In many cases, you will know if someone has nominated you as executor in their Last Will and Testament because they will have discussed the appointment with you. Sometimes, however, a person fails to discuss their plans ahead of time, resulting in a surprise telephone call letting you know that you are appointed as the an executor. If this happens, what do you do?
First, don’t panic. A nomination is just that -- a nomination. You are under no legal obligation to accept the position. If you do not feel that you can serve as the executor, or do not want to serve, you may decline the nomination.
If you decide to accept the nomination, there are several basic things that will need to happen afterwards. Unless someone else has already done so, you need to petition the appropriate court to probate the decedent’s estate.
Next, you should marshall and safeguard the estate assets to the best of your ability. Eventually you will also need to thoroughly inventory and value the estate assets.
Finally, if you have not already done so, you should retain professional help. Depending on the size of the estate, you may need the assistance of an attorney as well as other professionals in order to properly administer the estate. Typically, reasonable fees associated with professional services you use in order to probate the estate are paid for out of the estate assets . If you find yourself in ths situation, consult with an estate planning attorney as soon as possible to learn of all your fiduciary obligations.
Once the world began to get over the shock of the death of music legend and golden girl Whitney Houston, reports began to surface that there was trouble brewing with regard to her estate. Houston was found dead in her Beverly Hills hotel room at the age of 48 and left behind only one heir -- 18 year old Bobbi Kristina. While fans rushed to buy anything related to Houston, Houston’s family was already poised for a fight over her estate with Houston’s ex-husband Bobby Brown. With the news this week that Houston left behind a trust, everyone in Houston’s camp can breath a sigh of relief.
Despite unprecedented success in her professional career throughout the 90s, Houston was plagued with personal problems as a result of a battle with drug and alcohol addiction as well as a stormy relationship with Bobbi Kristina’s father, singer Bobby Brown. After finally divorcing Brown in 2007, Houston appeared to be on the road to a comeback when she was found dead last month.
While Houston’s daughter is of age to inherit directly, she allegedly battles her own issues with drugs and alcohol, making her susceptible to a claim that she is unable to handle her own finances and in need of a conservator. Houston’s family was reportedly worried that Brown would petition a court to become her conservator, effectively gaining control of Houston’s fortune. Houston, however, apparently thought ahead and created a trust for Bobbi Kristina. By creating a trust, Houston put a stop to any attempts to gain control of the money and put control of the money in the hands of someone she hand picked as trustee.
The voice behind the famous song I Will Always Love You, was found dead of unknown causes in the bathtub of her hotel room just hours before the Grammy Awards. The untimely death of the 48-year old singer/actress comes after a decade of personal troubles including drug and alcohol addiction as well as the end of her highly publicized relationship with Bobby Brown. Just hours after her death, sales of anything “Whitney Houston” started to soar. The ultimate value of her estate has yet to be determined; however, it is clear that, as has been the case with other artists, her death may cause her popularity, and therefore her wealth, to increase substantially. The death of the once darling of both the screen and the radio reminds us all of how important it is to create an estate plan.
People often make the mistake of thinking that creating an estate plan is not necessary unless you have a substantial estate at the time. What many people don’t realize, however, is that the value of your estate can soar at any time. Unfortunately, as the untimely death of Houston reminds us, death can also strike at any time. The seed you plant today, whether it is an investment, life insurance, law suit or fledgling business, could be worth a small fortune tomorrow. Those “seeds” will become part of your estate upon your death. Even if they are not worth a substantial amount at the time of your death, they may continue to grow after your death. Deciding who will receive those assets, therefore, becomes important. The only way to ensure that your assets will be handled in the manner you intend is to create a comprehensive estate plan today.
