The Living Trust Source | Reno Nevada

Estate Planning Attorney Reno Nevada

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PROBATE OF THE LARGE ESTATE IN NEVADA IS IT REALLY THAT BAD?

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Families with large estates have a mixed blessing. Along with the benefit and enjoyment of wealth comes responsibility. Holding onto, and growing family wealth requires planning. Things can go wrong when the owner dies and the property must be transferred to their children. This is when estates become vulnerable to expensive disputes, negligence, and fraud. Large estate holders seek to minimize risk with careful estate planning.

Most wealthy families want their property to be transferred to their children quickly and inexpensively. For most people this involves a probate avoidance strategy. For large and complex estates the plan of choice usually involves a living trust. But is the trust always the better estate plan for large estates? This article briefly considers some of the pros and cons of a will versus a trust when a large estate is involved.

Probate of a will is generally seen as a costly and time consuming process. The advantages of probate, however, are usually overlooked or entirely ignored. Likewise, the potential problems that can arise with a living trust seldom receive the attention they deserve. This article considers the lesser known advantage of a will versus a trust.

The disadvantages of executing a will instead of a trust receive a lot of attention. If you create a last will & testament (will) your large estate will go through probate.  If a person dies without a will or trust the estate generally goes through an administrative process similar to probate. For a wealthy estate this process can take a year of more.  Probate is also a public process so anyone can attend your probate or look at the court file. Also, the legal costs of a probate are greater than the cost of establishing a living trust.

Although most wealthy families aim to avoid probate for these reasons, some well-informed owners of large estates familiar with the process actually plan for a probate. This is because the transfer of property is overseen by a judge, or probate commissioner who makes recommendations to the judge. Executors, interested parties, and sometimes lawyers are less likely to cause problems when a judge has jurisdiction over the transfer of their property.

If you have ever attended a probate hearing you may have observed the judge approve or disapprove the attorney fees charged by the lawyer in representing the estate, approve the sale of real or personal property, or even admonish parties or counsel not following the law or instructions. Although statistics are unknown, it seems probable that there is more fraud and bad faith in the administration of trusts than in the probate of wills because the transfer of property from a trust is generally not overseen by a probate court.

Often, the decision to involve a judge through probate may hinge on family characteristics. Some parents worry that a fight will erupt between their children. Often families don’t have a suitable trustee who can be trusted to distribute the estate promptly and fairly. In these situations we often recommend a professional successor trustee be nominated to handle the administration of the estate after death. Although professional trustees charge fees for their services, they are often a viable solution when a family does not have suitable successor trustee. Trustee negligence, misconduct, inaction, and self-dealing is generally more costly and time consuming than probate. A living trust is only as reliable as the named successor trustee.

If you have a large estate chances are that the best estate plan will involve a revocable living trust. Most estate planning attorneys, as a matter of course, would recommend that your large estate pass through a living trust. This, however, doesn’t mean that a living trust is the best option for every family.

Although probate has a reputation as something to be avoided, this may not be the case for families that might benefit from judicial oversight. At the Living Trust Source every estate plan is customized for the client’s family.   We help our clients understand the advantages and disadvantages of transferring wealth by either a will or trust.

Kevin Walsh

Attorney at Law

1Source Law & Living Trust Source

Estate Planning Attorney Reno, Nevada

WELCOME TO ESTATE FRIENDLY NEVADA

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Nevada wasn’t the first choice for most early settlors pushing westward. For them the thought of the fertile valleys and more temperate climate on the other side of the Sierra Nevada Mountain Range would have been motivation to keep their wagons rolling across the desolate high desert basins and ranges of Nevada. Now the migration is in reverse for a number of reasons in addition to the unspoiled beauty of the Nevada desert. This includes favorable estate laws that new arrivals should be aware of.

If you’ve recently moved to Nevada, or are considering relocating here, you probably know Nevada does not have a state income tax. That’s great if you’re still working. But if you’re already retired, you’ll also be interested in learning Nevada has living trust friendly laws. It’s one of the states that does not levy an estate tax when you die a resident of Nevada. The Silver State is also making Nevada attractive to retirees with some new trust friendly legislative amendments.

The 2021 Nevada State Legislature enacted some new laws that will help ensure people with a Nevada with a living trust avoid probate. Living trusts avoid probate when the assets are properly titled in the trustee of the trust.  When the owner passes away and an asset was not transferred to the trust a probate is often the unintended result. Nevada’s newly revised NRS 147.070(b) is a type of ‘get-out-of-probate card’ if the decedent’s will “directs all or part of the decedent’s estate to be distributed to the trustee . . .” Whenever a living trust is drawn up in Nevada, the attorney should also draft a pour-over will to take advantage of the new and improved statute.

