Back in 1987, Congress recognized March as Women's History Month to celebrate the incredible contributions of women in American history across various fields. From building a strong and prosperous nation to being the backbone of their families, women have been unstoppable. Yet, in the midst of caring for others, women often neglect their own financial and estate planning. It's high time for women to prioritize themselves by crafting a solid plan that caters to their future needs, which may differ from those of their male counterparts and dependents.
Longer life expectancies. According to Social Security Administration data, in 2021, women had an average life expectancy of 79.5 years compared to 74.2 years for men. As a result, it is important for women to create an estate plan that accounts for additional years of living expenses during retirement, healthcare costs, and possibly long-term care costs. As women age, there may be a greater possibility that they could become incapacitated and need someone to act on their behalf to make financial and healthcare decisions. Documents such as financial and healthcare powers of attorney and living wills authorize a person they trust to make decisions or take action for them if they are not able to act for themselves. Some women may not only own their own assets but also inherit wealth from both their parents and a spouse who dies before them, and if so, they need a financial and estate plan to optimally preserve and transfer this wealth. Because women may outlive their spouses, they also may be responsible for administering their spouse’s estate or become the sole surviving trustee of a joint trust. These duties may be difficult for a woman who is experiencing health issues that often occur at an advanced age, and this possibility should be addressed in their estate planning. For example, a woman concerned that she will be unable to handle administering her trust at an advanced age can name a co-trustee or successor trustee to administer it if she is no longer able to do so.
Lower earnings. According to U.S. Census Bureau data, women continue to earn less than men, and the pay gap widens as they age. In addition, because some women have shorter employment histories due to time off to raise children or care for aging parents, they may have less saved for retirement. As a result, it is important for them to take steps to protect their money and property from lawsuits or creditors’ claims. For example, a woman could transfer her money and property to an irrevocable trust. Because she is no longer the legal owner of the property, a creditor cannot reach it to satisfy claims against her so long as the trust is properly drafted to include appropriate distribution standards and administrative and other provisions. The woman may be a discretionary beneficiary of the trust, and the trustee may distribute the funds she needs for living expenses. Additionally, because they have less money and property during their retirement, women need to have a solid plan in place to make sure that they are able to financially provide for their loved ones upon their death and that unnecessary costs and expenses are minimized to the extent possible.
Care for loved ones. Many women are caregivers for minor children, adult children with special needs, or aging parents. As a result, they are often concerned about who will care for their loved ones if they are no longer able to do so. If a spouse or sibling is not available to provide care, they need to make sure that another family member or trusted individual can be the caregiver (sometimes called a guardian of the person) for their loved one. The same individual—or someone else—can serve as the guardian of the loved one’s estate (sometimes called a conservator or guardian of the estate) to manage the inheritance for their benefit. In the case of a child with special needs, if no family member is able to take on the responsibility of their care, a group home or assisted living facility may be the best choice. A special needs trust may need to be established to ensure that funds are available for the child’s care but do not decrease the amount of government benefits they are eligible to receive.
You have accomplished a lot in your life! Celebrate your accomplishments and contributions during Women’s History Month by contacting us to set up an appointment to create an estate plan that provides for your own future needs and those of the people you love. You deserve the peace of mind that comes with knowing your future is secure.
As the new year begins, many of us take stock of our past and plan for the future. As a business owner, it can be easy to get caught up in daily tasks and neglect long-term planning for your its succession. However, it's essential to consider the impact and legacy you want your business to have in the future. If you want to make a positive difference for future generations, consider using a new, lesser-known planning tool called the purpose trust.
A traditional trust is a legal agreement between three parties: the grantor, trustee, and beneficiary. The grantor funds the trust with financial or property assets, and the trustee manages these assets according to the terms of the trust, for the benefit of designated beneficiaries. A charitable trust is an exception, as it is created for a charitable purpose but does not have specifically designated beneficiaries. Recently, some states have introduced the concept of noncharitable purpose trusts, also known as purpose trusts.
These trusts can be established for most lawful purposes, as long as they are reasonable and do not violate public policy. However, in some states, they can only be used for specific purposes such as pet care or grave site maintenance. To ensure that the trustee carries out the grantor's stated purpose, the grantor must appoint an independent “enforcer” who can petition the court if duties outlined in the trust are not performed. A trust protector can also be appointed to modify the trust if necessary, for example, to add beneficiaries or modify the jurisdiction where the trust is effective. The goal of a purpose trust is not primarily to minimize taxes or transfer wealth efficiently (though this can be achieved), but to ensure that the grantor's purpose is fulfilled.
You’ve likely heard of, or own clothing from the company, Patagonia. In September 2022, Yvon Chouinard, the the company’s founder, transferred the voting stock of the $3 billion outfitter to a purpose trust to extend his mission of fighting the planet’s environmental crisis. In an excerpt on the Patagonia website, he stated that the company's continued purpose is to "save our home planet." After finding out his children did not have a desire to take over the family business, Chouinard decided not to sell the company, as he worried a new owner might have different values and his employees would not retain job security.
The Patagonia Purpose Trust, guided by the family and advisors, took over the voting stock of the company to ensure that its values were upheld and profits were used for their environmental protection goals. A 501(c)(4) nonprofit organization was also set up to transfer the nonvoting stock into. The nonprofit will be funded by Patagonia’s dividends, amounting to an estimated $100 million a year, for environmental protection efforts. The business interests were not donated to a charity, so they will encounter an estimated $17.5 million in gift tax, and no charitable deduction will be available to Chouinard. However, he effectively avoided $700 million in capital gains taxes and substantial estate tax liability upon his death.
