If you are thinking about drafting your last will and testament or revocable living trust yourself using one of those do-it-yourself ("DIY") products, you may want to reconsider. Despite how popular these form documents have become and the reduction in cost they promise, these computer generated products do not compare to professional legal work. Even if the document you bought has some of the hallmarks of a professional document, there is always a risk that DIY wills or trusts may not work the way you expected, or even prove to be invalid.
A last will and testament is a written legal document that describes to everyone who survives you how you intend for your estate to be distributed. A revocable living trust is used by many as a substitute to a will to achieve a more efficient distribution of estate assets outside the purview of the probate courts. Both documents may be revised or rescinded at any time during your lifetime to take into consideration changes in your family circumstances or state or federal laws. There are numerous clauses that are important to consider including in a thorough, well-drafted will of trust. The vast majority of the DIY products we have reviewed in our office lack the detailed provisions you may need to meet your estate planning goals and objectives.
Before you make the decision to substitute professional advice with online estate planning products, you need to first understand the risks of doing so. This is especially true in complex legal matters like estate planning. Most of the mistakes that occur with DIY wills come from how the document is executed. For instance, often people fail to have the document properly witnessed, which typically requires two independent witnesses signing the document simultaneously. If the DIY will is not properly witnessed when executing the will that could be held to be invalid and crest a serious issue. Many states require that at least one witness not be a beneficiary. Other very common mistakes include misspelled names and ambiguous terms that require interpretation by a court. In the realm of DIY trust planning, the DIY service providers generally provide very little guidance on funding the trust properly, and none of them we have experienced provide customized advice on how to coordinate beneficiary designations on IRAs or tax qualified retirement plans with the overall estate plan. This can result in retirement plan assets being distributed to unwanted beneficiaries upon your death.
Some of these common mistakes can easily result in real legal issues that require a petition to the probate court for instructions after your death. Most these issues cannot be quickly rectified with a few simple modifications. The American Bar Association has created a Task Force to evaluate the use of certain do-it-yourself methods in estate planning, including DIY will and trusts. The biggest danger clients face in preparing their own estate plan with a do-it-yourself product is the false sense of security, because they are unaware of the errors which will potentially undermine their plans. In addition, unlike an estate planning attorney, these companies do not carry professional malpractice insurance, so the risk of their mistakes is merely covered by the assets of the company.
There are some very limited situations in which a do-it-yourself estate planning product may be sufficient to meet your needs. In situations where clients have very limited assets owned in the client's name alone, a DIY Will may be sufficient when the client intends to leave that property to their closest living relative outright. On the other hand, if a client has substantial assets that are more complicated, or there are other issues that by their nature do not generally surface in a DIY estate planning process, the use a DIY estate planning solution could have serious consequences.
While a DIY will may be an inexpensive alternative to an estate planning attorney, the consequences of executing an invalid estate planning document can be very serious. Not only do you risk leaving your family in financial and emotional turmoil, but your legacy could be lost to enormous legal fees or unnecessary taxes.
The job of an estate planning attorney is to provide legal advice in a legal field that typically requires drafting complicated documents. Those documents typically result in serious consequences when not properly drafted. An experienced estate planning attorney will ask the appropriate questions to identify all the issues that should be addressed in a complete estate plan. That is why the American Bar Association's Task Force encourages people to reconsider using do-it-yourself documents when creating their own estate plan.
The risk of errors in executing DIY Wills is not the only reason you should reconsider the use of those products. Wills are not one size fits all by any means. Wills, as well as most other estate planning documents, are meant to be customized as no two clients have the same family or financial situation. That is why it is important to work with an estate planning attorney who has the knowledge and experience to help you create the perfect plan. Otherwise, your estate plan may not be valid or may not work the way you expected.
Attend a free Webinar! If you have questions regarding DIY wills or any other estate planning issues, please contact Anderson, Dorn & Rader, Ltd. for a consultation, either online or by calling us at (775) 823-9455.
It may come as a surprise but for some people finding out that you are about to receive an inheritance is not always good news. For people who are currently receiving some form of income or asset based government benefits, such as SSI or Medicaid benefits, there is always a concern that an inheritance may jeopardize their eligibility for those benefits. For others, the thought of receiving certain types of assets, such as a family-owned business, may seem overwhelming. If you are about to receive an inheritance you should contact your estate planning attorney to determine if inheritance planning is something you may need.
Before you can successfully plan, you need to know, at least in general terms, what type of inheritance you will be receiving. For example, if you are inheriting from a parent, then you should obtain a list of assets and a copy of your parent's will if there is one. That way you can get at least a rough estimate of the size of the estate and what your share will be. Depending on the size of the inheritance, you will need to consider how to modify your own estate and financial planning strategies.
Exactly how you should integrate inherited assets into your own finances depends on several factors, including the nature of the assets you inherit, the financial and estate planning strategies your parent may have used, your marital status and potential desire to keep your inherited assets separate from your marital estate, and your own financial situation. Again, if you receive government benefits of any kind, your eligibility for which are dependent on your financial resources, you will need specific inheritance planning to protect that inheritance as well as your benefits, and time is usually of the essence.
Typically, inheritances include mostly cash, along with some heirlooms and other tangible property that often has more sentimental value than real financial worth. In most cases it is easier for the Personal Representative of an estate to distribute assets to heirs after they have been liquidated. However, there can be situations where you may receive shares of stocks, mutual funds, individual bonds, real estate or an interest in closely held business. Depending on the size of these types of assets, you may prefer to sell them and reinvest the proceeds using a different strategy. Your estate planning attorney can help you make these decisions.
Depending on the nature of the assets you expect to inherit, there are certain actions you may need to take sooner, rather than later. For instance, if you wait too long to sell an asset you inherited, you could increase the chances of recognizing unfavorable tax consequences. If you are inheriting a retirement account, you need to have a plan as to how you will withdraw those retirement funds, and the retirement account must be retitled as an inherited retirement account by September 30 of the year following the account owner's death. Being aware of all of your options is important when creating an inheritance plan, especially if your goal is to reduce your tax liabilities as much as possible.
Once again, if you receive income-based government benefits, receiving a significant amount of income from an inheritance could put your eligibility for those benefits in jeopardy. If inheritance planning will not provide the protections you need or the risk is not worth the value of the inheritance, you may want to consider rejecting it if state law permits such an approach. Many people do not realize that you can reject an inheritance and there are situations where that may be the best course of action.
It is important to note that rejecting or disclaiming an inheritance requires more than simply telling the Personal Representative you do not want the money or property. There are specific laws that dictate how you can reject an inheritance. If order to be sure that you never become the legal owner of the property, there are very specific steps that need to be followed.
In nearly every case, you need to put your disclaimer in writing and deliver it to the person in control of the estate if you want to properly reject your inheritance. Typically, that would be the Personal Representative of the estate or the Trustee of the trust that holds the subject property. This disclaimer should normally be submitted within nine months of the person’s death. It is very important to note that, in order to effectively reject the inheritance, you may not accept any benefit from the property whatsoever.
Attend a free Webinar! If you have questions regarding inheritance planning or any other estate planning issues, please contact Anderson, Dorn & Rader, Ltd. for a consultation, either online or by calling us at (775) 823-9455.
