As estate planning attorneys, we sometimes hear from a client that wants us to provide damage control. The individual does not know where to turn, because their last surviving parent passed away without any estate planning documents in place. There are things that we can do in many cases to mitigate the damage, but this is a tough situation that could have been avoided.
They say that the only two certainties of life are death and taxes. With this in mind, everyone is prepared to file their tax returns on or before the 15th of April. For some unknown reason, many of the same people do not even consider the matter of estate planning. They are avoiding something that is absolutely inevitable, and their family members pay the price in the end.
Studies have been conducted periodically to gauge the estate planning preparedness of adults in the United States. LexisNexis probed into the situation, and they found that 55 percent of Americans do not have wills or any other estate planning documents in place. The figure is lower among older Americans, but still, many people in their 50s and 60s have been totally remiss.
If you pass away without an estate plan, the condition of intestacy will exist. The court will step in to name a personal representative to act as the estate administrator. Subsequently, the final debts will be paid out of the estate’s resources, and the remainder will be distributed in accordance with the intestate succession laws of the state of Nevada.
It is likely that you would not approve of the way your assets are distributed if you die intestate. For example, if you pass away with a surviving spouse and a parent still living, your spouse would not inherit everything. Your surviving spouse would inherit all community property, but just half of your separate property. Everything else would go to your parent.
As you can see, you must put a proper estate plan in place so that your true wishes will be carried out after you are gone. A last will is a possibility, but when you understand the facts, you will see that a revocable living trust is preferable in many ways.
If you use a last will as your vehicle of asset transfer, it would be admitted to probate. The court would be involved, and your loved ones that are named in the will would have to wait out a long, drawn out process. It typically takes about eight months to a year for a simple case to pass through probate, and no inheritances are distributed during this interim.
You probably do not want to see a lot of money go out the window that could have gone into the pockets of your loved one. If you feel this way, you may want to look for an alternative to a last will. Numerous expenses pile up during the probate process, including a court filing fee, the executor’s remuneration, attorney fees, appraisal charges, liquidation expenses including commissions, and incidentals.
These drawbacks are completely avoided if you utilize a revocable living trust as the centerpiece of your estate plan. You can act as the trustee and beneficiary while you are living, and you name successors to assume these roles after you pass away. In the trust declaration, you leave behind instructions to the trustee with regard to the way that you want the assets to be transferred after you are gone.
You have the ability to instruct the trustee to distribute assets incrementally; you are not required to allow for lump sum distributions. This is another advantage that a living trust provides over a last will. To prolong the viability of the trust, you could allow for a certain amount be distributed every month so the principle can continue to earn income and replenishes the trust.
When the time comes, the trustee would follow your instructions and handle all of the estate administration tasks. The process of probate would not be a factor.
If you do not have an estate plan in place, or if your existing estate plan has not been updated in a long time, you should definitely come into our office for a consultation. We will get to know you, gain an understanding of your situation, and make the appropriate recommendations. You can send us a message to request an appointment, and if you like to speak with us over the phone, our number is 775-823-9455.
Often, the smallest things have the most sentimental value. Your grandmother’s silverware or your grandfather’s railroad watch could connect you to them in a special way. Your mother’s ring or your father’s Boyscout bugle could hold a special place in your heart. Your sports memorabilia could connect you to one of your children in a unique way. You may want those items to go to particular beneficiaries who will cherish their sentimental value as you have. There’s an easy and flexible way to do that.
When your will or trust is drafted, it can include a disposition of “tangible personal property” through a list external to the document. Tangible personal property includes things you can touch, like the items listed in the paragraph above. It does not include real estate or intangible assets like bank accounts, cash, etc.
In most (if not all) states, if your will or trust references a tangible personal property list external to the will or trust, the list is valid to transfer the items detailed on that list to the beneficiary identified. The list would reference your will or trust and would provide for the disposition of the specific item of tangible personal property with a description of the item and to whom it should go. The list must be signed and dated every time you update it.
The unique thing about the tangible personal property list is that it does not need to be executed with the formalities of a will or trust. For example, the list does not need to be witnessed or notarized, even though the document referencing the list needed additional formalities. If you change your mind, you can simply update the list and sign it and date it again.
The list is an easy and flexible way to earmark items to your desired beneficiary. The flexibility can be important. Let’s say that you have an athletic daughter and you were leaving all your sports memorabilia to her. Then, your grandson earns an award in a swimming event. You may want to decide to give your diving trophy to your grandson since it’s a way for him to remember the special bond you share. You can simply update the list with the new disposition and sign it and date it.
When you lose a parent, it can be one of the most emotional times of your life. Despite the grief, there will be estate administration matters that must be addressed. If a decedent leaves a Last Will it will be admitted by the Court for a probate process. If the decedent died without a Last Will or living trust the estate will go through a similar probate process. Although each state has slightly different procedures and rules, there are a few common things you should know that may help you understand the process and determine whether your parent’s estate must be probated.
