Prepare to be amazed! May is not just any ordinary month - it's National Home Remodeling Month, the time of year when the National Association of Home Builders officially recognizes the tremendous value of home improvement projects. Springtime comes with spring cleanings and home improvement projects, but can also be a good time to consider updating your estate planning documents.
If you need to make small updates to your estate planning documents, such as changing the names of beneficiaries or decision makers, you may wonder whether you can take care of these changes on your own or if you should seek the assistance of a professional. Here are some things to consider before choosing which option is best for you:
If Your Name Changes
If you've changed your name due to marriage and/or your own personal preference, and your estate planning documents don't need to be changed, you may only need to keep copies of any legal paperwork reflecting the name change. Keep copies of these documents together with your estate planning documents. If you've remarried and want to change your name in your estate planning information, or if a trust you established has your old name in the title, it's best to consult an industry professional, such as an attorney, to ensure that the name change is properly handled.
If a Beneficiary’s Name Changes
Wondering what you should do if your beneficiary's name changes? Whether it is due to marriage and/or personal preference, staying on top of this information can save you from running into issues later down the road. While updating your estate planning documents is not necessarily critical, it may be necessary for your beneficiary to prove their identity with a court order, marriage certificate, or birth certificate. It is important to avoid making changes directly on your estate planning documents, such as crossing out a name and writing in a new one. This has resulted in confusion and has even prompted litigation in the past. Courts have had to weigh in on these types of edits to estate planning documents to determine their validity and intent. Even though it may seem harmless, unforeseen consequences can often arise when attempting to edit legal documents yourself.
Adding or Removing a Beneficiary
When events occur such as the birth of a child or the passing of a beneficiary, you may wonder if you need to update your estate planning documents. The answer is that it depends on the language in your documents. Some estate planning documents are drafted to anticipate future additions or removals of beneficiaries by name. It is highly important to seek legal advice before making any changes to your estate planning documents, as serious legal consequences can result from attempting to do so on your own.
Making changes without legal advice could result in unintentionally cutting off people from receiving an inheritance or having your property go to those who never intended to benefit. For instance, adding a spouse’s name to the list of children in your estate planning documents could lead to unintended consequences if the spouse remarries after the child’s death. The former in-law could become a beneficiary of the family trust and have certain rights regarding the trust’s administration, including the right to demand a copy of the trust documents and any financial accountancy. Once that share is paid out, the former in-law might use it in a way that it was not originally intended for, causing negative consequences from an innocent and well-meaning attempt to provide for an in-law.
Appointing New Trusted Decision Makers
In some cases, you may want to appoint new individuals to make important decisions about your property if you become incapacitated or pass away. However, it’s important to understand that certain legal documents cannot be amended easily. While it may be tempting to simply cross off the names of the people you want to remove and add new preferred decision-makers, this can actually void the document under certain circumstances.
If you need to make such important changes, it’s best to have the documents redrafted and executed with the same formalities used in the original documents, ensuring that you follow the applicable state law. For instance, your state may require multiple unrelated witnesses to the signing of a modified will, even if the change you’re making is a one-sentence amendment. The same is true for a codicil, which is an amendment to your will. Other legal documents, such as a power of attorney, a trust amendment, or restatement, may also require similar formalities, such as having your signature notarized.
Modifying Distribution Provisions
There may be times when you consider altering the distribution provisions of your will or trust by changing the percentage/fraction shares of your estate. It is important to note that this modification should be avoided when attempting to make such changes on your own. It is always advisable to consult an attorney if you wish to modify the distribution provisions of your will or trust. You must consider this amendment very carefully and execute it with strict documentation. Such a change to your estate planning documents carries the risk that a beneficiary who receives less under the amendment may challenge it and use any argument available to invalidate the changes. An experienced estate planning attorney will know the necessary steps to take to ensure that your legal documents will be honored by your beneficiaries and the courts after you pass away.
As you have seen, remodeling your estate plan without the help of a trained and experienced attorney can lead to many potential issues. When handled properly, these changes don’t have to be expensive. Your attorney can quickly and inexpensively fix some of these small issues by drafting an amendment to your estate planning documents. Other changes may require more work because the issues are considerably more complex than you first realized. In either case, with a legal professional guiding you through the process, you can be confident that you will not be leaving your loved ones with a legal mess to sort out after you are gone.
If you are uncertain about whether you need an attorney to help you modify your estate plan, we encourage you to contact us. We are happy to consult with you and help you determine what changes, if any, you may need to make.
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.
In October 2022, singer and songwriter Jerry Lee Lewis passed away. He left behind a rock legacy, a big family, and an estate valued in the multi-millions.
We often follow the lives of celebrities and dream of having their lavish lifestyles. Even so, famous folks experience many similar estate planning challenges just like the rest of us. This includes implementing the optimal tax strategy, as well as distributing assets to loved ones when deceased.
Lewis’s passing has prompted many to look back fondly at his music career. Aside from that though, it begs the question: what will shake out with his sizable estate? Let’s play “what if” in the following estate planning scenarios and see which lessons can be learned for celebrities and regular folks alike:
Jerry Lee Lewis lived a long life, passing at the old age of 87. Like other rock icons of the last century (Elvis, Johnny Cash), Lewis’s lifestyle put hard miles on him. Even though he engaged in substance abuse and experienced health problems, he outlived other leading rockers and was deemed “the last man standing from the dawn of rock and roll” by New York Magazine.
You likely have heard his greatest hit, “Great Balls of Fire”, but Lewis had a variety of other hits that earned him four Grammy wins. Lewis was inducted into both the Rock & Roll Hall of Fame and Country Music Hall of Fame. His music career spanned for an astounding seven decades, and he produced over forty albums.
At his death, Lewis left behind his seventh wife, Judith Coglan Lewis, and four of the six surviving children from his marriages. In the years preceding his death, a feud ensued between Lewis and his daughter, Phoebe, and her husband, Ezekiel Loftin. Lewis sued the Phoebe and her husband in 2017 for taking advantage of his financial status. Charges were later dropped.
Lewis had his fair share of financial missteps, filing for bankruptcy in 1988. The filing included more than $3 million in debts. This came from over $2 million in IRS dues, unpaid medical bills, and tens of thousands in attorney fees. Still, his net worth at the time of his death was estimated to be in the range of $10 million and $15.4 million.
As professional estate planning attorneys, we evaluate the life and legacy of Jerry Lee Lewis through the perspective of our field of expertise. While his tumultuous and fast-paced lifestyle may not align with our personal experiences, we recognize the valuable insight it provides in regards to common estate planning issues. In this discourse, we will address several issues related to Lewis's estate that are particularly noteworthy.
Based on what we know about Lewis’s relationship with his daughter, Phoebe, it is likely that he will remove her from any consideration to receive a portion of his assets. Mississippi law permits individuals to disinherit beneficiaries under a legitimate basis. However, it is worth noting that Phoebe has established her own career in the music industry and has done quite well for herself, potentially rendering any inheritance unnecessary.
The distribution of assets for his remaining children is yet to be determined. While most parents opt for equal distribution of assets among their children, the unique circumstances of the Lewis family dynamic require analysis of what is equal versus what is fair.
We can take lessons away from the Lewis family and apply them to our own situation. Each child has financial needs unique to their lives. While some are able to obtain financial freedom, others may struggle. A family’s financial picture can change for better or for worse between the birth of children as well. For instance, a younger child might enjoy a slightly more affluent lifestyle than the older siblings, simply because their parents have worked their way to a better career milestone and are making more money now than they were. This is why dividing assets equally within an estate plan is not always the fairest method for all parties.
Will He Transfer Assets to His Surviving Spouse?
