The 18th birthday of a disabled child can evoke feelings of apprehension for parents. While some parents may view their children as ready to embrace independence and take charge of their lives, parents of disabled children typically harbor concerns about how their child will navigate life without their oversight. With their child now legally considered an adult, parents may lose the ability to make decisions on their behalf or receive information about their medical or financial needs. This can leave many parents feeling unsure of how to continue caring for their child. However, by preparing thoroughly and seeking professional legal advice, parents can take measures to ensure that their child's needs continue to be met and their best interests remain safeguarded with asset protection you can perform in Reno, NV.
To ensure the ongoing ability to provide care for your disabled child after they reach 18, it is advisable to explore the option of having them execute a financial and/or medical power of attorney. A financial power of attorney will authorize someone chosen by your child to make financial decisions on their behalf in case they become incapacitated or are unable to communicate their wishes. In the absence of this document, you may need to pursue legal avenues to acquire the necessary authority for managing your child's financial affairs. It's important to know that if your child chooses you to make decisions for them, they can still make their own choices if they have the capacity too.
Additionally, your child has the option to execute a medical power of attorney. This will allow them to designate a trusted agent who can make medical decisions on their behalf in situations where they are unable to do so or unable to communicate their preferences to healthcare providers. The agent appointed is chosen to make decisions according to your child's wishes. As long as your child possesses the capacity to make and articulate their own medical decisions, they maintain the right to do so, and the appointed agent would only step in if your child becomes incapable of making or expressing their preferences.
Executing a financial or medical power of attorney requires that your child has the mental capacity to understand and sign the documents, with specific capacity requirements varying by state. Even if your child cannot physically sign the documents, they may still be able to execute them. It's crucial to prepare these documents ahead of time, particularly if your child has a degenerative condition. Not planning ahead can lead to serious problems because the documents are meant to assist your child when they can't make decisions on their own. Until that happens, your child can still make their own choices.
In the event that your child is not able to execute a financial or medical power of attorney due to lack of mental capacity, making decisions on their behalf may require court intervention. This process can be lengthy, costly, and public, causing additional stress and difficulties for both you and your child.
If your child is incapable of executing the required legal documents, you might need to undergo a legal procedure in court to establish guardianship and conservatorship. During this process, you would ask the court to grant you the authority to make decisions on your child’s behalf. The exact titles of the roles you may be seeking appointment for vary by state, but generally a guardian (sometimes known as a guardian of the person or conservator of the person) is authorized to make general life decisions for your child, such as where they live and what medical treatment they receive. A conservator is authorized to make financial decisions on behalf of your child.
If appointed as a guardian or conservator, you would have authority to make all decisions, including power of attorney for medical records, and your child would no longer be able to make any decisions for themselves. In some states, you may have the option to seek a limited or partial guardianship or conservatorship, where you can only make decisions specified by a court order. In all other matters, your child retains the right to make their own decisions. The court's overall objective is to promote independence while ensuring that your child receives the necessary support and care.
Get in touch with us today if you are wanting to be prepared for your child with disabilities to approach the age of 18. It's important to plan ahead so that your child gets the same care they had going up well into their adult life. This includes addressing the power of attorney for medical records. Our team is available to provide support and guidance as you navigate through the essential steps.
As individuals embark on the journey of estate planning, they find themselves engaged in a delicate balancing act. Their objective is to strike a harmonious equilibrium between minimizing income and estate taxes, safeguarding their assets from potential creditors, and ensuring that their loved ones receive the utmost benefit. To achieve this equilibrium, it is necessary to explore the available legal and financial instruments that can bring their estate plan to fruition.
One crucial consideration when creating an estate plan is the reduction of income and estate taxes. These taxes can significantly diminish the amount of wealth and property received by beneficiaries. To minimize estate taxes, various strategies can be employed, such as gifting assets to loved ones or establishing trusts on their behalf. Additionally, leveraging tax-advantaged investment accounts can be an effective means of reducing income taxes. The optimal approach will depend on an individual's unique financial circumstances and the desired outcomes of their estate plan.
