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.
Living, Revocable or Family Trusts
Our firm regularly utilizes revocable trusts as part of a client’s estate planning. One goal of a revocable trust is to avoid the costs and delays of the probate process. The revocable trust, if drafted correctly, also helps utilize important estate tax exemptions which dramatically reduce or eliminate federal estate taxes for heirs. The revocable trust can also be drafted to protect the assets being transferred to beneficiaries from beneficiaries ex-spouses, creditors or a beneficiaries’ own improvidence.
In the event a person becomes incapacitated, it is important to have a number of legal documents in place so that bills can be paid, finances managed prudently, and health care decisions made by the right people. Our firm prepares the following documents for clients so that emergency situations can be handled carefully: Power of Attorney, Financial/Legal Power of Attorney, Health Care Power of Attorney, Living Wills, and HIPAA Release & Authorization.
The Will is an important legal document in which a person can designate the following details:
- Designation of the Guardian for minor children
- Who inherits property
- Funeral wishes
- Designation of a personal representative
In a litigious society it is important to protect the assets you have accumulated. Our firm helps clients protect their assets through various legal strategies including the following:
- State law exemptions, including the Homestead Exemption
- Retirement plans
- Business Entities (Limited Liability Companies, Corporations,and Limited Partnerships)
- Irrevocable Trusts, including:
- Nevada Asset Protection Trusts
- Gifting Trusts
- Dynasty Trusts
- Off-Shore Trusts
Advanced Estate Tax Planning
As part of our estate planning services, we particularly focus on the estate tax planning. Currently the United States federal estate tax rates run from 41% to 45%. (These rates are much higher than the income tax rates) Since we all pay taxes on assets as they are earned, we like to assist clients in avoiding this second tax known as the estate tax or death tax. We regularly utilize strategies to avoid the estate tax including the following:
- Gifting Strategies
- Irrevocable Life Insurance Trusts
- Grantor Retained Annuity Trusts
- Sales Transactions to Defective Grantor Trusts
- Dynasty Trusts (GST Trusts)
- Charitable Trusts
- Gifts/Sales of Business entities to children
- Charitable Foundations
When a loved one passes away, it is an emotional time. It is a very difficult time to deal with financial and legal issues. Our firm assists family members, personal representatives and beneficiaries with all aspects of the probate process.
Our law firm assists individual and corporate trustees with various aspects of Trust Administration.
Business Succession Planning
When a business owner retires, becomes disabled or passes away, it is important to have a succession plan to insure the stability of the business. Our firm advises business owners regarding buy-sell agreements and succession plans.