Wills are very common estate planning tools with great value when it comes to having the freedom of determining to whom your estate will be distributed after your death. Without one, you die “intestate,” which means how your estate is distributed is established by the intestate succession laws in your state. Even with its clear benefits, there can be complications if your will is challenged after your death. Will contests can be expensive and stressful on your family. An easy way to guard against one common challenge to the validity of your will is to create, what is called a “self-proving will.”
The first step in drafting your will is making sure it meets all of the legal requirements to be valid. Each state sets out the specific legal requirements for a valid will. Most states accept wills from another state, as long as the legal document is considered valid under the other state’s laws. The general requirements for a valid will are the same in most states. The will must be in writing, it must be signed by the person creating the will, and it must be signed by at least two witnesses who were present at the execution of the document by the "testator" (the person whose will it is) and the signatures of the other witnesses.
Nevada’s laws regarding “Wills and Estates of Deceased Persons,” are set forth in the Nevada Revised Statutes, Title 12, Chapter 133 Wills, Sections 133.020 through 133.050. In Nevada, every person of sound mind, over the age of 18 years, can create a will. The terms “sound mind” simply means the person has not been determined to be, or is not obviously legally incompetent. As in most states, a will in Nevada must be in writing and signed by the testator and two witnesses.
Witnesses must also be 18 years of age or older and generally competent. The beneficiaries should not be witnesses; rather the witnesses should be independent third parties. A will is not invalid because one of the witnesses is a beneficiary. However, if there are not at least two disinterested witnesses, then the one who is a beneficiary must give up the portion of their gift that exceeds the amount or value they would have received under the laws of intestate succession.
It is not uncommon for wills to be challenged. The benefit of creating a self-proving will is that, the court will automatically accept the will as authentic. Consequently, the probate process, when a self-proven will is involved, is much simpler. There is no need for the witnesses to be located and brought into court to give testimony.
Creating a self-proving will in Reno is not very difficult. The only extra step is for the testator and the witnesses to affirm the will’s authenticity by notarized affidavit, or by affirming under penalty of perjury that they have witnessed the signing of the testator, verified that he or she is over the age of majority and is apparently competent. The process of self-proving a will can be completed at the time the will is executed, or later, including upon the testator’s death. The affidavit is typically made a part of the will and attached to it. Even if the witnesses are available to testify when the testator dies, having a self-proving affidavit eliminates the delay and effort in requiring the witnesses to testify in court.
If you have questions regarding self-proving wills, or any other estate planning needs, please contact Anderson, Dorn & Rader, Ltd., either online or by calling us at (775) 823-9455.
Estate planning in Reno and throughout Nevada involves everything related to transfer of your assets at the time of your death. One of the primary estate planning tools is the will. However, it is only one tool included in the many available in our services. As Reno estate planning attorneys, the firm of Anderson, Dorn & Rader, Ltd. is equipped to assist your personal representative through the probate process to manage, transfer, and distribute your real and personal property, upon your death, pursuant to your last will and testament. These services will be accomplished in the manner that allows your estate to avoid as much tax liability as possible.
A will describes to everyone who survives you, exactly how you want your assets to be distributed when you die. A will can be revoked or modified during your lifetime. Generally, a will should address the following:
A Survival Clause provides instructions on how to handle the situation where a named beneficiary has died before you. If these instructions are not included, the property you intended to leave to that person will go to their heirs, possibly through a second probate. If that is what you intend, then the situation would need to be addressed by use of the right of representation. If you want to identify an alternative beneficiary, you must also do so in a survival clause.
The Tax Apportionment Clause directs the inheritance and estate taxes to be paid from the gross estate, prior to your property and money being distributed to named beneficiaries. With this important clause, your beneficiaries will receive their share of the estate reduced by their fair share of taxes based on the amount to which they are entitled to receive from your estate.
A Simultaneous Death Clause is also an important section. Similar to the survival clause, it deals with the possibility that you and one of your beneficiaries may die at the same time, or within a few days from each other, like in a car accident. If this were to happen, it would be treated as though the beneficiary died before you, thus avoiding a second probate.
