The Basics of Estate Planning – Estate planning is the process of implementing a strategy that allows you to pass your assets and property on to family and loved ones according to your desires in a tax, time and cost-efficient manner, and to provide for the care of any minor children you may leave behind. Your estate plan can either be relatively basic and simple, or more complex, depending on the size of your estate and your desires regarding the distribution of your assets and property at death.
Probate – One of the most prevalent concerns of those considering an estate plan is the desire that, upon their death, their heirs not be burdened with the court-supervised proceeding referred to as “probate”. Under Nevada law, probate proceedings generally takes at least six months to complete with most cases taking ten months to a year. Additionally, probate will cost a deceased person’s estate (and, therefore, their beneficiaries) thousands of dollars in attorneys’ fees, court costs, appraisal fees, and so on. Because Nevada probates are not “user-friendly”, many people seek to avoid the probate process while ensuring that their testamentary wishes are met.
A Will or a Trust? –When considering your estate planning options, you have essentially two choices: (1) a last will and testament (“Will”), or (2) a revocable living trust (“Living Trust”).
A Will gives you the right to determine who will administer your estate when you die, who will be the beneficiaries of your estate, how the estate will be divided and distributed among those beneficiaries, and who will serve as guardian for any minor children. Contrary to the belief of many, however, a Will does not allow your estate to avoid probate at your death.
A properly structured and implemented Living Trust, on the other hand, can allow a person’s estate to completely avoid probate, eliminating the substantial cost and time delays that would otherwise be incurred through the probate process, thereby greatly simplifying the administration and settlement of the estate.
Features and Advantages of the Living Trust – . Generally speaking, a trust is a legal document entered into between a trustor (the creator of the trust), a trustee (the manager of the trust) and one or more beneficiaries, whereby the trustee agrees to manage and distribute the assets transferred into the trust by the trustor for the benefit of the beneficiaries.
With a Living Trust, you are the trustor, trustee and the beneficiary. As such, during your lifetime you have full and complete access to, and use of, your assets which you have transferred into your Living Trust. Later, upon your death, the Living Trust provides for someone that you have personally selected (the “successor trustee”) to step in and administer and distribute your assets and property to your beneficiaries in accordance with the terms of the trust agreement.
In addition to eliminating probate at death, the Living Trust offers other important advantages not available with a Will, such as:
- Avoiding potential guardianship. A Living Trust is designed so that, if you become physically or mentally incapacitated, your successor trustee can then step in to continue managing the trust on your behalf, ensuring that your money and property are used and applied for your benefit. This arrangement can eliminate the need for your family to seek guardianship over your estate, which requires a formal court proceeding resulting in significant attorney fees and publicity of your condition.
- Privacy. Because the Living Trust can avoid probate, it ensures that your assets, the identity of your beneficiaries, and your wishes regarding the distribution of your estate are all kept out of the public eye.
- Minimizing claims against the estate. Living Trusts have been shown to be a more formidable barrier than Wills with respect to disgruntled beneficiaries or others who may seek to claim a share (or larger share) of your estate to which they are not entitled.
- Eliminating ongoing court costs and attorney fees. The Living Trust is a very cost-efficient vehicle for the long-term management of your money and property after your death, avoiding significant attorney fees and court costs that would otherwise result if the long-term management of your estate were being carried out under your Will.
It is important to keep in mind that having a Living Trust does not eliminate the need for a Will, which remains a necessary component in the overall estate plan to ensure your wishes are carried out. Further, even with a Living Trust, certain administrative steps need to be taken care of to insure that the Trust is administered legally and according to a client’s wishes.
Powers of Attorney and Living Wills –Not only do you need a plan for the efficient and orderly administration and distribution of your assets at death, you should also consider the importance of planning for certain events during your lifetime that may impact on your ability to make decisions regarding your medical care or to give instructions concerning end-of-life measures. A power of attorney for health care decisions coupled with a Living Will (medical directive) can ensure that your desires regarding medical care and treatment, as well as end-of-life desires (i.e., “pull the plug” or not) rest in the hands of those you trust. Furthermore, a financial power of attorney allows you to designate one or more persons who can step in to manage your other affairs if you become incapacitated.
Read about the Nevada Asset Protection Trust (NAPT)
Read more about Estate Planning and Probate