Las Vegas Wills and Trusts Attorneys
Estate planning is the process by which people develop a plan that ensures that the assets they have worked so hard accumulating during their lifetimes are protected and distributed to those they love. Without proper estate planning, the Internal Revenue Service (IRS) stands to inherit a large portion of your assets. Fortunately, it's not too late to write the IRS out of your will. We can help you implement a variety of advanced tax strategies to keep your assets out of the hands of the IRS.
The Las Vegas law firm of Michelle L. Abrams, Ltd, handles a variety of estate planning matters, advising clients how to gain the maximum legal benefits while carrying out individual personal wishes. Contact us online or call 888-636-8370 to speak to an attorney.
Wills
The most widely known and accepted form of estate planning is the "will". A will affords a person the opportunity to dispose of his or her estate upon his or her death in a prescribed, predetermined manner. To properly execute a will in Nevada:
- The person making the will must be at least 18 years of age and competent.
- The will itself must be in writing, signed by the person making the will, witnessed by at least two disinterested persons and signed by those persons as witnesses to the will, in the presence of the person making the will.
Nevada recognizes the use of "holographic wills," which are wills handwritten by the testator, dated and signed by him or her. Nevada is also the only state to recognize the use of "electronic wills."
Dying Without a Will
Failure to make a will does not necessarily negate the distribution of the decedent's estate to his or her heirs. If a person dies without a will, the remaining estate must be probated "intestate." This means that upon conclusion of the estate's probate administration, the remaining assets will be distributed according to Nevada's laws for intestate succession. In other words, the decedent's assets may be distributed in part to a surviving spouse, children, grandchildren or perhaps next of kin. Very rarely will a decedent's estate escheat to the state of Nevada; i.e. the state of Nevada succeeds to any remaining property. Regardless, if a person dies testate (with a will) or intestate (without a will), the estate must be probated to transfer those assets to the decedent's heirs.
Living Trusts
Living trusts and revocable trusts are two of the most common and popular tools used in estate planning. These types of trusts have several advantages over a will. Living trusts can keep assets from being subject to probate. Probate is only necessary when a person dies owning assets titled solely in his or her own name. When that occurs, the only way to transfer the title of that asset to another person is by court order. The person who obtains such an order is known as the executor or administrator for the probate estate.
The Role of a Successor Trustee
When a living trust has been properly drafted and funded, the assets will escape probate and can be transferred to beneficiaries without the assistance of an executor or administrator. However, someone still must transfer the titles of the assets to the beneficiaries. That someone is called a "successor trustee." The successor trustee is very similar to an executor or administrator for a probate estate, except that the successor trustee is not required to administer the trust with court supervision.
Rather, the successor trustee is provided with authority and broad powers to distribute the assets of the trust after a death. During your lifetime, you and your spouse may act as the sole trustees. Following your deaths, you can choose an individual or corporate trustee to serve in your stead and carry out your dispositive wishes.
Living Trusts
In a living trust, you and your spouse never lose control over the assets you place in the trust. You, as the grantor or creator of the trust, can amend, revoke or alter the trust at anytime during your lifetime. This type of control allows you to freely use the assets of your trust, free of interference from anyone. Once you have decided to use a living trust in your estate plan, you should likely transfer all of your assets (with a few exceptions) into the name of the trust so as to ensure that none of the assets would be subject to probate upon your death. As mentioned above, the successor trustee will carry out the duties and responsibilities of the executor or administrator, such as filing tax returns, disbursing assets to the beneficiaries, paying creditor claims, inventorying assets, etc.
Tax Considerations
Living trusts do not eliminate or reduce income taxes. This is so because you maintain complete dominion and control over the assets in your living trust and thus, you are still considered the owner of the assets for income tax purposes. The income you earn on your living trust assets must be reported by you on your individual income tax return during your lifetime. The savings you get by using a living trust include the avoidance of probate expenses and fees, the avoidance of guardianship expenses and fees and the reduction or elimination of federal estate taxes.