If both you and your spouse die at the same time, you can declare in your will that your spouse not to be affected by the simultaneous death clause. You can also indicate that the spouse with the smaller estate be considered to have survived the other. This type of provision may help to reduce federal estate taxes. Generally speaking, however, if your estate is subject to the estate tax, you will be much better served with a trust combined with other strategies, than with a will. Because wills are subject to probate, expenses are multiplied.
Your will should include the nomination of the person you wish to serve as the personal representative of your estate. The probate court will ultimately either accept or reject this person, depending on whether there are any legitimate objections. You should also include an alternative personal representative, just in case your first choice is unable to serve. Your will should also appoint a guardian in the event you have any minor children that survive you. An alternate guardian should be identified, as well.
If you have questions regarding wills in Reno, or any other estate planning needs, please contact Anderson, Dorn & Rader, Ltd., either online or by calling us at (775) 823-9455.
A trust is a great way to plan for future management of your property, in the event you become unable to do so yourself. Like most things, the terms of the trust must come to an end at some point. When that happens depends on the circumstances.
The definition of a trust
A trust is simply a special type of arrangement where the original owner of the property (known as the “trustor”) places that property into a trust, while designating someone else (known as the “trustee”) to take care of it, for the benefit of another person (known as the “beneficiary”). The instructions for using the property or taking care of it, are set out in the written document, called the "trust instrument."
How a trust can be terminated
The most common way for a trust to end is upon the exhaustion of the trust property. For instance, if the trust property is cash or stocks, then the trust ends when all of the funds are paid to the beneficiary. If, on the other hand, the property was tangible like a house or car, then the trust will end when that property is destroyed.
The other most obvious way a trust ends is when the document itself specifies. The terms of the trust can either designate an ending date or a specific condition upon which the trust will end. Common examples are trusts that end when a minor reaches the age of 21 or graduates from college.
Terms of a testamentary trust
Testamentary trusts customarily state when the trust will end, such as when the beneficiary dies or completes his or her education, as mentioned above. In some case, when the value of the trust falls below a minimum value, and it appears that continuing the trust would defeat or substantially impair the accomplishment of the trust's goals, that situation could also terminate the trust.
Termination of a Living Trust
As with other types of trusts, a living trust can terminate on the date specified in the trust document, or when some condition is met or event occurs, such as the death of the beneficiary. If the trust is irrevocable, some state laws provide that the trust can terminate early if the material purpose of the trust has been completed.
What happens after the trust terminates?
Once a trust terminates, and there is property remaining in the trust, the trustee and the beneficiary will work together to determine the best way to distribute that property. It is a good idea to include instructions in the trust instrument addressing how the assets should be distributed, in that case. If, however, there are no instructions, the trustee and the beneficiaries must decide the most reasonable method of dividing the assets.
If you have questions regarding your rights with respect to the end of a trust, or any other estate planning needs, please contact Anderson, Dorn & Rader, Ltd., either online or by calling us at (775) 823-9455.
In general, trusts are very valuable estate planning tools. A Family Wealth Trust can be used, not only for making estate administration simple and easy, but also for safeguarding the family’s legacy. They can be useful in regulating a younger heir’s access to assets and in providing long-term oversight and management of investments. The trustee of a Family Wealth Trust will be responsible for investing your assets and making sound decisions when it comes time to make distributions to your beneficiaries.
The primary goal of asset protection is to shelter the wealth you have accumulated from unnecessary risks. A family wealth trust can be a very effective and flexible option for doing just that. Regardless of the value of your estate, you should consider asset protection for, and creating an estate plan that will ensure your family wealth will be passed on to your loved ones.
What Is a Trust?
