Estate planning can be a very difficult process. While it’s not brain surgery, making the decision to move forward with the planning requires us to face the fact that we will not live forever. This thought can stop many people right in their tracks. Others talk themselves out of seeing a qualified attorney to put together an estate plan based on some of the following common myths:
When we hear about estate planning on the news or read about it on the internet, it is usually in regards to a wealthy businessman or celebrity who made some error, did no planning, or has family members who are angry about the planning that was actually done. The topic catches people’s attention: Rich people have so much that surely they need planning and can afford to have the planning done correctly. By comparison, when the average person thinks about their own property and planning needs, they assume that it is not necessary because they do not have anything close to Bill Gates’ billions.
However, this could not be further from the truth. Estate planning is about more than just the money. While proper planning allows you to determine who gets your money and property upon your death, the planning process also addresses what happens if you become incapacitated and someone has to make decisions on your behalf--a far more likely scenario. If you have not done any planning, the court will have to appoint someone to make your medical and financial decisions for you. This can be very time consuming, expensive, and public. It can also wreak havoc on a family if they disagree about who should be appointed and how decisions should be made.
Even for those of modest means, who gets your hard-earned savings when you die is an important consideration. Without any planning, state law will decide who gets what—and many times, what the government’s best guess as to what you would want is contrary to what you actually want. But, because you did not take the opportunity to formalize your wishes in an estate plan, the state has to step in and do it for you.
For many married couples, it is common to own property or bank accounts jointly. If these assets are owned jointly or as tenants by the entirety, when one spouse dies, then the surviving spouse automatically becomes the sole owner. In most cases, this is the desired outcome for married individuals.
However, this approach can be dangerous. While it is convenient for assets to pass automatically to the surviving spouse, this outright distribution offers no protection. What happens if, after your spouse dies, you get into a car accident and are sued? If the assets you owned jointly automatically became yours alone, this money and property are available to satisfy any judgment that could be entered against you resulting from a lawsuit.
Additionally, what if, after you die, your spouse gets remarried? If the brokerage account you owned jointly becomes your spouse’s only, your spouse is now able to spend it all in any way he or she wants without any consideration for your wishes or the next generation. Your spouse’s new spouse could go out and buy a sports car with the money you intended to pass to your children. With blended families being common today, this is a real concern for many people.
Estate planning does not mean that you have to disinherit your spouse. Rather, it means the two of you can sit down and plan out what happens to your joint property and accounts upon either of your deaths, ensuring that the survivor is provided for and that any remaining money and property are gifted in a way that is agreeable to both of you.
Many people believe that once they have created a will—whether drafted by an experienced attorney, or using a DIY solution or online form— they have avoided probate. Unfortunately, they are wrong.
While a will is a great way to designate a person to wind up your affairs once you have passed, determine who will get your hard earned savings and property, and, if necessary, appoint a guardian to care for your minor children, this document has to be submitted to the probate court to begin the process of distributing your money and property. The level of involvement by the probate court can vary depending on the circumstances, but this process is not private, as the will becomes a matter of public record.
Summary Proceedings: In some states, if the value of your estate (i.e., what you own at your death) is below a certain monetary threshold, then anyone who is entitled to inherit from the decedent can file a petition and have the property distributed outside of the traditional probate proceedings. The filing may require a court appearance and formal legal notice to anyone who might be interested before allowing your property to be distributed.
Affidavit Procedure: Some states allow for an affidavit to be used to collect and distribute a decedent’s money and property. In some states, this affidavit can be self-executed, while others require that the document be filed with the court. Generally, affidavits require the passing of time from the date of a decedent’s death—ranging from a few days to a few months. After that, a “successor” to the decedent (a spouse or heir) signs the affidavit and presents the affidavit to collect the decedent’s assets for distribution to his or her rightful heirs.
Supervised Probate: With this type of proceeding, the probate judge oversees every step of the administration process and has to approve of the Personal Representative’s actions. During a supervised probate, all pleadings and required documents have to be filed with the probate court and then served on interested persons or parties. This can be a very time consuming and expensive process. Each time the Personal Representative has to take an action, a legal pleading has to be filed and served on the interested party, which, in contentious situations, opens up the possibility for disagreements and attorneys’ fees.
Unsupervised Probate: In cases where there are no controversies and the parties all get along, an unsupervised probate administration may be the best option. In this situation, although the administration is not supervised by a court, there are still actions the Personal Representative needs to take, but the Personal Representative may not be required to file petitions and documents for each of those steps. However, a Personal Representative may be required to file some steps, such as the preparation of the inventory, with the court and the interested parties, but no corresponding hearing is scheduled. While this is less complicated and possibly less expensive than a supervised probate, it can still be time consuming and your financial and personal affairs would become a matter of public record.
We are here to help answer any questions you may have about estate planning, the estate planning process, or probate. Together, we can craft a one-of-a-kind plan to ensure that you and your family are properly protected. Give us a call today.
Q: What is Probate?
A: Probate is designed to create a “final accounting” upon death. It is the legal process of “proving up” a Will, or verifying that a Will is valid, takes place in one of two instances. First, if a person dies leaving behind a Will, or second, if the deceased has died intestate, that is, has not left behind a Will or estate plan of any type or the Will cannot be found.
Q: Does the Probate process take a long time?
A: Depending on the complexity of the estate and the thoroughness with which accounting has been carried out before death, probate can either be a relatively simple task or a daunting one. Be aware that no matter the situation, probate may be a lengthy process often taking months or possibly years to play out, and one which may take a considerable amount of an executor’s time.
To summarize the process, probate can be broken into six basic steps:
Each of these steps involve legal documentation and validation, and more importantly, proper accounting each step of the way.
Q : What is Probate Court?