Lewis was married a staggering seven times, and each came with their own controversies. His seventh wife was by his bedside upon his death. Will he distribute assets to her?
In the case that Lewis did not have a will in place, intestate law would take effect. This would automatically make his spouse the primary beneficiary. It’s not a far off scenario – about two thirds of American adults fail to compose a will. Rock icons can fall into this category if they fail to do some basic estate planning before death.
In the case that Lewis did have a will, he still could have left his entire estate, or a portion, to the surviving wife. If he just left a portion, those assets could be given to her as a lump sum, or distributed over time under the management of the estate’s trustee.
Lewis also would have had options deciding the type of trust set up. The pros and cons of these different types are as follows:
Even though death and taxes are certain in life, estate taxes may not fall into this category. It all depends on the breadth of the estate at Lewis’s death, and the amount of the lifetime exemption used.
The lifetime gift and estate tax exemption denotes the maximum amount of wealth that an individual can pass on to their heirs without incurring estate taxes. Such transfers can take place either as gifts throughout a person's lifetime or at the time of their death.
In 2022, the federal lifetime gift and estate tax exemption threshold was $12.06 million, rising to $12.92 million in 2023. Based on the conservative estimate of Lewis's net worth, the value of his estate is lower than the 2022 lifetime exemption limit. Therefore, in the absence of any previous use of his exemption during his lifetime, he may not require workarounds for estate taxes if his spouse does not posses substantial personal assets. It is worth noting that for couples, the exemption amount doubles to $25.84 million in 2023.
Mississippi does not impose an estate tax, so Lewis's estate does not need to worry about such a tax being levied. However, if Lewis had passed away in a state that imposes an estate tax, or if he had owned property in such a state, then his estate might have been subject to an additional tax due to his death. The exemption amount and tax rate for each state's estate tax are determined by that state.
In the case that Lewis's spouse does possesses assets and wealth that surpass the individual gift and estate tax exemption limit, it may behoove her to ask for the deceased spousal unused exclusion (DSUE) amount. The DSUE provision, aimed at helping the surviving spouse, allows the unused exemption amount of the deceased spouse to be transferred to the surviving spouse in case the former did not use up the entire exemption amount. In simpler terms, Lewis's wife would be eligible to receive a DSUE amount of $2.06 million, calculated based on the 2022 exemption of $12.06 million and Lewis's estimated estate value of $10 million.
Based on the 2022 exemption of $12.06 million and an estimated estate value of $10 million, Lewis's wife would be eligible for a DSUE amount of $2.06 million.
It is impossible to know for sure how Jerry Lee Lewis chose to allocate his wealth. His wife and children may be as uninformed as the general public, and there could be unexpected elements in his estate plan that have yet to surface.
The Lewis family requested that instead of sending flowers for his funeral, contributions be made in his name to either the Arthritis Foundation or MusiCares. It raises the question whether Lewis may have chosen to allocate a significant portion of his estate to these or other charitable organizations instead of his family.
Only time will tell how it’ll play out. We may not even get the full story if he left his estate to charity, since it’s common for charity information to stay private.
Ironing out an estate plan is not exclusive to rock-and-roll icons. Regardless of the complexities of your estate, it is essential to develop a plan for the distribution of your assets, settling your debts, and ensuring that your wealth goes to the individuals and causes that matter to you. Contact Anderson, Dorn & Rader’s office today to arrange a consultation with our team of estate planning attorneys and begin planning for the future.
You may have seen the popular ABC TV show, Modern Family, which follows a fictional extended family through life’s ups and downs. It’s a relatable show that addresses many issues life throws our way. Just like the families depicted in the series, it’s crucial to have an estate plan to protect loved ones when someone passes, or becomes unfit to manage their finances. Let’s take a look at some situations that arise in Modern Family episodes and how you can apply the lessons learned to your own situation.
Throughout the Modern Family series, various family members start and own businesses. No matter if it’s a passion project, investment opportunity, or owner-operator business, it should have a plan for the future.
The “traditional” lines in familial relationships can get blurred within multi-generational, blended families. For example, Jay often refers to Manny as his son, even though he’s technically his stepson (the child from Gloria’s previous marriage). Though he loves Manny as if he were his own son, the law doesn’t take these emotions into account when it comes to transferring business interests. Legally, stepchildren have no right to inherit a stepparent’s money or property. In situations like these, documentation should be created if you want any assets to be left to stepchildren, including your business interests.
There are several minors within the Modern Family series that would require guardianship in the event that their parents pass away. While Manny expressed a desire to serve as Joe's guardian if Gloria and Jay pass, it is important for them to formally nominate their preferred guardian in their wills. However, it should be noted that such a nomination is not binding and may be contested by others. To mitigate the risk of potential disputes and ensure Joe's wellbeing, it is advisable for Jay and Gloria to have open and candid discussions with both of their families to prevent any possibility of a guardianship dispute.
Rex and Lily would also require guardianship in the event of the passing of their parents. Without a comprehensive estate plan in place, it is possible that a dispute may arise between the families of Cameron and Mitchell. While Lily has spent a significant portion of her life close to Mitchell's family, later in the show, Lily and Rex move to reside with their parents in Missouri, which is closer to Cameron's family. As a result, Rex may develop a stronger bond with Cameron's family as he grows up, which could potentially lead to conflicts between the Pritchett and Tucker families if guardianship for these two children becomes necessary. To avoid such a scenario, it is imperative for Cameron and Mitchell to establish an appropriate estate plan.
Finally, it is important for Poppy and George to have designated guardians in the event that their parents, Haley and Dylan, die. While the family may not possess significant financial assets or property, it is crucial for them to establish basic plans for their children's care, including the appointment of primary and alternate guardians. When the show ends, Haley and Dylan have moved out of Phil and Claire's residence, but still nearby. Furthermore, it is noteworthy that Farah, Dylan's mother, has become increasingly involved in their lives since the announcement of Haley's pregnancy. It is possible that she may express an interest in assuming the role of guardian for the children in the event of the untimely passing of Haley and Dylan.
As a parent of minor children, it is crucial to consider and plan for the potential guardianship of your children should the unexpected occur. While no one can replace a parent's love and care, it is essential to formally nominate a guardian in a last will and testament or through a separate legal document, as permitted by state laws. While the court ultimately makes the final determination, clearly expressing your wishes can provide peace of mind. Furthermore, discussing potential guardianship with your family members in advance can help prevent disputes and ensure that your wishes are respected upon your passing.
As all married couples know, the question of what will happen in the event of the first spouse's death is important to consider. For couples like Phil and Claire, who have built and accumulated their assets during the course of their marriage, it may be natural to consider everything they own as jointly held. Both partners may wish for all assets to pass to the surviving spouse. However, without proper planning, leaving assets outright to a surviving spouse can leave them vulnerable to creditors and predators.
It is important to consider potential scenarios, such as the possibility of a scam artist exploiting a well-intentioned person like Phil, or a successful woman like Claire remarrying and unintentionally disinheriting her children by leaving all assets to her new spouse. To safeguard assets for the surviving spouse, regardless of whether it is their first or third marriage, a qualified terminable interest trust can be an effective solution. This designation of trust allows the surviving spouse to receive annual income from the trust and withdraw principal for specific purposes like health, support, education, and maintenance. It also grants you the power to choose where any remaining assets are allocated upon the death of your spouse.
