In the world of estate planning, Dynasty Trusts have become increasingly popular due to their ability to bypass estate taxes and shield assets from creditors across many generations. Not all states are created equal when it comes to the laws governing these trusts. Alaska, Delaware, Nevada, and South Dakota have emerged as leaders in attracting out-of-state Dynasty Trusts, thanks to their favorable laws.
A Dynasty Trust is a robust irrevocable trust crafted to last through several generations. It's designed not only to preserve family wealth but also to offer protection from creditors, divorce settlements, and bankruptcy. These trusts often empower the primary beneficiary with significant control over the trust assets, mimicking outright ownership but without the associated risks.
Alaska allows trusts to potentially last up to 1,000 years and offers strong protections against creditors, including protection from claims by divorcing spouses.
Delaware is known for its perpetual trusts for personal property, though real property trusts are capped at 110 years. It has unique decanting laws that allow for flexibility in trust management but requires careful drafting to avoid issues with divorcing spouse claims.
Nevada boasts a 365-year limit on trust duration and is noted for its lack of state income tax on trusts, robust spendthrift provisions, and flexible decanting rules that enhance creditor protection.
South Dakota allows for perpetual trusts and has advantageous decanting and creditor protection laws, making it a strong contender for setting up a Dynasty Trust.
Decanting Laws Across States
Decanting is a process that allows trustees to transfer assets from one trust to another—a useful feature that can adapt a trust to changing laws or family circumstances. Among the four states, Delaware, Nevada, and South Dakota offer more flexibility in decanting practices compared to Alaska, providing significant strategic advantages in long-term trust management.
While Alaska, Delaware, Nevada, and South Dakota are top choices, other states like Tennessee, Ohio, and Wyoming also offer strong Dynasty Trust provisions. Selecting the right jurisdiction depends on specific trust goals, the location of trust assets, and the residence of beneficiaries. Working with knowledgeable estate attorneys in the chosen state can ensure that the trust is set up to maximize benefits.
For those considering a Dynasty Trust, these states offer compelling reasons to look beyond your home state. With their strong legal frameworks for long-term asset protection and tax benefits, they present golden opportunities for securing family wealth across generations.
Death is a delicate subject, but can be made simpler with proper planning. In the best case scenario, all paperwork and assets associated with a passing loved one is prepared with the utmost detail prior to death, allowing friends and relatives to fondly remember the deceased and take time to grieve.
Anderson, Dorn & Rader, and the estate planning business as a whole, aims to simplify the legal processes surrounding death so legacies can be transferred to surviving loved ones in a fair, stress-free manner. To accomplish this, savvy individuals will often take measures to ensure they don’t burden their surviving relatives with undue complications like the probate process.
Several tools are available through qualified attorneys to keep your property and monetary assets out of probate. Among these, establishing co-ownership of bank accounts and home titles, as well as lining up beneficiaries on investment and insurance accounts are great to start with. But a revocable living trust is one of the most favored comprehensive options that an individual can set up to avoid probate. Let’s check it out:
A trust is a fiduciary arrangement that grants a third party, or trustee, the legal permission to hold and manage assets on behalf of a beneficiary or beneficiaries. A living trust is enacted while an individual is still alive, rather than upon death. Arrangements can be made to grant you oversight duties on your own living trust until you become incapable of soundly managing your assets, or pass away. Upon your incapacitation or passing, the successor trustee assumes responsibility over the assets in the trust and manages them on behalf of all involved beneficiaries.
The Probate process involves transferring ownership of all monetary assets and property that haven’t been assigned to beneficiaries, or don’t contain a pay-on-death or transfer-on-death designation upon your passing. Often times with probate, the court gets involved, and the long-winded process to account for the assets ensues.
With a trust, your assets are ready to be transferred to your beneficiaries upon your death, if they haven’t already been transferred to the trust while you’re still alive. This puts probate out of the question, as your assets are all accounted for and can be distributed in a timely manner.
Even better, trusts can incorporate pretty much any category of asset: from real estate, to stock holdings, to bank accounts, to family heirlooms. This keeps your legacy from being administered through the probate court, ensuring everything you worked for ends up in the hands of the individuals you deem as successors. Not only does this eliminate costly court costs, but it keeps your records out of the public’s eye and enables beneficiaries to remember the deceased and carry on the good fortune of the trust without running into road blocks.
The language and investment surrounding the establishment of a trust can be daunting, often prompting individuals to delay the process or put it off entirely. But to plan without a doubt where your assets will end up, and with whom, it’s vital to create a trust. It’s peace of mind for both you and your loved ones when you pass.
Planning the details around your death is sometimes a difficult topic to breach, but can be made simpler with the help of your family and knowledgeable attorneys like Anderson Dorn & Rader. While you are ultimately at the helm when it comes to important decisions, our estate planning group truly cares about maximizing the legacy you will leave to your loved ones. For any questions about how to start the trust formation process, please give us a call or fill out our contact form. We look forward to bringing you and your family peace of mind.
When a loved one suffers from a mental illness, one small comfort can be knowing that your trust can take care of them through thick and thin. There are some ways this can happen, ranging from the funding of various types of treatment to providing structure and support during his or her times of greatest need.