For those seeking to reduce the amount of money and property subject to estate tax, making gifts during their lifetime can prove advantageous. The current annual gift tax exclusion for 2023 allows for $17,000 per recipient ($34,000 for married couples making joint gifts), and individuals can give away up to a total of $12.92 million during their lifetime without triggering federal estate tax. By transferring accounts and property, the income tax burden can also be shifted to recipients who may find themselves in lower tax brackets, resulting in reduced tax liabilities on generated income. However, it is important to consider the potential capital gains tax implications for recipients if the value of the assets appreciates significantly. Additionally, once assets are transferred, individuals lose control over how the money is spent or how the property is utilized, and the assets may become vulnerable to the creditors or divorcing spouses of their loved ones.
Creating trusts is another avenue for tax savings. Trusts serve as legal entities that can hold and manage accounts and property on behalf of beneficiaries. By utilizing irrevocable trusts, income taxes on the trust's generated income can be paid by the trust itself as a separate entity, thereby allowing the trust's accounts and property to grow free from estate taxes for the beneficiaries. However, establishing such trusts may necessitate the use of annual gift tax exclusions or lifetime gift and estate tax exclusions. Certain types of irrevocable trusts can also provide asset protection, as the transferred accounts and property are considered separate entities. Nonetheless, relinquishing control over the trust becomes a requirement going forward.
Optimizing tax savings can also be achieved through the utilization of tax-advantaged investment accounts like IRAs and 401(k)s. These accounts offer opportunities to defer taxes on contributions and investment earnings until retirement, potentially resulting in a lower tax bracket during distribution. Roth IRAs and Roth 401(k)s provide an alternative by allowing after-tax contributions and tax-free withdrawals of earnings. By thoughtfully considering and utilizing these diverse investment accounts, individuals can potentially maximize tax savings and increase the overall value of their estate.
In addition to tax considerations, it is crucial to contemplate protecting assets from potential creditors when developing an estate plan. Insufficient asset protection measures may expose accounts and property to seizure for debt repayment or legal judgments against individuals or their beneficiaries.
One way to safeguard your accounts and property from creditors, including potential Nevada estate tax implications, is by establishing a trust with specific provisions. Trusts can be structured to create a level of separation between your assets and any potential creditors. For example, if your loved ones have a history of overspending or face potential creditors, incorporating a spendthrift trust into a revocable or irrevocable trust can be beneficial. This type of trust restricts beneficiary access to the trust's accounts and property, making it more difficult for creditors to seize them.
However, it's important to note that a spendthrift provision alone does not offer adequate protection from creditors. To further enhance creditor protection, a discretionary trust can be utilized. In a discretionary trust, the trustee has the discretion to determine when and how to distribute money and property to the beneficiary, thereby preventing distributions vulnerable to seizure by creditors. The choice of trustee is crucial for the level of creditor protection. An independent trustee, not related to or subservient to the beneficiary, is ideal. A well-drafted discretionary trust limits the beneficiary's access to the trust's accounts, property, and income. If the trust retains the income generated by its assets and doesn't distribute it to the beneficiary, the income may be taxed at the trust's income tax rate, unless the trust is structured in a way that holds the trustmaker responsible for the tax liability. Both provisions can be incorporated into either a revocable or irrevocable trust.
It's worth noting that different tax rules apply to trusts and individuals when it comes to income tax. Individuals are subject to a graduated tax system, with tax rates increasing as income rises. For the tax year 2023, individuals face a maximum marginal tax rate of 37 percent, which is applicable to income surpassing $523,600 for individuals and $628,300 for married couples filing jointly. Conversely, trusts are governed by a compressed tax bracket system, where any income over $13,451 is subject to the top marginal tax rate of 37 percent. Consequently, trusts may face a higher tax rate on the same amount of income compared to individuals in similar tax brackets.
For individuals aiming to safeguard their accounts and property from their own creditors, specific types of irrevocable trusts should be considered. As previously discussed, an irrevocable trust entails surrendering control over the assets held within it, potentially resulting in a higher tax liability on the trust's income if it remains undistributed to beneficiaries or lacks a structure to hold the trustmaker responsible for the income tax obligation.
While saving on taxes and protecting assets from creditors are vital aspects of estate planning, giving beneficiaries maximum access to their inheritance is also important. This is particularly relevant if you want to support their needs and provide flexibility in how they utilize their inheritance. To achieve this, you can structure your estate plan in a way that allows unhindered distributions to beneficiaries. Options include creating a revocable living trust with lenient distribution instructions or outright giving assets to beneficiaries during your lifetime or at your death. However, providing unrestricted access to inheritance carries certain risks. Beneficiaries might be tempted to spend the money unwisely or mishandle the property, potentially making them targets for fraud or manipulation. Moreover, this approach may expose them to creditors and legal claims like divorce. Thus, it's crucial to carefully consider the advantages and disadvantages of granting maximum access to beneficiaries and implement safeguards to mitigate potential risks.