In blended families, as seen on Modern Family, there are a variety of options for inheritance distribution. As Jay prepares his estate plan, it is important for him to consider how he wishes to divide his assets among his family members. This includes his spouse, two adult children from a previous marriage, a minor son, and an adult stepson, as well as five grandchildren and two great-grandchildren. He will need to make decisions regarding the distribution of assets, including the beneficiaries, the amount, and the timing of the distribution. He will need to consider whether it would be more beneficial to provide for his current spouse, Gloria, through a trust during her lifetime, with the remainder going to his other children, Claire, Mitchell, and Joe upon her death — or if his children should receive their portion of the inheritance while Gloria is still alive. Additionally, he will need to decide if he wants to provide for his stepson, Joe, or leave that responsibility to Gloria if she survives him.
When formulating an estate plan, it is crucial to consider the legal requirements for providing for a surviving spouse. In certain jurisdictions, there is a mandated minimum inheritance, known as the elective share, that must be allocated to the surviving spouse. Additionally, in states with community property laws, a surviving spouse may be entitled to a portion of assets acquired during the marriage. While one may assume that their spouse can support themselves without an inheritance, it is essential to have open and thorough discussions about estate planning, and document any agreements to ensure that the surviving spouse's rights and needs are protected. Without proper planning and documentation, a surviving spouse may unhinge the distribution of assets if they have not been taken into consideration within the estate plan, and haven’t waved their minimum inheritance rights.
Phil and Claire will need to evaluate their familial situation and devise a plan to distribute their assets and financial assets among their children and grandchildren. Given the distinct characteristics of their three children, it is important to consider each of their individual needs. For example, Haley, as a mother of two, may require a larger portion of the inheritance to support her children. Phil and Claire may elect to set aside a specific fund for their grandchildren. Alex is very smart and her education or employment opportunities may not require as much financial support. Luke, on the other hand, may benefit from trust money to pursue his business ventures and protect him from impulsive decisions.
An estate plan is a valuable tool for ensuring the protection of assets and financial resources for families of all sizes and backgrounds, not only those depicted in television series. The estate planning attorneys at Anderson, Dorn & Rader are dedicated to collaborating with families to develop a personalized plan that reflects the unique characteristics woven into each one. Reach out to our knowledgeable staff to see how we can assist your modern family with a financial plan for the future.
Death is a delicate subject, but can be made simpler with proper planning. In the best case scenario, all paperwork and assets associated with a passing loved one is prepared with the utmost detail prior to death, allowing friends and relatives to fondly remember the deceased and take time to grieve.
Anderson, Dorn & Rader, and the estate planning business as a whole, aims to simplify the legal processes surrounding death so legacies can be transferred to surviving loved ones in a fair, stress-free manner. To accomplish this, savvy individuals will often take measures to ensure they don’t burden their surviving relatives with undue complications like the probate process.
Several tools are available through qualified attorneys to keep your property and monetary assets out of probate. Among these, establishing co-ownership of bank accounts and home titles, as well as lining up beneficiaries on investment and insurance accounts are great to start with. But a revocable living trust is one of the most favored comprehensive options that an individual can set up to avoid probate. Let’s check it out:
A trust is a fiduciary arrangement that grants a third party, or trustee, the legal permission to hold and manage assets on behalf of a beneficiary or beneficiaries. A living trust is enacted while an individual is still alive, rather than upon death. Arrangements can be made to grant you oversight duties on your own living trust until you become incapable of soundly managing your assets, or pass away. Upon your incapacitation or passing, the successor trustee assumes responsibility over the assets in the trust and manages them on behalf of all involved beneficiaries.
The Probate process involves transferring ownership of all monetary assets and property that haven’t been assigned to beneficiaries, or don’t contain a pay-on-death or transfer-on-death designation upon your passing. Often times with probate, the court gets involved, and the long-winded process to account for the assets ensues.
With a trust, your assets are ready to be transferred to your beneficiaries upon your death, if they haven’t already been transferred to the trust while you’re still alive. This puts probate out of the question, as your assets are all accounted for and can be distributed in a timely manner.
Even better, trusts can incorporate pretty much any category of asset: from real estate, to stock holdings, to bank accounts, to family heirlooms. This keeps your legacy from being administered through the probate court, ensuring everything you worked for ends up in the hands of the individuals you deem as successors. Not only does this eliminate costly court costs, but it keeps your records out of the public’s eye and enables beneficiaries to remember the deceased and carry on the good fortune of the trust without running into road blocks.
The language and investment surrounding the establishment of a trust can be daunting, often prompting individuals to delay the process or put it off entirely. But to plan without a doubt where your assets will end up, and with whom, it’s vital to create a trust. It’s peace of mind for both you and your loved ones when you pass.
Planning the details around your death is sometimes a difficult topic to breach, but can be made simpler with the help of your family and knowledgeable attorneys like Anderson Dorn & Rader. While you are ultimately at the helm when it comes to important decisions, our estate planning group truly cares about maximizing the legacy you will leave to your loved ones. For any questions about how to start the trust formation process, please give us a call or fill out our contact form. We look forward to bringing you and your family peace of mind.
The days are flying by, and before you know it, the New Year will be here. Plan ahead and fine-tune your gift giving before the holiday chaos ensues. It’s possible to make annual, medical, and educational exclusion gifts that aren’t technically considered as such under federal gift tax law.
Annual exclusion gifts are one type that you can give that do not trigger federal gift tax. For the year 2022, the gift tax threshold is $16,000 per person. That is expected to increase to $17,000 in 2023.
With annual exclusion gifts, assets amounting to $16,000 or less that are given to an individual within the calendar year are not considered gifts (for tax purposes at least – the recipients will still be thankful!).
Hypothetically, that means you can gift assets amounting to $16,000 or less to as many individuals you’d like up to December 31st of this year, then follow that gifting criteria again for the same recipients on January 1st, 2023 without having to file them under federal gift tax law.
Some sources may indicate that married couples are able to effectively double the annual exclusion amount ($32,000 per calendar year). Even if a married couple abides by this threshold, in some cases they may still be required to file a gift tax return. We recommend consulting our estate planning services to see if you need to report these “split gifts”, as they’re referred to.
Qualified medical exclusion payments / gifts are another type of transfer that aren’t considered ‘gifts’ under federal tax law.
To take advantage of medical exclusions, one must make a payment directly to a healthcare institution or medical insurance provider. Generally, this exclusion can be applied to any medical expense qualifying for a deduction under federal income tax guidelines.
For instance, you could have given $20,000 to the hospital that your grandchild was treated in for an emergency procedure earlier in the year, then give the same grandchild up to an additional $16,000 amount before December 31st, 2022. You could even go as far as to gift another $16,000 on January 1st, 2023. Even in this extreme example, these gifts would not trigger the federal gift tax threshold, as long as they are accounted for and transferred with the exclusions in mind.
An important note: the medical exclusion gift / payment must be made directly to the medical institution or medical insurance provider, not the individual receiving the medical care or insurance money. Even if the payment is “earmarked”, the patient cannot touch it, or the federal tax law will kick in and consider it a gift.
Gifted assets that meet the criteria of educational exclusions are another type of transfer that aren’t considered ‘gifts’ under federal tax law. This includes qualifying payments made directly to both domestic and foreign institutions.
So hypothetically, you could pay for your grandchild’s emergency procedure (referenced above), pay for their educational tuition amounting to $25,000, give them an additional $16,000 by December 31st, then give them $16,000 on January 1st, 2023. That’d be one thankful grandchild, and you likely wouldn’t trigger any federal gift tax returns.
Remember two things before initiating an educational exclusion gift: First, the payment must be made directly to the educational institution, not to the individual enrolled. Next, the payment can only be put towards tuition. Not supplies, books, dorm payments, or other related educational expenses.