Let’s explore a few ways you can help take care of a loved one struggling with mental illness with the help of your estate planning attorney:
Trusts can be disbursed in many ways. If your loved one is involved in an inpatient care facility or an ongoing outpatient program, you can structure your trust so that its disbursements cover the costs of that treatment as time goes on. This also helps your loved one because it relieves them of the responsibility of managing large sums of money on their own. They can rest easier knowing that their care is covered without having to set up a complicated payment plan on their own.
In some cases, the person suffering from mental illness doesn’t have the capacity to enroll themselves in the right type of care. If an intervention of care is needed, your trust can also help encourage involuntary treatment that ultimately serves your loved one’s best interests in the long run.
Selecting a trustee isn’t always an easy feat. That’s one of many decision-making areas where we’re more than happy to step in and walk you through the process. When you have a loved one battling mental illness, your choice of a trustee becomes even more of a nuanced decision.
We’ll help you deduce the perfect person to not only manage the wealth contained within the trust but also keep a compassionate watchful eye on your loved one benefitting from the trust. An astute trustee can look for early warning signs surrounding your loved one’s mental health issue and make sure to get them connected to the care and services they need in no time.
Most people don’t think of large inheritances as a burden. But this can be the case when an individual is dealing with depression, anxiety, hoarding, or diseases like schizophrenia. Lifetime trusts are an excellent way to take care of your loved one without saddling them with a challenge on top of what they are already experiencing.
A discretionary lifetime trust can be drafted in such a way that its funds can only be used to go toward certain goods and services — such as outpatient mental health care, housing, or other “necessaries” of life. Likewise, it can also prohibit spending in areas that would cause more harm than good — gambling or compulsive shopping, for example. The discretionary nature of these types of trusts makes it so your loved one doesn’t have to worry about their own potential missteps when it comes to using the wealth contained within the trust.
Do you have a family member or other loved one who could use the financial flexibility and structural support of a trust? Give us a call today, and together we’ll figure out the best ways to enhance your loved one’s life by finding the right estate planning tools to offer the most help.
With roughly 40 percent of U.S. adults suffering from a mental illness, it’s time to remove the stigma surrounding the topic. With greater awareness, there is greater opportunity to ensure that those affected by mental illness receive the help or treatment that they need, not just now, but in the future as well. Estate planning for someone with a mental illness will give you peace of mind that your loved one will be well taken care of in any unforeseen event.
The odds that you or somebody in your family is living with a mental health condition are 2 in 5. Rather than dismiss these issues because they are uncomfortable, we recommend being proactive about these challenges so that you’re prepared for whatever life brings your way. The best way to do this is with the help of an incapacity and estate planning attorney who will be able to draft a trust that covers all your bases.
Nearly 50 Million Americans Suffer from Mental Illness
Saying that America is dealing with a mental health crisis is not an exaggeration. According to the National Alliance on Mental Illness, approximately 40 percent of US adults experience mental illness, which is an increase of 20 percent from the year 2020. Additionally, 1 in 20 who experience serious mental illness, and 17 percent of American youth experience a mental health disorder.
The mental health crisis has worsened during the coronavirus pandemic. Loneliness and isolation are fueling increases in anxiety, depression, and thoughts of suicide and self-harm, reports Mental Health America. More people are seeking mental health screening and treatment, but around 23 percent of Americans with mental illness are still not receiving the services they need.
Improvement starts with acknowledging that there is a problem. Talking to a healthcare professional about mental health struggles and treatment options leads to better outcomes. One improved outcome can be creating an estate plan that takes into account your own, or a family member’s, mental health.
Your Mental Health and Your Estate Plan
Every estate plan should be tailored to the individual’s needs and their unique family dynamics. A number of estate planning documents are available to address concerns about your mental health. Chief among such concerns is the possibility that, at some point, you may be unable to manage your own affairs. To prepare for that contingency, consider having the following documents in place:
Importantly, for these documents to have legal authority, you must have mental capacity when you sign them. To ensure capacity, you may want to obtain a professional opinion from a licensed mental health provider stating that you are of sound mind and understand the meaning and effect of the documents you are signing. Alleging lack of capacity is a common basis for contesting an estate plan.
In addition, if you are entrusting somebody with power of attorney authority, and that person has their own mental health concerns, you should discuss the issue with your family as well as your estate planning lawyer.
Your Beneficiaries’ Mental Health
Having beneficiaries who suffer from mental illness presents a different estate planning challenge. You must pass your legacy to them in a way that serves their best interests. Discretionary trusts and supplemental needs trusts are two ways you can look out for a mentally ill loved one even after you are gone.
There is a significant difference between suffering from a severe mental illness, such as bipolar disorder or schizophrenia, and a more minor issue such as anxiety or depression. Some people’s mental health issues can come and go over the course of their lifetime. Others’ illnesses are prolonged or recurrent. In some cases, a person may be genetically predisposed to mental illness that has not yet manifested. Proper proactive estate planning can protect you and your loved ones from whatever type of mental disorder may be of concern to you.
These are some of the factors to consider when making estate planning decisions based on mental illness in your family. Every individual and every family is unique. Your estate plan should reflect what you know now and be updated to reflect changes in your life and the lives of your family members. Contact us to learn how mental health considerations can fit into your estate plan.