A purpose trust can be a viable option for business succession planning if you own a profitable company and want to keep its mission alive. Similar to the Chouinard family, you can ensure that your company's values and mission continue to be upheld for many years to come, and that your employees have job security. This is particularly useful if you do not have children who are interested in running the business or if your children do not share your values. The terms of a purpose trust can ensure that future management adheres to the trust's purpose, and also ensures that the company remains private and that values remain a priority over profit.
From a business standpoint, what are your goals for the future? If you're interested in using your wealth for the benefit of a cause you’re passionate about, you might want to look into a purpose trust. Contact the team at Anderson, Dorn & Rader to see if this planning option is suitable for you.
One of the most crucial decisions within your life plan is determining who will manage the estate when you aren’t around anymore, or are no longer fit to do so. This individual is called the successor trustee.
A large amount of responsibility comes with being nominated as a successor trustee. Because of the complicated procedures, time they’ll need to dedicate, and risks that the trustee will assume, many people consider hiring a professional fiduciary (like an estate planner) to be their trustee.
When hiring a professional to carry out the duties of trustee, you’ll first need to ensure that a terms of engagement document is signed by both parties to lay out the relationship between parties. This should be a separate document from the one that identified their duties as your estate planner. You’ll also want to look for the following qualifications (and potential red flags) when deciding whether to carry out the relationship.
Even if a professional fiduciary is able to draft a thorough terms of engagement document, that doesn’t necessarily mean that they have all the resources to properly administer your trust. Don’t be afraid to ask questions. You need to make sure that the professional fiduciary takes the trustee role seriously, and that they are well-equipped to take on the job. The below functions should be well within the wheelhouse of a satisfactory candidate for a professional trustee:
Even seasoned estate planners who take on the responsibility of trustee can find it difficult to fit your estate management into their schedule. The professional that you hire should be responsive and accessible. This is especially the case when the trust requires critical decisions related to distributions, beneficiary health, maintenance, education, and support. After you are gone, your beneficiaries will also be in constant contact with your hired fiduciary, and even more so when distributions are made on a reoccurring basis.
For instance, one of your beneficiaries may request an early distribution to cover the expenses of a medical procedure. Or perhaps the period to take advantage of government benefits is drawing to a close on a distribution amount. Will your professional trustee pick up the phone or quickly respond to an email in these instances? Proper communication is paramount to deal with the intricacies of your family’s lives, and your hired trustee must be passionate about providing them service when needed.
No one can work forever, and even your hired trustee must retire at some point. Do they have a plan in place to transfer their responsibilities to another individual or firm? The terms in your trust should outline who will become your successor trustee, but in the case that your trust puts the power of designating the successor in the hands of the trustee, you’ll want to ask your professional fiduciary who will fill their place if something happens to them.
Some instances will require your professional trustee to communicate with the caregivers of your beneficiaries. This could be due to the beneficiaries being minors, or perhaps because they are disabled.
In the case that a beneficiary is not able to manage the assets they’re gifted in the trust, it’s vital that your professional trustee can communicate with caregivers to understand their needs and translate them into actionable estate management duties.
After applying these suggestions when considering a third party trustee, notify them of your decision to nominate them. Even though they won’t assume trustee duties until you are unfit or no longer around, being proactive benefits the planning of your affairs.
Your nominated professional trustee does not necessarily have to accept the position. But by finding out if they’d like to take on the responsibilities sooner than later, you’ll have ample time to make an educated decision if you need to select another individual.
If you have any questions about selecting a professional estate planner to be your trustee, the knowledgeable attorneys at Anderson, Dorn & Rader can help. We offer Trustee Services to help guide you in the process of choosing an adequate trustee to carry out your wishes and preserve your family’s wealth.
Schedule a FREE consultation to discover the benefits of choosing Anderson, Dorn & Rader as your professional corporate trustee. We look forward to serving your needs with a high level of professionalism, experience, and dignity to match the values of your family.
Life is riddled with unknowns. While you can control certain events like whether you’ll have kids or tie the knot, other milestones are not as easy to predict. Life comes at your fast, and sudden, unexpected events can muddle with estate planning. For this reason, make sure your plan is flexible.
You’re able (and it’s recommended) to update your estate plan as you age. But when you die, the plan is more or less set in stone. To curb some of the unknowns that will inevitably arise, it’s a good idea to incorporate milestones into your estate plan. Milestones trigger predetermined decisions that allow you to exercise your wishes and pass wealth to loved ones after you are gone.
If-then statements are pre-made decisions that are carried out based on conditions you set. They are commonly seen in legal documentation, including estate plans.
The concept of if-then statements is straightforward. If a certain criteria is met, then a given action is put into motion. Take the following for example: “If my spouse and I both pass away before our children are fit to care for themselves, [Relative X] will be nominated as their rightful guardian."
Clauses like these can reserve some of the power you have over otherwise unforeseen circumstances. They also offer more flexibility than more simplistic declarative statements (“I leave the property in The Hamptons to my oldest daughter”, for example).
