Establishing a revocable living trust is a critical step in creating a well-rounded estate plan. Many individuals assume that setting up a trust automatically helps them avoid the complexities of Nevada probate. However, this isn’t always the case. Simply creating a trust is not enough; you must also ensure that your assets are properly transferred to the trust or have appropriate beneficiary designations.
Anderson, Dorn & Rader Ltd. in Reno specializes in Nevada estate planning. This article explores the essential factors that determine whether a living trust will help you avoid probate, what types of assets are subject to probate, and the consequences of not properly funding your trust.
For a revocable living trust to function as intended and bypass probate, it must be fully funded. Funding your trust involves transferring ownership of your assets—such as real estate, bank accounts, and investments—into the trust or naming the trust as a beneficiary.
For example, if you own property, you need to re-title it in the name of your trust. Similarly, financial accounts that you wish to include in the trust must have the trust named as the owner or beneficiary. Without this step, these assets will remain outside of the trust and may be subject to probate proceedings in Nevada.
Failing to properly fund your trust can negate the primary benefit of avoiding probate, leading to potential delays and additional costs for your heirs. Anderson, Dorn & Rader Ltd. can help you ensure all necessary assets are included in your trust.
Not all assets are automatically exempt from probate simply because you have a trust. Probate is required for assets titled solely in your name without a designated beneficiary or joint ownership agreement. Examples include:
Additionally, assets owned as tenants in common with another person will need to go through probate unless explicitly included in your trust or assigned to a beneficiary. A thorough estate plan accounts for these nuances, helping you avoid unexpected probate proceedings.
Certain assets are not subject to probate and will pass directly to beneficiaries upon your death. These include:
It’s important to ensure that beneficiary designations are updated and reflect your current wishes. Anderson, Dorn & Rader Ltd. offers personalized estate planning services to help align your beneficiary designations with your overall trust strategy.
Even with a well-prepared revocable living trust, if your assets are not transferred or titled correctly, they could still end up in probate. This creates additional burdens for your loved ones, who may need to navigate the probate process while managing your estate.
To address this issue, some individuals include a pour-over will in their estate plan. This type of will directs any unfunded assets to be transferred into your trust during probate. However, relying on a pour-over will is not an ideal solution—it still involves going through probate, which can delay the distribution of assets and increase legal fees.
The best approach is to work with estate planning professionals who can help you avoid the pitfalls of unfunded trusts. Anderson, Dorn & Rader Ltd. in Reno provides guidance on properly funding your trust to ensure that your assets are transferred efficiently and according to your wishes.
At Anderson, Dorn & Rader Ltd., we understand that each estate plan is unique. We take a personalized approach to ensure that your revocable living trust is fully funded and aligned with your goals.
Proper planning reduces the risk of probate and ensures that your assets are distributed smoothly to your heirs. Our team will help you review your trust, update beneficiary designations, and transfer assets as needed to avoid probate complications.
If avoiding probate is a priority for your estate plan, setting up a revocable living trust is only the beginning. You must also ensure that your assets are correctly transferred into the trust or designated with appropriate beneficiaries.
Contact Anderson, Dorn & Rader Ltd. in Reno for expert guidance on funding your trust and avoiding probate. Our personalized estate planning services will help ensure your trust operates as intended, protecting your assets and providing peace of mind for you and your loved ones.
You should be aware of the process of probate in Nevada when you are making preparations for the distribution of assets to your loved ones after your passing. When you hear some of the details you may decide that you would like to take steps to avoid probate.
If you have a will, it is filed by the executor and is reviewed by the court to determine its validity. If there is no will, the probate court will follow the "will" found in the statutes of the state where you reside. These are call the laws of intestate succession. During the probate process final debts of the deceased must be reviewed, allowed or challenged and, after approval by the court, paid by the executor out of estate funds.
This can include the payment of taxes, so services of an accountant are often necessary. Certain assets may need appraisals, and this can require the engagement of an appraiser or appraisers.
Because probate is a legal process the executor is also going to need the assistance of a probate lawyer in many cases.
When you add up the fees that will be charged by all these professionals they can be considerable. Further, the executor who is administering the estate is entitled to payment for his or her time and trouble.
One reason to avoid probate is to avoid these costs. Another is to reduce the time spent in administration that increases the wait for distribution to the beneficiaries.
Some people decide they want to avoid probate and they do it by adding a co-owner to property and financial accounts. This is called joint tenancy with right of survivorship.
The idea is that the surviving joint tenant inherits the property in question after the death of the other co-owner, without the need for probate.
There are a number of risks you take if you were to go this route.
Let's say that you make your brother the co-owner of your property. Someone sues your brother. The property you have worked for all of your life is suddenly fair game for the litigant seeking redress.
Another risk you take is that the person you add to your bank account has total access to the funds. Clearly you are going to select someone that you trust, but their creditors also have total access.
These are a couple of things to think about, but there are many other unintended consequences that can result if you use joint tenancy as an estate planning solution.
The creation of a revocable living trust would be a better way to avoid probate. You as the creator of the trust are called the "trustor" or "settlor." While you're living you can act as the trustee and the beneficiary so you have sole control of the assets.
Because the trust is revocable you can dissolve it if you wish, or amend and change the terms at any time. After your passing the trustee you choose to succeed you when you create the trust becomes the trustee. He or she then administers the estate outside of the courtroom and distributes the assets to the beneficiary or beneficiaries in accordance with your expressed wishes.