Estate planning is a sensitive subject and it can be even more sensitive when the issue of mental health is involved. If you need to set up an estate plan, or revise an existing estate plan, around mental health concerns, we are here to help. Please contact our office to set up an appointment with an estate planning attorney.
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
The statistics that are compiled to get a feel for the estate planning preparedness of American adults are not encouraging. Sometimes a particular publication will start to track the progress of a certain phenomenon over a number of years, and Caring.com has focused on this subject.
They have published a survey for 2020 that is eye-opening, and not in a good way. In 2017 when they started doing their research, they found that 42 percent of American adults had estate plans in place. This year, the number is just 32 percent, and lack of preparedness is not confined to young people.
Just over 27 percent of respondents that were between the ages of 35 and 54 had wills or trust, and the parents of dependent children are typically in this age group. If you want to take chances when no one is depending on you, that’s one thing, but parents are in a different category.
You would certainly think that most people that are 55 years of age and older have addressed this responsibility, but this is simply not the case. Only 47.9 percent of individuals in this age group have wills or trusts.
If you are going through life without an estate plan like most people and you never take action before it’s too late, you would die intestate. Under the circumstances, the probate court would step in to supervise the estate administration process.
They would appoint a personal representative to act as the administrator. This is a role that is similar to that of the executor that would be named in a last will.
Final debts would be paid during probate, and the court would ultimately order the distribution of the assets under the intestate succession rules of the state of Nevada.
If there are children but no spouse, siblings, or parents for living, the children would inherit the entire intestate estate. The surviving spouse would inherit the estate if there are no living parents or children.
Parents would be the sole inheritors if there is no surviving spouse and there are no siblings or children. The siblings are the inheritors if there are no children, no parents, and no surviving spouse.
When there is a spouse and one child, the spouse would assume ownership of all community property and half of the separate property, and the child would get the other half the separate property.
In a situation where there is a spouse in more than one child, a spouse would get the entirety of the community property and one-third of the separate property. The children would divide the rest equally.
If a spouse and parents survive a decedent, the spouse would inherit all of the community property and half of the separate property, and the parents would inherit the remainder.
The asset transfers that are subject to the intestate laws are transfers that would have been subject probate if there was a will. Some types of asset transfers are in a different category.
Life insurance proceeds and inherited individual retirement accounts would go to the beneficiaries that were selected by the decedent. The same thing is true with payable on death accounts and property that is held in joint tenancy.
There is no reason to take any chances with your legacy. We know that people assume that they will always have time to take care of it later on, but for far too many fate intercedes.
When you take the right steps to preserve your legacy for the benefit of your family, you can go forward with peace of mind.
If you’re ready to get started, you can send us a message to request a consultation appointment, and we can be reached by phone at 775-823-9455.
Estate planning attorneys always emphasize the fact that there is no one universal approach that is right for each and every person. The optimal way to proceed will depend upon the circumstances, and this one of the major reasons why it is important to work with a qualified lawyer.
This being stated, there are certain core components that an estate planning will have in a general sense. Let’s look at the essentials that should be addressed in every estate plan.
Far too many people assume that a will is the right choice as the document that you should use to express your final wishes. In reality, a last will is usually not going to be the best choice unless the situation is extremely simple and straightforward.
Why is a will inadequate in a lot of cases? One reason why a will is less than ideal is the fact that it would be admitted to probate. This is a costly and time-consuming legal process that strips your family of privacy, because probate records are available to anyone that is interested in them.
There are also limitations when you use a last will. Unless you include a testamentary trust as part of the plan, the will would facilitate lump-sum asset transfers. This can be a source of concern if you have people on your inheritance list that are not great at handling money.
In addition to your desires, you also have to consider the life situation of the individuals that will be receiving inheritances. For example, people with special needs typically rely on Medicaid for health insurance, and they get income through the Supplemental Security Income program.
These are need-based government benefits, so an improvement in financial status can cause a loss of eligibility. If you name someone that is in this position in a last will, they would directly receive an inheritance, and this could impact benefit eligibility going forward.
This is just one example, but there are other reasons why a will would not be the best choice to provide for some people.
There are a number of different types of trusts that can be used to satisfy various estate planning aims. They are definitely not strictly used by wealthy individuals, and some of them wouldn’t even be appropriate for high net worth families. Once again, you should explore your options thoroughly with the benefit of professional guidance.
One of the cold hard truths that you should understand when you are thinking about the future is the possibility of latter life incapacity. It is not a pleasant thing to consider, but about one third of people that are 85 years of age and older have Alzheimer’s disease.
This is not the only cause of incapacity, so you should definitely prepare for this eventuality in advance. If you do not, people close to you could petition the state to appoint a guardian to act on your behalf. You would become a ward of the state, and this is not a very pleasant fate.
A guardianship can be avoided if you take the right steps to prepare for possible incapacity. If you have a living trust, you could name a disability trustee that would administer the trust in the event of your incapacity.
Another document that you can use if you do not have a trust is a durable power of attorney for property. The agent that you choose would be able to act as your representative if you ever become incapacitated.
You should actually have one of these documents even if you have a living trust, because the agent would be able to manage property that was never conveyed into the trust.