A trust is simply an agreement between three parties: the trustor, the trustee and the beneficiary, regarding to whom the property will be transferred. The “trustor” is the person who owns the assets in, and creates the trust. The “trustee” is the person who manages the assets of the trust. The “beneficiary” is the person who gets the benefit of the assets after certain conditions are met. Initially, the trustor will likely be the beneficiary, but at the death of the trustor, beneficiaries will be named in the trust agreement to receive the assets. There are few limitations on who can serve as trustee. Commonly, trustees are the trustor, and when the trustor can no longer act as trustee they will be succeeded by trusted friends or relatives of the trustor. They can also be professionals, such as accountants or attorneys. A corporate trustee can also serve as trustee for a family wealth trust.
How can Family Wealth Trusts provide protection for assets?
Family wealth trusts become irrevocable at the death of the trustor, which simply means the terms of the trust cannot be changed. Also, when the trust is created, the assets are permanently removed from the trustor’s estate, in order to be placed in the trust. So, when the trustor passes away, the assets in the family wealth trust are passed on as trusts to the beneficiaries who, in many cases can also act as their own trustees. When the beneficiary dies, the inherited assets are not considered part of the beneficiary's estate. This also means those assets will not be subject to estate taxes, which can be a huge benefit in protecting family wealth.
What is the benefit of a Generation-Skipping Trust?
Another option to consider in family wealth planning, is the Generation-Skipping Trust. If you transfer your property to a grandchild, instead of your daughter or son, that transfer could be subject to a specific tax referred to as the “generation skipping transfer tax.” The generation skipping transfer tax is a tax assessed on property as it is passed on to a generation that is two or more levels below the generation actually transferring the property.
The Generation-Skipping Trust, also known as a “dynasty trust,” is designed specifically to avoid, or at least minimize, taxes on transfers to subsequent generations. This can be accomplished by holding the assets in the trust and distributing the funds in a pre-defined way to each generation. Consequently, the entire amount of the trust will be protected from estate taxes with each passing generation.
These trust provisions are somewhat sophisticated and require careful planning, but can be significant if they are properly prepared.
Trusts are a vital wealth planning tool, not only for asset protection, but also for safeguarding the family’s wealth, regulating access to property and assets by younger family members, and providing long-term oversight and investment management for families. The trustee is responsible, either directly or indirectly, for investing those assets and making sound decisions in making distributions to beneficiaries.
Regardless of the size of your estate, it is important to consider protecting your assets and creating a plan to ensure that your family wealth will be passed on as you wish. The goal of asset protection is to shelter the wealth you have created from unnecessary risks. A family wealth trust can be the most effective and flexible option for protecting family wealth. When your estate planning attorney properly customizes a trust for your family, the benefits will far exceed simply leaving assets to family members in your will. Remember, a Family Wealth Trust is not just for the wealthy.
What Is a Trust?
A trust is just an agreement between a trustor, trustee and beneficiary regarding how and when assets will be transferred. The “trustor” is the person who owns the assets in and creates the trust. The “trustee” is the person to whom the legal title of the assets passes. The “beneficiary” is the person who eventually receives the assets after specific conditions have been met. Trustees can be friends, relatives or professionals, such as attorneys or accountants. In some cases, an entity such as a bank or a trust company can serve as trustee.
How do Family Wealth Trusts actually provide protection?
Usually, a family wealth trust becomes irrevocable when the trustor dies. This simply means its terms cannot be changed once it has been created. Furthermore, the assets are no longer part of the trustor’s estate once the trust becomes irrevocable. So, when the trustor passes away, these assets are not considered part of the personal estate and will not be subject to the beneficiary's creditors. This is only one advantage of this type of trust.
A Generation-Skipping Trust
Another option to consider is the Generation-Skipping Trust, which will allow you to retain your tax exemption on gifts to your grandchildren and avoid the tax on any amounts exceeding that exemption. In 2014, the Generation-Skipping tax exemption is $5.34 million, which is the same as the federal estate tax exclusion. This is also a beneficial estate planning tool, if you want to leave assets to your grandchildren. For instance, you can put $100,000 in a generation-skipping trust and allow it to accumulate earnings for any number of years. Still, your lifetime exemption would only be reduced by the original $100,000. If you have any questions about these or any other asset protection tools, please contact our office.