A: Probate begins and ends with the special Probate Court set up in each state to handle estate issues. (Sometimes known as the Orphan’s or Chancery Court in certain states.) All actions taken regarding the estate are accountable to this court, and must be noted and reported regularly. This court is staffed by special judges qualified to oversee estate resolution issues.
Q: Does the Trust Administration process take a long time?
A: To summarize the process, trust administration can be broken into five basic steps:
Although the trust administration process seems relatively straightforward, there are several reasons it can sometimes be drawn out over several months or even years. The first step, the inventory of assets, must be completed before the trust administration can begin, and this can be difficult to complete depending upon the prior organization and the size and complexity of the decedent’s assets. Next, the 706 estate tax return must be filed within 9 months, or 15 months if an extension is filed. Often, it is prudent to wait until the last minute to file this form. If the spouse of the decedent is in failing health and may pass away before the deadline, then both 706 forms can be used to maximize tax advantages to the estate. The final step, asset distribution, cannot take place until the 706 has been filed, and even then should not take place until the “Closing Letter” is received from the IRS certifying acceptance of the 706 return. This closing letter will take a minimum of 6 to 8 months, and as long as 3 years, to arrive after the 706 is filed. In addition, there may be a state estate or inheritance tax return required, even if a federal return is not required.
Q: I thought that a living trust avoids probate and attorney fees. Why do I have to pay more fees?
A: While having a living trust can significantly reduce costs compared to probate, there is still a considerable amount of work to be done in properly administering even a simple living trust. The services of an attorney are required, and that person or firm should be compensated fairly for their services. It is important to remember that the fees allowed for trust administration are usually much lower than those for probate, and there is generally less work involved, as there is less involvement of the courts and state bureaucracy.
Q: Can I pick and choose what assets go into the “B” trust?
A: The answer depends upon the language of the trust document. Certain trusts include “pick and choose” language that allows trustees to selectively place assets into the “B” trust.
Q: How do I transfer the car(s) into my name?A: If you are a relative of the deceased, this is simple in most states. To transfer the title of vehicles owned by the deceased, simply take the death certificate to the DMV, and perform the transfer, paying whatever fees they require. If not a relative, bringing along the will and or any trust documents indicating your status should be sufficient.
Q: What do I do about Social Security?
A: Social Security will continue to send out benefit checks until they are notified of an individual’s death. The executor/spouse/trustee should contact the local Social Security Administration office and notify them of the death, or if a benefit check is received, send it back with a letter notifying them. This is important. If checks continue to be deposited, the recipient can incur liability later when Social Security learns of the recipient’s death.
When we consult with clients, we often hear many of the same questions. With this in mind, we present a hypothetical question-and-answer session with a Reno estate planning lawyer in this post.
To die without an estate plan is called dying intestate. Under the rules of intestacy, the probate court would supervise the administration of the estate. Creditors would be given an opportunity to come forward seeking satisfaction, an estate is inventories and valued, disputes are resolved, and ultimately the assets would be distributed under intestate succession laws.
That’s the good news, but the bad news is that it is very possible that your assets would not be distributed in accordance with your wishes. For example, if you are happily married, you have no children, and your parents are still living, you would probably want your spouse to inherit everything. In Nevada, under intestate succession rules, your spouse would inherit half of your separate property, and your parents would inherit the rest. Intestacy law does not appropriately deal with most issues that arise with separate property. Further, intestacy law does not account for many modern day families, such as blended families with step-children, non-traditionally married couples, and a myriad others.
There is no reason to surrender control of your estate to the judicial process when it is so easy to engage the services of a licensed Reno estate planning lawyer.
It is true that there are some types of trusts that are used by high net worth individuals that are exposed to the federal estate tax. However, there are other types of trust that can be quite useful for people of relatively ordinary means.
Far and above the most common is the revocable living trust. If you use a last will, it would be admitted to probate after you die. The court would provide supervision, and the executor would handle the estate administration tasks. But this process will take eight or nine months to a year to run its course, and inheritors receive nothing during this interim. There are also innumerable expenses that pile up during probate, often at a cost between 4% up to 8% of the estate value.
If you use a living trust instead, the trustee that you name in the trust agreement would be empowered to distribute assets to the beneficiaries outside of probate. This is one advantage, but there are a number of others, including the option to protect an inheritance through a trust against lawsuits, creditors, divorcing spouses, or other predators.
A living trust is beneficial whenever a client has a goal to avoid probate and make the process easy for their loved ones. It's not only for wealthy people, but for people who want to better take care of their life planning.
Since the Internal Revenue Service requires you to report all sources of income, you may assume that inheritances that you leave to your loved ones would be taxed. In actuality, inheritances are not subject to taxation, with the exception of inheriting retirement accounts (such as traditional IRA or 401(k) accounts).
There is, however, a federal estate tax that might apply to your estate before everything is distributed to the beneficiaries as an inheritance. But, the vast majority of people do not have to be concerned about the estate tax because there is a VERY large exclusion. Only the portion of your estate that exceeds the amount of this exclusion would be taxed. At the time of this writing in 2019, the exclusion stands at $11.4 million.
These are a few short questions that we frequently hear from our clients, and you can ask your own if you attend one of our upcoming Webinars. The information sessions that we hold provide a treasure trove of useful information, so we strongly encourage you to attend the Webinar that fits into your schedule. To get all the details, visit our Webinar page and follow the simple instructions to register for the date that works for you. Starting in 2019, we are offering Webinars semi-monthly in the evening to accommodate those people that cannot attend during the middle of the day.
The idea of estate planning might be one of the scariest things you have to confront as an adult. After all, nobody wants to think about their death. Or incapacity. But estate planning does not have to make chills run down your spine. On the contrary! Estate planning is empowering for both you and your family and allows you to live confidently knowing that things will be taken care of in the event of your passing or incapacity. Remember, estate planning is not just for the ultra-rich. If you own anything or have young children, you should have an estate plan. Read below to find out reasons why.