Estate planning requires a thoughtful balance of various factors and interests. Evaluating your goals and priorities and determining the most suitable approach is essential. We are dedicated to assisting you throughout this intricate process, guaranteeing that you achieve the desired equilibrium. Contact us today to begin or review your estate plan, taking into account Nevada estate tax.
When it comes to estate planning and legacy planning, most individuals focus on passing down their assets to their children and heirs. However, for those seeking to establish a legacy that will endure for generations, the concept of a dynasty trust becomes particularly intriguing.
A dynasty trust, an integral part of estate planning, is an irrevocable trust that offers similar tax advantages and asset protection as other trust types, but with a remarkable distinction—it can span multiple generations. Often referred to as perpetual trusts, dynasty trusts are meticulously designed to last indefinitely, as long as the trust's assets remain intact. Given the long-term nature of a dynasty trust, it is imperative to establish it with utmost care and attention to detail. Once the trust is in place, its rules generally cannot be altered, underscoring the importance of getting everything right from the beginning.
Setting up a dynasty trust follows a process akin to that of any other trust. The grantor, who serves as the trust's creator, transfers funds and assets into the trust during their lifetime or, in the case of a testamentary dynasty trust, after their death. Once the trust is funded, it becomes irrevocable, and the rules established by the grantor become fixed. Modifying these rules is only possible under specific state laws that govern trust modifications.
When establishing a dynasty trust, thoughtful consideration must be given to selecting the most suitable trustee. It is common practice to appoint an independent trustee, such as a bank or trust company, to administer the trust throughout its existence. Although a beneficiary can serve as a trustee, this approach may give rise to potential issues concerning taxes and creditor protection. A beneficiary-controlled trust can have significant implications for income and estate taxes, depending on the extent of the beneficiary's powers. It can also impact the level of asset protection provided to the beneficiary and expose family wealth to the risk of misappropriation. On the other hand, a corporate trustee, such as the dynasty trust itself, possesses indefinite legal life and can ensure uninterrupted administration across generations. Corporate trustees typically charge an annual fee based on the value of assets held in the trust.
While trusts are generally beneficial for individuals across various financial backgrounds, there are exceptions, and the dynasty trust is one of them. Establishing a dynasty trust does not necessitate grand dynastic aspirations akin to illustrious families like the Medici or the House of Windsor. However, it is most commonly utilized by families with substantial wealth. While there are no legal requirements regarding the minimum amount of funds needed to establish a dynasty trust, from a practical perspective, it is typically suitable for those with sufficient wealth and assets capable of sustaining multiple generations, taking into account the financial needs and responsibilities of the beneficiaries. Grantors who are concerned about future generations beyond their children often opt for dynasty trusts as part of their estate and legacy planning. Additionally, dynasty trusts can prove invaluable for families that own a family business and desire to maintain its continuity within the family lineage.
Statistics reveal that many family businesses fail to survive beyond the second or third generation, but a dynasty trust can significantly enhance the chances of success. By placing shares of the business into the trust, the grantor can provide for multiple generations of beneficiaries while ensuring the seamless continuation of business operations through professional trustee management. The trustee assumes responsibility for managing the business affairs and maintaining continuity, while the beneficiaries reap financial benefits. Furthermore, the grantor can include specific terms within the trust to guarantee competent business management, such as mandating the trustee to establish an advisory council functioning as a board of directors.
In the realm of estate planning and legacy planning, one of the notable advantages of establishing a dynasty trust is the potential for significant tax benefits. By leveraging the federal estate tax exemption amount (which currently stands at $12.06 million per individual in 2022, or twice that amount for couples) to fund a dynasty trust, you can effectively transfer money and property directly to your grandchildren while avoiding gift or generation-skipping transfer (GST) taxes. To achieve this, you would place accounts and property into the trust and file a gift tax return to allocate appropriate tax exemptions to the trust or pay a portion of the wealth transfer tax. This strategic approach ensures that these assets are not included in your taxable estate, nor in the taxable estates of your beneficiaries, provided that the trust is fully exempt from GST tax.
