With a 529, if the monies are earmarked for non-qualified expenses, you must pay a further 10% federal tax and 2.5% state income tax on the earnings portion of the withdrawal. There are further penalties for withdrawing more than the allowed amount as well. It is actually possible to lose money in a California 529 plan. California 529 plans should really be started early and may not provide the ideal investment diversification. If started closer to the end of high school, the 529 could suffer from market volatility and might not be able to bounce back before the funds are needed. Some states offer Federal Deposit Insurance Corporation (FDIC) insurance for 529 plans, but California does not. California 529 Plans for Non-California Residents Although all states have their own version of the 529 plan, anyone in any state can avail themselves of a California 529 plan. You don't have to be a California resident to open a 529 account. However, there are certain benefits only open to Californians. For new accounts, contributions up to $200 are matched dollar for dollar through the 2022 Matching Grant Program. All one needs to do is to set up a minimum $25 automatic monthly contribution. The account holders must be California residents at the time of enrolment, with an SSN or federal tax ID number, and make no more than $75,000 income a year. Furthermore, in California, 529 funds are not counted towards Medi-Cal and other state benefit eligibility. If you have any questions about investing for your or someone else's future education, speaking to your lawyer or financial advisor is highly recommended.

A civil lawsuit is a court-based process that addresses allegations of wrongdoing. It involves two parties: the plaintiff, the person or group that files the suit, and the defendant, the person or group accused of wrongdoing. A civil case begins when the plaintiff claims that the defendant has failed to carry out a legal duty. Many different types of wrongdoing can lead to a civil suit. Examples can include personal injury, a contract breach, a wrongful eviction, sales of unsafe products, unfair business practices, or professional malpractice. Unlike criminal cases, during which prosecutors seek punishment for a criminal act, a civil case aims to deliver compensation to the plaintiff. If the court rules against the defendant, they have to pay compensation or perform specific actions that fix the wrongdoing. If (like most plaintiffs) you are filing a civil lawsuit for the first time, you are probably unsure of what to expect. While the details of each case can vary considerably, there is a well-defined process for most civil cases. A lawyer can aid you when it comes to taking the correct steps and ensuring the best chance for a favorable ruling. The Stages of a Lawsuit for a Plaintiff Here is what you can expect after you decide to file a lawsuit. The Complaint The first step in the process involves drafting and filing a complaint against the defendant. This document outlines your version of events and describes how the defendant’s actions caused damage. It also includes the amount of monetary compensation or other remedies you are seeking. The complaint gets filed with the clerk of the appropriate court. A lawyer can help you ensure you select the correct jurisdiction. After this, the court creates a case file, assigns it a case number, and provides the defendant with the complaint and a summons to appear in court. Defendant Response After receiving the complaint, the defendant is required to respond with their version of the events. The court will give them a set amount of time in which to reply. In the answer to the complaint, the defendant may admit or deny the plaintiffs’ claims or offer counterclaims. In some instances, they can also name others as defendants. The defendant’s answer may also ask the plaintiff to clarify or correct parts of the complaint. They can also request that the court dismiss all or part of the lawsuit and give reasons or evidence for the dismissal request. The Scheduling Order After the complaint has been filed and answered, the judge assigned to the case will issue a scheduling order. This document will set up a timeline for the exchange of information between the parties, make deadlines to file motions for the case, and set a date for the first hearing. Discovery Discovery allows both parties in a civil lawsuit to request and obtain relevant information from each other. The court provides specific guidelines for the disclosure of this information. If one party fails to respond to the other’s request, that party may file a motion to force the release of the information. During discovery, the plaintiff, defendant, witnesses, and experts may be asked to provide testimony under oath. Additionally, lawyers can gather information through written questions known as “interrogatories.” All the information collected during discovery can be used during litigation unless one party files a motion to keep the other from using it. The judge will then decide whether or not the information in question can be a part of the case. Motions Motions involve formal requests by either party asking the judge to make specific decisions about the case. In a civil case, many motions include a request for dismissal of all or part of the case. They can also request the inclusion or exclusion of a particular piece of information or evidence. Usually, motions include a written brief that explains the legal argument for the request. The motion can also include supporting evidence or statements. The opposing party has a chance to see the motion before it gets submitted to the judge. The judge will consider the brief and evidence and either issue a decision immediately or schedule a hearing so that the two parties can present oral arguments about the motion. The judge will then issue a decision. Case Evaluation and Settlement Options In some states, civil cases get referred to a panel of legal experts who perform a case evaluation. They weigh the facts and decide if the arguments have merit. They can also issue a decision about what they think is a fair settlement amount. After the panel gives their decision, the two parties can decide whether or not to accept the decision or if they would still prefer to argue the case before a judge. The plaintiff and defendant can also agree to settle the matter out of court, either with or without a case evaluation. In some cases, they may decide to use a third-party mediator to help negotiate a fair settlement. These steps aim to get a resolution without going through with the additional time and expense of a trial. Trial and Judgment If the parties do not settle the dispute out of court, the case goes to trial. Depending on the case, the final decision could be made by a judge, a panel of judges, or a jury. During a trial, both parties get to present their cases. Typically, attorneys will represent the plaintiff and defendant and argue on their behalf. The plaintiff always goes first in a civil trial, and the defendant then has a chance to respond to the claims and evidence. In civil trials, the onus is on the plaintiff to prove wrongdoing. After both sides present their case, the judge or jury makes the final decision. If the defendant is guilty of wrongdoing, the court will also issue a rule about the amount of monetary compensation or other types of restitution that the defendant must make. Appeal If you are not satisfied with the verdict, you have the right to appeal the decision. The defendant has this same right. In an appeal, another judge revisits the first court’s decision. Lawyers can file additional briefs to explain why they think the original judgment should be affirmed or reversed. The appellate court judge will then issue a ruling. Despite the well-defined steps for filing a lawsuit, it is usually best to rely on a lawyer with experience in civil court to help you navigate the case and give you the best chance for your desired outcome.