Proper estate planning accomplishes many things. It puts your financial affairs in order. Parents should designate a guardian for their minor or disabled children, so the children are cared for by someone who shares your values and parenting style. Homeowners can make sure their property is transferred to the proper beneficiary in the event of untimely death. Business owners can ensure the enterprise they’ve worked so hard to build stays within the family.
Yet, according to WealthCounsel’s 2016 Estate Planning Literacy Survey, only 40% of Americans have a will and just 17% have a trust in place. This means a majority of American families not being adequately protected against the eventual certainty of death or the potential for legal incapacity.
When it comes to estate planning, knowledge is vital. Less than 50 percent of those surveyed by WealthCounsel understood that an estate plan can be used to address several concerns - financial or non-financial matters - including health decisions and guardianship, avoiding court and preempting family conflicts, protecting an inheritance for your beneficiaries, as well as taking advantage of business and tax benefits.
Legal disputes over estate plans and wills - or, usually, the lack of having these in place at all - are common. These conflicts can cause harm to family relationships and be financially burdensome. Disputes among the rich-and-famous often made headlines, but disputes among everyday folk stay buried in courts for years.
Some scary outcomes of inadequate or non-existent estate planning include:
These horror stories are not limited to wealthy celebrities. WealthCounsel’s survey found that more than one-third of respondents know someone who has experienced, or have themselves suffered, family disputes due to the failure of an existing estate plan or inadequate will. Additionally, more than half of those who have established an estate plan did so to reduce family conflict. Preserving family harmony is for everyone - not only for the wealthy or celebrities.
Estate planning can be confusing as each circumstance is unique and requires different tools to achieve the best possible outcome. Nearly 75 percent of those surveyed by WealthCounsel said estate planning was a confusing topic and valued professional guidance in learning more - so you’re not alone if you aren’t sure where to begin.
We’re here to help. An estate planning attorney is essential in determining the best way to structure your will, trust, and estate plan to fit your needs. If you or someone you know has questions about where to begin - contact us today. Anderson, Dorn & Rader, Ltd. has been protecting families and their legacies for decades. We offer free, no-obligation Webinars every month around Northern Nevada to teach and guide people about how to plan appropriately for these inevitable issues.
Probate is simply the administration of an estate through the court system after someone's death. Nearly every estate is required to pass through probate before heirs can receive their inheritance. While the purpose of this process is to transfer the estate in an organized fashion, there are three major disadvantages to probate, which typically lead individuals to try to avoid the process altogether. Whether or not probate should be avoided is a decision each person should make when considering their estate planning. Reno estate planning lawyers can help you determine whether avoiding probate is the best option for you.
Contrary to what many clients believe, the requirement of probate applies regardless of whether or not you have a valid Will. If you have a Will, that document will determine how your estate is transferred during the probate process. Without a Will, your assets must still go through probate based on the laws in the state where you live.
The two primary steps required in the probate process involve paying your debts and transferring your assets to your beneficiaries. Although some of the specific may be different, from one state to the next, the same basic stages are followed:
If you have a Will which designates your personal representative, that person will be in charge of your estate. If you do not have a Will, then the court will decide who will be your executor/executrix. This is also the case if the person you selected is unable to serve and you did not specify an alternative.
One of the primary motivations for avoiding probate is the desire to maintain privacy regarding your estate. The probate process is a completely public proceeding, which means that anyone who is interested will be able to attend probate hearings and access your probate records. This means that the terms of your will, the nature of your assets, and the identity of your beneficiaries and creditors are all open to the public. For many people, this lack of privacy is a major disadvantage of probate.
Based on how complicated your estate property and other assets are, the cost of probate administration can very high. Court fees, accounting and appraisal fees, legal fees, and fees for your personal representative can all be expected. If your estate includes a business, then there are likely to be business valuation fees, too. There are many estate planning strategies to limit many of these expenses, and you may be able to avoid the cost of probate altogether.
The entire probate process, from beginning to end, can take months or even years to complete. Although, if you have a Will the process may be a bit quicker, there are still many transactions to be completed. With a Will, the court will not need to determine the administrator and heirs or beneficiaries. However, the accounting of the property will still be required. Also, real estate will need to be appraised so its value can be determined. Creditors need to be notified. All of these necessary steps require a certain amount of time.
Probate is not always inevitable, depending on the nature of your estate and the strength of your estate plan. In fact, it is not difficult to avoid the probate process altogether. There are many different estate planning tools you can use to ensure that your property passes to your heirs, while avoiding the probate process. However, you should consult with one of our lawyers in order to make sure you utilize the tools most suitable for you. If you have the appropriate estate planning tools in place, the probate process can be avoided.
Some examples of estate planning tools that can be used include revocable living trusts, gifts, joint ownership of property, and pay-on-death accounts. These estate planning tools are meant just for this purpose.
If you have questions regarding probate administration, or any other estate planning needs, please contact Anderson, Dorn & Rader, Ltd., either online or by calling us at (775) 823-9455.
There are three common reasons most people choose to avoid probate. Probate is a very public process, it can be rather expensive and, for some, it can take a long time. When trying to decide whether to take steps to avoid probate, many people ask, “if my estate requires probate, will it take a long time to complete the process?" The answer is that it really depends on several factors.
The length of time it will take to close the probate of an estate depends a great deal on the size of the estate and the nature of the assets included. In most cases, basic probate proceedings last at least 120-180 days due to the need to publish notice to creditors and allow them time to file their valid claims. If there are any problems with the probate process may take longer. Generally speaking, most probate proceedings take almost a year to complete. If there is a contested Will, the process can stretch on for years.