Being asked to serve as a trustee of a trust is a very important job. The decision of whether or not to accept the appointment as trustee should not be taken lightly. The role of a trustee is essential to successful trust administration. As trustee, you are the person responsible for making sure the terms of the trust document are fulfilled. You are also responsible for managing trust property and maintaining accurate records regarding any transactions you make involving the trust. In consideration of these and other duties of a trustee, here are five common mistakes in trust administration that must be avoided.
A trustee is always required to manage the trust property while keeping the best interests of the beneficiaries in mind. A fiduciary duty is one of honesty, impartiality and trust. All actions taken on behalf of the trust and its beneficiaries must be above board. A trustee must avoid engaging in transactions that may be construed as a conflict of interest. Under state law, trustees are also required to invest trust assets prudently and must avoid investing too speculatively. If a trustee fails to satisfy these requirements and the trust assets suffer a loss, the trustee can he held personally liable.
In light of the substantial responsibility of a trustee and the numerous state and federal laws that govern trust administration, we recommend that a trustee seek professional assistance when carrying out the trustee's responsibilities in administering a trust. When a trust becomes irrevocable upon death of the creator of the trust (commonly referred to as the "Trustor" or "Settlor"), the trust becomes a separate taxable entity which subjects the trust to a number of federal (and state if the trust is being administered in a state that has an income tax) tax compliance requirements. A trustee also has responsibilities to provide beneficiaries information about the trust and its administration and to provide annual accountings to the beneficiaries either annually or upon request. Finally, it is highly advisable for a trustee to delegate the responsibility of prudently investing trust assets to a qualified financial professional. This shifts the duty to invest trusts assets prudently from the trustee to the financial advisor and insulates the trustee from any potential personal liability for poor investment choices or investment performance. Investment management is the most highly litigated issue in trust administration.
As a fiduciary, you are required to look beyond your own interests and enforce the terms of the trust document impartially in every decision you make. This may be more difficult than it seems, especially if you have some type of relationship to one of the beneficiaries of the trust, or even if you have emotional ties to the family in general. For example, suppose you are the trustee and have discretion to make distributions of income among your children and other more remote family members who are all beneficiaries of the trust. Such relationships often create the perception, if not a presumption, of a lack of objectivity which could lead to the trustee being removed and replaced with an independent trustee.
As mentioned briefly above, a trustee has a duty to provide beneficiaries a complete and accurate reporting of all transactions involving trust property. This is another very highly litigated area of trust administration. For this reason, it is very important that, as trustee, you are aware of all that your responsibilities encompass and understand the potential risks for liability. State trust accounting laws mandate the information and format in which an accounting must be provided to beneficiaries. Aside from documenting and reporting all the financial transactions of a trust, the trustee's rationale behind each decision he or she makes that relates to trust property should also be documented, especially the trustee's decisions to approve or deny distribution requests from beneficiaries. If a trustee keeps detailed, accurate records of the trust administration, the trustee will be prepared to defend his or her decisions and protect him or her from personal liability if there is ever a dispute.
Trustees are typically entitled to a fee for their services. However, what constitutes a reasonable fee can differ from one state to the next. In some cases, the trustee will not request a fee depending on their relationship to the Trustor and/or the beneficiaries. Unlike corporate trustees, which usually have a set fee schedule, an individual, non-professional trustee will need to negotiate a reasonable fee for his or her services. If a trustee fails to discuss fees up front, when the issue of compensation arises later it may come as a surprise to the beneficiaries who may then challenge the fee. In some situations, a trustee may serve in that role for several years without being paid. Later on, when the time and effort required to fulfill the duties has increased significantly, the trustee may try to seek compensation. If compensation was not discussed at the beginning, the beneficiaries may take issue with paying a fee now, which may result in the need for court intervention.
If you are in the process of establishing your trust and you are considering who to select as trustee, there are many factors you should consider. You should choose someone whom you believe will provide careful management of your trust assets, someone who will exercise the right level of attentiveness when implementing your instructions, and who will demonstrate the ability to place the interests of your beneficiaries above all others. Most importantly, you should select a trustee who will form and maintain a relationship with your beneficiaries and their families. Talk to your estate planning attorney for guidance in choosing the right trustee for you.
If you have questions regarding trust administration, or any other estate planning issues, please contact Anderson, Dorn & Rader, Ltd. for a consultation, either online or by calling us at (775) 823-9455.
When it comes to planning for your future and the future of your family, the advice of an estate planning attorney can be invaluable. Estate planning attorneys can provide the guidance you need navigate through the numerous choices available.
An estate planning attorney specializes in preparing clients for, not only death, but also the possibility of mental incapacity. Estate planning attorneys offer customized advice based on each client's needs and goals. For example, clients may want to involve their family members in the management of their estates, while others might not. Your attorney will describe all of your options and help you decide what you need to accomplish your goals for your estate. An attorney is also invaluable when it comes to ensuring your plan meets state guidelines. That way, your plan will be valid and you can avoid most potential disputes.
Because estate planning is not a "one size fits all" venture, it is vital that you work with an estate planning attorney who has the knowledge and experience required to advise you. In order to be the most effective, your estate planning attorney should be very knowledgeable about the applicable laws in your state. This would include the laws that regulate probate, wills, and trusts. Otherwise, your estate plan may ultimately be invalid or not operate the way you intended. It is also important to be as detailed about your life, your goals and your family situation, in order for your estate planning attorney to be able to create an appropriate plan. If not, your estate plan will not likely meet your expectations or your personal goals.
If your goal is to make sure you and your family are prepared for what happens after your death, an estate plan is what you need. Estate planning can also prepare you for potential incapacity which could keep you from handling your own affairs. There are several different estate planning tools which an experienced estate planning attorney can use depending on your specific needs. With an inclusive estate plan, you can simply prepare for both incapacity and death.
Planning for the future is always an important goal in many areas of your life. When it comes to your estate, planning ahead provides you with the opportunity to decide who should inherit your property upon your death. Estate planning can also be helpful in reducing your estate taxes. In the event that you become incapacitated for any reason, whether temporarily or permanently, your estate plan can also give your family the authority it needs to manage your affairs if you are unable to make financial and medical decisions for yourself.
Your estate planning attorney can explain how the part of your estate plan that relates to your death will work. Your plan should first pay off your debts and then it should specify who will receive your remaining assets once your debts have been paid. The most common estate planning tool used to accomplish this is a Will. A will is essentially your written instructions on how you want your estate to be handled upon your death. A will should also identify the individual you have chosen to manage the distribution of your estate.
Very similar to planning for death, planning for the possibility that you may become incapacitated requires two components. In case you suffer an injury or medical condition that makes you incapable of handling your own affairs, you will need someone to take make the important decisions for you. The first part of a typical incapacity plan addresses your personal and health care needs, while the second part addresses your financial affairs. On the other hand, if you become incapacitated but do not have an effective incapacity plan in place, it will likely be necessary for a court-supervised guardian to be appointed to care for you and handle your affairs. Guardianships can be very expensive and require you to relinquish control of your affairs entirely. For these reasons, planning ahead is critical.
If you have questions regarding estate planning, please contact Anderson, Dorn & Rader, Ltd. for a consultation, either online or by calling us at (775) 823-9455. Attend a free Webinar for more information.