A Will is probably the most common estate planning tool. It is also a very easy way to make sure your property is passed on to those individuals you choose, after your death. Not everyone is competent to create a will, however. If you do not have the legal capacity required at the time you execute your will, it will not be considered valid. There are basic requirements, established by law, which must be met for your will to be valid. Basically, the testator (the person executing the will) must have the legal and mental capacity to create the document, and there must be no undue influence, fraud or duress in creating the will.
What is competency?
Generally speaking, the testator must be old enough to create the will and must be able to understand the nature and extent of his or her property, as well as the identity of his or her heirs. In Nevada, a testator must be at least 18 years old and of “sound mind,” according to statute.
Under Nevada law, an incapacitated person is defined as follows:
“Incapacitated person” means a person who is impaired by reason of mental illness, mental deficiency, advanced age, disease, weakness of mind or any other cause except minority, to the extent of lacking sufficient understanding or capacity to make or communicate responsible decisions.
In some cases, incapacity is only temporary, such as when a person is unconscious or in a coma. In those cases, they are considered incapacitated because they cannot respond to questions or make decisions on their own, not because of any mental issues. If that temporary condition is resolved, capacity is considered to be restored. So, not all incapacity results in a will being deemed void.
What if someone contests the will?
It is the court that makes the legal determination that someone is incapacitated. The court generally reviews the opinions of medical experts, but may request further examinations or independent analysis by a psychologist or psychiatrist if there is any contest to the will or the competence of the testator. Family members, beneficiaries of the will, as well as the person whose capacity is in question, can also contest the will and require the court’s final determination.
What if undue influence or fraud is suspected?
A suspicion that the testator was unduly influenced by someone else to create the will or to include certain terms in the will may arise. This is a concern where there is evidence of exploitation of an emotionally vulnerable testator, who might otherwise be competent. In those cases, evidence from family members who once were close, but have been excluded by the testator since another person has moved in with or extracted the affections of the testator or even a forensic specialist may be needed to determine whether the signs of undue influence are present.
In some situations, it can be shown that a beneficiary of the will made a specific false statement to the testator, which resulted in the testator changing his or her will in a way that benefits that beneficiary. One common type of fraud occurs when a testator, who has had several mental lapses and allowed a beneficiary to make decisions for him or her. The testator in that situation is more likely to be suspected of allowing fraud to influence the decision. These are all considerations in determining whether the person making the will was “competent” under the law.
These same considerations are applicable to any testamentary document such a trusts, and assets where beneficiaries can be named such as POD and TOD accounts.
If it is time you created your estate plan or had it reviewed, you should do so now to avoid the possibility of future incapacity. See a qualified northern Nevada estate planning attorney to get the process started.
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
A living will is an advance directive for health care, along with a health care power of attorney, should be part of any comprehensive estate plan. It is important to plan ahead for the possibility of incapacity before passing away, but many people fail to do so.
Take a closer look at the different things you need to know about living wills in Nevada in this infographic.
A very common question asked by estate planning clients is “what happens to my property if I am single when I die? The answer to this question generally depends on three things: (1) whether you have a will, (2) the laws of the state you live in and (3) which of your relatives are still alive when you pass away. This would be true even if you are married when you die. Each state has its own set of “intestate succession” laws which determine where you property will go if you die without a will. If you have a will, on the other hand, the terms of your will determine who will inherit your property.
A will is an estate planning document that allows you to specify the individuals, institutions or other organizations (including charities) you want your assets distributed to when you pass away. Whether you are married or single when you die, the terms of your will always determine where your property will go. If you die without a will, or “intestate,” the laws of your state will determine how your assets are distributed.
In Nevada, if you have children but no spouse, your children will inherit everything. If your parents are living, but you have no children when you die, they will inherit everything. Likewise, if your parents are deceased and you have no children, but your siblings survive you, they will inherit everything. If any of your siblings are deceased, the share they would have received will go to their descendants.
