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Las Vegas Estate Planning Law Blog

How a spendthrift trust works

Some Nevada residents who are creating an estate plan may be interested in a spendthrift trust. This trust is usually used to protect a beneficiary who is unlikely to be able to manage money responsibly. It might also protect assets from creditors and in the event of a divorce although it is important that the trust does not have the appearance of having been created specifically for those purposes.

A spendthrift trust should have certain provisions and language. The trust may specify what its assets should be used for, such as toward a person's education. The trust may also contain a provision against transfer of funds in the trust whether it is voluntarily by the beneficiary or through seizure.

Unless you execute a plan, you can't choose an estate heir

Do you ever hear people talking about someone in their 50's and think to yourself that 50 sounds light years away, then suddenly realize it's right around the corner in your own life? It's not uncommon, as people often feel younger in their minds than they are in reality. Since you don't go around thinking about your midlife age all the time, there may be other topics not forefront in your mind as well, some of which are very important, such estate planning.

The truth is, some Nevada residents are among many throughout the nation who do whatever they can to avoid talking about their own mortality. They go through life assuming that when their time on earth is done, their homes and possessions will automatically pass to their spouses, children or significant others. Many don't realize that if they don't execute a thorough estate plan before they die, probate courts will administer their estates.

Letters of final wishes can comfort and help families

Nevada lawyers with experience in estate planning draft wills, trusts and powers of attorney for their clients, but there is one very important document that is not written by an attorney. Letters of final wishes have no legal standing and do not influence how assets will be distributed, but they do convey information and requests that grieving relatives and friends may find both comforting and useful.

Letters of final wishes are a way to convey information that family members and trusted individuals may need but cannot find in a will. In addition to personal messages, these letters could contain details about funeral arrangements or the passwords for online accounts. Testators can also use letters of final wishes to explain some of their estate planning decisions. This can be particularly important when heirs are unlikely to be happy about the contents of the will.

How to handle an unfunded trust

Nevada residents may know that a trust may be an effective estate planning tool. However, the trust doesn't work as intended unless it is properly funded. Assets that were meant to go into that trust may need to be looked at to determine how they were owned and by whom. Without knowing the type of ownership of an asset, it may be impossible to determine how it can be transferred.

For instance, if an asset was jointly owned with another person, he or she will likely take possession of it. If the asset had a beneficiary designation, the beneficiary will likely take possession of that asset. Items that were in the deceased person's name only without any clear beneficiary may need to go through probate before it can be transferred to anyone.

How an estate tax repeal might affect planning

Nevada residents whose estates are large enough to worry about federal estate tax will probably want to review their estate plan if there is an estate tax repeal. For most people who expect to owe estate tax, devising ways to reduce the value of the estate and bring the tax down as close to the exemption amount as possible is the cornerstone of the estate plan.

One way people might try to keep the value of their estate down is by making a gift to a multi-generation trust. This would be funded depending on what the generation-skipping tax exemption is. An estate plan might be set up to fund an exemption trust and a marital trust for any additional assets.

The uses of a funeral trust

Nevada residents who are concerned about how they might pay for their funeral may want to consider a funeral trust. Planning a funeral ahead of time may help relieve loved of having to make difficult decisions while they are also dealing with grief. A funeral trust can help take care of finances.

A funeral trust may be irrevocable, which means it cannot be changed or canceled. However, there are advantages to an IRF. If people are trying to spend down assets in order to access government assistance for long-term care, they can place money in an IRF, and it will no longer be counted among their assets. The money in this trust has to be used for funeral expenses. A revocable funeral trust is also an option, and although it may not offer some of the benefits of an IRF, it can be changed or canceled by its creator.

Analyzing the effectiveness of an estate plan

Nevada residents who are creating an estate plan may want to consider an estate analysis and a settlement cost analysis. The former reviews the current arrangements to make sure they are consistent and effective. For example, an estate analysis could reveal that a will conflicts with a testator's beneficiary designations on life insurance policies and similar accounts. Beneficiary designations override wills. A settlement cost analysis examines the costs of various options for estate planning and takes into account factors such as inflation and charitable bequests.

While a person with a complex estate will need a more complex estate plan, even those with few assets needs some kind of plan. Some points to keep in mind include choosing an executor for a will and trustees for a trust, creating a health care proxy or living will in case of incapacity, and appointing a guardian for any minor children.

Certain life events are inevitable. Will your estate be prepared?

Recent studies indicate that as many as 60 percent of individuals who are nearing the age of retirement don't have a will in place. Perhaps you have loved ones that you wish to provide for in the event of your death, but you haven't found time to write a will. Maybe you find the mere thought to be frightening or alarming. You may not be able to decide how or when you go, but you can make plans regarding what happens to your property and assets.

When finally deciding to write your will, you may have numerous concerns regarding the security and validity of the document. With the availability of almost anything online, you may also wonder if you can properly execute a will all on your own.

Handling debts after a person passes

When an individual passes in Nevada, the executor of the estate should determine if that person's estate has any outstanding debt balances. From there, the executor must decide when and how to pay them. It may also be necessary to contact creditors to tell them about any delay in payment that may occur. Property tax and insurance bills are among the most important debts that an estate may need to pay right away.

The deceased's income tax return may also need to be filed in a timely manner. In some cases, past returns may need to be filed for someone who was ill prior to his or her death. Estate tax returns may also need to be filed if the estate is worth more than the federal exemption. State law generally requires all creditors to be notified of a person's death in a reasonable amount of time.

Duties of a trustee

Nevada residents who are creating an estate plan may want to include a trust as part of it. However, in choosing someone to act as trustee, they might also wonder what duties that person is expected to perform. Trustees are not expected to be a financial expert, but they are expected to manage the trust's assets effectively. Therefore, trustees might want to hire an investment adviser.

The trustee may need to go above and beyond the investments of a deceased settlor. Heirs who feel the trust has not been managed effectively may claim that the trustee has violated his or her fiduciary duty. It is a good idea for trustees to prepare a document that explains what their investment goals are. An investment adviser might be able to assist them in understanding how to reduce various types of taxes, what assets should be sold and what the best investments might be.