Nevada has benefited from the influx of out-of-staters bringing more culture, intellect, and wealth to the Silver State. Reno Estate planning attorney Kevin P. Walsh, founder of the Living Trust Source, welcomes these newcomers and recommends certain changes to estate documents that are drafted in other states. Chances are the out-of-state trust incorporates the law of the jurisdiction where it was drafted. The trust will not be deemed invalid if it was valid at the time of its creation, but it most likely applies the other state’s law of wills, trusts, and estates. For example, a living trust drafted in California would probably have numerous references to the California Probate Code. The foreign trust should be amended or restated to gain full advantage of Nevada’s estate-friendly laws.

Other out of state documents such as power of attorney for finances and health should be on the forms adopted in the Nevada Revised Statutes. Healthcare workers in Nevada are accustomed to Nevada forms and out-of-state forms sometimes cause confusion, doubt, or inaction on the part of Nevada doctors and staff. Nevada also has a special form for advanced directives that, which when signed, allows a doctor to stop artificial hydration and nutrition when there is no hope of recovery. If you’re ever in that situation, your doctors will appreciate having the familiar Nevada forms.

When you update your estate planning documents take advantage of the opportunity to make desired changes to your distribution pattern, or maybe select a different trustee or successor trustees. It’s also comforting to know you have established a relationship with a trusted estate planning lawyer. When unexpected deaths or illness occurs, the stress can make it difficult to find the right legal guidance. Get ahead of the game by finding an attorney who is customer-centric and will return your call, or the call from a family member.

Attorney Kevin P. Walsh grew up in Northern Nevada and has seen Reno mature from a sleepy town reliant on the casino industry into a hub of innovation and opportunity. He wants to make sure that our new neighbors are well positioned to take advantage of Nevada’s favorable trust laws. If you have recently moved to Nevada, or are planning a move to Nevada, you should consult a Nevada estate planning attorney to amend or restate your trust and pour-over will to take advantage of Nevada’s estate-friendly laws.

Kevin Walsh

Attorney at Law

1Source Law & Living Trust Source

Estate Planning Attorney Reno, Nevada

 

Will Your Kids Fight Over Your Assets When You Are Gone? The Best Predictor of Future Behavior Is Past Behavior

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If your kids never got along while you are alive, what makes you think they will get along when your gone? The old maxim “The best predictor of future behavior is past behavior” should be closely considered by parents who want to maximize the likelihood of a conflict-free transfer of family assets to their children. The risk of future legal conflicts between sibling trust beneficiaries can be managed in estate planning.

Every long-term relationship, especially among siblings, will have a certain degree of conflict. Whose children never squabble and have arguments? It is a matter of degree, and for some brothers and sisters, it needs to be considered in estate planning. Between some siblings there is a seemingly incurable friction from an early age. These strained sibling relationships may persist into adulthood. Some brothers and sisters, when growing up, could hardly be left in the same room without a fight erupting. If these are your children, it’s a fair bet that there will be fights when your gone. You may have great kids, but they have been conditioned by the past. Plan your estate for sibling conflict avoidance.

If you are worried about a painful and expensive conflict erupting between your children, you can draft an estate plan, or modify and existing plan, in a way that minimizes the odds of a dispute over the family estate.  Here are some tips worth considering:

  • Avoid Unequal Distributions – Parents make unequal distributions to their children for a variety of reasons. It’s not uncommon for a parent to give a boot to the child who has not been as successful because of any number of reasons. This can cause a deep resentment in the children who feel they worked harder and achieved more. Also, some parents want to reward the “good” child who came to visit. This can motivate other siblings to challenge the disposition. Remember when the children unwrapped presents at Christmas. There is less to argue about when everyone gets the same value.

 

  • The Risk of Sibling Caregivers – Commonly one child lives at home with the last surviving parent and provides care. Often, they have power of attorney over the parent’s finances. The compensation received by the caregiver must be carefully gauged in light of state law, particularly the law of fiduciaries. Gifts to the son or daughter caring for aged parent are presumed invalid in many states and may spawn a family dispute. Compensation given to caregiver sibling should be carefully gauged, reasonable, meticulously documented, and authorized by the trust agreement. It is also wise to disclose it to other siblings, so it does not come as a surprise and agitate other siblings after the parent’s passing.

 

  • The Co-trustees Mistake – Don’t make the mistake of believing the sharing of power over the administration of the trust will help avoid conflict. The opposite is usually the case. When you choose who will be the successor trustee of the trust choose the person who is most capable of getting the job done according to the terms of the trust agreement. Successor trustees don’t have to be your children. In fact, in families with kids prone to fighting, it may be better to designate a trustee who is not a child if they are willing and able to do the job.