If you are a gun collector, or maybe just a gun owner, you may be wondering, what is the best way to pass on your firearms to your heirs? You may have even heard of a gun trust, a specific type of trust designed to address to the unique laws applicable to firearms. A gun trust can be beneficial in handling the inheritance of certain types of weapons, especially those that are governed by federal and state regulations. At the very least, you want to keep your heirs from inadvertently violating the law.
Whether it is necessary to place certain weapons in a gun trust depends on the type of weapon and whether it is regulated. There are two federal laws that might apply: the National Firearms Act of 1934 (NFA) and Title II of the Gun Control Act of 1968, which revised the NFA. NFA weapons include machine guns, silencers, short-barreled rifles, and short-barreled shotguns (including sawed-off shotguns), grenades, and other similar weapons.
Under federal law, NFA weapons are required to have a serial number and be registered with the federal Bureau of Alcohol, Tobacco, Firearms and Explosives, commonly referred to as the ATF. An NFA firearm can only be possessed and used by the registered owner. For this reason, special arrangements need to be made in order to pass these weapons on to someone else. The catch is, if such a weapon has not already been registered, it cannot later be registered and is illegal to own. To transfer a registered firearm, the owner must obtain ATF approval and pay a $200 tax on most transfers. It also requires receiving permission from the local chief law enforcement officer (CLEO) and being fingerprinted and photographed.
There are several advantages to utilizing a gun trust. First, the trust can help you to avoid certain federal transfer requirements. For example, if you name more than one trustee of your gun trust, each of those individuals will have the right to possess or use the trust firearms. Also, you can draft your trust in a way that it remains in effect after your death. Since the firearms remain in the trust at your death, the need to transfer those firearms is avoided. In other words, your heirs will not be required to pay the $200 transfer tax and satisfy the other transfer requirements.
The typical executor is not familiar with the various rules and regulations governing ownership and possession of NFA and other weapons. That means, without proper guidance, your executor could violate criminal laws by transferring a weapon in your estate without going through the proper procedure. An executor could also make a mistake by taking or sending an NFA weapon to a state where it is prohibited or giving it to a person who is not permitted by law to own that weapon. However, if you use a gun trust, those issues can be handled ahead of time.
The Gun Control Act makes it unlawful for certain individuals to possess firearms. For instance, the following categories of people are restricted from possessing firearms, among others:
A gun trust is different from the common revocable living trust. A simple living trust provides for the transfer of trust assets without going through probate court. This generally saves time and money after your death. A living trust often terminates shortly after your death, after the trust assets have been distributed to your heirs.
A gun trust, on the other hand, commonly has multiple trustees and is intended to last for more than one generation. Gun trusts must also take into account state and federal weapons laws. For these reasons, it is important to consult a lawyer who has significant experience with the applicable state and federal laws governing the legal use and possession of weapons and how they must be transferred.
If you have questions regarding gun trusts or any other estate planning needs, please contact Anderson, Dorn & Rader, Ltd., either online or by calling us at (775) 823-9455. Attend a free Webinar!
In the event you become unable to make decisions about your own medical care, due to illness, injury, advanced age or some other reason, having the right legal documents in place can be a lifesaver. Simply writing down your wishes ahead of time may not be enough because you cannot anticipate every situation. You also need to select someone you trust to manage your care, instead of relying on a doctor, estranged relative, or even a judge, none of whom are likely to be aware of your preferences. Consider a medical power of attorney.
In order to accomplish a comprehensive medical power of attorney in Nevada, you need three different types of health care documents: the durable power of attorney for health care, a living will, and a HIPAA authorization form. The durable power of attorney for health care allows you to select someone you trust to manage your health care when you are unable to do so, based upon predetermined statements of your desires. That person you appoint is your “agent” for all medical decisions that need to be made during your incapacity. The second document, the living will, allows you to specify in writing the type of medical treatment you agree to receive (or not receive) in certain situations. This can include “do-not-resuscitate” orders and other living saving procedures. The HIPAA authorization form allows you to identify all people that you wish to receive your medical information that would otherwise be protected under HIPAA laws and regulations.
The person you select to make your health care decisions is called your agent. It is common for people to name a spouse, partner, relative, or close friend as an agent. However, in Nevada your agent may not be:
These restrictions do not apply to your spouse, legal guardian, or next of kin, however. So if your spouse happens to be employed at a health care facility, the restriction would not apply.
Despite the name, a living will is nothing like a conventional will (also commonly referred to as your "last will and testament"). It does not address the disposition of your property or assets upon your death; it only provides instructions regarding your health care preferences. It can be as general or specific as you want it to be, as long as it provides sufficient information to health care providers about your preferences. Generally, most living wills will be a directive to your physical to cease or not provide life-prolonging or life-sustaining treatment if the patient has a permanent, terminal, and irreversible condition that will cause the patient's death within a relatively short period of time. This can avoid the family arguing over whether you would have wanted them to "pull-the-plug" or not.
In order to create a legally valid power of attorney or living will, you must be considered “legally competent.” In this context, competency refers to mental capacity, age and maturity. In order to enter a legally binding agreement, you must have reached the age of majority established for your state. In Nevada, the age of majority is eighteen (18). This requirement is based on the presumption that individuals who are still immature are too inexperienced to understand or properly execute a contract or legal document.
A power of attorney for health care is typically drafted so that it goes into effect once a physician has determined you are incapacitated and unable to make your own health care decisions. Lacking capacity generally means that either you can no longer understand the nature and consequences of the health care choices that are available to you, and/or you are unable to communicate your own wishes for care, either orally, in writing, or through gestures. In other words, if you are so ill or injured that you cannot express your health care wishes, your power of attorney or living will spring into effect immediately. If, however, there is some question about your ability to understand your treatment choices and communicate clearly, your doctor (with the input of your health care agent or close relatives) will decide whether it is time for your health care documents to become operative.
In Nevada, you can authorize your health care agent to take over your medical care immediately upon execution of the document, which is preferable since accidents can never be foreseen. In the event of something happening, there will be no need for a physician to determine whether you are incapacitated or not. Instead, you agent will have the ability to step in and make decisions on your behalf at any time. As long as you are competent, you will still be able to dictate your own medical care. Regardless of when the document goes into effect, your health care agent is always required to act in your best interests and follow your health care wishes as you have expressed them.
If you have questions regarding a medical power of attorney, or any other elder law issues, please contact Anderson, Dorn & Rader, Ltd., either online or by calling us at (775) 823-9455. If you are in the Reno, NV area, be sure to schedule an appointment to speak with us about a Reno power of attorney for your medical needs!
Trusts are a key element of every good estate plan. Knowing which type of trust you should have is also key, and the most popular type of trust is a Revocable Trust (also commonly called a Living Trust). It is often necessary to review and revise your trust to address changes in your finances, family, and other aspects of your life, and the need to change the terms of your trust can arise more than once throughout your lifetime. For clients who create revocable trusts, it can be easily amended or revoked whenever necessary, and the flexibility of a revocable trust is one of its greatest benefits.