It can be exciting to gift money and property to loved ones. After all, they will carry on your legacy in the future. While it’s tempting to simply transfer it to the recipient’s bank account, consider the guidelines surrounding annual, medical, and educational exclusion gifts to avoid the burden of taxes and maximize your financial picture. For assistance in doing so, contact the experienced Reno estate planning attorneys at Anderson, Dorn & Rader. We are happy to walk you through the process to make it enjoyable for all parties involved.
Estate plans are more than your monetary net worth. Categories of your estate can include real estate, pets, possessions and all other property you own. Some people forget how priceless personal property, such as family heirlooms and keepsakes, can be to those you leave behind.
It is important to work out what will happen to these valuable items after your death by creating an estate plan.
Heirlooms have been passed down to family members for generations. These items can vary in monetary value, but the memories attached to them are copious, giving them an emotional and sentimental value that shouldn’t be discarded or auctioned after your passing.
Keepsakes are slightly different from heirlooms because they apply to specific items you owned during your life. These items can be anything from cutlery sets, furniture, or jewelry that you left behind for your family. While these valuable items only have been passed down once, they have nostalgia your family wouldn’t want to lose.
Family members can have different values associated with certain heirlooms and keepsakes. It can be crucial to talk with each family member about their feelings and expectations towards certain items in advance. This common knowledge will help your family avoid unnecessary fighting for heirlooms or keepsakes after your death.
It is a good idea to decide if you need to have your family heirlooms or keepsakes appraised. By doing this, you provide your heirs with the necessary documentation to understand the value of each object passed down to them. Plus, you might realize you want to get some of these items insured due to their worth. Handling this before you pass will make it easier for your heirs to go through the mourning process and avoid unnecessary externalities.
There is no proper way to distribute these valuable and irreplaceable items after your death. Of course, these valuables could end up lost or undervalued if they end up in the wrong hands when there is no plan in place for family heirlooms and keepsakes.
Here are some ways to distribute these precious items to your heirs.
Some people prefer to equally distribute heirlooms and keepsakes to their heirs by focusing on each items' monetary value. An estates planning attorney can offer you guidance when understanding the liquidity of each family heirloom and keepsake.
It is important to note more than two of your heirs may desire the same heirloom or keepsake. You can resolve this dilemma before you pass by creating a personal property memorandum. This document is a chance for you to explicitly state your wishes and avoid any conflict that may come after your death.
One benefit to this type of inheritance planning is that a property personal memorandum is referred to as your last will and identifies who is to receive said property. Also, you don't need to execute a new will or amend your trust if you decide to make modifications to which heirs receive these family heirlooms and keepsakes.
You may prefer to gift special items to your heirs before passing away. Doing this could be a consideration if you find enjoyment in seeing how your family reacts to receiving their heirloom or keepsake.
Of course, you don't want to forget the gift tax you may incur after giving any items to your heirs while alive. Furthermore, you may want to consider if you should factor them into what share of your estate your heirs receive after your death depending on their value.
Anderson Dorn and Rader’s attorneys have the expertise and knowledge to help you create an estate plan that considers all your assets. Family heirlooms and keepsakes are just one piece of the puzzle. Define all your wishes for what your heirs receive with an estate plan to help avoid conflict between your heirs later on.
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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In the attempt to progress towards a modern US tax system, the Biden administration has proposed a number of changes to the current tax code. According to a publication released by the U.S. Treasury early this year, they hope to push these changes through Congress which is necessary to gain approval for the amendments. It’s true that many Americans are divided on the best methods for stimulating the US economy, however, one fact remains undoubtable - careful estate and tax planning is crucial for the wealth and financial security of American families.
The Greenbook, a publication that provides information regarding the Administration’s revenue proposals, details the proposed changes which will ultimately impact estate planning in numerous ways. Many of the effective estate planning strategies that have been diligently defined by professionals in the industry for decades may be discarded. However, this could also enhance certain processes in estate planning by implementing other key strategies.
Notably, the reduction of estate and gift tax exemption amounts is absent from the list of proposals. While it’s possible that this could change in the future, we know that for now, these tax exemptions remain extremely high. It’s important to understand the law as it is written today so that you can make appropriate decisions with your assets and prepare for other coming changes.
As it stands today, the estate tax laws that were passed under the Trump administration will expire and reset to the prior laws starting in 2026. If there is no action made by Congress to change this, the reset will restore the estate and gift tax exemption amount to $5 million, as it was in 2016. However, the rate of inflation must also be included in this amount which brings the total to roughly $6.6 million by 2026.
With this information in mind, it’s crucial that you do all you can now to determine the expected return on your investments for the future. To do this, you should consider the average rates of return on your current investments, compounded annually. Many people have found that a healthy return of 7% annually could double one’s net worth in just 10 to 12 years. However, if estate tax exemption amounts are reduced by roughly 50% and continue to increase with the inflation rate, you risk having to pay significantly high estate tax rates.
It can be difficult to prepare for the uncertainties that may affect your tax and estate planning strategies. Without knowing what the future holds, how do you determine the best way to protect your assets? To make a more accurate decision, some of the other Greenbook proposals should also be considered, such as:
These changes haven’t been approved yet by Congress, but their consideration could help sway your strategic plans. The following strategies are still effective tools under current tax law, and implementing them now could provide significant tax savings.
A grantor retained annuity trust (GRAT) is an estate planning strategy that allows the grantor to contribute appreciating assets to chosen beneficiaries using little or none of your gift tax exemption. To do this, you would transfer some of your property or accounts to the GRAT in which you will still retain the right to receive an annuity. Following a specified period of time, the beneficiaries will receive the amount remaining in the trust.
Another estate planning strategy that may be beneficial for you is to gift seed capital, typically in the form of cash, to an intentionally defective grantor trust (IDGT). You will then sell appreciating or income-producing property to the IDGT in which they will make installment payments back to you over a period of time. If the account or property increases in value over the period of the sale, the accounts or property in the trust will appreciate outside your taxable estate and will therefore avoid estate taxes. Additionally, the trust does not have to pay income taxes on the income the trust retains since the taxes are already paid on the income generated and accumulated in the trust.
In a spousal lifetime access trust (SLAT), the grantor is to gift property to a trust created for the benefit of their spouse and possibly their beneficiaries. An independent trustee can make discretionary distributions to those beneficiaries, which can also benefit you indirectly. Contrary, an interested trustee should be limited to ascertainable standards when making distributions, such as health and education. With this estate planning strategy, you can take advantage of the high lifetime gift tax exemption amount by making gifts to your spouse. This trust avoids the use of the marital deduction which means the assets in the SLAT will not be included in either your or your spouse’s gross estate for estate tax purposes.
Finally, there are irrevocable life insurance trusts (ILITs). This trust allows leveraging life insurance to ease the burden placed on your estate if it becomes subject to estate tax at your death. This type of trust is established by transferring an existing life insurance policy into the ILIT in which you make annual gifts to the trust in order to pay the premiums on the policy. At your death, the trust receives the insurance death benefit and distributes it according to the trust’s terms. The death benefit and the premiums gifted to the trust are completed gifts, meaning your estate would not include any of the trust’s value.
We are holding a series of webinars over the coming weeks, from which you can obtain a great deal of useful information. Just choose the session that fits into your schedule. The webinars are being offered on a complimentary basis, so you have everything to gain and nothing to lose. This being stated, we do ask that you register in advance so that we can reserve your seat.
To sign up for an estate planning webinar, visit Anderson, Dorn & Rader here. Once you find a date that is right for you, click on the button that you see and follow the simple instructions to register. For more information regarding estate tax exemptions and planning, connect with our estate planning attorneys today.
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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.