 

 

  • Consider a Will – Probate court gets a bad rap because it is generally more expensive and time consuming than the administration of a trust. The benefit of probate, however, is a judge oversees the orderly distribution of your estate. You don’t get that kind of oversight with a trust. Siblings who are waiting for the distribution pursuant to a will know the administrator is acting under court order and has taken an oath to properly administer the estate. When a sibling trustee is administering a trust, the other siblings may become anxious and start questioning the trustees conduct, and possibly hire legal counsel to make a challenge.

 

  • Use a Different Transfer Strategy – Maybe neither a will or trust are best for the transfer of your property to your quarrelling kids. Simple estates without real property may be able to pass without a will or trust. If cash is the only assets that would cause a probate, ask your bank if you can arrange for the transfer of your accounts on death. Real property can also be deeded upon death although it cannot be divided in the same manner as a bank account. Also, qualified retirement accounts and life insurance generally pass according to beneficiary designations. These other methods are probably not suitable for estates with real property or other assets that need to be sold before being divided. Talk to an estate planning lawyer about alternative succession methods to avoid an unwanted probate.

 

Name a Professional Successor Trustee to Administer Your Trust – If it makes sense from an economic perspective, designating a professional is one of the best moves a parent can make for their warring children. The trust agreement can designate a company that will act as trustee and distribute the assets to the children, or hold them in trust for the beneficiaries, as the trust agreement may instruct. Siblings often question or challenge the manner in which a child is administering the trust. A professional trustee is an excellent away to remove the risk of a sibling beneficiary challenges against a sibling trustee.

 

If your kids fight, you should discuss your estate plan with an attorney. Online trust kits cannot address the risk of beneficiary conflict. With some strategic planning, your children can receive their inheritances timely and peacefully.

 

Kevin Walsh

Attorney at Law

1Source Law & Living Trust Source

 

The Pirate Trustee & Beneficiary’s Rights to the Estate

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Living trusts are the preferred method for the efficient transfer of property to a beneficiary when the owner passes away. But like Caribbean cargo ships of the early 18th Century, the transfer of trust assets may encounter risks before reaching their destination. The most serious risk is that of the pirate trustee trying to steal the treasures of the estate. Often the trust raider attempts to hide the estate assets and the beneficiary is left adrift and in the dark.

While more people are executing living trusts, not everyone is doing so with the guidance of counsel or sufficient understanding of the duties of a trustee. We are seeing more cases of this type in Nevada. They involve the failure of the trustee to follow the terms of the trust agreement and comply with state law. Often, for a variety of insufficient reasons, a trustee refuses to make distributions to the beneficiaries as required by the trust. In more extreme situations the trustee steals from the trust.

Below is a bullet point list of some, but not all, Nevada statutory tools available to a beneficiary who suspects a trustee of mishandling or stealing trust assets.

  • Demand an Accounting of Trust Assets: A “current beneficiary” can make a written demand for account. A “current beneficiary” is a person who is eligible to receive, or should be receiving, trust assets. An accounting can reveal to the beneficiary the form of assets, value of assets, where the money has come from, and where it’s gone. If the trustee refuses to provide the account, the beneficiary can petition the court for an order that the trustee provide the accounting.
  • Demand a Copy of the Trust: Nevada law enables a current beneficiary, who is eligible to demand an account as described above, to demand a copy of the trust. If the trustee refuses to hand over the trust, the beneficiary can turn to the court for help. The court can order the trustee to provide a copy of the trust to the beneficiary, or specific portions of the trust that may affect the beneficiary’s rights.
  • Removal of Trustee: A beneficiary can request that the court remove a trustee under a variety of reasons including breach of trust, unfitness, unwillingness or persistent failure to administer the trust. An uncooperative co-trustee can also be removed if they substantially impair the administration of the trust.
  • Compel or Enjoin the Trustee: Nevada law also allows the court to make a variety of orders requiring the trustee to do, or not do, certain things. This may include making distributions to beneficiaries as required by the trust. The Court can also order that a trustee correct problems they have caused by their breach of trust.

The remedies briefly discussed above are some, but not all of the weapons available to a beneficiary when a trustee goes rogue. A beneficiary who believes the trustee has breached the trust agreement should consult an attorney. To fight back against the raider of the trust 1Source Law recommends sourcing legal counsel with experience in both the law of trusts and adversarial proceedings.

 

Kevin Walsh

Attorney at Law

1Source Law & Living Trust Source

Trust Litigation and Disputes, Estate Planning Attorney Reno Nevada, Living Trust Attorney, Reno Nevada