In reality, probate takes much longer when there are unique assets that require special handling. Most often, the most complicated asset to deal with is an operating business; if you have a sole proprietorship, partnership, LLC, or closely-held corporation, the probate process can be drawn out even longer. When there is a Will, the probate process is often more straightforward and less difficult to handle. With a Will, the personal representative and the heirs or beneficiaries have already been chosen and identified. Therefore, less time is required awaiting the court's decision on those matters.
The main reason probate takes so long is because there are many different tasks that must be accomplished in every probate case, all of which are governed by Nevada statutes. The personal representative is the person assigned to handle most of the leg work involved. That person must follow the necessary steps, keep appropriate records, and make an accounting of the assets in the estate and what has been done with them. With almost every step in the probate process, there are petitions that must wait for a court hearing, statutory waiting periods, and statutory timelines for certain steps to be done.
The property in the estate must be collected and inventoried. Nevada requires that the inventory must be completed within 60 days! Most valuable personal property, and all real estate, needs to be appraised. There is a requirement that notice of the decedent's death be given creditors so they can make legitimate claims. This typically means placing a Notice of Creditors in the local newspapers so that all potential creditors have a chance to make a claim and collect legitimate debts owed to them by the deceased.
A similar notice, a Notice of Administration is sent to anyone else who may have an interest in the estate. That would include heirs and beneficiaries named in a Will. Once creditors, legal judgments, taxes and related expenses have been paid, the remaining assets are then divided and distributed to the heirs and beneficiaries.
There are four ways to distribute the assets of a decedent under Nevada law: (1) Affidavit of Entitlement, (2) Set Aside, (3) Summary Administration, and (4) General Administration. These different procedures all accomplish the same goal. However some methods are a bit more involved than others. Deciding which method applies will depend on the value of the estate, according to Nevada law.
If the estate is valued at less than $25,000 ($100,000 if the beneficiary is a surviving spouse) and there is no real estate involved, then all that is required is an Affidavit of Entitlement to transfer the estate without full probate court proceedings. Instead, the affidavit authorizes the release of the assets to the named beneficiaries.
For estates with a value less than $100,000, excluding mortgages, the assets can be distributed simply by Court Order based on the terms of the Will or the laws of intestate succession, whichever applies. With the Set Aside method, the appointment of an executor or administrator is not required.
If an estate is valued between $100,000 and $300,000, it is necessary to open probate proceedings with the probate court. In that case, an executor or administrator will be appointed to manage the proceedings. With Summary Administration, distribution of the estate can only occur after 90 days. Summary Administration is more streamlined than General Administration.
In situations where the value of the estate exceeds $300,000, then full probate proceedings are required. Creditors must be given notice so they can file their claims within 90 days. General Administration is inherently more extensive than Summary Administration proceedings. The Personal Representative obtains “Letters Testamentary” from the probate court if there is a Will, or “Letters of Administration” if there is no Will. These letters, issued by the probate court, provide the legal authority and responsibility of the Personal Representative.
Attend a FREE Webinar to learn more about probate, the reasons to avoid probate, and the way to properly execute an estate plan to do so! If you have questions regarding probate, 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.
You may have heard the term "intestate" or "intestacy" before, but wondered what it means. As your estate planning attorney can explain, the term "intestate" simply means dying without a will. So, intestate succession refers to how property will be distributed after your death, if you die without a will or any other estate planning instruments.
If you have no plan then the probate court in your county of residence will be left to determine how to distribute your property based on the laws of intestate succession in your state. Based on those laws, to whom your property will be distributed depends on which of your relatives has survived you. Dying intestate means you have no control who will receive an inheritance and what they will receive.
When it is time to probate your estate, typically the only assets that are involved are those that you own solely in your name. If you own joint property it will not be included but will instead pass automatically to your co-owner. There are also other types of property that are not affected by the laws of intestate succession in Reno:
In Nevada, your property goes to your spouse, children, grandchildren, parents, siblings, and descendants of siblings, in that order. In other words, if only one of these relatives survives you, that relative inherits everything. If, for example, you have two children or two siblings they will divide your property equally. If you have no living spouse, children, parents, siblings, or descendants of siblings, your property will go to a more remote beneficiary, such as an aunt or uncle, first cousin, second cousin, or even a fourth cousin-thrice removed.
Nevada is one of a few Community Property states. If you are married at the time of your death, your spouse inherits all of your community property. “Community property” is property acquired while you were married. The exception is that gifts and inheritances given to only one spouse, even if acquired during marriage, are not considered community property. Everything that had been acquired during marriage that is community property will be transferred to your surviving spouse.
Your separate property, however, will be divided 1/2 to your spouse and 1/2 to your children, if living, or your grandchildren. If you do not have any living descendants, 1/2 of your separate property will go to your parents, siblings, or nieces and nephews, again depending upon what relatives have survived you.
Children who have been legally adopted, will receive a share along with any biological children. However, foster children or stepchildren who were not legally adopted do not automatically receive a share. Children that have been placed for adoption and who were legally adopted by another family are no longer entitled to a share of your estate.
Children conceived but not born before your death (posthumous children) can still receive a share of your estate. Children born outside of marriage can only receive a share of your estate if it can be proven that you acknowledge them as your children and contributed to their support.
This is EXTREMELY important because intestacy laws were drafted based upon an antiquated model of a "traditional" family. These laws do not account for second marriages, blended families, or non-traditional relationships that are extremely common in today's day and age.
Siblings with only one parent in common, so-called “half” siblings, inherit as any other sibling would. Relatives entitled to an intestate share of your property will inherit whether or not they are citizens or legally reside in the United States. Finally, Nevada has a “killer” rule which says that anyone who feloniously and intentionally kills you, will not receive a share of your estate.