Federal Estate Tax Exemptions
In 2001, estates valued over $675,000 were not subject to federal estate taxes. This exemption amount increased to $1 million in 2002, $1.5 million in 2004, $2 million in 2006 and $3.5 million in 2009, according to the Economic Growth and Tax Relief Reconciliation Act of 2001 ("EGTRRA") passed by congress. In 2010, the act provides that the federal estate tax will be repealed. The repeal, however, is only effective for estates of decedents dying in 2010. Estates of decedents dying thereafter will be subject to the Internal Revenue Code of 1986, as if the repeal had never occurred, absent Congressional action to extend the repeal period of the 2001 Act.
Regardless of what the future holds, the existence of the federal estate tax means there are significant estate tax planning opportunities.
There are some post-mortem tax planning strategies to minimize the federal estate tax burden to be realized upon the death of the second spouse, however, careful planning today will allow those strategies to be even more effective for a person with a taxable estate larger than the exemption amount. For a single person, other planning strategies can be used to enhance the exemption amount and maximize tax savings.
Probate Consequences of Living Trusts
Regardless of the size of your estate, one of the primary advantages of using a living trust is to avoid probate. The cost and amount of time to complete estate administration in probate is considerably greater than that of a living trust. Probate, on average, can take four to nine months to complete, thus freezing the assets over this period, which your family may need at this most desperate time.
With respect to persons who own real property in different states, they will have to endure multiple probates of that real property if they fail to implement a living trust. This occurs because real property can only be probated in the jurisdiction in which the land is located. By using a living trust, no probate in any jurisdiction would be necessary since the property would be owned by a trustee at the time of your death, not you individually.
Post-Mortem Asset Management
Successor trustees of living trusts generally have more powers and latitude in managing estates than do personal representatives. In most cases, a personal representative will have to seek court approval to carry out some act he or she believes is in the best interests of the probate estate. This process can be time-consuming and costly to the probate estate.
Living Trusts and Guardianships
Living trusts are excellent tools to eliminate the need to establish a guardianship or conservatorship over an estate. Living trusts can provide standards for determining competency and appoint a person or corporate fiduciary to manage your estate while you are incompetent. Court supervision and continued hearings regarding the accountings of your estate are eliminated since the assets are in your trust and not part of a guardianship or conservatorship estate.
Pour-Over Wills: Do I Need a Will and a Trust?
Many people think that if you have a living trust you don't need a will. This is partly true, and partly false. It is true that you don't need a will if you have a living trust because your successor trustee will distribute your assets without the need for probate and in accordance with your wishes, which are set forth in your trust agreement. However, a will is still necessary. If there is any property subject to probate, your will can direct your executor to probate the property and put it into the living trust for proper management and distribution. This type of will is known as a "pour-over will." Your pour-over will is also important because you can:
- Designate your wishes concerning your burial arrangements
- Designate a guardian for your minor children
- Designate a guardian over your personal needs if you became incapacitated
- Address creditor claims for a particular asset that may not be advantageous to placing in your living trust
Disadvantages of a Living Trust
The up-front cost of implementing a living trust may be more than creating a will. The main costs are in transferring your assets into the living trust. You can accomplish most of these transfers fairly easily with the assistance of your broker, real estate agent, banker or investment advisor. The up-front cost of preparing a trust and drafting the supporting documents is more costly than preparing a simple will. However, with careful estate planning and a thorough analysis of your estate planning goals, tens of thousands of dollars can potentially be saved by using the living trust, thus, making it a sound investment in your future as well as your family's future.
Contact Us
For estate planning assistance in Nevada or Montana, please contact a lawyer at Michelle L. Abrams, Ltd. We provide a free initial consultation, flexible office hours and prompt, attentive service to meet your needs.
Find answers to any estate planning questions at our Probate and Estate FAQ page.