The last pieces to the basic estate plan puzzle are advance directives for health care. With a living will, you state your preferences regarding the utilization of life-sustaining measures.
You would add a durable power of attorney for health care to name an agent to make medical decisions on your behalf. These would be decisions that are not directly connected to life-support matters.
Another document that is necessary is a HIPAA release form. This will give health care professionals the ability to speak freely with the person or people that you name on the form.
We have scheduled a number of webinars that you can attend to obtain some important information about the estate planning process. There is no charge, and you can check out the dates and obtain registration information if you visit our webinar page.
Our firm has always been very receptive to the needs of the LGBT community, and there was once a time when legal safeguards were absolutely necessary for committed gay couples. When same-sex marriages were not recognized by the federal government, people in these committed partnerships were not afforded the same inherent rights that married people enjoy.
To provide an example, if you pass away without any state estate planning documents at all, this would be looked upon as the condition of intestacy in a legal context. Under these circumstances, the probate court would enter the picture to supervise the administration of the estate.
Ultimately, the assets would be distributed using the intestate succession laws of the state of Ohio. In our state, if a married person dies intestate without any descendants, the surviving spouse would inherit the intestate property.
However, if there is no valid “piece of paper,” this protection would not exist. Surviving parents would be first in line to assume ownership of the intestate property, and if there were no parents still living, siblings would come next. The line of succession would continue from there with the closest blood relatives.
There is also the matter of health care decision making. If no provisions are made for these contingencies in advance, the next of kin would be contacted by medical professionals. Someone that is in a committed relationship that is not legally married would not have the ability to make decisions on behalf of their partner.
We should emphasize the fact that estate planning has always been quite relevant for people that are legally married. The point is that they do have some basic protections from an estate planning perspective that are built into the laws. Things weren’t the same for couples that could not get married, but all that has changed, and a women named Edith Windsor had a great deal to do with it.
Thea Spyer and the aforementioned Edith Windsor consummated a 30 year romantic relationship with their marriage in Toronto, Ontario in 2007. The following year, the state of New York recognized the marriage as well, but same-sex marriages were not federally recognized.
This was because of Section 3 of the Defense of Marriage Act (DOMA) that defined the institution as something that can only exist between a man and a woman.
There is a federal estate tax marital deduction in the United States that allows for unlimited tax-free transfers between spouses. When Spyer died in 2009, she left a sizable inheritance to her spouse. In spite of the fact that they were married, the IRS demanded over $360,000 to cover the estate tax liability.
Windsor was not prepared to take this lying down, so she filed a lawsuit, and the case ultimately made its way to the docket of the United States Supreme Court. On June 26, 2013, a majority of the Justices found that the section of the DOMA that limited the scope of marriages was unconstitutional.
Since then, same-sex marriages have been recognized by the federal government. As a result, the safeguards that have always been in place for married people are now extended to legally married members of the LBGT community.
As we have stated previously, in spite of the fact that things have changed for the better, estate planning is a must for all married people, regardless of sexual orientation. Plus, there are those that choose not to get married for one reason or another, and inheritance planning is essential for these individuals as well.
Our firm is here to help if you are currently unprepared from an estate planning perspective. We would be more than glad to sit down with you, gain an understanding of your situation, and explain your options. If you decide to go forward, we can craft a personalized estate plan that ideally suits your needs.
You can schedule a consultation right now if you give us a call at 775-823-9455. There is also a contact form on this website that you can use if you would prefer to send us a message.
A lot of people like to roll up their sleeves and embrace do-it-yourself projects, and there is certainly nothing wrong with taking the initiative to get things done on your own. It can save you money, and it can become an enjoyable hobby. This being stated, it is important to know where to draw the line when it comes to the DIY phenomenon.
There are websites on the Internet that sell do-it-yourself legal documents, including last wills and other estate planning devices. Since it doesn’t take any particular acquired skill to fill in the blanks on a worksheet, it can seem as though you can create your own will using tools that you can easily find online.
Is it wise to put an estate plan together on your own without any legal advice? This is a question that the people at the highly respected website and magazine Consumer Reports were interested in answering several years ago. To do just that, they launched an initiative that would give them some insight into the efficacy of DIY estate planning, or the lack thereof.
They assigned staff members to create last wills using downloads and worksheets that were being offered by three of the leading purveyors of do-it-yourself legal documents. In addition to wills, they actually used online tools to produce a few other legal documents that are not related to estate planning. Of course, we will stick to the last wills here.
Once the documents were in their hands, they had to find legal scholars that were qualified to examine them. Gerry Beyer from Texas Tech University School of Law was engaged, along with Norman Silber, a legal expert from Yale University. The third set of experienced eyes belonged to Hofstra University contract specialist Richard K. Neumann.
At the end of the process, they determined that there were unnecessary limitations in these templates. They found that it is unlikely that the DIY products that are on the market would meet your needs unless your intentions are extremely simple, like leaving everything to your spouse.
The fact that you really can’t trust boilerplate documents that you can get online is only one part of the equation when it comes to the shortcomings of do-it-yourself estate planning. As a layperson, how would you know what documents you should use?
And yes, we are using the plural, because a well-constructed estate plan will cover multiple bases.