In order to avoid your estate being distributed according to the laws of intestate succession you must create an estate plan. A comprehensive estate plan will see that your debts are paid and designated how and to whom the remainder of your estate will be distributed. The most basic estate planning instrument is a last will and testament. A will is your written instructions as to how you want your estate to be handled when you die. One drawback of using a will is that the property must go through probate before your assets can be distributed. There are other ways to avoid probate, and a properly drafted estate plan prepared by an attorney can also help avoid probate and many other issues that commonly become problems when someone dies.
Attend a FREE Webinar today! If you have questions regarding intestate succession in Reno, or any other estate planning needs, please contact Anderson, Dorn & Rader, Ltd., either online or by calling us at (775) 823-9455.
If one of your goals in estate planning is to avoid probate through a revocable living trust, you should also have a "pour over" will. Pour over wills allow certain property that passes through your will at your death to be poured into (or transferred) to a trust. At that point, the property is distributed to your trust beneficiaries.
A revocable living trust only governs the assets that have been transferred under the Trust Agreement. Any assets that are not funded into the trust during someone's life will have to go to probate and administered by the person's will. Most estate planning attorneys believe that handling all of your assets with one document, a trust agreement, is easier than trying to handling the estate through two processes (through both a probate administration and a private trust administration). There are, in fact, several advantages to creating a pour over will. When all of your assets are controlled by one document, there is less room for confusion. Also, a pour over will takes care of those assets that you may have neglected to transfer to the trust, before your death.
Another advantage is the privacy that you can maintain with the trust that a simply will does not provide. Wills become public record with the probate court, which means they are available to everyone who is interested in looking at them. Using a pour over will to transfer your assets to a trust keeps the details of your assets and your beneficiaries private.
The biggest disadvantage to using a pour over will is that the property must still pass through probate. Therefore, the distribution of any property headed toward the trust could be delayed in probate before it can be distributed to the trust. This could take months. On the other hand, if the property is passed on through a living trust directly, without first going through a pour over will, the property are likely to receive their inheritances within a few weeks. A pour over will should be a "backup" method of funding a trust; it is much more efficient to have the trustor(s) transfer assets into the trust while they are still living in order to avoid probate entirely.
Generally, most of your assets will not pass through the pour over will. Instead, if you have a proper estate plan, your most valuable assets will already be transferred to a living trust. Only the property that remains, minor assets and anything unintentionally omitted from the trust, will pass under the terms of the will. As such, the probate procedure will likely be simpler and less time consuming, based on the size of the probate estate.
Just like any other type of will, a pour over will must nominate an executor to wrap up the estate after your death. The duties of the executor often include collecting the assets, satisfying debts and paying taxes, then ultimately distributing the assets to the beneficiaries. These tasks are much simpler for the executor of a pour over will. The only duty is to take all of the assets identified in the pour over will and transfer them to the trust. Generally, the executor of a pour over will is the same person or entity that is the trustee of the trust to which the assets are transferred - that makes it extremely easy for the same person to administer the entire estate.
A trustee is a vital part of every trust. The trustee is the person who must ensure that the terms of your trust are followed. A common choice for trustee is an adult relative or a trusted friend. Selecting someone you know personally has its benefits, of course. You are likely to receive personal attention from someone you know, and they may not be inclined to charge a fee. However, acting as a Trustee is not necessarily a privilege! There is a lot of work in the administration of a trust, and a personal relative or friend might not have the time, energy, or know-how to effectively administer the trust.
Another option is a financial institution. Certainly, financial institutions and trust companies are qualified and capable of serving as trustees. Indeed, these institutions have the knowledge and expertise in managing funds which would provide a sense of comfort. However, financial institutions and trust companies are typically more expensive and charge their fees based upon a percentage of the trust estate. A licensed professional is another option, and their fees are typically lower.
Once the assets have been transferred to the trust, they become the responsibility of the successor trustee (the person you named in your living trust to take over at your death or incapacity). The duties of a successor trustee are similar to that of an executor, except that the trustee has control over the trust assets only and may administer those assets privately outside of court. The successor trustee has no control over property that is part of your probate estate.
If you have questions regarding a pour over will, or any other estate planning needs, please contact Anderson, Dorn & Rader, Ltd., either online or by calling us at (775) 823-9455.
Nevada's probate statutes are a set of laws pertaining to issues relating to wills and estates. There is a Uniform Probate Code (UPC) which is meant to simply the probate process and standardize the laws regarding wills, trusts, and intestacy. The Uniform Probate Code also deals with gifts as well. Since the probate code is likely to impact your estate plan in some way here is an overview of several of its important aspects.
Why is a standardized set of laws necessary?
Both federal and state governments have the authority to enact their own law as long as those laws conform to the mandates of the U.S. Constitution. When the UPC was first drafted, the intent was that all states would adopt its requirements. However, since the original version was first enacted in 1969, only a few states have adopted it in its entirety. Nevada has not. Many states have adopted parts of the UPC. However, there remains substantial differences in those state's laws.
"Probate" is the legal process in which the assets and debts left behind after someone dies are handled by the court. Your estate is distributed to your heirs, after paying your creditors. The probate process is supervised by the probate court. The probate process involves the components of estate administration, including the following:
Each state has its own laws or statutes that deal with probate administration. In Nevada, there are basically four different procedures of probate administration in Nevada.
When it is time to settle your estate, typically the only assets that are involved are those that you own in your name only. Those are the assets that will pass to your heirs through the laws of intestate succession. If you own property in joint tenancy it will not be included, but will instead pass to the surviving joint tenant. There are also other types of property that are not affected by the laws of intestate succession in Reno:
In most states, including Nevada, if you decease without a will and there is no beneficiary designation attached to your assets upon your death then ownership of your property will transfer to your spouse, children, parents or siblings, pursuant to Nevada's intestacy statutes. For example, if your spouse and one child survive you, your spouse will inherit half of your property and the child will inherit the other half. If you are survived by a spouse and more than 1 child then 1/3 of your estate will be inherited by your spouse and your children will inherit the other two-thirds in equal shares.