If-then statements can build upon one another to account for various future scenarios. So you could say, “If my spouse and I both pass away before our children are fit to care for themselves, [Relative X] will be nominated as their rightful guardian. If [Relative X] is unfit to care for our children, [Friend A] will assume the nomination.”
The beauty of conditional actions in your estate plan is that they can take on many forms. Aside from if-then statements, you can also include asset allocations or gifts that are put into motion when certain milestones are reached.
Check out these events that are commonly incorporated to trigger gifts or distributions to loved ones:
These milestones are just the tip of the iceberg, and can be combined or modified. For instance, you may give wedding money to a child while storing the rest of their inheritance within a trust. This ensures that if they get divorced, the assets you pass on won’t fall into the hands of their ex-spouse.
You can also set up your estate plan to allocate more money to an individual if the value of that asset increases over time. Remember that if-then statements can be used to make such allocations flexible. The possibilities are endless.
It's a complicated process to populate your estate plan with if-then statements and other milestones. But the work you do up front will protect you and your loved ones from the unknowns of the future.
The professional estate planners at Anderson, Dorn & Rader will help to put all your wishes in writing. To simplify the proceedings, we can spell out your conditional statements with flow charts and diagrams. These can then be integrated into your estate plan to provide clarity after you’re gone.
Whether you’re looking to update an existing life plan, or start from scratch, our estate planning lawyers can help. Contact Anderson, Dorn & Rader to secure your plans for the future and continue your legacy after you’re gone.
If you are the executor (personal representative) of a will, or the designated trustee of their trust passes away, it’s your legal duty to act in the best interests and distribute the assets to the beneficiaries of the trust according to the terms laid out by the benefactor.
*The roles of executor and trustee can be listed under the umbrella term: fiduciary, so we’ll refer to both as such throughout the blog. There are various reasons why you, the fiduciary may not be able to locate a beneficiary of the will or trust. Maybe you lost touch, or perhaps you had a falling out. What should you do in this situation?
When you were bestowed with a fiduciary role, it became your legal obligation to use reasonable diligence in attempting to locate the missing beneficiary. The definition of “reasonable” can depend on individual scenarios like the monetary value of the assets, and what actions have been made in attempting to contact the missing beneficiary.
To start, you as the fiduciary should call the missing beneficiary’s last known phone number, then send a notice that the estate / trust is being administered to their latest address on file. If you get no response from these initial touch points, try contacting their family members and friends for any information they may have on their whereabouts. Social media can also be a powerful tool, as well as people-locating sites on the internet. It also can’t hurt to conduct a property search via government websites, which often show official home records like deeds.
If the assets being distributed are not monetarily significant, you as the fiduciary won’t be required to shell out copious amounts of the trust’s money to try and locate the missing beneficiary. On the other hand, if the assets are of a significant amount, you may have to take further actions to attempt to locate the absent beneficiary to meet the threshold for ‘reasonable diligence’. These can include hiring a P.I. (private investigator) or utilizing an heir search specialist.
Believe it or not, there’s are services dedicated to finding missing beneficiaries. By utilizing estate investigators and genealogists, heir search specialists are able to comb through vast swathes of the country – and worldwide – to find potential heirs. They do so thanks to access to records like birth, death, marriage, and adoption records.
Heir search specialists do cost money, but can provide peace of mind that the person receiving distributions from the trust is, in fact, who they say they are. Unfortunately, there are instances where people pretend to be estranged heirs, so it’s important to confirm identities before any money from the trust is handed over.
If your efforts in hiring a search specialist still don’t turn up the beneficiary you’re looking for, it’s possible to petition the court asking permission to distribute a preliminary amount of property and money to the beneficiaries who have been successfully located. It’s likely that the court will order that the assets be held in the trust for a period of time (this varies by state) so the missing beneficiary has a reasonable amount of time to come forth and claim it. Another option is to obtain indemnity insurance, which covers you in the scenario where a previously un-located beneficiary appears and asks for their portion of the trust after it’s been distributed.
Tracking down an estranged beneficiary can take significant resources and lead to a prolonged asset distribution process. Additionally, the beneficiaries already located can often become impatient while time lapses. For these matters, it can benefit you to hire a legal professional with experience handling the known beneficiaries’ demands while still abiding by state regulations and protecting the trust’s best interests.
In the event where a beneficiary cannot be located, even after your due diligence efforts, it’s best to have a legal professional’s guidance when petitioning the court for a preliminary asset distribution to known beneficiaries. It saves time, and ensures legal compliance.
Becoming a fiduciary of a will or trust is an honor that comes with large responsibilities including carrying out the wishes of the deceased. Thankfully, you do not have to navigate challenging situations alone. By leaning on the extensive experience of the attorneys at Anderson, Dorn & Rader, your unique circumstances can be handled to provide a positive outcome for all parties involved. When you need estate administration assistance, our team will be ready. Contact Anderson, Dorn & Rader, and we’ll ensure your role as the fiduciary is maximized while honoring loved ones in the process.
In general, the answer is yes; your trust can own your business after you die. But taking a deeper look into this matter, some factors may affect your individual situation. Both the type of business you own (LLC, Partnership, corporation, sole proprietorship), as well as how your business is currently managed can determine how the trust obtains ownership and continues operations after you pass. We’ll explore these determining factors here:
Once the trust has obtained ownership of your business, there are factors that affect how it will be managed after you are gone. The first factor is the type of business that has been transferred (which we explored above). The other is the way the business was managed prior to the transfer of ownership.