When it comes to asset transfers, a last will is not your only option, and in fact, it is not the right choice for many people. A will must be admitted to probate, which is a costly and time-consuming process that strips your family of privacy.
If you were to use a revocable living trust instead, the drawbacks of probate would be avoided. There are additional benefits that can be taken advantage of as well, like the ability to instruct the trustee to distribute limited assets over an extended period of time to protect a spendthrift heir.
This is just one of numerous different types of trusts that can be utilized when you are planning your estate. The ideal choice will depend upon the circumstances, and this is why it is important to discuss your unique situation with a licensed estate planning attorney before you make any impetuous decisions.
Getting back to the concept of multiple different objectives to address, end-of-life issues should be confronted when you are planning your estate. A significant percentage of elders become unable to make sound decisions at some point in time due to Alzheimer’s disease or dementia that is triggered by some other underlying condition.
If you have a living trust, you could name a disability trustee to manage the assets if you become unable to do so yourself. You can also add a durable power of attorney for property to give someone the ability to make decisions on your behalf concerning property that is not in the trust.
A durable power of attorney for health care decision-making will also be part of a typical incapacity plan. This is an advance directive for health care, and a living will is another advance directive that should be included. With this type of will, you state your preferences regarding the utilization of artificial life-sustaining measures.
We have prepared a very useful worksheet that you can use to gain some additional insight into the estate planning process. It is being offered free of charge, and you can visit our worksheet download page to get your copy.
People that are serious about their estate planning efforts are interested in attending to every detail. This is wise, because the matter boils down to the final gifts that you will be able to give to the people that you love the most. The simpler and more efficient it is, the better for them, so you would naturally be concerned about the time frame after you are gone.
There is no cookie-cutter, one-size-fits-all estate plan, so the waiting game, as it were, will depend upon the way that you plan your estate. Let’s look at some of the details.
If you use a last will, you name an executor to handle all of the tasks that must be completed to get the assets into the hands of the inheritors. The executor is not allowed to act independently. After your passing, the executor would admit the will to probate, and the court would supervise the estate administration process.
When probate enters the picture, your heirs will not receive their inheritances shortly after your passing. The first order of business for the court would be to determine the validity of the will, and to this end, any party that wants to issue a challenge can take advantage of this window of opportunity.
Creditors must be notified, and they are given a certain amount of time to come forward seeking satisfaction. The executor would have to identify and inventory all the assets that comprise the estate, and appraisals and liquidations are typically going to be necessary.
All in all, the best case scenario would be 6 to 8 months to a year. More complex cases, like a contested estate situation, can take considerably longer. For example, it took well over a decade for the Anna Nicole Smith case to run its course.
It should be noted that this is not the only drawback of probate. Considerable expenses accumulate, and this money reduces the amount of the inheritances that will eventually be passed along to the heirs. There is a loss of privacy as well, because probate records can be accessed by the general public.
A lot of people that do not look into the subject closely assume that a last will is the right asset transfer vehicle to benefit your heirs. They are under the impression that trusts are only utilized by very wealthy people that have estate tax concerns or other complicated situations to address.
While it is true that there are trusts that are beneficial for high net worth individuals, these would be irrevocable trusts. There is another type of trust called a revocable living trust that can be ideal for “the rest of us" and actually benefit your heirs.
When you use a revocable living trust as the centerpiece of your estate plan, you maintain complete control of the assets, because you would act as the trustee and the beneficiary while you are alive and well. You name a successor trustee to take over when the time comes, and you name your heirs as the beneficiaries. After your passing, the trustee would be empowered to distribute assets to the beneficiaries in accordance with your wishes as stated in the trust declaration.
These distributions to beneficiaries would not be subject to the probate process and the undo time consumption that goes along with it. Many of the other drawbacks would be avoided as well, and a living trust would provide additional advantages. For one, you can include a spendthrift clause to protect assets that you are leaving to someone that does not manage money effectively.
Our doors are wide open if you would like to discuss your estate planning objectives with a licensed attorney. You can schedule a consultation right now if you give us a call at 775-823-9455. There is also a contact form on this website that you can use to send us a message.
In some instances, a client will come to us looking for help because of a bad situation that has developed due to a lack of informed planning. We do what we can under these circumstances, and there are damage control strategies that can sometimes be implemented.
These situations are a bit frustrating for us, because we know how easy it could have been to avoid the difficulties. With this in mind, we will look at a handful of common estate planning mistakes that are made in an effort to increase awareness.
If you have been successful enough to be able to leave behind a suitable legacy for your loved ones, a last will may not be the right choice for you as an asset transfer vehicle. The notion that trusts are only for the wealthy is a major misconception that is harbored by far too many individuals that are not well-informed.
As we will look at in another section, there are certain types of trust that can be useful for people that have advanced estate planning concerns, like death tax exposure. This being stated, a revocable living trust is a legal device that can be useful for a wide range of people that are not in the upper financial stratosphere.
A living trust would actually not be the right choice for high net worth individuals. You retain incidents of ownership when you establish this type of trust, because you can in fact revoke the trust, and you can act as the trustee and the beneficiary while you are alive and well.