If you do not have a will, and you have children, In Nevada they will receive what is called an “intestate share” of your estate. The size of the share will depend on how many children you have, because they will share equally. They must legally be your children; it will not go to step children. If you legally adopt a child, he or she will receive an intestate share along with any biological children. However, foster or stepchildren who have not been legally adopted do not receive a share.
If you have a child who was legally adopted by another family, that child will no longer be entitled to a share of your estate. Men who have children born outside of marriage can only receive a share if paternity has been acknowledged or proved in court. A child that was conceived by you, but not actually born before your death, will still receive a share of your estate in Nevada.
There are a few miscellaneous rules or definitions that may apply to your particular situation. For example, “half” relatives inherit as if they were “whole.” So, your brother with whom you share a mother, but not a father, will have the same right to your property as he would if you had both parents in common. Citizenship does not affect inheritance, either. Nevada also recognizes what is known as the “killer” rule, which provides that if someone commits a felony and it results in your death, that person cannot inherit any part of your estate.
If you have any questions regarding inheritance and intestate succession laws in Reno Nevada, or need assistance in will drafting in Nevada, please give us call.
Many people who are not wealthy assume that trusts are only useful for high net worth individuals. They are under the impression that last wills are for "the rest of us."
This may be a mistaken assumption. All trusts are not created equal. Different trusts serve different purposes. Yes, there are trusts that are used to accomplish objectives that are needed primarily for the wealthy. On the other hand, there are other types of trusts that would not only be useful to high net worth individuals, but to the "mere mortal," as well.
One of these trusts is the revocable living trust.
The Value of a Revocable Living Trust
With a revocable living trust you as the person creating the trust will be referred to as the trustor. You name a trustee to administer the trust. You also name a beneficiary or beneficiaries who will receive distributions out of the trust.
At first you as the trustor can act as both the trustee and the beneficiary. Under this arrangement you do not surrender control of the assets while you are living. Further, because the trust is revocable, you can actually dissolve it at any time. You can also amend the terms and add or subtract beneficiaries as you see fit.
In the trust agreement you name a successor trustee who will assume this role after your death or incapacity. This is the individual or entity that will administer the trust in accordance with your wishes.
You can ask someone you know to act as trustee. However, there are other options. First of all, you may not have a personal relationship with anyone who has experience in asset management.
Secondly, even if you did know someone who is qualified, if he or she passes away or becomes incapacitated, you should have an alternate to replace them.
As an alternative you could name a trust company or the trust department of a bank to act as trustee.
When you convey assets into a living trust, your beneficiaries will receive their inheritances outside of the process of probate. When you use a will the estate must be probated before inheritances are distributed.
Probate can take a significant amount of time. There are also expenses incurred during probate. Probate costs will decrease the amount of the inheritances that will be received by the heirs.
With a living trust probate is not a factor. The trustee distributes assets to the beneficiaries in a fast and efficient manner.
Another benefit is the fact that you can include the selection of a disability trustee. If you were to become incapacitated and unable to handle your financial affairs, this disability trustee would administer the trust on your behalf, because you are still the primary beneficiary.
Probate stands in the way of your heirs and their inheritances when your assets are in your name at the time of your death. Nevada probate can take a significant amount of time (often a year or more), and most people would like their heirs to receive their inheritances in a more timely manner. For some, this wait is not a problem. For other families, however, there may be an immediate need for liquidity.
The waiting period is only one of the problems with the Nevada probate process. Expenses can accumulate during this process , and they can ultimately consume a noticeable percentage of the estate (often 4% - 8% or more if there is a contest). This is all money that could have gone to the heirs if probate was avoided.
It is possible to avoid probate in Nevada. There are a number of ways to go about it, and one of the most popular probate avoidance solutions is the revocable living trust.
Once you convey assets into the name you have given to your revocable living trust you name a trustee that is empowered to manage the assets that are titled in the trust. You also name a beneficiary or beneficiaries who would receive distributions out of the trust. The nature of these distributions would be decided by you when you create the trust agreement.