As is the theme with trust transfers, the terms will determine whether income is distributed to beneficiaries. The trust is entitled to receive income or distribute profit distributions to owners or stockholders.
In the case that your business is taxed as an S corporation, there are unique circumstances under which someone can own the S corporation after your death. Prior to transferring ownershipof trust assets, consult a qualified attorney or financial professional.
As discussed, there are many factors to consider and navigate when transferring business ownership before you die. Overall, it depends heavily on the type of business you are operating, as well as how it is currently being managed. Therefore, it’s a great idea to consult with professionals to properly consider every factor and complete the transfer of ownership with confidence. It can be daunting, but Anderson, Dorn & Rader is here to help!
Contact Anderson, Dorn & Rader, the trusted team of Nevada Wealth Counselors, to properly transfer ownership of your business before you pass.
Many Northern Nevadans know the dangers that come along with this time of year. A 2019 statistic showed that 17% of all accidents happen during winter conditions, highlighting an increased chance for individuals to experience an accident due to extreme weather changes. Ultimately, no matter how long you’ve lived in the region, less sunlight, alongside rain, snow, and black ice creates challenges for anyone driving on the road. While no one ever thinks they will fall victim to an accident, knowing what to do after a fender bender is crucial to ensuring a headache-free experience.
Following these guidelines can help you document the incident calmly and efficiently.
While many people believe there is no reason to immediately report minor accidents, following these steps avoids unnecessary complications and significant penalties down the road.
If an accident occurs making you unable to speak or communicate decisions clearly, you will need to have someone talk to medical professionals on your behalf. This should be a previously planned and trusted individual who would be deemed your medical power of attorney. This person will arrange treatment with doctors until you regain consciousness, so it's crucial you've assigned this power to someone. Your medical power of attorney will expedite medical treatment in the case of an emergency. Furthermore, your medical power of attorney should know where to obtain a copy of this documentation to help expedite treatment.
Opting for minimum coverage can be detrimental to your savings and property in the event of a serious lawsuit. You and your car must be fully covered to prevent this from happening. Plus, you should speak to your insurance broker to find out if umbrella insurance makes sense for you. Umbrella insurance is a low-cost way to gain extra liability coverage and protect yourself from damages that may exceed the limits of your car insurance. Umbrella insurance ensures you have access to a bigger pool of money in the event of a car crash lawsuit against you, protecting your savings and future prosperity.
After a car accident with significant property damages and medical injuries, it may feel necessary to protect your assets from excessive lawsuit demands. You may attempt to do this by transferring funds to friends and family, but be careful because this is against the law in some states. These transfers used to protect assets won’t be ignored by the courts. If considered fraudulent, court judges have the full right and power to reverse transfers. This means that these assets can be obtained by the party in the event of a successful lawsuit against you even after being gifted to a friend or family member.
Revocable trusts are used to protect your assets and trust from creditors and lawsuits after your death. Unfortunately, while some people believe that these trusts protect their assets during their life, this is a misconception and not their design. These trusts fail to completely protect your assets because you have complete control of all assets placed in a revocable trust. Your ability to control these trusts means a judge can order you to revoke the trust to pay creditors and lawsuit judgments.
However, with the guidance of an experienced asset protection and estate planning attorney, you can use properly designed strategies to enhance protection for your assets and property. That means taking the time to sit down with an experienced attorney well before an accident occurs offers you the best chance to maximize asset protection for your estates.
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Contact us today to see how AD&R can provide you with the finest legacy and wealth planning advice Northern Nevada has to offer. We help get you the proper insurance and design estate planning to help you overcome unexpected lawsuits after an accident. Give us a call today so that we can help prepare you for the perils winter might bring.
To date, twenty-four states have enacted or introduced model legislation referred to as the Uniform Voidable Transactions Act (Formerly Uniform Fraudulent Transfer Act). The full text is available on the website of the Uniform Law Commission at https://www.uniformlaws.org/committees/community-home?CommunityKey=64ee1ccc-a3ae-4a5e-a18f-a5ba8206bf49.
You’ve had your trust documents drafted and signed, now you assume your estate plan is in place and no further action is required. Unfortunately, this is not all that needs to be done to ensure your estate plan is effective. For any trust to have actual value, it needs to be funded.
The process of funding your trust is essential to leave property, cash, and other assets to your beneficiaries. Learn more about trust funding and proper titling below.
Funding is the process of moving assets, such as money and property into the appropriate trust. To fully understand funding, imagine your trust as an empty bucket. The bucket by itself doesn’t offer much usefulness, but once you fill the bucket up, it has a purpose. Trusts function similarly in that they are only useful when they have money or property in them.
The funding process involves retitling your assets in the name of your trust. Bank accounts, property, and any other assets will need to be titled in the trust’s name in order for them to be included in that trust, otherwise, it will remain empty. This can be done in one of two ways:
By doing this, your trust can be easily handed over to a successor trustee to manage in the event of your incapacitation - without the need for court intervention. Your successor trustee will have the right and responsibility to use the assets placed in the trust for you and your beneficiaries while you are unable to manage those things on your own. Fortunately, fully funded living trusts are exempt from the probate process, which provides a superior method of managing the trust for streamlined asset distribution and much more.