A trust is often used as an estate planning tool in order to accomplish a variety of goals. At its most basic, a trust consists of a grantor (sometimes called a settlor, or trustor) who establishes the trust, a trustee who administers the trust assets, at least one beneficiary, and assets to fund the trust. Often, all three positions -- grantor, trustee and beneficiary -- can be held by the same person. Beyond that, trusts come in numerous forms that range in complexity; however, one simple distinction centers around whether the trust is revocable or irrevocable. Understanding some of the important features of the two options can help you decide which one is right for you.
All funded trusts, including the revocable trust, avoid probate. What this means is that the funds held in the trust are not required to pass through the often lengthy legal process that follows the death of the grantor, making the trust benefits available to the beneficiaries in a much more timely fashion. A much more important aspect of a revocable trust is that a revocable trust, as implied by the name, can be revoked, amended or modified by the grantor at any time. This feature can be very important if you feel that you may wish to change the beneficiaries or the specific terms of the trust at some future point. This flexibility makes a revocable trust an attractive option for most people.
An irrevocable trust cannot be revoked, amended or modified without court intervention in most states. Under most circumstances, the grantor may not be the trustee or the beneficiary. All control and access is delivered to an independent trustee and a third party beneficiary. What the grantor receives, however, for giving up the ability to control the trust is asset protection, probate avoidance, possible estate tax avoidance and potential income tax and, when the beneficiary is a charity, capital gains tax advantages. These are highly complex strategies and must be entered into with appropriate caution. The expertise of a qualified estate planning attorney should always be sought.
When you create a trust, one of the most important decisions you must make is who to appoint to succeed you as your trustee. Although each trust is unique, there are some basic considerations that you may wish to take into account before making a decision regarding the appointment of a trustee.
The last will is a document that most people are familiar with and is the most common estate planning tool. In fact, many movies have romanticized the proverbial "reading" of the last will of a deceased family member. We can all imagine a family gathered in a lawyers office as the will is read, letting each person know what they received, or did not receive, from the estate.
Most people know that there are other legal instruments that can be utilized. But a lot of them are under the impression that only people of extraordinary wealth need to step outside of the tried-and-true last will as a primary vehicle of asset transfer.
In reality, people of ordinary means may want to consider alternatives to a last will when they are making plans for the future. There are a number of reasons for this, but the most compelling one is the fact that your estate must be probated if you use a last will.
The process of probate can slow things down considerably. During this interim the probate court examines the will in an effort to determine whether or not it is valid. So, at this time interested parties who may not agree with the contents of the will could step forward and present challenges. This can result in a long and drawn out legal struggle. Just think back to the case of Anna Nicole Smith. That battle was just resolved last summer some 15 years after it began.
Probate is also a source of asset erosion. There are costs that the estate will incur while it is being probated. Depending on the size of the estate, the nature of the assets contained therein, and whether or not there are any challenges costs could reach 4-8% of the total value of the estate and in some cases even more.
Most people are not going to be fully informed when they start making plans for the future. The worst way to plan is to rely on Hollywood's representation of what an estate plan should look like. The best way to gain an understanding of how to proceed given the unique nature of your circumstances is to consult with an experienced, savvy estate planning attorney.
Making sure that your assets are properly prepared for distribution to your loved ones after your passing can be an involved matter. Because there's so much to take into consideration it is easy to look past some of the finer details. If you are a pet owner, making sure that your dog or cat is provided for after your passing may be one of these matters that gets lost in the shuffle. You may just assume that it is something that will take care of itself, or that you will outlive your pet. While it is possible that someone would simply step forward and care for the pet or that you will outlive it, it is best to make the appropriate arrangements "just in case."
It should be mentioned that pet ownership can be very beneficial for senior citizens. Many of our elders get lonely, and of course a dog or cat can be your best friend and provide some much-needed companionship. When you are retired and your children and grandchildren are no longer directly depending on you, you can be hard-pressed to find a sense of purpose. Caring for a pet can provide this life-affirming feeling. In addition, some types of pets can provide protection, even if it is simply by barking to alert its owner of unusual sounds coming from outside the residence.