Furthermore, utilizing trust funds to cover a beneficiary's living expenses or investing in a home for their benefit can also help reduce their taxable estate. Additionally, when a dynasty trust is properly drafted, accounts and property left to your loved ones within the trust can enjoy protection from creditors and divorce courts. In contrast, gifting money outright may not offer these same protective benefits.
It is worth noting that dynasty trusts are not available in every state due to the rule against perpetuities, a common law principle that restricts the duration of controlled property interests, including those established within trusts. This rule, which was not specifically created for trusts, aims to prevent individuals from exerting control over property ownership for an extended period after their demise through legal instruments like deeds and trusts. However, many states have modified or even eliminated this rule, as its interpretation can be complex. With the guidance of an experienced estate planning attorney, you may be able to establish a trust in a state where you do not reside, taking advantage of more favorable laws.
If you are considering the establishment of a dynasty trust, our firm can connect you with a skilled estate planning attorney who can guide you through the process. During your consultation, crucial factors such as selecting a trustee and beneficiaries, implementing tax and creditor protection strategies, understanding state laws pertaining to perpetual trusts, and aligning the dynasty trust with your comprehensive estate plan will be thoroughly discussed. Taking this initial step will enable you to secure your legacy and ensure the preservation of your wealth for future generations. To embark on this journey, please reach out to us, and we will be delighted to assist you.
May marks not only the end of the academic year and the start of summer, but it also marks the beginning of the busiest season for moving - National Moving Month! When you're moving, there are numerous tasks to tackle, including packing your belongings, managing utilities, forwarding mail, updating voter registration, and more. As you prepare for your next move, there are two major tasks to take into consideration:
In all of the chaos of moving boxes and packing tape, it is easy for things to get lost in the shuffle or even thrown out during a move. Certain important documents, such as birth certificates, social security cards, passports, financial statements and estate planning documents, should not be packed up and put on the moving truck along with your less important belongings. Keep these important documents safe and accessible during your move and ensure that they do not get thrown out by accident.
One idea is to purchase a portable file box with an attached lid and a secure latch. You might consider purchasing a brightly colored one so that it is easily identifiable. Then, place this file box in a secure and easily accessible location. If you are moving locally, a logical place might be at a family member’s or friend’s home. If you are moving a longer distance, that place might be the trunk of your car.
Having electronic backup copies of your important documents is a wise decision, especially during a move. You can take pictures of your documents and save them on your smartphone or a password-protected removable flash or external hard drive. Another option would be to store it in the cloud. This way, you'll always have a copy of these important documents in case you cannot locate the original.
Adding this step to your moving checklist can save you time and from stress. For example, you will not have to run around searching through unpacked boxes for your children's birth certificates to register them for their new school.
When moving, it's important to not only contact the moving company, but also to reach out to your team of advisors. A major consideration is the cost associated with the move, which is influenced by factors like the size of your home, the distance of the move, and your preference for do-it-yourself tasks. To ensure your moving expenses align with your long-term financial objectives, it's advisable to consult your financial advisor and establish a moving budget.
It is recommended to contact your estate planning attorney if you are moving different states. While a will or trust created in one state should generally be valid in another, certain documents such as a financial or medical power of attorney may be state-specific. Due to the variations in estate planning laws across different states, it is strongly advised that you have your estate planning documents examined to ensure their effectiveness in your new state. You can have your attorney review the documents or they can assist you in finding a local attorney who can review them for you in your new state.
If you and your spouse are moving out of or into a community property state, your estate planning may be more complicated. In these states, any property acquired during the marriage is presumed to be owned equally by both spouses, while property brought into the marriage by one spouse or acquired by gift or inheritance is separate property. Moving from a community property state to a common law state or vice versa raises questions about the status of community property. For instance, if a couple purchases a home in California during their marriage and then moves to Nebraska and buys a new home with the proceeds from selling their California home, is the new Nebraska home community property? Your estate planning attorney can answer these questions and help you take necessary steps to maintain any tax benefits.
Moving involves many things to consider, but don't forget to keep your important documents secure and meet with your team of advisers. These are crucial items to add to your moving checklist. If you're planning to move soon, we would be more than happy to help you keep this as smooth as possible.
Every child is a precious gift, and as parents or grandparents, we strive to plan for their future, anticipating their needs and aspirations. However, families with special needs children or grandchildren face additional responsibilities in ensuring their loved one's future is secure, fulfilling, and supported. To ensure a flourishing future for your special needs child or grandchild, estate planning measures focused on their unique circumstances are essential. We recommend the following steps:
When it comes to estate planning, creating a Special or Supplemental Needs Trust (SNT) for your special needs child or grandchild should be a top priority. An SNT is a specialized trust designed to set aside funds and assets for the benefit of a beneficiary who may qualify for public assistance due to their disabilities. It can be established as a standalone trust or added to your existing trust.