Initially you may serve as both the trustee and the beneficiary. By doing so, you do not surrender control or beneficial use of the assets. You can distribute assets to yourself, manage your own investments, and change the terms of the trust agreement if you want to do so. Since the trust is revocable, you can even revoke it entirely if you ever choose to do so. Since the point is to facilitate the transfer of your financial assets after you pass away you name a successor trustee, and you name beneficiaries who will receive distributions out of the trust after you die.
Once the assets have been conveyed into the revocable living trust they are no longer considered to be probate assets under the laws of the state of Nevada. As a result, when the trustee distributes monetary resources to the beneficiaries of the trust these asset transfers are not subject to the process of probate.
The creation of a revocable living trust is one way to avoid the probate process, but there are others as well. If you would like to discuss all of your options with a licensed professional please feel free to contact Anderson, Dorn & Rader, Ltd. to request a no obligation consultation.
We will listen carefully as you explain your objectives, gain an understanding of your unique personal situation, and make the appropriate recommendations. You can then go forward with a tailor-made estate plan that will facilitate a fast, efficient, and cost-effective transfer of assets to your loved ones when the time comes. To learn more, please download Anderson, Dorn & Rader, Ltd.'s free probate process report.
Estate planning is important for all able, competent adults. In spite of the obvious fact that everyone is going to die someday a minority of people actually have an effective estate plan in place. It is kind of hard to understand why so many people fail to plan ahead for something that is definitely going to happen. Yet, surveys consistently find that most people aren't properly prepared.
You may have every intention of planning your estate, and you may understand why it is important. However, procrastination can often times take hold. You expect to live a long life, and it seems as though you can start taking estate planning seriously after you retire and start to settle into your senior years.
This works out for some people, but others pass away before they ever get around to it. It is also not entirely uncommon for elders to become incapacitated and unable to make sound decisions.
Some 13% of people who are at least 65 are suffering from Alzheimer's disease. If you were in this position you may not understand the fact that you should plan your estate. Even if you do, your efforts may not be valid because you may not be of totally sound mind.
Some people know they should take action, but there are others who take a different approach. They believe that everything will just fall into place on its own after they pass away. These people are under the assumption that the government has it all figured out.
There are legal guidelines in place that would hold sway if you were to pass away without a last will or a trust that directs the transfer of your financial assets to your loved ones. These guidelines are the laws of intestate succession.
Someone who dies without a last will or a trust is said to have died intestate. Under these circumstances the probate court is required to distribute the assets that comprise the estate under the intestate succession laws.
These laws are pretty similar state-by-state, but there are some differences. The difference is largely centered around what your children may be automatically entitled to if you have a spouse when you pass away.
In Nevada your spouse would get everything if you had no children. If you had children but you did not have a spouse the children would get everything. If you have a spouse and children, your spouse would inherit all of the community property, and your spouse and children would share your separate property.
This is a glimpse at what happens if you die without a will or trust in Nevada. If you want to make sure that your own true wishes are carried out to the letter do the right thing and put an estate plan in place with the assistance of a qualified estate planning attorney.
The process of estate planning involves some very measured and informed decision-making. If you make certain assumptions as a layperson you may be making errors of commission and omission.
Because of the fact that there are websites on the Internet selling do-it-yourself generic, fill-in-the-blanks last wills, more and more people are getting the idea that they can go it alone. Unfortunately, this is increasing the numbers of people who are not properly prepared.
With a will, you need to consider the fact that your estate must be probated before the heirs receive their inheritances. The probate laws in the state of Nevada require rigid formalities that may cause delay and expense if they are not followed precisely.
When you work with a qualified estate planning attorney who is licensed in Nevada you can be certain that your will is properly constructed.
If you use a boilerplate document that you picked up on the Internet or at the book store you have no way of knowing if the will is truly up to par.
And then there is the simple fact that a last will may not be your best choice.
Last Will Alternatives
The probate process that we mentioned above is time-consuming, and, when all the costs, fees and expenses are considered, quite expensive.
There are effective ways to arrange for asset transfers to your heirs directly, outside of probate. One of them would be through the creation of a revocable living trust.