During estate planning, the beneficiaries are likely to change over time. It’s common for grandchildren to be added into the plan as they come, which will require several amendments from a licensed estate planning attorney. Estate planning attorneys are often asked about trusts for grandchildren and what the best option is.
Several inheritance methods exist to accommodate grandchildren and there are many factors to consider when determining the best one for you and your family. For most grandparents, the best way to provide for their grandchildren is to leave their accounts and property to the grandchildren’s parents. In some cases, however, it makes better sense for grandparents to give property directly to their grandchildren.
If you’re wondering, “Can I open a trust account for my grandchildren?” the answer is yes. Below are examples of trusts for grandchildren and some of the basic information you need to know about them.
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.
Regardless of your current situation, it is important to consider the possibilities and options for leaving an inheritance to your grandchildren. Failing to do so can have long-lasting consequences and, in many cases, may result in difficult legal challenges and family complications upon your passing.
Many grandparents decide that the best way to provide for their grandchildren is to leave their assets to the grandchildren’s parents. This typically ensures the financial stability of that family unit, thereby indirectly benefiting the grandchildren. From a practical perspective, the grandchildren’s parents are often in the best position to know how to use the money for the benefit of their children and can spend or invest it appropriately on their behalf.
In a majority of the U.S., default inheritance laws have been set to provide first for children and then for the grandchildren in the event of the grandparent’s death.
In rare instances, grandparents may find that it is in everyone’s best interests to leave their assets directly with the grandchildren. This may occur for a few reasons including cases where the grandparents are untrusting of their own children and are concerned that the money would not be responsibly used for the benefit of the grandchild.
One may also choose to directly leave their assets to the grandchildren if the grandchild’s parents are independently wealthy. This could result in added taxes being tacked onto the estate caused by exposing the property which may be costly.
Lastly, you must consider the possibility of grandchildren inheriting your assets through their parents by default. Although the intent of grandparents may have been to leave everything to their adult children, an inheritance may be given to grandchildren unintentionally. In the event that the adult child who originally inherited the assets prematurely passes away due to an accident or illness, the grandchild could inherit all assets. Arrangements can be made to accommodate these situations in the will or trust.
There are many types of trusts for grandchildren for you to choose from including HEET trusts, Gift trusts, and Generation Skipping trusts. Each has its advantages and disadvantages, therefore, it is important for you to discuss which option is best for you with a licensed trusts attorney.
One of the most preferred ways to leave assets to grandchildren is by naming them as a beneficiary in your will or trust. As the grantor or trustor, you are able to specify a set amount of money or a percentage of your total accounts and property to each grandchild as you see fit. This is an effective method given that all of the grandchildren receiving such gifts are physically and emotionally stable, financially prudent, and have reached adulthood.
However, if the grandchildren are minors at the time of your death, this method leaves the trustee or executor of the estate with more responsibilities to handle before the inheritance can be distributed. In this case, the gift will need to be held in a custodial account for the minor until they have reached the majority age (either 18 or 21). And in some instances, establishing a court-controlled conservatorship over the property may be required.
Regardless of either instance, once the child reaches the age of majority, you or the trustee will not be able to control how that money is used by the grandchild. This could result in the inheritance being spent very poorly by the grandchild or could possibly fall into the hands of a spouse or other person who was not intended to receive the gift.
A trust offers one of the most flexible methods for leaving an inheritance to grandchildren. Not only are you able to amend the trust as you need, but you also have the ability to set the maturity date and control how the inheritance is used. When you leave an inheritance to grandchildren via a trust, you can ensure that the money and property are used appropriately and at appropriate times.
There are a variety of ways to use trusts in your estate planning. Provisions can be added to your will or revocable living trust that give you the freedom to decide how the inheritance is distributed. For example, you can instruct the executor or trustee to hold any property that is payable to a grandchild in a separate trust share rather than making a direct distribution of the accounts or property to them. Also, you can specify in those trust terms how the money is to be used or distributed and when. Such provisions are extremely important to ensure your estate plan follows your specific instructions, regardless of unexpected events impeding on those wishes. Fortunately, a trust can protect and manage the inheritance until it can be distributed to the grandchildren at a more appropriate time.
Another way to use trusts for grandchildren is to have the grandparent create a trust that designates them the trustor and the trustee. Creating the trust during your lifetime and naming yourself as the trustee allows you to transfer some of your property into the trust for the benefit of your grandchildren to use before your passing. From a tax perspective, you can make gifts to this trust using the annual gift tax exemption (currently, $15,000 per beneficiary of the trust per year) to safeguard the gifts from transfer taxes.
If your estate is large enough to potentially be subject to the generation-skipping transfer (GST) tax, then you may consider creating a special trust that may provide additional tax benefits. A health and education exclusion trust (HEET) is one of these special types of trusts. A HEET is designed to be used for the use of paying for health and education expenses directly on behalf of the beneficiaries without being subjected to gift taxes in the future. Furthermore, the distributions to the beneficiaries will be exempt from the GST tax. This benefit is obtained by naming a charitable institution as an additional beneficiary of the trust. As long as the trustee makes regular and reasonably substantial distributions to the charitable beneficiary from the trust, the distributions to the other beneficiaries will be GST tax-exempt.
A HEET is worth considering for several reasons. First, if you would like to help your grandchildren and succeeding generations with their education and medical expenses this is the perfect option for you. And if you have used up your GST tax exemption amount through gifting or other estate planning strategies, a HEET exempts the GST tax. Lastly, a HEET gives you the opportunity to benefit a charitable organization as part of your estate planning.
When planning your estate, generation skipping transfer taxes need to be considered. GST taxes are a unique form of taxation that will undoubtedly affect your grandchildren’s inheritance if what you own is valued at more than the current estate tax exemption amount. For most people with modest accounts and property, the GST tax does not pose any significant plight. However, the GST tax is something that you should be aware of and plan around if you plan to leave any amount of money or property with your grandchildren.
Another point to consider when creating a trust specifically for your grandchildren is the GST tax that is required should you include your grandchildren’s children in the trust. You may need to take certain steps upon creation of such trusts to ensure that the trust is GST tax-exempt which a tax professional can assist with.
Though many grandparents seek to provide their grandchildren with an inheritance with good intentions, gift-giving such large sums of money may not be as appreciated by the parents. While some parents may see the gift as a blessing, others find that such large inheritances may hinder their child’s character development. By taking away the need to become financially independent, some parents worry that their children will miss out on important life lessons about sacrifice and hard work and the value of money in general.
Be sure to speak with your grandchildren’s parents beforehand about how you can best support the development of your grandchildren and provide for them in their early years. This will ensure that your gifts will be appreciated and truly beneficial.
Whether you want to specifically and intentionally include your grandchildren in your estate planning or just want to make sure they are carefully accounted for in the event that they unexpectedly inherit your property, it is critical to examine your estate plan with your attorney to make sure that your plan reflects your wishes and your family’s values. Fortunately, the experts at Anderson, Dorn, and Rader have an exemplary understanding of this type of law and are happy to help you update your estate plan.
Connect with our Reno estate planning attorneys and learn how you can open a trust for your grandchildren.
How to Responsibly Leave an Inheritance to Your Grandchildren, Ortiz Gosalia Attorneys at Law (June 8, 2021)
This year has been unprecedented from a political perspective in many ways. President Joe Biden stepped into office facing huge obstacles related to the COVID-19 pandemic, an economy battered by the pandemic, a crumbling national infrastructure in dire need of repair, an ongoing immigration crisis at our southern border, and deep political and social divisions in this country, among other challenges.