To provide for your pet after your passing you must first identify a suitable caretaker. You may simply want to ask a family member or friend that you would consider to be a likely candidate. You then must make financial arrangements, and this can be done by simply leaving a bequest to the caretaker in your will. Another option would be to create a pet trust that will finance the care of your pet throughout its life.
To find out more about pet planning and pet trusts, simply arrange for an initial consultation with an experienced estate planning attorney.
There are many "tools" to choose from when establishing your estate plan. One traditional option is the Will. If you research information about Wills you will find Internet marketing sites that will sell you a "one-size-fits-all" template. To hear them tell it, drawing up a Will is a simple matter but there's more to it than meets the eye.
If you pass away leaving a Will as your estate plan your estate will pass through a probate procedure. The probate court will examine your Will to ensure its validity and proper execution. During this process interested parties will have an opportunity to contest your Will. In this case the Court would schedule a hearing to review the matter. Obviously, when you're planning your estate you don't want your will to be contested; you want your wishes to be carried out to the letter.
Each state has different laws surrounding the formalities of drafting and executing a Will and the process of probate. If you were to use some sort of general template as a Will there is no telling whether or not it will wind up being ironclad once it is probated in the State Court. Reno probate lawyers make a career out of working with the probate courts in northern Nevada, and we understand exactly how to construct documents that are specifically targeted for the local Court. Providing for your loved ones after you pass away is a serious matter that requires a an experienced estate planning attorney.
There were some big changes to the estate tax parameters included as part of the new legislation signed into law by the president on December 17th that is being called the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010.
The lead story from an estate planning perspective involved the rate of the tax and exclusion amount. Rather than the $1 million exclusion that was scheduled upon the expiration of the Bush tax cuts the exclusion is set at $5 million, and the rate of the tax is now 35% rather than the 55% that was on tap.
Is worthwhile to underscore the fact that this $5 million estate tax exclusion is for each individual. So if you are married you and your spouse have a total combined estate tax exclusion of $10 million to work with going forward in 2011 and 2012. If you think this through, a logical question will arise: If I passed away would my spouse get to use my $5 million exclusion as well as his or her own?
In estate planning circles this idea is defined as the issue of "portability." To many observers the estate tax in and of itself is unfair, so as you might expect most of the rules surrounding it tend to defy logic as well. Until the passage of this new tax relief legislation in December the answer to the above question was no, your surviving spouse could not use your estate tax exclusion if you were to pass away.
The reason why this is unfair is because the estate that is accumulated by a married couple is the product of the earnings and investments of each individual; this wealth represents the combined efforts of two people. When one of these two people passes away his or her contribution to the estate still exists and it is taxable, but his or her exclusion is not available to defray the tax liability.
As a result of the new law the estate tax exclusion is now portable, and your spouse can indeed use your $5 million exclusion if either of you were to pass away. Unfortunately, the new measure is only available for the next 22 months and dies with the sunset provision in 2013. Who knows what the law will look like at that time, but at least there is now a "toe in the door."
Nobody is especially anxious to part with any of their hard earned money and hand it over to the tax man. But in spite of the complaining, most people recognize the fact that some taxation is necessary and are perfectly willing to pay their fair share. What people don't want to do is pay taxes multiple times on the same earnings, and this is one of many reasons there is so much support in some quarters for a permanent repeal of the estate tax.
Consider this overly simplified example that demonstrates the logically indefensible nature of the estate tax. Let's say that Elizabeth was an avid saver throughout her life. She socked away a sizable portion of every paycheck that she ever earned in a savings account.
Since she was so frugal it always bothered her to see that she was left holding only about $60 out of every $100 she earned after paying payroll and income taxes, but she was heartened by the fact that she was doing her part as a good citizen.