It's important to note that government programs providing aid to disabled individuals have strict criteria regarding the amount of money and property a person can own while receiving benefits. Structuring any inheritance your special needs beneficiary may receive in a way that doesn't disqualify them from obtaining government benefits is crucial. Even if they are not currently receiving government benefits, considering the possibility of future needs is essential. To ensure all opportunities are available, it is vital that the trust is meticulously drafted by a lawyer well-versed in the eligibility requirements for government benefits.
An SNT not only provides financial security but also allows you to appoint a care manager or advisory committee. The care manager serves as an advocate for your special needs beneficiary, overseeing their well-being periodically or daily, depending on their level of care requirements. An advisory committee, comprising family members, friends, and professionals, can provide guidance to the trustee on the beneficiary's needs and the best use of the funds.
Additionally, the SNT can include a statement of intent, outlining the trust's purpose and how the funds should be utilized. This section acts as a safety net in case changes in the law make the beneficiary ineligible for government benefits. It allows for modifications to ensure your original intentions are met, even in the face of unforeseen circumstances.
In addition to establishing an SNT, putting your instructions in writing is crucial to ensure your wishes are carried out as intended. Consider creating a letter or memorandum of intent that provides guidance to your trustee on managing the trust after your passing. Although not legally binding, this document offers valuable insights into your true intentions. You can include details on how the funds should be used in accordance with government rules, specific goals you would like the beneficiary to achieve, and the standard of living you envision for them.
Supporting a special needs child or grandchild can be financially demanding, and it's important to consider how to sustain their care once you pass away. Life insurance can be a valuable tool in ensuring there will be sufficient funds for the trustee to use for their benefit. By designating the SNT as the beneficiary, you can provide a lump sum payment that is not subject to the same tax liabilities as retirement accounts.
The SECURE Act has brought changes to how beneficiaries can receive distributions from inherited IRAs, potentially impacting the financial support available to your special needs beneficiary. However, the Act also recognizes "eligible designated beneficiaries," including individuals with disabilities, who can still receive distributions over their life expectancies. Congress has established rules that allow the life expectancy of disabled beneficiaries to be used for certain types of trusts. If you have a substantial retirement account, it is crucial to discuss your distribution options to maximize benefits for all your beneficiaries.
We understand that securing a bright future for your special needs child or grandchild is of utmost importance to you. Our priority is to work with you in developing a comprehensive plan that will guarantee continued care and well-being for your loved ones. Please do not hesitate to reach out to us to schedule an appointment so that we can begin this process together.
When Elvis Presley, the King of Rock and Roll, passed away in 1977, he left behind a complicated legacy, just like his famous dance moves. His estate, including the iconic Graceland, eventually ended up in the hands of his only child, Lisa Marie Presley. However, the future of Elvis's legacy and the fate of his estate face challenges ahead. These challenges involve Lisa Marie's personal financial issues, a significant age gap among her children, and even a legal dispute initiated by her mother, Priscilla Presley. The unfolding of this captivating saga will determine the course of Elvis's rockin' legacy.
From Elvis to Lisa Marie: Inheritance and Financial Legacy
Lisa Marie, born in 1968 to the legendary rock and roll icon Elvis Presley and his wife Priscilla Presley, had to face the tragic loss of her father at a young age. Sadly, Elvis passed away at forty-two due to a heart attack. Fast forward to January 2023, and Lisa Marie herself succumbed to heart problems at the age of fifty-four.
Despite Elvis's untimely departure, his legacy has continued to thrive, with his estate earning an impressive $400 million in the previous year alone. The value of the estate skyrocketed to over $1 billion, thanks in part to the 2022 Elvis biopic movie. This created a substantial financial legacy for Lisa Marie to inherit.
The Elvis Presley Trust
When Elvis Presley passed away, his estate was placed in a trust with Lisa Marie, his grandmother, and his father as beneficiaries. According to the trust, Lisa Marie's inheritance was held in trust until she turned twenty-five in February 1993. After that, the trust dissolved automatically, and Lisa Marie inherited $100 million, including Graceland, her childhood home.