With these trusts you can retain control of the assets while you are alive and well. If you were to become incapacitated, your successor trustee would be empowered to handle your financial affairs, usually avoiding the need for a guardianship.
Upon your passing the trustee administers the estate outside the probate court and then distributes assets to the beneficiaries in accordance with your wishes.
Specialized Concerns
There is no one-size-fits-all estate plan because different families have different concerns. For instance, if you have estate tax exposure you must take steps to position your assets in a tax efficient manner to avoid a 40% hit.
If asset protection is a concern you would implement certain strategies that would not be important if you were not concerned about shielding assets from creditors and litigants.
Special needs planning is a factor for some people. You have to be careful about the way you set aside money for a person with a disability who is relying on government benefits like Medicaid and Supplemental Security Income.
People who are owners of small businesses are going to have estate planning concerns that differ from those who work for someone other than themselves.
These are just a few examples of the unique circumstances that require varied approaches.
Decision Makers
It is also important to include an incapacity component within your estate plan. The courts could, at considerable expense to your estate, appoint a guardian to manage your affairs if you don't take the appropriate action. This guardian may not be someone that you would have chosen.
You can select potential future decision-makers using an appropriate revocable living trust combined with a durable power of attorney.
All these solutions are best handled with a qualified estate planning law firm.
It is important to understand that estate planning documents do not exist in a vacuum. Estate planning is one of the most technical and dynamic areas of the law. Properly planning an estate requires consideration of federal and state tax issues, state property law, state probate law and state trust law. Estate planning documents must be carefully customized to meet each individual’s unique circumstances and objectives. If they are not, unintended, and often costly, consequences may result.
Suppose you use a generic template that you find online to create a last will and testament or revocable living trust. Are you sure that the documents that you wind up with will stand up to any challenges that may present themselves after your death? Are you sure the tax sensitive provisions of your documents have been properly considered for your particular circumstances? Could there be conflicting clauses that require your family to go to court to interpret the document after you have passed? Has the document been thoughtfully drafted under state law so that your beneficiaries’ inheritances are protected from a divorcing spouse or other potential creditors?
Another thing to consider is best explained by way of example. Let's say that you never played golf before. You look into the bag and you see a lot of clubs, but you really don't know what club you should use. You may not use the right clubs as you try to negotiate the course without any information. The same is true of estate planning. There are numerous different legal instruments that can be utilized. Just arbitrarily deciding which ones you are going to use in a DIY last will and testament or revocable living trust is simply reckless.
These are a few things to think about, but if you would like to learn more of the facts we urge you to download our free report on DIY estate planning. This special report goes into a good bit of detail about the dangers of do-it-yourself wills and living trusts.
We urge you to download your copy of the report. Access will be granted if you follow the simple instructions that you see after clicking this link: The Dangers of DIY Wills & Living Trusts.
The federal estate tax carries a 40% maximum rate, and the exclusion amount is $5.25 million in 2013. What this means in simple English is that only $5.25 million worth of assets can be passed on to your heirs before the estate tax is imposed. Married couples, with proper planning, can preserve the exclusion amount for both spouses for a combined exclusion of $10.5 million.
We also have an unlimited marital deduction that allows you to leave any amount to your spouse free of the estate tax, even if it exceeds the exclusion amount. That is, as long as you and your spouse are both United States citizens.
It is not entirely uncommon, however, for Americans to marry people who are citizens of other countries. At any given time we have a lot of military personnel stationed overseas, and sometimes they marry people that they meet in other countries.
Many civilians work abroad as well, and there are international dating sites that some people find to be appealing. And of course world travelers sometimes fall in love along the way.
Whatever path you may have taken to an international marriage you must concern yourself with the estate tax because the marital deduction is not extended to an American who is married to a non-citizen.
A partial solution could be the creation of a qualified domestic trust. With these trusts the beneficiary, your surviving spouse, can receive distributions from the trust for their needs according to an ascertainable standard established by the IRS.