In order to avoid the laws of intestate succession distributing your property for you, after your death, you must create an estate plan. A comprehensive estate plan will see that your debts are paid and designated how and to whom the remainder of your estate will be distributed. The most basic estate planning instrument is a last will and testament. A will is your written instructions as to how you want your estate to be handled when you die.
If you execute a will, all of your property must pass through probate, which is an expensive, time-consuming and public process. Contrary to what many people think, it is not difficult to avoid probate. Some simple methods of making sure your property passes to the heirs you choose, without going through probate, include establishing a revocable living trust, pay-on-death accounts and registrations and joint ownership of property and gifts. Consult with a Nevada estate planning attorney to explore which options are best for you.
If you have questions regarding probate court, or any other probate issues, please contact Anderson, Dorn & Rader, Ltd., either online or by calling us at (775) 823-9455.
The basic probate process is already time-consuming, taking years to complete in some cases. However, did you know that if you have property located in a state other than where you live, your estate will be subjected to another separate probate process? Probate attorneys have experience handling, what is referred to as, ancillary probate. The question is: can it be avoided?
The term “ancillary,” in the legal context, means a legal proceeding that is not primary, but which aids in the rendering an outcome in the main proceeding. In other words, if upon your death you are a resident of Nevada, the primary probate proceeding would take place in Nevada. If you own real estate in Florida, an ancillary proceeding in Florida would aid the probate court in Nevada in completing probate of the entire estate, including the property in Florida.
Basically, the rules require that real estate is probated in the state where the real estate is located. So, if you are a resident of Nevada, your real estate where your residence is located will be probated along with your other assets – in Nevada. But, if you have a summer home in Florida, then there would need to be an ancillary probate proceeding in Florida for that particular property. Why? Because only the Florida court would have jurisdiction over the Florida property.
Most personal representatives who are faced with ancillary probate contact probate attorneys in the state where the out-of-state property is located. Probate is always commenced in the deceased’s state of residence. The second probate proceeding is then opened in the other state. Once the will has been accepted by the probate court in the primary proceeding, it is typically accepted by the other court as a “foreign will.”
If you want to spare your family the stress and cost of an ancillary probate court proceeding after your death, you should definitely consider incorporating some common estate planning tools that can help them avoid ancillary probate. The most common methods include:
Probate attorneys in the state where your other property is located can provide you with other useful methods, so be sure to discuss this issue with them.
Living trusts are very helpful estate planning tools and they are quite similar to a will. Trusts have an added advantage, though, of keeping property from becoming part of your probate estate. How does this work? When you transfer property (including real estate) to a trust, then the trustee actually owns the property, not you. Since the property is owned by the trust and is not subject to disposition according to the terms of your will or the laws of intestate succession upon your death, it does not need to be probated.
Another way to avoid ancillary probate is by recording a transfer-on-death deed for the property. The process is simple. The deed will identify the person you choose to receive the property upon your death. At that time, the property is transferred directly to your named beneficiary without going through probate.
Joint ownership is another simple way of avoiding ancillary probate. When property is owned jointly and one owner dies, the surviving joint owner retains ownership of the property automatically. That way, there is no need to go through the probate process in order to transfer the property. There are several different types of joint ownership, so discuss your options with your probate attorney.
It is quite common for people to transfer their primary residence to their trust, but forget to include their timeshare or a vacation home. In fact, this is one of the most common estate planning mistakes. If all of your property is not included in the trust, you cannot avoid probate.
If you have questions regarding ancillary probate, or any other probate administration needs, please contact Anderson, Dorn & Rader, Ltd., either online or by calling us at (775) 823-9455.
If you ask most people about the purpose of an estate plan, they will tell you avoiding probate is the primary goal. But how many people really understand what this means? There are a few misconceptions regarding what an estate plan does and how it can actually avoid the probate process.
Basically, probate is the process through which the assets of an estate are distributed to beneficiaries when there is no other way to do it. Assets or property that are transferred through a trust or other estate planning tool can be distributed to beneficiaries according to the terms of those documents without the need for a probate judge to oversee the process. Probate is the method of last resort, overseen by a court, for distributing an estate to its beneficiaries.
There are three primary reasons most people choose to avoid probate. First, the process is a public court proceeding, which means that anyone can have access to the contents of your will, your finances, your debts, and the identity of your beneficiaries. A second reason is that probate can be expensive, depending on the nature of your assets and property. Fees associated with probate include court fees, attorney fees, accounting fees, fees for appraisals, if necessary, and fees for the executor's services, to name a few. Some reports estimate the overall cost of the probate process between 4% and 10% of the value of the probate estate. Finally, the entire probate process usually takes a significant period of time – months or even years. Although having a will may shorten that time, it can still be a lengthy process. During that time, any decisions about the management of the probate estate (such as the decision to sell stock that is losing value) and any distributions (such as paying for a beneficiary's medical or educational costs) usually must first be approved by the court, which can cause significant problems for many people.
Leaving your property to your heirs basically requires transferring ownership of that property to those individuals. There are several ways this can be accomplished outside of probate. Some of the most common ways to transfer ownership outside of probate include (1) transferring your assets to a revocable living trust, the terms of which will direct a Trustee to distribute the estate according to your wishes, (2) joint ownership of property (such as joint tenancy), which will automatically transfer assets to the surviving co-owner upon your death, and (3) pay-on-death or transfer-on-death designations, which allow certain assets to be transferred directly to named beneficiaries - all of these without court involvement. If done correctly, using any or all of these methods will allow you to avoid the time, expense and publicity of the probate process.
One alternative to leaving your estate to probate is to convert your bank and investment accounts into payable-on-death accounts. The process is very simple. You need only list your beneficiaries on those accounts so that, when you die, the money will be automatically transferred to your named beneficiary without the need for probate.