There are several different types of trusts, but they are all basically categorized as either revocable or irrevocable. There is a very important difference between a revocable and irrevocable trust. A revocable trust permits the grantor(s) (the person(s) creating the trust) to make changes to the terms of the trust. You can also revoke the trust altogether, at any time, during your lifetime. Once you pass away, the trust usually becomes irrevocable. Because revocable trusts can be modified when your life circumstances or intentions change, they are very flexible estate planning tools. With a revocable trust, the trustee takes over only upon your death or incapacity.
An irrevocable trust is different because, by definition, it cannot be modified once it has been executed. Despite the fact that irrevocable trusts cannot be modified, there are a great many benefits to this type of trust. Because the trust is irrevocable, the assets are basically out of the reach of estate taxes, probate court, and in some cases, your creditors. Though you may lose control of your assets, you gain favorable tax consequences and other protections.
In order to enjoy true asset protection, your trust must be irrevocable. That is because, after your money has been transferred to the trust, it is no longer considered your money. In other words, it is no longer subject to your creditors. Note, however, that there are certain exceptions for fraudulent transfers, and there are certain look-back periods that might make those assets available to creditors. Contrarily, with a revocable trust, if you maintain the right to amend the trust and have the authority to transfer the assets back to your control, then a creditor can still reach those assets.
There are generally two ways to modify a revocable trust. It can either be amended or restated. Revoking a trust is usually more complicated because the property included in the trust has already been transferred and must be transferred again. This adds complexity, time, and cost when changing a revocable trust and is not generally recommended. It is important to understand the state laws that govern your trust, and a qualified attorney should be able to review your trust documents to help determine if anything needs to be updated. That way, you can ensure your amendment or restatement will be valid.
There are some situations where an amendment is sufficient to account for changes in your life. For example, if you get married or have a baby, or when you have a substantial increase in your trust property, then an amendment could do the job to make sure your goals are met. If your beneficiaries change, either because someone has died, or you changed your mind about who you want to inherit a particular piece of property, then an amendment can update these parts of your trust without affecting the rest of the documents. Additionally, if there have been minor changes in the law that would not otherwise affect the majority of your trust, an amendment can specifically identify and update those terms of your trust to reflect the most current law and legal practices.
Adding amendments to an existing trust can often be the simplest way to modify your trust, but amendments can become confusing. When amending a trust, an attorney must first look to the original trust document, and every subsequent amendment, to make sure the proper language is in your trust agreement. If you have made multiple amendments to your trust, it can be a nightmare to track each change through each separate legal document. Other times, the changes needed will require amending large portions of your trust, which adds times, cost, and complexity. One solution is to restate an existing trust without revoking the trust entirely; in other words, start over from scratch in writing the trust agreement. That way, you can simply include the necessary changes, while keeping the original date of the trust. Then, the trust property that is already held in the trust will not need to be transferred again.
Creating a shared trust with a spouse is quite common. With a shared trust, either you or your spouse has the authority to revoke the trust as long as you both are alive. If you decide to amend or restate the terms of the trust, both you and your spouse must agree to those changes in writing. Shared trusts can be drafted a number of different ways, so that after the death of one spouse the trust can either limit the surviving spouse's ability to amend the trust, or it can provide complete flexibility allowing the surviving spouse to amend the entire trust.
If you have questions regarding revocable trusts, or any other estate planning needs, please contact Anderson, Dorn & Rader, Ltd., either online or by calling us at (775) 823-9455.
You are probably not surprised that contesting a will is very common. Regardless of the desire to eliminate family disputes about who should receive what, they are often inevitable. You can take certain steps to avoid them and your estate planning attorney can help.
There are generally four different legal bases for challenging the validity of a will. The four grounds include:
Each of these grounds can be difficult to prove. Contesting a will can also be a very expensive court process, yet that fact does not discourage everyone.
State law regarding wills in Nevada govern the specific requirements for a valid will. The document must be signed by the testator (person creating the will) and by two witnesses who must be present during the execution of the will and each signature. Many will contests challenge the authenticity of the signatures. The validity of the will may also be challenged when a required signature is absent.
A will cannot be validly executed if the testator lacks the required testamentary capacity. In Nevada, the term "incapacity," which would prevent a testator from executing a valid will, is defined as follows:
“Incapacitated person” means a person who is impaired by reason of mental illness, mental deficiency, advanced age, disease, weakness of mind or any other cause except minority, to the extent of lacking sufficient understanding or capacity to make or communicate responsible decisions.
Even if in cases of temporary incapacity, it is necessary to establish that the testator was not incapacitated at the time the will was executed. Proving incapacity can be difficult to do in most cases and pursuing this avenue of contesting a will is often expensive.
Regrettably, there are many situations where it is suspected that undue influence or coercion have been used to coerce a testator into either creating the will or including certain provisions in the will. This is a common challenge when there is evidence that the testator may have been emotionally vulnerable in some way. Indeed, as we age it is possible to lose some mental faculties, which may then be exploited by someone close to us. As with showing incapacity, proving undue coercion can be hard.
Deception is a major issue in creating wills. Like undue coercion, fraud in the creation of a will is also an issue. A will may be challenged by evidence that the testator may have been tricked into signing the will or including terms in the will that the testator did not intend. For example, a testator may be given a document that is represented to them as a deed or power of attorney, when in fact it is a will. The problem with proving fraud is that the primary witness, the testator, is no longer around to testify. The witnesses to the will become extremely important.
If you want to be sure that your family won't waste time contesting a will after your death, you might want to consider creating what is called a "self-proved" will. This specific type of will, recognized in the state of Nevada, takes the guesswork out of will authenticity. You simply sign your will in the presence of a notary. Your witnesses sign in front of a notary, as well. Additionally, you and your witnesses need to sign a notarized affidavit that sets out who you are and confirms the fact that each of you knew you were signing the will. This affidavit is always kept as a separate document.
The greatest benefit in using a self-proving Will, in addition to preventing contests, is that it speeds up the probate process. The probate court does not need to obtain testimony from the witnesses in order to prove the Will's validity, which makes the process faster.
Please join us for a free Webinar! If you have questions regarding your last will and testament or any other estate planning needs, please contact Anderson, Dorn & Rader, Ltd., either online or by calling us at (775) 823-9455.
While most of us would probably be excited to receive news of an inheritance, that is not the case for everyone. The reality is there may be certain situations where receiving an inheritance is not in your best interest. There are many different reasons this may be the case. So, you may find yourself wondering how to reject an inheritance. This can be an important part of inheritance planning.
The answer is yes, you can reject an inheritance. However, it is a bit more complicated than simply telling the executor you don’t want it. Certain rules must be followed if you want to ensure that you never legally become the owner of the property. First, the disclaimer must be put in writing and delivered to the person who is in control of the estate. That would typically be the personal representative or trustee. In most cases, the disclaimer should be completed within 9 months of the person’s death. The most important thing to remember is that you cannot accept any benefit from the property you are rejecting.
If one spouse dies, the surviving spouse can inherit the entire estate tax free, based on the unlimited marital deduction. However, once the inheritance is added to the surviving spouse’s estate, it may cause the surviving spouses' estate to exceed the lifetime credit of $5.45 million. Only estates that are valued under that amount can be passed on without incurring estate taxes. Any excess amount will be taxed at 40 percent. In this situation, it may be a smart choice to disclaim the inheritance from your deceased spouse, allowing it to pass directly to the next beneficiaries, typically your children. Before making this decision, discuss this with your estate planning attorney as part of your inheritance planning.