To properly fund your trust, you’ll need to work with the financial organizations you bank with to transfer ownership of your accounts into the trust’s name. Any real property you own will also need to be transferred into the trust’s name which may require a new deed to be signed with the correct information. Take a look at some of the common types of property that can be included or funded in your trust:
Accounts including checking, savings, money market, and certificate of deposit (CD) should all be regularly funded to your trust. To do this, you’ll need to work with the bank or credit union in which you have accounts to retitle them into your trust’s name. Commonly, you will be required to provide a certificate of trust that contains information the financial institution will need to complete the transfer. Just be sure that there are no early withdrawal penalties for retitling your CD accounts.
Real estate may refer to your personal residence or another property (commercial, residential, or industrial) owned by you. Real property refers to the interests associated with property such as mineral or timber rights. Both types of property will require the help of an estate planning attorney to prepare the appropriate documents and ensure the property deeds are signed and sealed specifically for your trust.
Investment accounts will also need to be transferred into your trust’s name which can be accomplished through your financial advisor or broker of a custodial account. To do this, a certificate of trust is often necessary for proper retitling of your investments.
Personal effects may include items such as jewelry, furniture, clothing, photos, artwork, collections, tools, vehicles, and more. You can easily move these items into your trust by signing an assignment of personal property.
In regards to your life insurance, it’s best to name your trust as the primary beneficiary of the policy so that the trust has authority over the earnings garnered from said policy. It is then customary to name loved ones or other special persons such as a spouse, partner, or child as secondary beneficiaries. Most insurance companies have processes in place that allow these changes to be made easily. To change the primary beneficiary on your life insurance policy, contact your insurance agent to get the proper beneficiary designation forms filled out and filed.
Retirement assets may include individual retirement accounts (IRAs) and 401k plans. Typically, it is not recommended to transfer ownership of these accounts to your trust due to the serious tax implications they pose for the plan’s owner. Before you assign your trust as the primary beneficiary on your retirement accounts, it’s crucial that you understand the potential tax consequences associated with this plan of action. Fortunately, your estate planning attorney can help you assess these risks and make the most appropriate decision for you.
The most common types of property are listed above, but these aren’t the only assets that you may want to be funded into your trust. To ensure that your legacy goes to the appropriate beneficiaries, and to avoid probate, it’s important to include all of your assets in your trust. Some of the other types of property that should be funded into your trust include:
Your estate plans matter more than you may think. While many people assume they don’t have adequate assets to warrant the need for a living trust or other types of estate plans, this isn’t the case. Reputable estate planning attorneys can help you develop an effective estate plan that safeguards your assets and ensures your legacy for generations to come.
Connect with Anderson, Dorn & Rader today to have your trust documents drafted and titled, and your trusts properly funded. We’ll help you retitle your accounts and ensure correct ownership of your property for an effective estate plan.
In the event of your incapacity, it’s crucial that you begin estate planning to set processes and prepare documents such as a last will and testament or revocable living trust to safeguard your assets. Congress determined that due to the importance and benefits estate planning has for Americans and their families, it was necessary to bring awareness to the cause. Thus, since 2008, the third week of October has been recognized as National Estate Planning Awareness Week. While the onset of COVID-19 did encourage a majority of us to begin thinking about the future, many American families are still severely lacking an effective estate plan with just one-third of adults in the U.S. having documented wills or trusts. If you assume that estate planning isn’t for you because you haven’t acquired mass wealth or several large assets, you’d be mistaken.
Estate planning is simply a way to protect your assets and your loved ones by creating legally valid documents that address a variety of concerns. These concerns often include ensuring that your money and property are protected, plans are in place in the event you become ill, and your assets are managed according to your wishes.
To begin the estate planning process, several considerations need to be made. Some of the things that will require your attention are whether or not you have a will or trust, your plans for powers of attorney, insurance coverage, and your existing accounts. Below, we will discuss these considerations more in-depth:
National Estate Planning Awareness Week is a great opportunity to get your own estate plan in place, but be sure to also reach out to your loved ones to ensure their future estate plans as well. Estate planning is often a difficult topic to broach because it brings the unpleasant topics of aging and death to the forefront of our minds. Here are a few tips to help you start the conversation:
Our estate planning and trust company in Reno, NV has been serving families and businesses throughout northern Nevada for over 25 years. As experienced estate attorneys, we are dedicated to providing you with the most current estate planning information and strategies to ensure your legacy for future generations. We’re able to prepare last will and testaments, revocable trusts, healthcare directives, and act as power of attorney in the case of your incapacitation. Contact us today to learn more about estate planning or sign up for one of our estate planning workshops.
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Trusts are an essential part of legacy and estate planning as they provide the best security over a person’s assets during and after life. A trust allows a grantor, or creator of the trust, to set aside possessions and assets for assigned beneficiaries following their death or incapacitation. There are several types of trusts to choose from, but regardless of this, you’re going to require the assistance of a successor trustee to manage the trust in the event that something happens to you. If you’re asking yourself “what is a successor trustee and why do I need one?”, you’re not alone. Take a look below to learn more about successor trustees and how to go about selecting them.
What is a Successor Trustee?A successor trustee is a person or group of people appointed to manage a trust when the grantor is no longer capable of managing it themselves. This may be due to the grantor becoming incapacitated, losing the ability to make decisions, or passing away. The successor trustee is responsible for administering and settling a trust in the event that one of these circumstances occurs.