Today, Graceland stands as a museum and popular tourist attraction, generating over $10 million annually. To manage Graceland and the rest of Elvis's estate, which includes Elvis Presley Enterprises, Inc. (EPE), Lisa Marie established the Elvis Presley Trust. Until 2005, Lisa Marie served as the owner and chairperson of EPE's board, but she later sold 85 percent of its assets.
Graceland and the Living Trust
Graceland, the iconic mansion that was once Elvis Presley's residence, has become a symbol of his legacy and a beloved tourist destination. After Lisa Marie inherited it, she made it clear that Graceland would always remain within the family.
Lisa Marie's children, Riley Keough, Harper Lockwood, and Finley Lockwood, are set to inherit her fortune and properties through a living trust. However, Lisa Marie's son, Benjamin Keough, tragically passed away in 2020.
Considering that it's unclear whether Lisa Marie had a separate will in place, the living trust, an estate planning document, will play a significant role in determining the distribution of her assets. Through the living trust, individuals can transfer ownership of accounts and property to a separate entity, the trust, which they control while alive. The trust also names a successor trustee to manage the accounts and property after their passing.
Priscilla Presley's Trust Challenge
A challenge to Lisa Marie's living trust has emerged from an unexpected source—her own mother, Priscilla Presley. The legal dispute revolves around a 2016 amendment to the trust, which removed Priscilla and a former business manager as trustees and replaced them with Lisa Marie's daughter, Riley Keough, and her late son, Benjamin Keough.
Navigating the Challenges: Estate Planning and Protecting Your Legacy
Priscilla's claim challenges the validity of the living trust amendment, citing violations of legal requirements. She highlights the lack of proper notification, absence of witnesses or notarization, and even a misspelling of her name in the document. Adding to her concerns, Priscilla alleges that her daughter's signature appears suspiciously different from her usual signature. Consequently, she has sought the court's intervention to invalidate the amendment that removed her as the trustee.
Lisa Marie's Financial Struggles
Recent legal documents indicate that Lisa Marie faced financial challenges before her passing, despite inheriting $100 million at the age of twenty-five. She held approximately $95,000 in cash and possessed various assets such as bonds and stocks valued at $715,000. Although she earned over $100,000 per month from EPE, she also carried a $1 million tax debt and incurred monthly expenses of $92,000. Furthermore, her ex-husband, Michael Lockwood, reopened a lawsuit seeking $4,600 per month in child support.
By 2016, Lisa Marie's $100 million trust had significantly dwindled to just $14,000 in cash. Her former manager, Barry Siegel, faced allegations of mismanaging her finances, which resulted in a decline of her wealth. Court records reveal that Lisa Marie was burdened with a $16.67 million debt at that time. However, in 2019, Siegel countered the claims and asserted that the sale of her 85 percent stake in EPE helped resolve over $20 million in debts.
Potential Legal Challenges for the Lisa Marie Presley Estate
The legal ambiguity surrounding Lisa Marie's estate gives rise to numerous potential legal issues that will likely require judicial resolution. One such challenge is Priscilla's claim against the living trust amendment. If her challenge is successful, the amendment would be considered void, making Priscilla the successor trustee responsible for managing the trust's assets and funds instead of Lisa Marie's daughter, Riley. This matter would necessitate court intervention for resolution.
Creditor Claims
Although it remains uncertain whether Lisa Marie had outstanding debts, if she did, creditors could make claims against her estate. The estate would need to determine whether to accept or reject these claims. Rejecting them could lead to legal disputes. Creditors hold priority over beneficiaries, which means that Lisa Marie's accounts and property, including Graceland, might need to be sold to satisfy any outstanding debts. Additionally, even after the debts are settled, the estate may still be subject to estate taxes, which could further complicate matters if creditors decide to initiate lawsuits.
Her Daughters' Inheritance
Assuming the estate possesses sufficient funds to settle debts without selling Graceland, Lisa Marie's three daughters, Riley, Harper, and Finley, are poised to inherit the mansion and any remaining property or funds. However, the upkeep and tax costs associated with Graceland surpass $500,000 annually. It remains uncertain whether the daughters would collectively agree to bear these expenses and preserve the Elvis legacy within the family.