In some cases, the beneficiary of an inheritance may also be the recipient of state or federal benefit programs, such as Social Security or Medicaid – benefits programs that are based on income or need. In those situations, accepting an inheritance, depending on its size, could effectively disqualify the beneficiary from those benefits. It may be more important to that individual to preserve continue benefits, than to receive an inheritance.
Regardless of the reason you may need to disclaim an inheritance, it is essential that you discuss your decision with an estate planning attorney. They can help you to ensure that the disclaimer is handled properly, so you can avoid problems in the future. Inheritance planning requires consideration of your present and future financial goals. There are several steps for developing this plan, which you and your attorney can follow.
In addition to an inheritance plan, you need to have a tax plan as well. While an inheritance is not generally considered income for purposes of federal income taxes, subsequent earnings from the inherited taxes are. That means, you will be taxed on any interest paid on inherited cash in a bank account or dividends on inherited stocks or mutual funds. Also, any gains you have when you sell inherited investments or property are generally taxable. Luckily, you can claim losses on these sales as well.
If you have questions regarding inheritances, or any other inheritance planning issues, please contact Anderson, Dorn & Rader, Ltd., either online or by calling us at (775) 823-9455.
Trusts are popular estate planning tools for many reasons, including the fact that they help avoid probate and they provide some asset protection. Depending on the size and nature of your estate, creating a trust can be complicated. However, your estate planning attorney can help you with the details. One of the most important steps in creating a trust is funding that trust.
A trust is a fiduciary agreement between the trustee and the grantor. Fiduciary just means an agreement based on confidence and trust. The trust agreement authorizes the trustee to obtain and manage all of your trust assets on behalf of your named beneficiaries. The trust agreement also provides specific instructions regarding the management and distribution of your assets.
Once you have decided to include a trust in your overall estate plan, here are the basic steps that must be followed in creating a trust. The basic steps to create any trust are as follows:
The most important thing to remember is, once you execute the trust agreement, you must fund your trust. If you do not, your assets will become subject to probate upon your death and the advantage of using a trust to avoid probate is lost.
A trust must be funded so that the property you intend to be controlled by the trust will actually be included in the trust. Once you properly fund the trust, your trustee can manage all of the property when you become mentally incapacitated or upon your death. You have to do more than just sign the trust agreement. How you go about funding your trust will depend on the nature of your assets. Not every asset is funded into a trust the same way.
There are basically three ways to properly fund a trust, depending on the type of property that needs to be transferred to the trust. These methods include:
All of these methods are pretty simple to accomplish, but you still have to follow the required procedures to make sure it is done properly.
There are several types of trusts, each with its own purposes, advantages and disadvantages. However, all trusts fall into one of two categories: revocable or irrevocable. It is important to understand the differences between these two types of trusts. When a trust is "revocable" the grantor (person creating the trust) retains the power to modify the terms of the trust or revoke it altogether. This makes revocable trusts very flexible, which is a good thing since circumstances often change resulting in the need for modifications.
You may have guessed – irrevocable trusts are different because they cannot be modified once they have been executed. This can be a great benefit, though. Because your assets are no longer a part of your estate, they are no longer subject to probate or estate taxes. So, although you must relinquish control of your assets with an irrevocable trust, some will enjoy valuable tax benefits.
There are generally two ways to modify a revocable trust: amendment or restatement. Either way, the result is basically the same so the choice is yours. In some situations, an amendment to the trust will be sufficient. For example, getting married, having children, or having a substantial increase in your trust property are all reasons you may need to amend your trust. Also, whenever your beneficiaries change, and amendment would be property. This most often becomes an issue when a beneficiary dies or you change your mind about giving someone an inheritance. Your estate planning attorney can help you decide the best way to modify your trust.
The answer is simple. Any property that is not properly funded into your trust will need to go through probate. That means before you heirs can inherit those particular assets, the court will need to oversee the probate of your estate, which is costly and time-consuming. As such, if you overlook the need to fund all of your property, your trust will likely not be as effective as you intended.
If you have questions regarding trusts, or any other estate planning needs, please contact Anderson, Dorn & Rader, Ltd., either online or by calling us at (775) 823-9455.
Nevada has allowed the use of self-settled spendthrift trusts since 1999. These trusts can provide great protection for trust property against the creditor's of beneficiaries. Basically, you are allowed to be the direct beneficiary of your own irrevocable trust, while still protecting your trust property from creditors. Under Nevada law, you must have an independent trustee who has the authority to distribute the trust income or principal to you. Then, as a co-trustee, you may have the power to distribute trust property to other beneficiaries, such as your descendants or other loved ones.
Even with an Asset Protection Trust, creditors may be able to pursue your trust property for two years after the property is transferred to the trust. That means that the protection does not begin immediately. Creditors also have six months from the time they discover the transfer, or should have reasonably discovered the transfer. A creditor that does not exist until after the trust is created, also has two years to file a claim. Once the two year period has ended, your trust property is protected against future claims.
According to Nevada law, a self-settled spendthrift trust will be recognized regardless of whether it was created in another state, as long as one of these factors is met:
Other assets, such as stocks, bonds, interests in real property, that are not located in Nevada can easily be moved to Nevada so they can be transferred into your trust.
Certainly anyone can create an Asset Protection Trust and benefit from the safeguards it provides for trust property. However, these specific types of trusts are particularly suitable for those who are exposed to substantial professional liability, such as doctors. Regardless, if you are concerned about liability of any type and need to protect your assets, an Asset Protection Trust can be a great way to accomplish this goal.
If you make a gift of property directly to your child, for example, there are certain inherent risks as to that property. If the gift is cash, the child may spend it immediately, or if it is real property, your child may take out a mortgage on it. Creditors could obtain liens on the property, or a spouse could come along and obtain a half interest in the property. If you want to mitigate any or all of these risks, you should consider a traditional third-party spendthrift trust. The child would be the third-party beneficiary. Based on the terms of the trust, you can provide certain limitations and protections.
Even in light of the many benefits, some people are still hesitant to relinquish complete ownership of property to an irrevocable trust. If you name yourself as a trustee of a spendthrift trust, you limit the protection against creditors. The solution to this dilemma is a self-settled, first-party spendthrift trust. As long as you comply with all of the statutory requirements, you can name yourself as the beneficiary, while enjoying the same creditor protection as third-party beneficiaries of the trust. If this is your goal, consider the Nevada Domestic Asset Protection Trust.
There are basically five requirements that must be met in creating a Domestic Asset Protection Trust in Nevada. First, at least one trustee must be either a natural person who resides or is domiciled in Nevada, or a bank or trust company that maintains an office in Nevada. The trust must also be in writing and irrevocable. The trust cannot include a provision that requires any part of the income or principal of the trust be distributed to the settlor, that is the person creating the trust. Finally, the trust must not be intended to hinder, delay or defraud known creditors.
The statute gives the settlor certain authority that does not affect creditor protection, which can be very useful. For example, the settlor has the power to veto trust distributions. Also, the settlor retains the ability to use real or personal trust property. The settlor may also retain the power to direct the investment of trust assets. Just as an individual with no known creditors is allowed to give away her property (and thereby protect it from future creditors), you can instead transfer that property to a Nevada Domestic Asset Protection Trust.