Duties of the successor trustee vary case by case as these terms are set by the grantor, but most commonly, trustees are responsible for overseeing the trust and managing the distribution of assets when the time comes. They will also be responsible for notifying relatives and proper institutions of the death or incapacitation. Often, the role of successor trustee lasts for many years making it a rather large commitment that may also be quite time-consuming.
Successor trustees can be any trusted adult you choose such as adult children, relatives, trusted friends, or professional trustee services like those from Anderson, Dorn & Rader.
When it comes time to select a trustee, the grantor has a few options. It may be recommended that one person be appointed to serve as the successor trustee or it may be suggested to have multiple trustees. Having a single person act as successor trustee helps avoid potential conflicts between co-trustees during the administration of the trust. For this reason, it’s a common approach in estate planning to assign one person as the trustee at a time. So long as the successor trustee maintains contact with beneficiaries, keeps them informed about the trust administration, and fulfills the trustee’s responsibilities under both the law and the provisions of the trust document, appointing a single successor trustee can be a great option.
However, many trust makers are reluctant to place the entire responsibility for trust administration on just one person. Because of this, a grantor may appoint two or more trusted adults to serve as successor co-trustees. This method may be beneficial not only for the trustees but for the grantor as well. For instance, dividing the trustee’s responsibilities will help make the job of serving as a trustee much more manageable. To explain, a grantor may appoint a professional trustee service to be in charge of handling trust investments or accounting and tax information while another appointed trustee such as a family member or friend handles the distribution of assets and other similar duties. Likewise, having successor co-trustees may ensure the process of checks and balances which ultimately safeguard your trust from potential abuses of authority.
To determine whether your trust will be better in the hands of a single successor trustee or multiple trustees, you need to first understand the advantages and disadvantages of having successor co-trustees managing your trust. Some of the advantages of the co-trustee approach include:
Some of the disadvantages of the co-trustee approach to consider are:
Before choosing whom to name as a successor trustee, you should discuss the options with your attorney and other professional advisors. Doing so will help you identify some of the potential pitfalls and complications that can arise with regard to your successor trustee choice. During this discussion, you may realize the need to make changes to your estate planning documents such as adding or eliminating beneficiaries or editing your assets.
Before determining what the right approach is for you, consider the following questions regarding potential successor trustees:
It can be extremely difficult to determine what the best management option for your trust is. Fortunately, there are professionals out there to help make the decision more simple. If you’re struggling to appoint a trustee or group of trustees, connect with the expert estate planners at Anderson, Dorn & Rader to learn more about your options. As estate planning attorneys with extensive experience serving as professional trustees, they’re more than qualified to help you make the right decision regarding your legacy.
Whether you nominate a single successor trustee or multiple co-trustees, carefully considering the pros and cons of each approach can help ensure that your wishes for the handling of your estate and trust will be honored. Contact us today so we can review your current successor trustee selections or create an estate plan with the right people in charge to assist you when needed.
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When we think of estate planning, we often think about preparing our accounts and property to go to our loved ones in a tax-efficient way, protected from probate, disgruntled heirs, beneficiaries’ creditors, divorcing spouses, bankruptcy, and the poor spending habits of children or other beneficiaries. We rarely consider preparing for receiving an inheritance of our own.
Believe it or not, there are some essential things you must consider when you anticipate receiving an inheritance. Understanding these issues can be crucial to protect that inheritance from unnecessary taxes and outside threats like creditors, divorcing spouses, and bankruptcy.
The first way to properly prepare to receive an inheritance is to discover what you will be inheriting. Is it real estate, a 401(k), or an individual retirement account (IRA)? Perhaps it is publicly traded stock, an interest in a family business, or just simply cash from a savings account or life insurance policy.
Whatever it is, there are steps you can take today to plan to receive and manage it properly. For example, if you will receive a large IRA account from a parent, do you understand the new rules associated with inherited IRAs as implemented by the SECURE Act passed in late 2019? If not, you should educate yourself now on how to maximize the tax benefits available under the law regarding required distributions. Without an understanding of these often complicated rules, you could make an irreversible mistake and withdraw all of the IRA funds at one time, thereby substantially increasing your tax liability in the year of withdrawal. There are a variety of nuances to these rules that a tax adviser or attorney can help you understand and navigate properly.
Likewise, if you are receiving rental property as a part of your inheritance, you should consider the business of being a landlord and if you even have an interest in continuing to operate such a venture. If not, you may want to prepare to find a buyer for the property who can offer you a fair price as soon as possible. Or, at the very least, look into hiring a property management company to take over as soon as you inherit the property.
If your loved one has completed trust planning that includes establishing an irrevocable trust for you, such trusts frequently include important features that are generally referred to as powers of appointment. A power of appointment in a trust is a right, often given to the beneficiary of the trust, to gift trust property to someone else or, in some cases, to yourself. These powers are often limited to making gifts to only certain classes of people (such as the descendants of the trust makers), or they may be limited to making gifts only at death (a testamentary power of appointment) or during life (a lifetime power of appointment). Some trusts include both types of powers. These can be powerful planning tools that have been given to you through trust documents. Failure to recognize the existence of these powers can lead to unintended consequences, or at the very least, crucial missed asset protection and tax-planning opportunities.