The daughters have the option to sell Graceland, but this decision could ignite internal conflicts if even one daughter wishes to pursue a sale. Additionally, crucial details regarding the ages of the daughters and their inheritances remain unknown. Did Lisa Marie establish a trust to hold her twin daughters' inheritances until they reach a specific age, as her father did for her? Or does the trustee possess discretionary power over the funds? Moreover, depending on the outcome of the trust challenge, will the trustee ultimately be Riley or Priscilla?
Furthermore, the question of whether Lisa Marie distributed her estate equally among her daughters remains unclear, as there is no legal requirement for equal distribution.
Control What You Can with an Estate Plan
The sudden and tragic passing of Lisa Marie Presley serves as a reminder that death can come unexpectedly. However, through estate planning, we can exert some control over our legacy.
Crafting a comprehensive estate plan can help alleviate some of the uncertainty and provide peace of mind to both ourselves and our loved ones. If you're ready to start planning for the future, please reach out to our office to schedule a consultation.
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.
SPEAK WITH AN ESTATE PLANNING ATTORNEY
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.
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.
SPEAK WITH AN ESTATE PLANNING ATTORNEY
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)
https://ortizgosalialaw.com/newsletters/client-focused-newsletter/how-to-responsibly-leave-an-inheritance-to-your-grandchildren/
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),
https://www.npr.org/sections/coronavirus-live-updates/2021/03/09/974841565/heres-whats-in-the- american-rescue-plan-as-it-heads-toward-final-passage
4 Fact Sheet: The American Families Plan, The White House (Apr. 28, 2021),
https://www.whitehouse.gov/briefing-room/statements-releases/2021/04/28/fact-sheet-the-american- families-plan/
5 Blank Rome, LLP, Estate Planning in 2021 and Beyond: The Possible Impact of Democratic Control in
Washington, JD Supra (Mar. 9, 2021)
https://www.jdsupra.com/legalnews/estate-planning-in-2021-and- beyond-the-6514827/
6 See Fact Sheet: The American Families Plan, The White House 14 (Apr. 28, 2021)
https://www.whitehouse.gov/wp-content/uploads/2021/04/American-Families-Plan-Fact-Sheet-FINAL.pdf
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
H. L. Mencken once said, "For every complex problem there is an answer that is clear, simple and wrong." In our quest for a simple solution to avoid probate, you may hear someone make a suggestion that makes some sense on the surface. But when it comes to estate planning you have to ask yourself why informed people don't take this layperson's advice.
There are those who like to think that the powers that be make things more difficult than they need to be, and perhaps there are cases when this is actually true. However, don't buy into overly simplistic assumptions regarding the transfer of assets to your loved ones after you pass away.
One idea that circulates is the notion that you can simply add someone's name to your bank accounts and tell this individual how you want your resources divided among your heirs after you pass away.
We will just assume for a minute that there is absolutely no chance that this individual that you choose will decide to do anything with the resources of which you would not approve either while you are living or after you pass away. (But of course in reality anything is possible.)
What if this perfectly trustworthy individual was to get into financial trouble or become the target of a lawsuit? As a joint account holder the funds that are in the account are the property of this person and they are subject to attachment. If that person dies before carrying out your wishes, their estate plan (or the government's plan) will determine where your assets will go.
Elder financial abuse has become a big problem in the United States today. Senior citizens are scammed out of billions of dollars annually. What if your co-account holder was to become a victim of financial abuse? You could wake up one morning and find the cupboard bare and there would little you could do about it.
Don't take chances with your financial assets. Perhaps it is time to engage the services of a licensed estate planning attorney who will assist you as you arrange for future asset transfers in a safe and effective manner.
It can be quite an exciting and challenging adventure to go into business for yourself. As we all know the majority of start-ups do not succeed in the long run so you have to defy the odds to gain traction and become successful.
Because of the demands involved in starting up a business how you will be exit the business may not be the first thing on your mind. However, once you know that you are in fact going to be in it for the long haul you should ask yourself how you or your estate will proceed when it is time to retire or after you pass away.
The way you approach this is going to vary depending on the type of business you are in. Some businesses are owner driven, such as professional practices and they are not really viable after the exit of the owner. Other businesses will continue to operate after the owner steps away. Some plan on handing the business off to the next generation. Others intend to sell the business to finance their retirement years. Partners in small businesses have yet a different set of circumstances to address.
The best way to explore your options and ultimately devise an exit strategy is to sit down with an experienced Reno NV estate planning attorney. Your lawyer will gain an understanding of your unique situation, listen as you explain your objectives, and give you the appropriate advice.