If you have questions regarding trust property, or any other estate planning needs, please contact Anderson, Dorn & Rader, Ltd., either online or by calling us at (775) 823-9455.
When it comes to estate planning most clients readily think about their cash, investments, houses, and cars. But what some clients tend to overlook are the valuable family heirlooms. Those items hold value: not only monetary, but most often emotional value. When it comes to deciding how to distribute your assets, you will certainly want to include your personal effects, such as your grandmother's engagement ring or your grandfather's pocket watch. Including heirlooms in your estate plan is important for you and your family.
Be specific and put it in writing
It is common for parents to sit down with their children and discuss which personal belongings or heirlooms each of them may want after the parents pass on. However, even though children may agree now their preferences may change over time. Memories often fade or personal feelings change. Though it may not be necessary to specifically leave each and every personal item to someone, the gifts that are meaningful to you or your family should be written down in specific detail. Designating which items you want to leave to which family members will be important to you and your beneficiaries in the future. A properly drafted estate plan will allow you to distribute those items upon your death through a separate writing that can be updated over time without constant attorney involvement.
Obtain an appraisal of your heirlooms
An heirloom is a specific item that is typically passed on from one generation to the next. Traditionally, these types of items include items that hold great monetary, historical, or sentimental value. Nonetheless, the first step you should take is to determine the potential monetary value by getting the items appraised. Some clients prefer to get an appraisal while still alive in order to make sure their children each receive approximately the same value of property, and this can help with our areas of planning (such as obtaining the right amount of insurance). But an appraisal while still alive is not necessary, as this step can also be done after your passing.
Finding someone to appraise your heirlooms
There are many different dealers out there with the expertise to appraise your heirlooms. Determining where to go depends on what type of items you have. For instance, antique dealers can appraise antique furniture and other older, rare items. Fine art dealers, rare book dealers, and many others are available to provide accurate appraisals of the value of your heirlooms. If you need a jump start on locating these individuals, contact certain professional organizations, such as Private Art Dealers Association, Art Dealers Association of America, International Fine Print Dealers Association, or the National Antique and Art Dealers Association of America. These associations are very helpful in finding the type of qualified dealer you need.
Include a “No-Contest Clause” in your estate plan
In Nevada, we recommend that you include what is referred to as a “No-Contest Clause” in your will or trust. This provision, when properly drafted, will often discourage family disputes over specific inheritances. With a No-Contest Clause, if an heir chooses to contest, or challenge, the will, they will no longer be entitled to receive any part of the inheritance.
If you have questions regarding family heirlooms, or any other estate planning needs, please contact Anderson, Dorn & Rader, Ltd., either online or by calling us at (775) 823-9455.
A living trust is an important component of every estate plan. But, before you make a decision to include one in your personal estate plan, you should dispel some of the most common myths regarding living trusts. These myths have been circulated through the general public, and are frequently repeated online. In an effort to debunk the most common of these misperceptions, this article will examine the 3 top living trust myths.
The procedures for creating a revocable living trust are pretty simple and straightforward. Living trust attorneys sit down with their clients to determine their goals and objectives, and then draft the trust document selecting all the terms terms under which the trust must operate. Living trust attorneys will discuss all options with their clients before recommending a particular trust design. Once the trust document has been drafted, the next step is to transfer the clients property into the name of the trust. This is referred to as “funding” the trust. After the trust is completely funded, the trust becomes the new owner of all the trust property.
Many clients are under the misconception that, because the trust owns the property, they will lose all control over the property that was transferred into the trust. However, this is not at all the case. A living trust is a revocable trust, meaning that you have the ability to manage the trust and the right to use and enjoy all of the property included in the trust as you see fit. Transferring property into a living trust results in no loss of control over the assets.
Most living trust attorneys will tell you that, although a living trust is an invaluable estate planning tool, it certainly is not the only tool you need. For instance, a living trust does not allow you to name a personal representative to administer any estate assets, or a guardian who will take care of your minor children in the event of your death. As such, you will need to also create a last will and testament in order to address both those needs. There are also many other estate planning documents you need to address other financial and medical planning considerations that a living trust simply does not cover. Examples of such documents include a durable power of attorney for property, a living will, a durable power of attorney for health care and a HIPAA disclosure authorization. The goal is to have a comprehensive estate plan.
While a living trust for a married couple may be designed to minimize estate taxes in certain cases, generally speaking a revocable living trust does not help to reduce or eliminate potential estate tax liability. Although there are different types of trusts that can serve this purpose, living trusts are typically not one of them. Furthermore, a living trust will not provide significant asset protection during your lifetime. If you wish to create an estate plan that provides effective asset protection or tax relief, it is best to discuss options with an experienced estate planning attorney. A popular and effective asset protection tool authorized under the Nevada Revised Statutes is a self-settled spendthrift trust, commonly referred to as a Nevada Asset Protection Trust. There are also numerous strategizes involving irrevocable trusts that can be utilized to dramatically reduce, or even eliminate, an estate's exposure to estate taxes.
Historically, the primary purpose most clients had for creating a living trust is to avoid the lengthy, public and costly probate process. While avoiding probate is still one of the advantages of creating a living trust, we have found that for our clients it is not generally perceived as the primary benefit. In Nevada, a living trust can be designed to protect a loved-one's inheritance from claims associated with a future divorce, including claims for alimony and child support. With divorce rates hovering at around 50% in many states, we have seen a significant amount of family wealth awarded to divorcing spouses over our 20 years of handling trust and estate administrations. A living trust may also be designed to protect a beneficiary's inheritance from other lawsuits, and even bankruptcy, should a beneficiary fall upon especially hard financial times. A living trust can be structured to preserve a beneficiary's right to government benefits for his or her long term-care expenses and not expose the inheritance to government reimbursement claims in the event a beneficiary is receiving government benefits at the time he or she receives the inheritance. A living trust may also be drafted to protect an inheritance against spendthrift behavior or irresponsible asset management for those beneficiary's who lack financial responsibility or investment management experience. Living trusts may also be structured to incentivize certain behavior or activity, such as developing a strong work-ethic, pursuing a higher education and maintaining full-time employment, while not allowing a loved-one to live off of his or her inheritance and not experience the intrinsic rewards associated with setting and achieving lifetime goals. These are just a few examples of the advantages that may be achieved from a customized living trust drafted by an experienced trust attorney.
If you have questions regarding living trusts, or any other estate planning needs, please contact Anderson, Dorn & Rader, Ltd., either online or by calling us at (775) 823-9455.
One of the reasons a living trust is popular is because it can help you to avoid probate while providing a reasonable degree of asset protection. Clients regularly have concerns about living trusts and commonly ask, "Do I have to forfeit control of my assets?" The answer is no – not at all. One of the most favorable aspects of a living trust is the ability to retain control of your assets while providing directions to your loved ones about transferring your estate upon your death.