What remains in the trust at the spouse's death would be subject to the estate tax. However, applying other strategies, it could be possible to avoid the estate tax, altogether.
To learn more about these trusts and other tax efficiency tools contact our firm to set up a free consultation.
People that have assets that exceed the exclusion amount ($5.25 million in 2013) most certainly need to discuss tax efficiency strategies with a licensed estate planning attorney who places an emphasis on wealth preservation.
However, there are those who the only reason someone would meet with an estate planning lawyer is to avoid taxes. They may reason that because their estate is less than the exclusion amount, there is no need for estate planning. In fact, there are myriad concerns that can be addressed with a properly constructed estate plan that have nothing to do with tax exposure.
One of these concerns could be long-term access to financial resources. You may be concerned about leaving lump sum inheritances to certain people on your inheritance list. After all, you won't be around to help if someone in the family was to burn through his or her inheritance too quickly.
A way to respond to this would be to convey assets into a spendthrift trust. You appoint a trustee, and this could be a family member, the trust department of a bank, or a trust company. This trustee will administer the funds according to your stated wishes and distribute assets to the beneficiary in a measured fashion. The beneficiary will not be able to control the principal, which also means their creditors would not have access, either.
This is only one possible scenario. There are many others, including planning for blended families and providing for a family member with special needs without jeopardizing disability benefits.
Arranging for the transfer of your financial assets to your loved ones is a profound act. It is something that is best undertaken with the benefit of professional guidance.
On the Internet there are marketers that sell generic estate planning documents like wills and trusts.
Statistics tell us that most people don't have a comprehensive estate plan in place. Some of these people finally decide to put the procrastination behind them and they start searching for solutions. They come upon one of the sites, and they see an easy answer because the marketing materials can be convincing.
It is important to recognize the things that you can do on your own with a little bit of guidance and the things that are better left to licensed professionals. Consumer Reports, the highly respected magazine that has been informing people about the quality of various products and services for many years, advised against DIY wills last year.
Legal professors who examined documents constructed with online worksheets and downloads saw a number of different problems with them.
We endeavor to provide legal information that is truly accurate, covering every aspect of estate planning. To this end we have joined with the American Academy of Estate Planning Attorneys and compiled a series of special reports that are available for download on our website.
These reports examine wills, trusts, powers of attorney, legacy planning, asset protection, special needs planning, estate administration, and a number of other topics.
You can download these reports absolutely free of charge. To reach the page that contains a list of the reports and a brief description of each of them simply click this link: Free Nevada Estate Planning Reports.
If you have further questions after reviewing the information contained in the reports simply contact our firm to request a free consultation.
The estate planning process involves a number of different facets, including matters that the typical layperson may not consider. When you know the facts you understand why certain courses of action are recommended by estate planning and elder law attorneys.
On the other hand, when you harbor misplaced notions you may fail to act or take incorrect courses of action. With this in mind we would like to highlight two misplaced notions that can lead to negative consequences.
Incapacity Is Unlikely
You may feel as though it is unlikely that you will ever become unable to make your own decisions. If you feel this way you should ask yourself if you expect to live until you are at least 65.
If you say yes to the above, and you are correct and you do reach the age of 65, it is likely that you will live to the age of 80 at minimum.
Alzheimer's disease is very common among the elderly. 13% of those who are 65 years of age and older have Alzheimer's, and if you confine the sample to those 85 and up you are looking at a figure of 45%.
Given the likelihood of Alzheimer's disease or other forms of dementia, having durable powers of attorney naming agents to act on your behalf the event of your incapacity is important. Having a living trust is an even better plan.
I Don't Need a Trust
There are those who don't even consider the possibility of creating a living trust because they feel as though trusts are for very wealthy people. Of course, wealthy individuals and families should have a living trust at a minimum, but even those with modest means can benefit.
Living trusts are used to facilitate asset transfers outside of probate. Probate is the process of estate administration, and because it is done through the courts, it is time-consuming and often costly. If you create a living trust your heirs will receive their inheritances in a timely manner because these transfers are not subject to the probate process.