After saving so diligently for so long she was able to accumulate quite a large sum of money. Every year she paid income taxes on the interest she had earned and then when she died, the estate tax kicked in and her children received just 65% of the savings that she worked so hard to accumulate after paying taxes. And then when her children died and left that money to their children, it was once again taxed at 35% and less than half of the taxable portion of Elizabeth's original bequest was left.
A viable response to this potential scenario is the creation of a legacy trust. With these vehicles you name your grandchildren as the beneficiaries, skipping a generation as it were. Your children can still receive benefits from the trust, but they don't own the assets so they can't be targeted by claimants or former spouses. When your children die, your grandchildren inherit the contents of the trust, and the estate tax is levied only once though two generation enjoyed benefits from the trust. And now, in Nevada, as well as a handful of other states, the tax can be avoided for multiple generations with a properly established trust.
When you are in a position to leave behind inheritances that can have life changing consequences for your loves ones you have a pleasant problem. You may want to make life easier on your family than they were for you, but at the same time you don't want to adversely impact one's motivation and work ethic.
By the time you have reached your twilight years it is likely that your children have become established in their own right. Leaving an inheritance out right to those who have already made it can be done with confidence. But you may have children with creditor problems or you may have younger children or family members that have not yet established themselves. Also, there could be someone in the family with a substance abuse problem, or an individual with a gambling problem. These factors present special planning considerations as you plan your estate.
One way that these types of concerns can be addressed is through the creation of an incentive trust. These instruments involve the naming of a beneficiary and the appointment of a trustee like other trusts, but there is one key difference. You as the grantor of the trust attach stipulations that must be met before distributions from the trust will be made.
If you have a younger heir these may be educational. You could allow for regular monthly distributions as long as the beneficiary remained a student in good standing. Perhaps you could offer an additional lump sum distribution upon attainment of an advanced degree. There are those who take it a step further and stipulate that the trust will match every dollar that the beneficiary earns on the job once he or she enters the workforce to encourage a strong work ethic.
You can include many variations of conditions that you see fit. Incentive trusts can go a long way toward alleviating concerns that you may have about your beneficiaries. It is important however to keep in mind that too many "strings attached" to an inheritance can result in resentment. Compelled behavior may not always be psychologically beneficial. Still incentive trusts are powerful tools and can be effective motivators in many circumstances.
We have all been involved in situations at various points in our lives when we decided to try to fix something on our own. There are times when you can indeed get out your basic tool kit and get the job done, but there are other instances when you learn an important lesson. As you are engaged in the task you see what is necessary, and then you look in your kit and recognize that you don't have the right tool. Knowing the right tools for each job and having access to them is one of the differences between a professional and a dabbler.
Estate planning is one of those jobs that requires the utilization of the proper tools for each circumstance. The one that we would like to take a look at today is the GRAT or grantor retained annuity trust. These vehicles are useful for gaining estate tax efficiency and gifting appreciating assets free of taxation.
The strategy that is employed to make this happen is called the "zeroed out" GRAT. You fund the trust with appreciable assets like securities, real property, or business interests, appoint a trustee, and name a beneficiary. You also decide on the duration of the trust term and the amount of the annuity payments that you would like to receive out of the trust for the term period.
When you fund the GRAT you remove the assets transferred to the trust from your estate for tax purposes, but the IRS does consider the donation to be a taxable gift. However, the taxable value of the gift is calculated using 120% of the federal midterm rate as it stands during the month the trust is created. So, when you set your annuity payments you want them to equal the total taxable value of the trust according to the IRS' valuation methodology. Because your retained interest is 100% of the taxable value, you owe no gift tax on the contribution into the trust. But, any appreciation that exceeds that valuation passes to your beneficiary at the end of the trust term tax-free.
If you have any questions regarding GRATs or other advanced planning techniques, please do not hesitate to contact our firm at any time.
The estate tax is repealed for 2010, but when it was last in effect back in 2009, the exclusion was $3.5 million. The exclusion stood at $2 million from 2006 through 2008. In 2011 the estate tax exclusion is going to be just $1 million, so a lot of estates that had been under the exclusion for years are now going to be exposed to the estate tax.