One of the basic purposes of a trust is to avoid probate proceedings, a court process that is usually lengthy and expensive. Each state has its own laws, which typically require a deceased person's property to go through probate if there is no proper estate plan in place. Another basic purpose of trusts is to appoint those persons responsible for making your financial and medical decisions for you in the event you become incapacitated. Without having the proper documentation in place, your loved ones may be required to petition a court to appoint a guardian or conservator to handle your affairs. One of the greatest benefits a living trust can provide is the ability to protect your assets for your loved ones, once you have passed away. If you are considering whether you want to create a living trust, you should be aware of both the advantages and disadvantages of such a trust.
A “living trust” is basically a type of trust created to become effective while you are still alive, as opposed to upon your death. As with all other types of trusts, a trust is an agreement where the property transferred to the trust is held and managed by a trustee, with directions as to how your estate should be transferred to your beneficiaries upon your death.
First, the ability to avoid probate is one obvious advantage of a living trust. It can save your loved ones both time and money in the long run, as well as help you to avoid potential complications, when distributing assets after your death. There are also some very valuable tax advantages connected with a trust. A living trust can also help to reduce the amount of estate taxes imposed on your estate, while allowing for income tax planning opportunities. By distributing assets in trust for your beneficiaries, you can provide the greatest ease in administering your estate, and you can reduce the amount of estate taxes your beneficiaries would otherwise need to consider on their own. In Nevada, we can continue to pass your assets down generation after generation estate-tax-free for up to 365 years. Privacy is another benefit; the terms of your trust remain private, unlike the public nature of the probate process.
There are certain legal protections provided by trusts. A living trust is a written legal document, which means it will always be enforceable by the courts. If there are any challenges to the asset transfers made after your death, the terms of the trust document will provide the best evidence of your intentions with regard to your property.
You are allowed to identify anyone you choose to be your trustee, including yourself. That would mean you can retain complete control of your assets during your lifetime. Therefore, a significant benefit of a revocable trust is that you may continue to buy, sell, encumber, and refinance assets just as you did before the trust was established. You also have the ability to remove assets from the trust whenever you desire. In other words, you maintain complete control of your property. As long as you are competent to handle your own financial affairs, you can name yourself as trustee of your living trust. Indeed, this is most commonly what people choose to do. If you are married, you can also name your spouse as co-trustee, if you wish. Upon your incapacity or death, the living trust will appoint a successor trustee to continue to manage your assets without court involvement. Once assets are transferred to your beneficiaries, your living trust may allow them to control their own trust share as trustee. If you have concerns about your beneficiaries' ability to manage their own estate, you may consider appointing a third-party trustee to manage those assets on their behalf to ensure the maximum protection for your assets.
Although there are many advantages to creating a living trust, there are also disadvantages that you should be aware of before making a decision. One downside is that living trusts can be more limited in coverage than a Will would be. A living trust typically refers only to specifically identified property that has been transferred into the trust. For this reason, the terms of a living trust need to be as detailed as possible when describing those asset.
There is the possibility that you may need to create a durable power of attorney, along with the living trust. While you typically name yourself as the original trustee, in order to maintain control over the trust while you are alive your successor trustee may not have the authority to manage any additional property that was not included in the living trust. For this reason, you will likely need a power of attorney, as well.
For your estate plan to be well rounded, you should also consider having all of your health care documents prepared as a part of your estate plan. These would include your Durable Power of Attorney for Health Care Decisions (a.k.a. your Health Care Power of Attorney), Living Will, and HIPAA Authorization forms.
If you have questions regarding Reno living trusts or any other estate planning needs, please contact Anderson, Dorn & Rader, Ltd., either online or by calling us at (775) 823-9455.
A trust is meant to work as a part of your estate plan as a means to avoid probate, minimize estate tax liability, and protect the inheritance for your beneficiaries. To put it in simple terms, a trust is basically a fiduciary agreement between the Trustor (the person or persons that create the trust) and a Trustee. The nature of a trust agreement is to authorize the Trustee to hold and manage the trust assets on behalf of the named beneficiaries. The trust's terms will provide the necessary instructions for managing and distributing the assets upon the incapacity or death of the Trustor. There are several different types of trusts, each with its own specific purpose. Nevertheless, there are three essential steps in creating any trust.
The trust agreement is the document that provides the Trustee with instructions as to how you want the property held in trust to be handled for your beneficiaries. It is the "who, what, and when" of the trust. The trust agreement is a contract, which is binding on the Trustee that you have chosen to manage the trust property. There is a reason this agreement is called a "trust" - it is an agreement based on confidence and reliance. Some of the basic provisions that should be included in any trust are:
Once the trust agreement has been created, the next step is to "fund" the trust. Funding is the process of transferring ownership of the assets that you intend to include in the trust. This involves changing the title on bank accounts to the name of the trust, re-titling vehicles in the name of the trust, recording a deed transferring real property to the trust, and/or naming the trust as the beneficiary of life insurance policies.
Under Nevada law, a trust only exists to the extent it owns assets - thus a trust agreement isn't worth the paper it's printed on unless the trust has been properly funded. This is the also the key aspect of avoiding probate upon your death; if a trust is not properly funded, a probate judge is required to transfer legal title of assets to your beneficiaries.
There are generally four ways in a trust is funded:
Assets such as bank accounts, non-retirement investment and brokerage accounts, stocks and bonds held in certificate form, vehicles, and real estate can be funded into a trust by simply changing the owner of the asset from the name of the Trustor to the name of the trust itself.
When the trust assets include personal property of the type that does not require a certificate of legal title (e.g., jewelry, artwork, antiques), the assets can be funded by simply assigning ownership to the trust. This would also include things like personal loans, royalties, copyrights and patents, partnership interests, and membership interests in limited liability companies.
For those assets that require a beneficiary, you can fund your trust by naming the trust as the beneficiary of those accounts or policies. Note, however, that it might be recommended to leave certain outside outside of the trust and to name your beneficiaries directly. This is most common the case with qualified retirement accounts in order to minimize the income tax of your beneficiaries and to allow for greater flexibility in managing those assets. You should consult with an attorney as to whether it is better to name the trust as the beneficiary.
If a Trustor does not transfer assets to a trust during their lifetime,a trust may be funded through probate. In this situation, a Testator transfers assets to a trust through their Last Will and Testament (also called a "Pour Over Will") by instructing a probate judge to transfer those assets into the trust. This is generally not recommended since it requires both a probate proceeding and trust administration.
After the trust is created and funded, then the final step is to settle the trust. This only occurs after the death of the Trustor. Once you pass away, your Trustee has an obligation to follow the terms of the trust that pertain to handling your property after your death. Since a properly drafted trust does not require any court involvement, the administration of a trust can be kept completely confidential.
Many companies and advisers are more than willing to "sell" you a trust as a means to promote some other goal. There can be many complex issues involved in creating a trust, which an estate planning attorney would be much better equipped at handling. Depending on the complexity of the terms of the trust agreement, the extent and nature of the assets, and the potential complexities of the family, an attorney can address these concerns and can assist with all three essential steps of creating a trust. Here are some special considerations that you should make when creating your trust:
All of these issues can be addressed as a part of your trust agreement. Your trust can be created for your benefit immediately and for your beneficiaries to receive after you pass away.
If you have questions regarding creating a trust, or any other estate planning needs, please contact Anderson, Dorn & Rader, Ltd., either online or by calling us at (775) 823-9455.