As Biden entered office, he named the following issues as his top priorities:
With these issues at the top of Biden’s priority list, it may appear that no real changes are coming down the pipeline that are directly related to the estate plans of most Americans of average means. But if recent history is any guide, although many of us hope that the estate planning landscape will remain settled and predictable, it is unlikely that we will be so lucky. Here’s what we know so far with regard to proposals coming from the White House.
While many of the issues Biden has prioritized have begun to be addressed within his first one hundred days in office, many of them are still in their infancy, with the details of how they will be implemented and funded still to be determined. The following steps have already been implemented or proposed in Biden’s plan.
These large spending bills, both passed and proposed, will need to be funded in some manner.
Some of the possibilities for funding this spending include the following changes to the tax laws
that could have a significant impact on your estate planning: 5
We are living in a time of significant uncertainty when it comes to estate planning and the economy. As a result, it is more important than ever to ensure that your estate plan is designed in a way that enables you to move quickly and take advantage of estate and tax planning opportunities that arise.
Additionally, there remain many non-tax-related reasons to keep your estate plan up-to-date
and relevant to your circumstances:
Keeping abreast of the whirlwind of changes in the law and the economy can be a tall order for anyone when it comes to maintaining your estate planning. That is why having an estate plan with appropriate provisions that allow for flexibility is so important. We are prepared to keep you apprised of the legislative changes that are headed our way and will help you stay informed so you can move quickly if changes to your planning become necessary. We always welcome a call from you to set up an appointment with our office to discuss your estate plan. Together, we can make sure you are prepared for whatever may come.
1 Jacob Pramuk, Biden Signs $1.9 Trillion COVID Relief Bill, Clearing Way for Stimulus Checks, Vaccine
Aid, CNBC (Mar. 11, 2021, 3:03 PM)
https://www.cnbc.com/2021/03/11/biden-1point9-trillion-covid-relief- package-thursday-afternoon.htmlhttps://www.cnbc.com/2021/03/11/biden-1point9-trillion-covid-relief- package-thursday-afternoon.html
3 Barbara Sprunt, Here’s What’s in the American Rescue Plan, NPR News (March 11, 2021),
4 Fact Sheet: The American Families Plan, The White House (Apr. 28, 2021),
5 Blank Rome, LLP, Estate Planning in 2021 and Beyond: The Possible Impact of Democratic Control in
Washington, JD Supra (Mar. 9, 2021)
6 See Fact Sheet: The American Families Plan, The White House 14 (Apr. 28, 2021)
In March 2004, the Senate passed Resolution 316, which officially recognized April as National Financial Literacy Month. Both Houses of Congress have passed similar resolutions since then designed to encourage financial literacy so that individuals are better prepared to manage their money, credit, and debt. Nevertheless, in the fourth quarter of 2019, U.S. household debt, which includes student debt, credit card debt, auto debt, mortgages, home equity loans, and other debts, exceeded $14 trillion for the first time ever.1 In addition, forty percent of the respondents of one recent survey indicated that it would be very difficult for them to meet their current financial obligations if their next paycheck were delayed for one week, and another thirty-four percent said it would be somewhat difficult.2 The COVID-19 pandemic has, unfortunately, made this potential difficulty a scary reality for many Americans.
Whether or not you are indeed struggling financially, it is important to do a realistic assessment of your financial situation and how prepared you and your family are for the future. Creating or updating your estate plan is an important part of exercising control over your finances, and ensuring that proper plans are in place can provide substantial peace of mind and security for you and your family.
Take an Inventory
One of the first steps in creating an estate plan is to take an inventory of your money and property. Regardless of whether you are wealthy or just getting by, everything that you own is part of your estate and should be listed--or at least accounted for-- in your inventory. This inventory should include the following:
As you and your estate planning attorney evaluate your inventory, there are several questions you should ask yourself.
Am I saving adequately for retirement? Clearly, the answer to this question will vary for different individuals and circumstances, but many financial advisors recommend saving ten to fifteen percent of your pre-tax income during the entire span of your entire working years. If you have not been saving adequately, consider increasing your contributions to your retirement accounts.
Are sufficient funds available to provide for my spouse and dependents if I pass away? If the answer is no, consider purchasing a life insurance policy large enough to replace your income, as well as pay off any outstanding debts, college for your children, final expenses, and other important expenses, e.g., the cost of your child’s wedding or their first car.
Do I have a lot of debt? If you have substantial debt, your family members generally will not be responsible for paying it if you pass away. However, your estate will have to pay off your creditors before your beneficiaries receive anything. Life insurance can help in this situation as well: You can either purchase life insurance sufficient to pay your debt or you can make family members or loved ones the beneficiaries of your policy (or a trust for their benefit), as the proceeds of the policy never become part of your estate but are transferred directly the beneficiaries of the policy. Similarly, retirement, investment, and brokerage accounts allow you to name one or more beneficiaries, keeping those funds outside of your estate. Real estate or accounts owned jointly will also pass directly to the surviving owner when permitted by state law.
An even better course of action, however, would be to meet with a financial planner who can help you create a budget enabling you to decrease or eliminate your debt so that your loved ones will receive all the money and property you would like them to have.
Protect Your Assets
If you transfer money and property you would like to preserve for your beneficiaries into an irrevocable trust, that is, a trust that cannot be amended, modified, or revoked (except under limited circumstances), those assets will be protected from any of your future creditors or judgments (with time limits). Because the money and property used to fund the trust is no longer yours and you have no control over it, it is not available to pay your creditors. Your family members and loved ones can be named as the beneficiaries of the trust. This strategy can be particularly helpful for individuals working in professions that are at a high risk of lawsuits, e.g., doctors, lawyers, etc.
Warning: An irrevocable trust will not protect money and property from creditors having a claim at the time the trust is created. Courts can rescind transfers to trusts if they are determined to have been made with the intention to defraud current creditors.
Consider the Needs of Your Beneficiaries
Protect their inheritance from their creditors. Even if you take all the steps necessary to ensure that your beneficiaries receive a nice nest egg when you pass away, it can disappear quickly once it is in their hands unless your estate plan is designed to avoid this possibility. Fortunately, you can create a trust with terms that will protect your beneficiaries’ inheritance against claims arising from their creditors, divorcing spouses, or lawsuits. There are a variety of different types of trusts that can protect the money and property from such claims, but the following are among the most commonly used.
Create a trust for a specific purpose(s). You can include terms in your trust authorizing the trustee to make distributions for your children or other loved ones for specific purposes so that even after you have passed away, you are still able to help the trust beneficiaries make certain important purchases or pay for special care.
Let Us Help You and Your Family Move Toward a Secure Future
Celebrate Financial Literacy Month by taking steps to get your financial house in order. Estate planning is an essential part of this process, as it is all about providing you and your family with the peace of mind that comes with knowing that even if the unexpected happens, the future is secure. Please call us today at (775) 823-9455 to set up a meeting so we can create an estate plan that meets all of your needs and goals.
1 Federal Reserve Bank of New York, “Quarterly Report on Household Debt and Credit, February 2020,” accessed March 17, 2020, https://www.newyorkfed.org/medialibrary/interactives/householdcredit/data/pdf/hhdc_2019q4.pdf
2 American Payroll Association, “Getting Paid in America Survey,” last modified September 10, 2019, https://www.nationalpayrollweek.com/wp-content/uploads/2019GettingPaidInAmericaSurveyResults.pdf
In 1984, Congress issued a resolution, signed by President Reagan, establishing March 21st as National Single Parent Day: a day devoted to recognizing the dedication of single parents, who make self-sacrificial efforts to care for their children’s needs, and encouraging family members, friends, and communities to help provide an optimal environment for their children. As a single parent, you should feel proud of your efforts to nurture and care for your children. Here are a few additional things you can do to provide for your children’s future that you may not have considered.