If you know that you have been granted a power of appointment, you should attempt to obtain a copy of the relevant trust documents to carefully review and determine the nature of these powers. An experienced estate planning attorney can help you with this task. With this information, your professional advisers can properly advise you on the planning opportunities and tax consequences of the powers of appointment that may be available to you.
A common mistake made by married individuals who receive an inheritance is to commingle that inheritance with the property of both spouses. How can this be a mistake? An example may best illustrate the point:
Imagine Robin receives a cash inheritance from her deceased father of $300,000 and she and her spouse Morgan decide to use the inheritance to buy a vacation cabin in the mountains. When purchasing the property, the title company assumes that because they are a married couple, they want to take title to the property as joint tenants with rights of survivorship and the deed gets prepared and recorded accordingly. Further imagine that over the years, they furnish the property together, maintain it, and enjoy many family vacations there. One night, however, Morgan has a little too much to drink at a bar, gets behind the wheel, and causes a deadly accident that results not just in a DUI, but also in a wrongful death lawsuit. Because Morgan’s name is on the title to the property as a joint owner, Robin and Morgan discover that the family cabin is an asset that can be used to satisfy the lawsuit judgment against Morgan. As a result, they are forced to sell the cabin and use half of the proceeds to satisfy the judgment.
This unfortunate circumstance can be the result of Robin’s failure to keep her inheritance as separate property. By commingling her property with Morgan, she made it much easier for the judgment creditor in the lawsuit to reach what otherwise would have been considered Robin’s separate inheritance property.
Commingling inherited property can also lead to a similar result if Robin and Morgan ultimately divorce and the family court judge has to determine how to divide the marital property. Failing to keep the inherited property separate during marriage can often lead to that property being divided between spouses at divorce.
A fourth way for you to prepare to inherit property is by using an inheritor's trust. This is a special type of trust that can be established by the individual who will be leaving an inheritance to you. An inheritor's trust is designed to receive the inheritance that you would otherwise receive directly. It must be carefully designed and implemented to work properly, and an experienced estate planning attorney should most certainly be used in the effort. A properly drafted inheritor's trust includes the following key elements:
An inheritor's trust includes the following benefits:
An inheritor's trust can be a powerful tool to use when you anticipate receiving a large inheritance and would like to make sure that the inheritance is protected from certain tax consequences or threats from creditors.
If you would like to learn more about any of these concepts, give us a call. We would love to discuss these ideas in greater depth with you so we can help you build and protect your wealth more effectively.
Give Anderson, Dorn & Rader Ltd. a call at 775-823-9455 to make a free consultation with an estate planning attorney
and see how we can help protect your legacy and your family.
The primary purposes of a Revocable Living Trust are to avoid Probate Court's costs at death and a guardianship proceeding should the creator of the Trust (the Trustor) become incapacitated during life. In order for a Successor Trustee to properly administer the Trust in the event of incapacity or death, the assets in the Trust should be identified.
Typically attached to an individual Revocable Living Trust is Schedule A that lists all the Trust assets. This provides a roadmap for the Successor Trustee to find the Trustor's assets held in the Trust and to begin administering the assets correctly. For married couples completing a joint Revocable Living Trust, Schedule A will identify Community Property, Schedule B will identify the Husband's Separate Property, and Schedule C will identify the Wife's Separate Property. Identifying the property's character can be very important for the Successor Trustee to properly administer the Trust for beneficiaries and determine if the step-up in income tax basis to Fair Market Value at death is applicable to the asset. The Trustors should update Schedules A, B, and C in writing as material changes are made to their assets such as new bank accounts, brokerage accounts, real estate, life insurance, safe deposit boxes, etc. While the Trustors can make updates and changes to their Schedules, the Trustors should never write on their trust document as any handwritten modification to a Trust document that is not properly executed/notarized will not be effective.
An example of Schedule A is included at the end of this article for a sample client assuming all their property is Community Property. While Schedule A provides the roadmap for administering Trust assets for Successor Trustees, it does not by itself fund assets into the Trust. To properly fund real property into a Trust, a deed must be prepared and recorded, bank account and brokerage accounts re-titled to the Trust, qualified plans and IRA beneficiary designations updated, life insurance beneficiary designations completed, and business interests assigned to the Trust.
While Estate planning can be complicated, it is essential in protecting yourself and your loved one's financial future. Give Anderson, Dorn & Rader Ltd. a call at 775-823-9455 to make a free consultation with an estate planning attorney and see how we can help protect your legacy and your family.
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.
When you establish a revocable living trust, you are also generally the initial Trustee of the trust, administering the trust assets for your own benefit as a beneficiary of the trust. If you are married, your spouse can be a trustee with you. This way, if either of you become incapacitated or die, the other can continue to handle your financial affairs without interruption. What happens if you and your spouse are unable to serve as trustees due to incapacity or death? Generally, your revocable living trust will provide for a Successor Trustee to manage your trust assets for your benefit. The Trustee should be prepared to manage your financial affairs by collecting income, paying bills/taxes, selecting health-care professionals if needed, providing for your well-being, providing for dependents if any, and keeping accurate records.
Some people choose an adult son or daughter, a trusted friend or another relative. Some like having the experience and investment skills of a professional or corporate trustee (e.g., a bank trust department, trust company, or law firm). Naming someone else as trustee or co-trustee with you does not mean you lose control. The trustee you name must follow the instructions in your trust and report to you. You can even replace your trustee in your revocable living trust should you change your mind.