Home ownership has long been the foundational wealth building vehicle in the United Estates, and many of the people who are now going to be exposed to the estate tax would say that the worth of their homes is what is causing the overall value of their estates to exceed the $1 million estate tax exclusion. For these individuals, an instrument known as a qualified personal residence trust, or QPRT, may provide the solution.
To implement this estate planning strategy you place your home into a special trust trust and you name your children, or whoever it is that you want to leave the property to, as the beneficiaries. When you are drawing up the trust agreement you state a term during which you will continue to live in the house rent free. Upon transfer to the trust, the value of the home is removed from your estate and your children will assume ownership of the property after the term expires, at which time you would begin paying rent to live in the home.
The funding of the trust with the house is subject to the gift tax, but the IRS does not use the fair market value of the home at that time to calculate its taxable value. They reduce the value of the home by the interest that you are retaining while you are still living in it rent free after you placed it in the trust. Assuming the value of your home appreciates at a reasonable rate moving forward (say, 3%), this techniques can provide a fair amount of gift and estate tax planning leverage.
Feel free to contact our office if you would like a consultation on how a QPRT may benefit you.
The estate planning attorneys from Anderson, Dorn & Rader are here to make sure sure your Will and Testament are valid. Get in touch with the experts by calling (775)823-9455 or fill out a contact form below.
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When a Last Will and Testament or Revocable Living Trust is created for inheritance estate planning purposes, the testator or trust maker will name beneficiaries to receive his or her property. If any beneficiary receives less than her or she expected or is omitted does that person have a claim to receive a portion of the estate? The answer depends upon state law and the relationship of the beneficiary to the decedent.
In community property states, a spouse may have a right to half of the marital estate upon the death of the other spouse. If the decedent chooses to completely leave his or her spouse out of the Will or to leave the spouse a portion smaller than half of the estate, the surviving spouse may have a claim against the estate.
In states where community property rules do not exist, a spouse may still have a right to a certain percentage of the estate. This percentage may depend upon how long the couple has been married and what assets were brought into the marriage versus purchased during it. If you are a spouse who feels you may have lost some of your estate to a deceased spouse's estate you may want to seek the assistance of a qualified estate planning and probate attorney.
A former spouse does not automatically have the right to inherit property from their deceased former spouse's estate. If, however, a couple is separated but not yet divorced, the surviving spouse may have a claim against the marital estate.
If your parent intentionally excluded you from his or her Will, you may not have the right to inherit unless special circumstances exist. If you were omitted from your parent's estate you may want to speak to a qualified inheritance estate planning attorney to discuss your rights. For example, if a child is born after a Will is created and the parent never revises that Will, the child may be able to receive a share of the estate.
On the other hand, if a parent explicitly states that a certain child is to receive nothing from the estate, that child may have little or no grounds to assert a claim or interest in the estate.
It is crucial to keep your Will, Testament, or Revocable Living Trust up to date. Work with an inheritance estate planning attorney to get started or to simply revise your plans.
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In a challenging economy we are often tempted to "DIY" (do it yourself). So, is it possible to write your own Revocable Living Trust? Yes, but you should know the disadvantages to a poorly drafted Living Trust before you begin.
There are three positions in the creation of a Revocable Living Trust Agreement: the Trustors, the Trustees, and the Beneficiaries. After completing the trust agreement, it is vital that you fund all assets into the name of the Trust. If you fail to set up and fund the trust properly, you risk at least two unhappy consequences: disinheritance and probate.
When you create a Trust, it is important to maintain your beneficiary designations. You must add new beneficiaries when they are born or join your family and take out beneficiaries who are deceased or have left your family. If you write your own Trust, you will be solely responsible for this. If you do not add or delete a beneficiary, or fail to do so in the proper form, you could possibly disinherit a loved one, or include someone who is no longer in favor. Many attorneys have a maintenance program, so your Living Trust can receive regular reviews to be certain you to update your beneficiaries properly.