This is a positive for many people that would not like to surrender control of their assets permanently. It would not be good for those that want to get assets out of their own name for certain reasons.
One of the major benefits that you gain through the creation of a revocable living trust is the avoidance of probate. This is a time-consuming, intrusive, and expensive legal process that would enter the picture if you use a last will to state your final wishes.
All the assets are consolidated in one place, and this is another positive. Plus, with a last will, there is an open forum for disgruntled parties to present estate challenges. It is much more difficult to contest the terms of a revocable living trust.
Unfortunately, countless families find out about the pitfalls of wills and the probate process when it is too late to do anything about it.
Another problem with a last will is the fact that, generally speaking, you would be facilitating lump-sum asset transfers to the people that are named in the document. A spendthrift inheritor could burn through their inheritance much too quickly and have nowhere to turn for assistance later on.
If you use a living trust instead of a will, you could include a spendthrift provision. This would allow the trustee to distribute assets to the beneficiary incrementally in accordance with your wishes. The resources would also be out of the reach of the beneficiary’s creditors.
As we have stated, you can act as the trustee of your living trust while you are alive. In the trust declaration, you name a successor trustee to handle the trust administration tasks after you pass away. Some people choose someone that they know personally that they trust in a broad sense, but this can be a major blunder.
It takes a significant amount of financial acumen to administer a living trust effectively, and there are legal guidelines that must be followed to the letter. The trust administration process can be time intensive, and the trustee could face personal liability issues if mistakes are made.
You can avoid these potential problems if you engage a professional that offers fiduciary services. We would be more than glad to act as the trustee of your living trust or any other type of trust that you create during the estate planning process.
When you have a professional at the helm, you can be certain that your trust will be administered properly.
We are here to help if you would like to consult with a licensed estate planning attorney. You can send us a message to request a consultation appointment, and we can be reached by phone at 775-823-9455.
They say that the only two certainties of life are death and taxes, and everyone is well aware of the April 15th date that approaches all too rapidly. With few exceptions, most people are diligent about making preparations for tax day. Yet, for some unknown reason, the majority of the same folks totally ignore the other inevitability that we will all face at some point in time.
A while back, a website that is focused on legal matters did some research to get a feel for the estate planning preparedness of Americans. The results were quite surprising, but not in a good way. Overall, 57% of the adults in our country are going through life without any estate planning documents at all.
When you look at this figure, you would naturally assume that people that are younger are going to bolster the statistic, and they do to some extent. A rather eye-popping 92% of individuals under the age of 35 are rolling the dice without a will or a trust or any type of postmortem asset transfer plan.
You can say that people in this age group are rarely going to pass away, and generally speaking, this is true. However, accidents happen every day, and younger individuals are stricken by catastrophic illnesses. It is rather arrogant to assume that you will never be “one of the statistics.”
When you are talking about people in their mid-20s to mid-30s, a significant percentage of them are parents of dependent children. Anyone that is responsible for the well-being of minors should certainly cover all their bases with regard to any eventuality that can come down the pike.
The statistics continue to tell a sad tale when you look at the older age groups. Only 44% of baby boomers, which are people between 45 and 64, have estate plans in place. A mind-boggling 22% of senior citizens over the age of 65 have done nothing to prepare for the inevitable.
If you pass away without any estate planning documents, the condition of intestacy would exist. Interested parties would inform the probate court, and the court would supervise the intestate estate process. A personal representative would be named to serve as the administrator; this role is similar to that of an executor.
There are numerous different circumstances that can come into play that would impact the situation, and the exact details vary on a case-by-case basis. Depending on your true wishes, your family dynamic, and the nature of your assets, the outcome can be disastrous.
When final debts have been paid and the court has made all its determinations, the remaining assets would be distributed in accordance with the intestate succession laws of the state of Nevada.
In fairness, it is possible that this would wind up being consistent with what you would have done, but it is very unlikely. And even if it is, there would be a lot of totally unnecessary expenditures and time consumption during the probate process.
One of the questions that was asked in the survey that we have been looking at is somewhat humorous, but it is instructive at the same time. Right around one third of people said they would rather have a root canal, give up sex for a month, or do their taxes than engage in the estate planning process.
We can say with absolute certainty that the real experience is nothing to dread, and we go the extra mile to make our clients feel comfortable on every level. The reality is, estate planning is one of the core responsibilities of adulthood, and there is no point in running away from it.
Personalized attention is the key to a well-constructed estate plan, because there is no one-size-fits-all approach. This is exactly what you get when you make a connection with our firm. If you are ready to do just that, you can call us at 775-823-9455 to set up a consultation.
You can alternately send us a message through our contact page and we will get back in touch with you promptly.
The Kiddie Tax can apply to the unearned income of children. Read on to learn if this tax applies to you or your children. Also, learn ways to avoid the Kiddie Tax.
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.
When we consult with clients, we often hear many of the same questions. With this in mind, we present a hypothetical question-and-answer session with a Reno estate planning lawyer in this post.
To die without an estate plan is called dying intestate. Under the rules of intestacy, the probate court would supervise the administration of the estate. Creditors would be given an opportunity to come forward seeking satisfaction, an estate is inventories and valued, disputes are resolved, and ultimately the assets would be distributed under intestate succession laws.