Family heirlooms come in all shapes and sizes – from jewelry to art, fine china to family photos. Determining how to fairly divide these family heirlooms among your loved ones, after your death, can be very challenging. Unless you provide very specific instructions in your will or other estate planning documents, your executor will be left without any assistance. Avoiding family heirloom disputes can be accomplished with some planning.
Using Personal Property Memos
A personal property memo is a written statement, referred to in a last will and testament, used to leave tangible personal property not specifically disposed of in the will to the beneficiaries. Often this is used to keep certain items out of public knowledge in the probate process. A personal property memo can be revised or modified without having to execute your will again. However, the memo is not considered an amendment to the will.
How to Ensure Equitable Distribution of Heirlooms
Typically, when it comes to family heirlooms, there are a few items with greater value than others. This can make equitable distribution between family members more of a challenge. However, there are few strategies that can be useful. Of course, the most direct way is to make specific bequests to your heirs and discuss your decisions with them while you are still living. If your children are happy with your choices, then the likelihood of a dispute over these items after your death can be greatly decreased. But, what should be done if there are family heirlooms that are not specifically bequeathed, for whatever reason?
Alternative methods of distributing family heirlooms
Without any specific instructions, in many cases the appointed executor or trustee will determine who to divide the family heirlooms at his or her own discretion. Another method, which is useful in avoiding family disputes, is to allow the beneficiaries to divide the heirlooms amongst themselves by agreement. If there are any particular items that cannot be agreed upon, the executor or trustee can make the decision. Beneficiaries can also select the heirlooms by drawing lots in equal shares, with any inequities to be resolved by cash payments. Similarly, the executor can hold a silent auction.
Reaching the ultimate goal
Ultimately, when a loved one passes away, the surviving family should not spend time fighting over their personal property. Instead, it is a time to be supportive to one another and to celebrate the life well-spent. By planning ahead, with the assistance of an estate planning attorney, you can prevent many of the potential challenges inherent in distributing an estate, including family heirlooms, and avoid family squabbles of these important items.
If you have questions regarding family heirlooms, or any other legacy planning needs, please contact Anderson, Dorn & Rader, Ltd., either online or by calling us at (775) 823-9455.
If you have any children under the age of 18, it is important that you at least have a will, including provisions designating who you would want to be the guardian(s) of your children, should anything happen to you. Legal guardianship provisions for minor children are an important part of estate planning.
The basics of the last will and testament
A last will and testament is basically used to make dispositions of your property at the time of your death. Another purpose of a will is to appoint someone to manage your estate and to appoint someone as guardian of your minor children. Without a will, your property will be distributed to your family following the laws of intestate succession in your state. Your closest relatives usually receive equal shares depending on the law's pre-determined priority system.
Establishing legal guardianship of minors with your will
When one spouse or parent dies, the surviving spouse or parent will automatically be the child's legal guardian unless that person's parental rights have already been terminated. Should both parents die at the same time, or nearly the same time, a guardian named in a will would become responsible for the child's care absent a court's determination that it is not in the child's best interest to have legal guardianship awarded to the person you designated. The presumption under the law is that the person you designate as your desired guardian of your minor children is the most appropriate choice.
Be sure to consider both present and future circumstances
When you are considering who should be named as legal guardian for your children, take into consideration the age, health and location of the potential individuals. You must also recognize that these factors will probably change in the future. For this reason, it is a good idea to select both primary and secondary guardians, should there be anything preventing your primary guardians from serving in that role. These designations should be reviewed at least every 2 years.
Make sure the legal guardians will have everything they need
In order to properly care for your children after you are gone your guardians will need to have access to financial assets, as well. Generally, it is most advantageous to accomplish this through the creation of a revocable living trust that is funded while you are alive. Using this technique your assets avoid the probate process upon your death and the person you designate as the successor trustee under the trust has access to the financial assets and the authority to make distributions to or for the benefit of your minor children without the probate court's involvement. The successor trustee may be the person you designate as your guardian, or it could be someone else if you feel someone other than the guardian is best suited to manage the financial decision-making. This can also be established through a testamentary trust created under a will, but then the assets would need to go through probate and the court will retain ongoing jurisdiction over the trust. The costs associated with administering a testamentary trust are generally much higher than those involved with the administration of a living trust after your death.
What happens if you do not nominate a guardian?
If you do not include guardianship provisions in your will, or establish a trust, the appointment of a legal guardian will be made by the probate court. Although it is the judge's responsibility to ensure the best interests of the child are met, the decision may not coincide with your own wishes. That is why being proactive and creating an estate plan is the best solution for you and your family.
If you have questions regarding legal guardianship, or any other estate planning needs, please contact Anderson, Dorn & Rader, Ltd., either online or by calling us at (775) 823-9455.
It is a very common reaction, upon losing a loved one, to be at a loss as to what actions may need to be taken. Finding the will, locating insurance policies, creating an inventory of assets, can all be very overwhelming. Particularly, when there is a living trust between spouses, there are certain initial responsibilities that require attention. Handling a trust when your spouse dies does not have to be stressful.
Locate the trust and review its terms
Once you locate the trust document, read the terms to familiarize yourself with them. Even if you participated in drafting the trust, it has probably been several years since it was prepared. Although most trusts between spouses leave all assets to the surviving spouse, some trusts provide for distributions to other heirs, too. Before you take any action to implement the terms of the trust, make sure you understand all of the provisions. Many provisions are quite technical, so it is always a good idea to consult your estate planning attorney before you take any further steps. It is best not to accept death benefits such as life insurance, retirement accounts or pensions before consulting with your estate planning attorney as you may be missing or jeopardizing your benefits.
Transfer title to the surviving spouse or other beneficiaries
More often than not, living trusts between spouses name each spouse as a co-trustee. In other words, once the first spouse dies, the assets need to be transferred to the surviving spouse as the sole trustee. Until the transfer occurs, banks and other institutions may continue to require two signatures for any transactions. In order to transfer title, you will need the certified death certificate of your deceased spouse and an updated certificate of trust. In terms of real estate, your estate planning attorney will draft an affidavit for you to record with the county recorder's office. Besides keeping the records straight, you may also be avoiding identity fraud.
Determine the type of living trust you have
The type of trust you have can have an effect on the steps you must take. You can always ask your estate planning attorney to help you determine the type of trust you, if you are not sure. One of the most common types of trusts between spouses is known as an A/B trust. This type of trust is one that requires special action, and if those requirements are not met, it could cost your family thousands of dollars in estate taxes, which could have been avoided. Incurring these costs would also defeat the purpose of this type of trust.
How does an A/B trust work?
An A/B trust divides the spouses' assets into two shares when the first spouse dies. However, this division will not occur automatically. Instead, the assets must be physically transferred into two separate trusts. An inventory and appraisal of the assets is created and then the assets are allocated between the two trusts. Specific procedures must be established to keep track of the assets in each separate trust. An income tax return needs to be filed for the decedent’s trust each year after his or her death. If not, the IRS may not recognize that the trust exists and the entire estate could be subject to taxation after the death of the second spouse.
If you have questions regarding living trusts between spouses, or any other estate planning needs, please contact Anderson, Dorn & Rader, Ltd., either online or by calling us at (775) 823-9455.