If a Last Will was not found, then the laws of intestacy of the state with jurisdiciton over the estate will be applied. If a Last Will was discovered then the estate will distribute to the beneficiaries identified in the Last Will. The size of the estate and the type of assets involved often impacts what type of probate process is required.
Nevada offers a form of less formal probate know as a set-aside administration for uncomplicated estates valued at less than $100,000. Although a Court hearing is required, this process can usually be accomplished in a matter of weeks.
A more formal probate process will be required those estates with values exceeding $100,000. This process will take months and sometimes years to complete and can cost the estate a significant amount of money. Some assets, such as life insurance proceeds or retirment funds, which already have beneficiaries identified, may not have to pass through probate.
Contact a qualified estate planning and probate attorney to learn more about the probate process.
Most of us assume that anyone worth millions of dollars would certainly go to the trouble of creating a comprehensive estate plan, or at the very minimum a Last Will and Testament. As with many assumptions, that one would be incorrect. A surprising number of the rich and famous have died intestate, or without leaving behind a valid Will, including the following:
Sonny Bono: Best known early on as half of “Sonny and Cher”, Bono later went on to become the mayor of Palm Springs, California and a member of the U.S. House of Representatives before dying in a tragic skiing accident in 1998. Bono did not leave behind a Will. Shortly after his death, his wife and mother became embroiled in a legal battle over Bono’s estate.
Steve McNair: The NFL star was shot and killed by an alleged girlfriend at the age of 36. McNair left behind a family and a fortune, but no Will.
DJ AM: Although this name may only be familiar to those of a certain age group, the famous DJ died of a drug overdose in 2009 without having executed a Will prior to his death.
Howard Hughes: The eccentric billionaire who was worth in the neighborhood of $2.5 billion when he died in 1976 failed to leave behind a Will. Although one was produced after his death, it was later determined to be a forgery. Eventually, 22 cousins inherited Hughes’s fortune.
Pablo Picasso: The famous artist died at the age of 91 leaving behind homes, cash and artwork valued in the millions, but did not leave behind a Will. Six years later, at an estimated cost of $30 million, his estate was settled.
You may not be famous or rich, but if die intestate you leave the problems for the courts and the state to decide. It leaves children unprotected, special people in your life disappointed and causes undue financial expense on the estate.
In many cases, you will know if someone has nominated you as executor in their Last Will and Testament because they will have discussed the appointment with you. Sometimes, however, a person fails to discuss their plans ahead of time, resulting in a surprise telephone call letting you know that you are appointed as the an executor. If this happens, what do you do?
First, don’t panic. A nomination is just that -- a nomination. You are under no legal obligation to accept the position. If you do not feel that you can serve as the executor, or do not want to serve, you may decline the nomination.
If you decide to accept the nomination, there are several basic things that will need to happen afterwards. Unless someone else has already done so, you need to petition the appropriate court to probate the decedent’s estate.
Next, you should marshall and safeguard the estate assets to the best of your ability. Eventually you will also need to thoroughly inventory and value the estate assets.
Finally, if you have not already done so, you should retain professional help. Depending on the size of the estate, you may need the assistance of an attorney as well as other professionals in order to properly administer the estate. Typically, reasonable fees associated with professional services you use in order to probate the estate are paid for out of the estate assets . If you find yourself in ths situation, consult with an estate planning attorney as soon as possible to learn of all your fiduciary obligations.
A comprehensive estate plan that was well prepared will include a funeral plan. By creating a funeral plan you will spare your loved ones additional grief and ensure that your wishes are carried out. Once written down, be sure to leave a copy with the trustee or executor of your estate and your estate planning attorney. Consider including the following information in your funeral plan:
A little advance planning can make a very difficult time for your faily much easier.
The voice behind the famous song I Will Always Love You, was found dead of unknown causes in the bathtub of her hotel room just hours before the Grammy Awards. The untimely death of the 48-year old singer/actress comes after a decade of personal troubles including drug and alcohol addiction as well as the end of her highly publicized relationship with Bobby Brown. Just hours after her death, sales of anything “Whitney Houston” started to soar. The ultimate value of her estate has yet to be determined; however, it is clear that, as has been the case with other artists, her death may cause her popularity, and therefore her wealth, to increase substantially. The death of the once darling of both the screen and the radio reminds us all of how important it is to create an estate plan.
People often make the mistake of thinking that creating an estate plan is not necessary unless you have a substantial estate at the time. What many people don’t realize, however, is that the value of your estate can soar at any time. Unfortunately, as the untimely death of Houston reminds us, death can also strike at any time. The seed you plant today, whether it is an investment, life insurance, law suit or fledgling business, could be worth a small fortune tomorrow. Those “seeds” will become part of your estate upon your death. Even if they are not worth a substantial amount at the time of your death, they may continue to grow after your death. Deciding who will receive those assets, therefore, becomes important. The only way to ensure that your assets will be handled in the manner you intend is to create a comprehensive estate plan today.