That’s the good news, but the bad news is that it is very possible that your assets would not be distributed in accordance with your wishes. For example, if you are happily married, you have no children, and your parents are still living, you would probably want your spouse to inherit everything. In Nevada, under intestate succession rules, your spouse would inherit half of your separate property, and your parents would inherit the rest. Intestacy law does not appropriately deal with most issues that arise with separate property. Further, intestacy law does not account for many modern day families, such as blended families with step-children, non-traditionally married couples, and a myriad others.
There is no reason to surrender control of your estate to the judicial process when it is so easy to engage the services of a licensed Reno estate planning lawyer.
It is true that there are some types of trusts that are used by high net worth individuals that are exposed to the federal estate tax. However, there are other types of trust that can be quite useful for people of relatively ordinary means.
Far and above the most common is the revocable living trust. If you use a last will, it would be admitted to probate after you die. The court would provide supervision, and the executor would handle the estate administration tasks. But this process will take eight or nine months to a year to run its course, and inheritors receive nothing during this interim. There are also innumerable expenses that pile up during probate, often at a cost between 4% up to 8% of the estate value.
If you use a living trust instead, the trustee that you name in the trust agreement would be empowered to distribute assets to the beneficiaries outside of probate. This is one advantage, but there are a number of others, including the option to protect an inheritance through a trust against lawsuits, creditors, divorcing spouses, or other predators.
A living trust is beneficial whenever a client has a goal to avoid probate and make the process easy for their loved ones. It's not only for wealthy people, but for people who want to better take care of their life planning.
Since the Internal Revenue Service requires you to report all sources of income, you may assume that inheritances that you leave to your loved ones would be taxed. In actuality, inheritances are not subject to taxation, with the exception of inheriting retirement accounts (such as traditional IRA or 401(k) accounts).
There is, however, a federal estate tax that might apply to your estate before everything is distributed to the beneficiaries as an inheritance. But, the vast majority of people do not have to be concerned about the estate tax because there is a VERY large exclusion. Only the portion of your estate that exceeds the amount of this exclusion would be taxed. At the time of this writing in 2019, the exclusion stands at $11.4 million.
These are a few short questions that we frequently hear from our clients, and you can ask your own if you attend one of our upcoming Webinars. The information sessions that we hold provide a treasure trove of useful information, so we strongly encourage you to attend the Webinar that fits into your schedule. To get all the details, visit our Webinar page and follow the simple instructions to register for the date that works for you. Starting in 2019, we are offering Webinars semi-monthly in the evening to accommodate those people that cannot attend during the middle of the day.
The estate planning lawyers at our firm place an emphasis on education, because far too many people have misconceptions about wills and trusts. One of the most common ones is the idea that a will is the only choice because trusts are "only for very wealthy people." Trusts are often misunderstood as being only useful for the rich.
Yes, very high net worth individuals can benefit from the utilization of certain types of trusts. These are going to be irrevocable trusts that are used for estate tax avoidance, income tax planning, and asset protection. However, irrevocable trusts are rarely used in an individual's estate plan. A revocable living trust is a tool that is often the best choice for a wide range of different people that do not consider themselves to be among the financial elite. Let’s look at a handful of the benefits that living trusts provide.
A lot of people are under the assumption that you surrender all personal control of assets that you convey into a trust. This is not the case when it comes to a living trust. A "trustee" is the person that administers, or manages, assets in a trust, and you can be the trustee for your own trust. When you establish the trust agreement, you name a successor trustee to handle these chores after you are gone. You can name someone that you know, or you can use a professional fiduciary such as an attorney, certified public accountant, trust company or the trust department of a bank.
Other people assume that they are "giving away" their estate by transferring property into a trust. A "beneficiary" in the trust is the person that enjoys the use of the assets in the trust. You will be the beneficiary and utilize assets in the trust as you see fit for the remainder of your lifetime. You also name a successor beneficiary to receive distributions from the trust after your death. If you choose to do so, you can name multiple beneficiaries.
In other words, since you manage and enjoy your own estate in the trust during your lifetime, you retain full control and use of your property without limitation. Your control is absolute, because you are not forever beholden to the original terms that you set forth when you established the trust declaration. You can change the beneficiaries, and you can name a different trustee. Plus, you can convey additional property into the trust at any time. The trust is a tool that ensures your estate will be managed by the proper person for your designated beneficiaries upon your death.
In fact, you can dissolve the trust entirely if you ever want to because after all, it is a revocable living trust.
As we touched upon above, you can use a professional to act as the trustee after you pass away. Many people will go this route for a number of different reasons. For one, there would be no succession concerns, because the professional trustee (such as a law firm or a bank) will almost always be there upon your death. Secondly, there is going to be professional oversight with regard to the way the trust is administered.
Another benefit is the fact that a professional will know how to invest the trust assets wisely. Lastly, you can rely on the fiduciary to show no favoritism and follow your instructions to the letter without emotion.
You do not have to instruct the trustee to distribute everything in the trust right after your passing. For example, you could allow for set monthly distributions to the beneficiaries, or you could direct the trustee to distribute only the earnings without dipping into the principal at all. Some people will allow for larger, lump sum distributions when the beneficiaries reach certain age thresholds.