If your children’s other parent is willing and able to care for them if you pass away unexpectedly, he or she will likely be given physical custody of the children and responsibility for their care. In the case of single parents, however, the other parent often may not be able or willing to take on this role. This is why it is crucial for you to name a guardian who will step into your shoes to provide day-to-day care for your children if something happens to you. If you do not name a person you trust, a court will step in to appoint someone. Because the person the court chooses to be your children’s guardian may not be the person you would have chosen, it is vitally important that you designate this person in advance. You can name a guardian in your will (and in some states, a separate document can be used specifically for this purpose): Although the court will still have to appoint the guardian, the court will typically defer to your wishes.
In making your decision, there are a few factors to keep in mind: Does your chosen guardian share your values and parenting style? Will your chosen guardian require your children to relocate? Does your chosen guardian have the energy and stamina needed to care for your children? Do they have the time to be an involved caregiver? Do you want more than one guardian to care for multiple children, or do you prefer for the children to stay together? It is important to weigh the importance of these considerations in making your decision.
If your children are minors, you can establish a custodial account to hold an inheritance under a law called the Uniform Transfer to Minors Act or the Uniform Gifts to Minors Act. If you do not appoint the custodian, the court will appoint someone to control and manage your children’s inheritance until they reach the age of majority. This is necessary because minors legally cannot own money or property on their own. A custodian will manage the funds in the account for the benefit of your children, but the downside is that when they reach the age of majority (18-21 years old depending on applicable state law), the funds will be distributed to them in a lump sum. At that point, they can spend the money as they wish, which may not be optimal for a young person who is not yet mature enough to make prudent financial decisions. In addition, any present or future creditors could try to reach your children’s inheritance to satisfy their claims.
A trust is often preferred over a custodial account because it is more flexible and can be designed to protect the funds against your children’s future creditors and their own imprudent spending. You can name someone who is adept at handling money to manage and disperse the funds for the benefit of your children if you die before they reach adulthood—or the age you have decided to the funds should be distributed to them. This can be the same person who will act as the children’s guardian, or a different person if you do not trust the guardian (e.g., an ex-spouse) to handle the money you have left to your children.
If you would like to set up a trust that can be used to manage your money and property for your (and your children’s) benefit if you become too ill to do it yourself, you can establish a revocable living trust with yourself as the trustee. This type of trust will remain in effect if you pass away, and the successor trustee you have named can continue to manage the funds and make distributions for the benefit of your children. The successor trustee can also step in to manage and distribute the funds for your benefit if you are unable to do so. An often less preferable option is to include provisions in your will for the establishment of a trust at your death. This type of trust will not help if you become disabled because it will not go into effect until your death. In addition, it will not be funded until your will has been probated, a process that may be expensive and time-consuming. Also, by creating the trust through your will, the management and distribution of funds may also be subject to ongoing oversight by the probate court.
The trust terms can specify the purposes for which the trust funds can be used, how and when the trustee should make distributions, and, if you so choose, the age at which you would like the trust funds to be fully transferred to your children—which does not have to be at the age of majority. You can choose the type of distributions you believe are best for your children: Some parents give the trustee the discretion to make distributions for specific purposes, such as the children’s health, maintenance, education, or support, or even for a down payment on a house or to provide funding for the child to start up a business. Others give the trustee complete discretion in making distributions for the benefit of the children. The timing of distributions, which can be designed to meet your particular goals, can also be spelled out in the trust.
If you have more than one child, you can specify whether the distributions should be for equal amounts or if a greater percentage of the money in the trust should be distributed for the benefit of certain children, e.g., children with special needs or younger children who did not get as much financial assistance from you while you were alive. In addition, you can address specific issues that may be of concern. For example, you can indicate whether you would like a home you own to be sold, or if you prefer for the children’s guardian to move into the home so they will not have to relocate. If your home is not sold, the terms of the trust can also indicate who will be responsible for paying the real estate taxes, utility bills, and maintenance expenses. The home is a particularly complex issue to consider, as there are often emotional ties and memories connected to it, as well as ongoing costs, and frequently, a mortgage. As experienced estate planning attorneys, we can help you think through the best course of action for your family.
If you have named someone other than a grandparent (your parent) to be your children’s guardian, it is important to specify in your estate planning documents whether you wish the grandparents to be able to visit with your children.
While you are living, it is your fundamental constitutional right to determine whether--and how often-- your children will see your parents (their grandparents). However, when you pass away, grandparents may have a right to see your children. Every state has enacted a grandparent visitation statute, and they vary regarding their permissiveness or restrictiveness. Some statutes only allow grandparents to obtain a visitation order when the children’s parents have separated, divorced, or one or both of them have died. Others are less restrictive1 and allow grandparents to obtain a visitation order even if the parents are still married and are both still living. What both types of statutes have in common is that they both require visitation not to interfere in the parent-child relationship and to be in the best interests of the child.
As a single parent, you can gain substantial peace of mind by creating an estate plan that ensures your children will be properly cared for—both physically and financially—in the unlikely event that something happens to you while they are still too young to take care of themselves. Please call the Anderson, Dorn & Rader office at (775) 823-9455 to schedule a consultation.
1 Some of these less restrictive statutes have been found to be an unconstitutional infringement on the fundamental right of parents to control the upbringing of their children.
As millennials (born 1981 to 1996), you are well known for your distinctiveness as a group. Your generation has followed paths and set goals that are decidedly different from those chosen by previous generations. You are highly diverse, better educated, more socially conscious, and wait longer to have families than your parents and grandparents. But one thing you have in common with other generational groups is the need for estate planning. Unfortunately, a startling 79% of millennials do not have basic estate plans in place. Your needs and goals may vary, but having an estate plan in place is crucial for every adult, including millennials. You do not know what the future holds, and we can help you make sure that plans are in place that not only provide for your own future needs but also those of your loved ones and pets.
As a millennial, you may not have accumulated as much wealth as members of older generations, but it is important for you to make sure that your money and property will go to the family members or loved ones you have chosen if something happens to you. If you do not have a will or trust, your money and property will pass to the person designated by state law, which may not be the person you would want to inherit your prized possessions and money. In addition, if you are married and have young children, you need to take steps to ensure that your spouse and children are provided for. A trust is often the best solution: If your spouse inherits your money and property outright under a will, and your spouse eventually remarries, your assets could go to the second spouse instead of your children. In addition, the inheritance will be vulnerable to claims made by your spouse’s creditors. A trust can avoid these results by allowing you to choose who receives your property and money, as well as the timing and size of the gifts.
If you are one of many millennials, especially those who live in large urban areas, who chose either to delay having children or to remain childless, you may have adopted pets that you love and dote upon just as you would a child. Especially if you are single, you should consider a pet trust to provide for your pet’s care if something happens to you. The pet trust can allow you to make arrangements for your pet if you die or are physically unable to care for them yourself. The pet trust can not only specify a caregiver for your pet, it can also provide care instructions and set aside funds sufficient to care for your pet’s needs (medical care, grooming, exercise, etc.). You also have the ability to name an additional person to manage the money you have set aside for your pet, if you would rather have someone other than the caregiver in charge of the money.
Millennials are well known for being socially conscious and wanting to make a positive difference in the world. If you want your money and possessions to support a charitable cause when you pass away, you may be interested in establishing a charitable remainder trust, which enables you to benefit from a stream of income for your own life, with the remaining money in the trust going to a charity you have selected upon your death.