At death your assets can be left outright or continuing sub-trust for asset protection of your heirs/beneficiaries. Sub-trusts provide asset protection to your beneficiaries from their own creditors, or potential x-spouses. If you leave your assets in sub-trust for asset protection of your beneficiaries, consider if each heir should be their own trustee or if a professional trustee, or another person would be a better choice. For special needs beneficiaries, or a spendthrift beneficiary, often a professional trustee is helpful.
You may be elderly, widowed, or in declining health and have no children or other trusted relatives living nearby. Or your candidates may not have the time or ability to manage your trust. You may simply not have the time, desire or experience to manage your investments by yourself. Also, certain irrevocable trusts will not allow you to be trustee due to restrictions in the tax laws. In these situations, a professional or corporate trustee may be exactly what you need: they have the experience, time and resources to manage your trust and help you meet your investment goals.
Professional or corporate trustees will charge a fee to manage your trust, but generally the fee is quite reasonable, especially when you consider their experience, the services provided, and the investment returns that a professional trustee can deliver.
We can help you select, educate, and advise your successor trustees so they will have support and know what to do next to carry out your wishes. Give us a call today at (775) 823-9455 to schedule a consultation.
Although many people equate “estate planning” with having a will, there are many advantages to having a trust rather than a will as the centerpiece of your estate plan. While there are other estate planning tools (such as joint tenancy, transfer on death, beneficiary designations, to name a few), only a trust provides comprehensive management of your property in the event you can’t make financial decisions for yourself (commonly called legal incapacity) or after your death.
One of the primary advantages of having a trust is that it provides the ability to bypass the publicity, time, and expense of probate. Probate is the legal process by which a court decides the rightful heirs and distribution of assets of a deceased through the administration of the estate. This process can easily cost thousands of dollars and take several months to more than a year to resolve. In Nevada, a gross estate of $400,000 in assets under NRS 150.060(4) is subject to $10,000 in fees plus court costs. Larger estates have an even more onerous probate fees. Or course, not all assets are subject to probate. Some exemptions include jointly owned assets with rights of survivorship as well as assets with designated beneficiaries (such as life insurance, annuities, and retirement accounts) and payable upon death or transfer on death accounts. But joint tenancy and designating beneficiaries don’t provide the ability for someone you trust to manage your property if you’re unable to do so, so they are an incomplete solution. Additionally, joint tenancy creates pitfalls for income tax purposes versus a trust. Last, having a will only does not avoid probate.
Of note, if your probate estate is small enough - or it is going to a surviving spouse or domestic partner - you may qualify for a simplified probate process in Nevada. In general, if your assets are worth $100,000 or more, you will likely not qualify for simplified probate and should strongly consider creating a trust. Considering the cost of probate should also be a factor in your estate planning as creating a trust can save you both time and money in the long run. Moreover, if you own property in another state or country, the probate process will be even more complicated because your family may face multiple probate cases after your death, one in each state where you owned property - even if you have a will. Beyond the cost and time of probate, this court proceeding that includes your financial life and last wishes is public record. A trust, on the other hand, creates privacy for your personal matters as your heirs would not be made aware of the distribution of your assets knowledge of which may cause conflicts or even legal challenges.
A common reason to create a trust is to provide ongoing financial support for a child or another loved one who may not ever be able to manage these assets on their own. Through a trust, you can designate someone to manage the assets and distribute them to your heirs under the terms you provide. This will also protect an inheritance from being lost to a child’s soon to be ex-spouse in a family law matter. Giving an inheritance to an heir directly and all at once may have unanticipated ancillary effects, such as disqualifying them from receiving some form of government benefits, enabling and funding an addiction, losing it in a family law matter, or encouraging irresponsible behavior that you don’t find desirable. A trust can also come with conditions that must be met for the person to receive the benefit of the gift. Furthermore, if you ever become incapacitated your successor trustee - the person you name in the document to take over after you pass away - can step in and manage the trust’s assets, helping you avoid a guardianship or conservatorship (sometimes called “living” probate). This protection can be essential in an emergency or in the event you succumb to a serious, chronic illness. Unlike a will, a trust can protect against court interference or control while you are alive and after your death.
Trusts are not simply just about avoiding probate. Creating a trust can give you privacy, provide ongoing financial support for loved ones, and protect you and your property if you are unable to manage your own assets. Simply put, the creation of a trust puts you in the driver’s seat when it comes to your assets and your wishes as opposed to leaving this critical life decision to others, like a judge.
To learn more about trusts - and estate planning in general, including which type of plan best fits your needs - contact Anderson, Dorn & Rader, Ltd. today at 775-823-9455 to make an initial consultation appointment with one of our estate planning attorneys or make a reservation to attend one of our free estate planning Webinars online HERE.
The basic purpose of a trust in estate planning is to minimize estate taxes and avoid probate. What is a trust, exactly? It is a fiduciary agreement (one based on confidence and trust) between a trustee and the grantor (maker) of the trust.
The agreement authorizes the trustee to hold and manage the trust assets on behalf of the beneficiaries, and provides specific instructions on how to manage and distribute those assets. There are many different types of trusts, each with their own specific purposes or goals. So, how well do you know your trusts? Let’s find out.
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