One important purpose of a Revocable Living Trust is to avoid probate. Probate is a costly and time consuming procedure. If you create your own Revocable Living Trust, you are increasing the chances that your family will have to deal with this sticky process.
When you hire an attorney, he or she can help you properly fund your Trust, make sure you have not left out an heir and ensure that your trust agreement meets current estate law. If your document is not properly drafted, probate may be needed for your entire estate. If you have not removed deceased beneficiaries, a court may have to determine who your beneficiaries should be. Further, if you have not properly funded your assets into your Trust, the only way to do so is through the probate process.
Your attorney can also help you create a Pour Over Will. This Will may assist if you leave any asset out of your Trust. A Pour Over Will is a safety net to transfer your assets into your Trust typically through a short version of probate.
If you create your own Trust, you will also be responsible for your own Will. If you leave property out of your Trust and you don’t properly create a Pour Over Will, a prolonged probate will be needed to determine the rightful heirs-at-law.
When you "do it yourself" to repair a leaky pipe, it may just require a plumber to do it right, if your repair fails. Writing your own living trust is a complicated process that could be many times more expensive and time consuming when it is not done right. This is no time to DIY.
To learn more about living trusts, the living trust lawyers at Anderson, Dorn & Rader are here to help. Call (775) 823-9455 to schedule a consultation today.
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When you pass away, your estate must be settled. If you have an estate plan, such as a trust or will, then your assets will be distributed in accordance with your estate planning documents. It is called “intestate succession” when you don’t have a trust or will when you pass away. Your estate will be distributed according to the laws of the state of your residence and any other state where you might own real estate.
Now, before you start thinking this might not be so bad, consider this:
When you die intestate, you have no say over how your assets are distributed or who will oversee the process. With a will, you may designate an executor, someone you trust to ensure your estate is properly administered and that your assets are divided up the way you want. This process is overseen by a court and is known as a probate. A trust works in a similar way allowing you to designate a trustee to oversee the process except that a court is generally not involved maintaining the privacy of your beneficiaries.
But in the absence of a will or trust, the court will appoint a personal representative to oversee your estate. This person will be responsible for not only distributing your assets but also settling any outstanding debts and selling off assets if there’s not enough funds in the estate.
That means that some of your most treasured heirlooms – the baseball card collection, the antique grandfather clock or your great-grandmother’s sterling silver tea set may very well end up being sold in an auction rather than in the hands of your loved ones. And of course, you won’t be around to stop it.
To learn more about the dangers of Nevada intestate succession and to create your own estate plan to prevent this from happening, contact the estate planning attorneys at Anderson, Dorn & Rader, Ltd.
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For starters, a living trust allows your heirs to avoid probate, an often costly and time-consuming legal process used to distribute your assets. With a trust, the distribution is handled within the trust documents. Because the trust technically owns the assets, no probate is required.
Unlike a will, the details of your trust are not public record. That means your estate remains private and your loved ones are protected from would-be con artists and overly aggressive sales people looking for a quick bargain.
A trust also gives you some options that you can’t get with a will. You can create incentives for your heirs for example, allowing them to increase the amount of their inheritance by achieving certain goals and objectives. Perhaps you set up the trust to match whatever income they earn on their own or to encourage higher education, your heirs can receive a bonus if they graduate college.
Likewise, you can use your trust to ensure that heirs with behavioral problems or addictions get help before inheriting a large sum of money.
Another one of the benefits of a living trust is that it also streamlines the entire distribution process, allowing you to create a legacy that can provide for multiple generations to come.
If you're still having trouble choosing between a will or living trust for you estate planning purposes, speak with the living trust lawyers at Anderson, Dorn & Rader, Ltd.