As the cost of college tuition continues to increase, the level of debt millennials have begun their adult lives with is startlingly high. The average student loan debt of adults aged 25 to 34 is $33,000 per borrower. Federal student loans typically are forgiven upon the borrower’s death, but the estates of borrowers who obtained private loans can be pursued by those lenders. In addition, high credit card debt is prevalent among millennials. If you have incurred substantial debt, life insurance sufficient to cover income tax on the cancellation of debt in the case of a federal student loan or to cover the debt itself if a student loan is owed to a private lender or money is owed to a credit card company may be a good solution if you are concerned about the burden your debt could place on your loved ones upon your death.
If you are like many millennials, who are the first generation who grew up using the internet, you have likely amassed a much greater quantity of digital assets than members of previous generations. These assets may include social media accounts, blogs, photographs and videos, financial accounts, and email accounts, among many others. A comprehensive list of these of these assets, which may be among your most prized possessions, as well as the accompanying usernames and passwords, and instructions for their management, is essential to ensure that your wishes are honored if you pass away or become too ill to manage them on your own. Depending upon your wishes, you can appoint a separate person to wind up (or continue managing, e.g., in the case of a blog) these assets and accounts, or you can choose to have your executor or trustee handle this aspect of your estate. The list, which can be incorporated by reference into your other estate planning documents, should be stored in a secure place along with your will and/or trust.
If you are a younger millennial, you may not realize that your parents no longer automatically have the right to make medical decisions on your behalf if you become too ill to make them on your own or if you are unable to communicate your wishes. Even if you are married, your spouse may still need to be properly named in a medical power of attorney to make decisions for you when you cannot. It is also important to designate a trusted person to act on your behalf if your spouse is unavailable. If you fail to have a medical power of attorney prepared, a court proceeding may be necessary to appoint someone to fill that role if, e.g., you are in an automobile accident and are unconscious. You should also consider completing a living will spelling out your wishes regarding medical treatment you want--or don’t want--at the end of your life or if you are in a persistent vegetative state.
Another document that is essential for your care if you were to become unconscious or too ill to make your own financial decisions is a financial power of attorney. It allows a person you have named to pay bills, take care of your home, manage your accounts, and make other money-related decisions for you. Even if you are married, a financial power of attorney is important because any bank accounts or other property that are not jointly owned cannot be managed by your spouse without it—unless your spouse goes to court and asks to be appointed as your guardian, causing unnecessary stress in an already distressing situation. A financial power of attorney can also be helpful if you do a lot of international travel and may occasionally need someone to handle your financial matters while you are out of the country.
You may think that estate planning is only for the elderly. However, even if you are young, an estate plan is crucial, regardless of whether you have accumulated much money or property. A properly executed estate plan provides not only for the well-being of your family, loved ones, and pets, but also allows you to put plans in place if you become ill or are severely injured and cannot make medical and financial decisions for yourself. Call us today at 775-823-9455 to learn more about how we can help you prepare for your future.
Estate planning can be a very difficult process. While it’s not brain surgery, making the decision to move forward with the planning requires us to face the fact that we will not live forever. This thought can stop many people right in their tracks. Others talk themselves out of seeing a qualified attorney to put together an estate plan based on some of the following common myths:
When we hear about estate planning on the news or read about it on the internet, it is usually in regards to a wealthy businessman or celebrity who made some error, did no planning, or has family members who are angry about the planning that was actually done. The topic catches people’s attention: Rich people have so much that surely they need planning and can afford to have the planning done correctly. By comparison, when the average person thinks about their own property and planning needs, they assume that it is not necessary because they do not have anything close to Bill Gates’ billions.
However, this could not be further from the truth. Estate planning is about more than just the money. While proper planning allows you to determine who gets your money and property upon your death, the planning process also addresses what happens if you become incapacitated and someone has to make decisions on your behalf--a far more likely scenario. If you have not done any planning, the court will have to appoint someone to make your medical and financial decisions for you. This can be very time consuming, expensive, and public. It can also wreak havoc on a family if they disagree about who should be appointed and how decisions should be made.
Even for those of modest means, who gets your hard-earned savings when you die is an important consideration. Without any planning, state law will decide who gets what—and many times, what the government’s best guess as to what you would want is contrary to what you actually want. But, because you did not take the opportunity to formalize your wishes in an estate plan, the state has to step in and do it for you.
For many married couples, it is common to own property or bank accounts jointly. If these assets are owned jointly or as tenants by the entirety, when one spouse dies, then the surviving spouse automatically becomes the sole owner. In most cases, this is the desired outcome for married individuals.
However, this approach can be dangerous. While it is convenient for assets to pass automatically to the surviving spouse, this outright distribution offers no protection. What happens if, after your spouse dies, you get into a car accident and are sued? If the assets you owned jointly automatically became yours alone, this money and property are available to satisfy any judgment that could be entered against you resulting from a lawsuit.
Additionally, what if, after you die, your spouse gets remarried? If the brokerage account you owned jointly becomes your spouse’s only, your spouse is now able to spend it all in any way he or she wants without any consideration for your wishes or the next generation. Your spouse’s new spouse could go out and buy a sports car with the money you intended to pass to your children. With blended families being common today, this is a real concern for many people.
Estate planning does not mean that you have to disinherit your spouse. Rather, it means the two of you can sit down and plan out what happens to your joint property and accounts upon either of your deaths, ensuring that the survivor is provided for and that any remaining money and property are gifted in a way that is agreeable to both of you.
Many people believe that once they have created a will—whether drafted by an experienced attorney, or using a DIY solution or online form— they have avoided probate. Unfortunately, they are wrong.
While a will is a great way to designate a person to wind up your affairs once you have passed, determine who will get your hard earned savings and property, and, if necessary, appoint a guardian to care for your minor children, this document has to be submitted to the probate court to begin the process of distributing your money and property. The level of involvement by the probate court can vary depending on the circumstances, but this process is not private, as the will becomes a matter of public record.
Summary Proceedings: In some states, if the value of your estate (i.e., what you own at your death) is below a certain monetary threshold, then anyone who is entitled to inherit from the decedent can file a petition and have the property distributed outside of the traditional probate proceedings. The filing may require a court appearance and formal legal notice to anyone who might be interested before allowing your property to be distributed.
Affidavit Procedure: Some states allow for an affidavit to be used to collect and distribute a decedent’s money and property. In some states, this affidavit can be self-executed, while others require that the document be filed with the court. Generally, affidavits require the passing of time from the date of a decedent’s death—ranging from a few days to a few months. After that, a “successor” to the decedent (a spouse or heir) signs the affidavit and presents the affidavit to collect the decedent’s assets for distribution to his or her rightful heirs.
Supervised Probate: With this type of proceeding, the probate judge oversees every step of the administration process and has to approve of the Personal Representative’s actions. During a supervised probate, all pleadings and required documents have to be filed with the probate court and then served on interested persons or parties. This can be a very time consuming and expensive process. Each time the Personal Representative has to take an action, a legal pleading has to be filed and served on the interested party, which, in contentious situations, opens up the possibility for disagreements and attorneys’ fees.
Unsupervised Probate: In cases where there are no controversies and the parties all get along, an unsupervised probate administration may be the best option. In this situation, although the administration is not supervised by a court, there are still actions the Personal Representative needs to take, but the Personal Representative may not be required to file petitions and documents for each of those steps. However, a Personal Representative may be required to file some steps, such as the preparation of the inventory, with the court and the interested parties, but no corresponding hearing is scheduled. While this is less complicated and possibly less expensive than a supervised probate, it can still be time consuming and your financial and personal affairs would become a matter of public record.
We are here to help answer any questions you may have about estate planning, the estate planning process, or probate. Together, we can craft a one-of-a-kind plan to ensure that you and your family are properly protected. Give us a call today.