Of course, you could give the trustee latitude with regard to emergency distributions. The exact details are up to you, and this is another great benefit that you gain if you utilize a revocable living trust as your primary asset transfer vehicle.
Alzheimer’s disease strikes approximately four out of every 10 people that are 85 years of age or older. Of course, some people become unable to make sound decisions for other reasons, and incapacity can strike at a younger age. To account for this, you could empower the successor trustee, or a different individual or entity, to act as the trustee in the event of your incapacity.
If you would like to learn more about Reno wills and trusts and other estate planning matters, attend one of our upcoming Webinars. They are free to attend, and you can get all the details if you visit our Webinar information page. Or you can call us to arrange a free consultation to discuss living trusts, or other estate planning matters, at (775) 823-9455.
It can be intimidating to consider the possibility of relinquishing control over your property. People sometimes assume that you do surrender control of assets when you create a trust.
In this post we will provide some clarity about creating a trust in northern Nevada.
There are different types of trusts. Perhaps the most commonly utilized trust in Reno NV in the field of estate planning is the revocable living trust.
These trusts are largely useful to enable probate avoidance. If you use a last will to state your final wishes, the estate must be probated before your heirs receive their inheritances.
This process can be expensive and time-consuming. Most people would like to facilitate timely asset transfers.
When you use a revocable living trust to arrange for these transfers the distributions to the beneficiaries will take place outside of probate.
Because of the fact that the trust is revocable, you do retain control of assets that you convey into this type of trust.
You can act as both the trustee and the beneficiary while you are still living, and most people will do this. As a result, you can control investments and give yourself distributions as you see fit.
The control doesn't stop there. Because the trust is revocable, you can actually dissolve or revoke it at any time. The terms that you originally set forth are not etched in stone either. You can change them and add or subtract beneficiaries.
There are irrevocable trusts as well. With some exceptions, these trusts do require you to surrender incidents of ownership, so you do not continue to have control of the property that has been conveyed into the trust.
Because the trust is not revocable, you cannot dissolve it, and generally speaking the terms cannot be changed.
Why would you want to create a trust that did not allow you to retain control? There are a number of reasons.
Certain estate tax efficiency strategies involve irrevocable trusts. Because the assets would be owned by the trust rather than the estate, there are certain benefits.
In addition, when you surrender incidents of ownership by placing assets into an irrevocable trust they are generally going to be protected from creditors and claimants seeking redress. Nevada does allow some irrevocable trusts to be "self-settled," so some incidents of ownership are retained, but these are sophisticated strategies that require the advice of competent counsel to establish and fund.
The best way to proceed if you have questions about estate planning would be to discuss everything in detail with a licensed Reno Nevada estate planning lawyer.
Rather than looking for answers to general questions about what trusts can and cannot do, you would be better off consulting with an attorney. You can explain exactly what you want to accomplish, and your attorney can give you direct answers to your specific questions.
The process of estate planning involves some very measured and informed decision-making. If you make certain assumptions as a layperson you may be making errors of commission and omission.
Because of the fact that there are websites on the Internet selling do-it-yourself generic, fill-in-the-blanks last wills, more and more people are getting the idea that they can go it alone. Unfortunately, this is increasing the numbers of people who are not properly prepared.
With a will, you need to consider the fact that your estate must be probated before the heirs receive their inheritances. The probate laws in the state of Nevada require rigid formalities that may cause delay and expense if they are not followed precisely.
When you work with a qualified estate planning attorney who is licensed in Nevada you can be certain that your will is properly constructed.
If you use a boilerplate document that you picked up on the Internet or at the book store you have no way of knowing if the will is truly up to par.
And then there is the simple fact that a last will may not be your best choice.
Last Will Alternatives
The probate process that we mentioned above is time-consuming, and, when all the costs, fees and expenses are considered, quite expensive.
There are effective ways to arrange for asset transfers to your heirs directly, outside of probate. One of them would be through the creation of a revocable living trust.
With these trusts you can retain control of the assets while you are alive and well. If you were to become incapacitated, your successor trustee would be empowered to handle your financial affairs, usually avoiding the need for a guardianship.
Upon your passing the trustee administers the estate outside the probate court and then distributes assets to the beneficiaries in accordance with your wishes.
Specialized Concerns
There is no one-size-fits-all estate plan because different families have different concerns. For instance, if you have estate tax exposure you must take steps to position your assets in a tax efficient manner to avoid a 40% hit.
If asset protection is a concern you would implement certain strategies that would not be important if you were not concerned about shielding assets from creditors and litigants.
Special needs planning is a factor for some people. You have to be careful about the way you set aside money for a person with a disability who is relying on government benefits like Medicaid and Supplemental Security Income.
People who are owners of small businesses are going to have estate planning concerns that differ from those who work for someone other than themselves.
These are just a few examples of the unique circumstances that require varied approaches.
Decision Makers
It is also important to include an incapacity component within your estate plan. The courts could, at considerable expense to your estate, appoint a guardian to manage your affairs if you don't take the appropriate action. This guardian may not be someone that you would have chosen.
You can select potential future decision-makers using an appropriate revocable living trust combined with a durable power of attorney.
All these solutions are best handled with a qualified estate planning law firm.