Basically, the process is the same for securities, vehicle registrations, and real estate for transfer-on-death instruments in Nevada. These legal documents allow you to transfer assets, such as real estate, by identifying a beneficiary in the title itself, such as a deed. This beneficiary provision will not take effect until after your death and these documents can be revoked at any time during your life, and the property is not required to go through probate.
While these tools can be useful in avoiding probate, they may not accomplish your goals of protecting assets for your loved ones, and they may ultimately end up being given to an unintended beneficiary.
Joint ownership is another simple option for avoiding probate. Upon the death of the first owner, the surviving joint owner will retain ownership of that property without going through probate. There are different types of joint ownership available depending on your needs or the type of property you own. Joint Tenancy with Right of Survivorship will allow the property to transfer automatically to the surviving joint owner upon the death of the first owner. Similarly, Community Property with Right of Survivorship will accomplish the same goals, and may also add some tax benefits for your surviving spouse.
Giving a gift of property to your loved ones while you are still alive is another common way to avoid probate. This method words to avoid probate because, obviously, if you no longer own the property when you pass away there is no need for the property to go through probate. Accordingly, the cost of probate is decreased because the expense of probate is connected to the value of the assets passing through probate. Another benefit is that gifts may not be subject to federal gift tax.
Living trusts are a very common estate planning tool created to allow individuals to avoid probate while still maintaining control over that property during their lifetime. With a living trust, you transfer assets to your trust during your lifetime and maintain the same rights and responsibilities as to the trust property (i.e. no loss of control). This removes the property from your estate so that the property does not go through the probate process. The only catch is that the property is still considered part of your estate for the purposes of federal estate taxes. Like a will, the trust document allows you to determine how your property will be distributed, however the trust can allow you to add protections for your loved ones to avoid assets being lost to divorce, creditors, lawsuits, and other liabilities. After you death, your trustee has the authority to quickly and simply transfer the trust property to your intended beneficiaries, without the need for probate.
If you have questions regarding avoiding probate, or any other estate planning needs, please contact Anderson, Dorn & Rader, Ltd., either online or by calling us at (775) 823-9455.
In Nevada, if the deceased person's assets exceed $20,000, or if there is real estate involved, probate is normally required.
Topics covered in this whitepaper include:
When you have no plan, the probate court will determine how to handle your assets, based on the laws of intestate succession. Based on those laws, to whom your property will be distributed depends on which of your relatives survived you.
Topics covered in this whitepaper include:
Probate is a court proceeding required for most estates in order to transfer property and settle the affairs of the deceased. Learn more about probate process in Nevada in this presentation
So, you just set up a revocable living trust. The next step is funding your trust. How the trust is funded depends on the type of assets you want to transfer to the trust. There are different methods for different types of assets. Understanding the most common methods will make the process less complex. Funding a trust is just as important as establishing the trust. Your estate planning attorney can help.
The goal of funding a Revocable Living Trust is to make sure your property is subsequently governed by the terms of the trust agreement. Once that is accomplished, the trustee will be able to manage those accounts, in the event you become mentally incapacitated, or upon your death. In order for a Revocable Living Trust to function as it should, you, as the trustor, must do more than simply sign the trust agreement.
After the trust agreement is signed and executed, you must then “fund” your assets into the trust. There are three general ways this is done, in order to properly fund a Revocable Living Trust. Which method is required depends on the type of asset being funded. The three methods are:
None of these methods are especially complicated. However, the procedures must be followed in order to properly fund the trust.
Assets such as bank accounts, investment and brokerage accounts (other than retirement accounts such as IRA or 401(k)); stocks and bonds held in certificate form or street form, and real estate, are funded into a Revocable Living Trust by simply changing the owner of the asset from your name into the name of the trust itself. Some institutions may require only that the name on your account be changed; while others may require you to close the original account and open a new one in the name of your trust.
If you have personal property that requires no certificate of legal title (e.g., Jewelry, artwork, antiques); personal loans, partnership and membership interests in limited liability companies, these types of assets are funded into a Revocable Living Trust by assigning ownership rights from your name into the name of the trust. This is done by creating a document called an assignment that the owner simply signs. Royalties, copyrights and patents can be assigned, but should also be changed in the office or agency that issued the certification.
Any asset that requires the naming of a beneficiary, like life insurance, certificates of deposit that will charge a fee for re-titling, and other such accounts, is not re-titled into the name of the Revocable Living Trust. Instead, the primary beneficiary of these accounts or policies is changed to the trust.
Retirement plans such as IRAs, 401(k)s and the like are trusts in and of themselves. Under limited circumstances, a Revocable Living Trust may be designated as a beneficiary, but often there are adverse tax consequences. You will want to discuss the pros and cons with qualified counsel before naming a beneficiary on those assets. Simply put, any property that is titled in your personal name must be probated when you die. If you overlook the importance of funding your Revocable Living Trust, your estate plan will not be as effective as you or your family anticipated when the trust was created, and the trust will not serve its purpose.
If you have questions regarding funding a trust, or any other estate planning needs, please contact Anderson, Dorn & Rader, Ltd., either online or by calling us at (775) 823-9455.
When you die, your assets pass to your heirs by way of the probate process, regardless of whether you have a will or not. Probate in Reno can be a lengthy process. The administrator is required to make an inventory of all of your assets. Real estate must be appraised to determine its value. Creditors and beneficiaries or heirs must be notified. If there is no will, these steps will likely take longer, because the court has to determine, based on the law in your state, which relatives are entitled to inherit from your estate.
However, this process is not necessarily required depending on how you plan your estate and how you situate your assets. There are various estate planning tools through which you can ensure your property passes to your heirs without having to go through probate in Reno. Some of the most common tools are joint ownership, living trusts, gifts and various pay-on-death accounts. Consult with a Reno estate planning attorney to establish the right plan for you.
Joint ownership is one method of transferring property without going through probate, if title is held as joint tenants rather than tenants-in-common. This method works because, when one joint owner dies, the surviving owner automatically obtains ownership of the property by operation of law. Therefore, transfer of full ownership does not require going through probate. There are many different types of joint ownership, with different purposes. Discuss your options with a Nevada estate planning attorney.
A living trust is an estate planning tool that holds certain assets during your lifetime and provides continuing management of those assets. Like a will, a trust can also provide instructions for the disposition of your property after your death. The difference between a living trust and a will is that the property placed in the trust does not become part of your estate after your death. Instead, the trust owns the property. Despite that fact, you maintain the ability to determine how the property will be distributed after your death. The trustee will have the ability to quickly and easily transfer your trust property to the heirs you intended, without going through the probate process. Of course, the trust must be administered, but the process is accomplished outside the courtroom.
Another common way to avoid probate is to give your property to others as gifts during your lifetime. The reason is, if you no longer own the property, it does not need to go through the probate process. Also, the cost of probate is often directly related to the value of your assets when you die. So, even if you do have to go through probate, the process will be less expensive because your gifts will have decreased the value of your estate.
You can also pass along some of your financial assets by converting certain accounts, such as your bank account or retirement account, into payable-on-death accounts. You need only complete a form that lists one or more beneficiaries of that account. At your death, the money is then transferred automatically to your named beneficiary without the need for probate.
While there are many methods to avoid probate, they may not be wise. Many protections can be included in a revocable living trust, that are not available with outright distribution with other methods. See your northern Nevada estate planning attorney to discuss which method is best for you.
In the case In re Estate of Karter Wu (Supreme Court of Queensland, Australia), Mr. Wu created and stored his Last Will and Testament on an iPhone, along with a series of other documents, most of them final farewells.
Wu’s iPhone Will named an executor and successor, set forth how he wished to dispose of his assets at death, dealt with his entire estate, and authorized the executor to deal with his financial affairs. The Will began with the words “This is the Last Will and Testament of Karter Wu.” At the end of the document, Wu typed his name where the testator would normally sign his name, followed by the date and his address. The Australian court admitted the Will to probate.
The law for the execution of a valid Will in Queensland, Australia, is set forth in the Succession Act of 1981. The Act provides the requirements for execution, however, it provides that, if the court is satisfied that a person intended a document to form his Will, then the document shall be considered a Will as long as it purports to state his testamentary intentions. Australian law defines a “document” to include any disc, tape, article, or any materials from which writings are able to be produced or reproduced. Citing a New South Wales, Australia, case that held a Word document stored on a laptop computer to be a document, the court held the electronic record on the iPhone was a document for purposes of the statute. Since the record contained on the iPhone named an executor, authorized the executor to deal with his financial affairs, and provided for the distribution of Wu’s entire estate at a time he was contemplating his imminent death, the court held that it met the requirements of the Succession Act 1981.
California Probate Code § 6110 provides that a Will shall be in writing and signed by the testator, or signed in the testator’s name by some other person in the testator’s presence and at the testator’s direction, or by a conservator pursuant to court order. The Will must have the signatures of two witnesses. If the Will does not meet these requirements, it shall be treated as if it did meet the requirements if the proponent of the Will establishes by clear and convincing evidence that, at the time the testator executed the Will, he or she intended the document to be his or her Will.
Similarly, New Jersey law provides at N.J.S. 3B:3-2 that a document or writing is treated as complying with the normal rules for executing a Will if the proponent of the writing establishes by clear and convincing evidence that the decedent intended the document to constitute the decedent’s Will.
The California and New Jersey statutes are based on § 2-503 of the Uniform Probate Code. The impetus for the enactment of this section of the Uniform Probate Code may have been a case where an attorney attempted to probate the unsigned draft of a Will of a decedent who was killed in the World Trade Center attack on September 11, 2001.
California Probate Code § 6130 further provides: “a writing in existence when a Will is executed may be incorporated by reference if the language of the Will manifests this intent and describes the writing sufficiently to permit its identification. California Probate Code § 6131 states: “a Will may dispose of property by reference to acts and events that have significance apart from their effect upon the dispositions made by the Will, whether the acts or events occur before or after the execution of the Will or before or after the testator’s death. . . .”
Recently, a Will was admitted to probate in California where the Will referred to the disposition of assets in accordance with recordings that the decedent had left, both prior to the execution of the Will and would leave after the execution of the Will, on his answering machine at his residence. The judge found that the recordings constituted a writing within the meaning of the California Probate Code and were to be incorporated by reference and were to be considered to be acts of independent significance. Therefore, the recordings were given effect with regard to the disposition of property as governed by the Will.
While the existence of these statutes in many states have broadened what may be admitted as a Will for probate, it is not a good idea to rely on these statutes to assure that one’s Will will be accepted by the local probate court. Having a Will drafted by an attorney experienced in estate planning and drafting is always the best course of action to assure there will be no problems with the disposition of one’s estate at death.
Furthermore, there are many reasons why one may not wish to subject his or her estate to probate upon death, including potential additional costs, delays in administration, and the publicity of both the extent of the decedent’s wealth and the identification of the beneficiaries of the estate. There are many ways to avoid a probate administration at death, including the execution and funding of a revocable or irrevocable trust during the individual’s lifetime.
For more information about the ways to avoid probate, contact our law office. Our office focuses on estate planning, probate administration, and methods to avoid probate for those who have a desire to do so. We work with clients of all wealth levels and ages. As a member of the American Academy of Estate Planning Attorneys, our firm is kept up-to-date with information regarding estate planning and estate and trust administration strategies. You can get more information about scheduling a complimentary estate planning appointment and our planning and administration services by calling Gerald M. Dorn, Esq. at (775) 823-9455