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Estate planning when you've had a falling out with your child

Most parents would probably agree that seeing their children come into their own is a bittersweet experience. Like them, you may miss those times when your child would cuddle up with you on the couch and loved you unconditionally, especially if you now have a strained relationship.

Perhaps, once your child reached adulthood, you could no longer see eye-to-eye. If you had a falling out of some kind, you may not have an estranged relationship. While you may always love your child, you are considering making the tough decision to exclude him or her from your estate planning.

Stepping up as a successor trustee

Many people in Nevada find that trusts are very helpful to their estate planning process. The additional privacy, flexibility and control provided by these options mean that they can be valuable tools in distributing assets after a person passes away. Still, people who are named as successor trustees in a trust may be unfamiliar about what to do when the trust's creator dies because many people are less familiar with trusts than, for example, the role of the executor of a will. In many cases, people create trusts during their lifetime, during which they retain full control over the property in the trust.

The trust documents will typically name a successor trustee who takes over responsibility for the trust when the creator dies or becomes incapacitated. In most cases, the documents will also state what the named successor trustee needs to do. They may need to provide a death certificate or a doctor letter certifying that the trust creator has been incapacitated. Next, the named successor needs to make some sort of affidavit or certificate affirming their role as successor trustee and committing to carry out their duties under state law and the terms of the trust.

How to correct estate planning problems

Changes to the tax law or other events that happen during a person's life may cause estate planning problems. For instance, a trust may become obsolete because of a change to the tax code or because it fails to provide for a newborn child. If an irrevocable trust does become outdated for any reason, it may be possible to change with permission from a judge or from the trust's beneficiaries.

A judge may allow an irrevocable trust to be modified if not doing so wouldn't allow it to fulfill its purpose. In some cases, an individual can decant an existing irrevocable trust by pouring assets into a new trust with different language. Other potential ways to modify an irrevocable trust is to appoint a trust protector or to insert language saying that it must comply with changes to tax law. If an individual does want to go through the decanting process, it is a good idea to review state law before doing so.

An overview of irrevocable trusts

Nevada residents may be interested in using an irrevocable trust as part of their estate plans. An irrevocable trust is one that generally cannot be modified without the consent of all of its beneficiaries. Once an item is transferred to the trust, the trust obtains full ownership of that item. Irrevocable trusts offer a variety of potential benefits such as shielding assets from being seized to satisfy a judgment or as part of a divorce settlement.

Assets inside of an irrevocable trust are typically considered to be held outside of a person's estate. Therefore, putting assets in a trust may help to minimize a potential state or federal estate tax bill. Keeping assets outside of an individual's estate may make it easier to qualify for government benefits such as Medicaid. After the trust is created, it will be overseen by a trustee responsible for making decisions based on its language.

What to know about wills and probate

If an individual who owns property in Nevada passes away, his or her estate may need to go through probate. This may be true whether or not that individual had a will. Certain assets such as a life insurance policy or a home that was owned jointly with another person may be able to bypass this process. The point of the probate process is to verify that a will is valid and enter it into the public record.

Generally speaking, the executor of the estate will present the will to the appropriate authorities. Wills may be valid even if a person has been married multiple times or has gone through other life events since the document was created. State law may spell out the guidelines related to challenging a will or other estate plan documents. For instance, Georgia law requires that a will be contested no more than four years after an estate has been settled.

Reading of wills no longer required by states

Nevada residents who have had a loved one recently pass away may be interested to know if they were named in the will. A will is a legal document that allows a person to determine what happens to their estate after they pass away. Wills typically name the beneficiaries and the amount of the estate that they'll receive after the testator's death.

In most cases, all of the beneficiaries named in a will are notified by an estate attorney. Though scenes of a will being read aloud to all of the beneficiaries are often depicted in movies and on television, this rarely occurs today. In fact, no states require that a will be read aloud. Most beneficiaries, any listed guardians and the executor will receive a copy of the will. This ensures that everyone listed in the will understands what they will be receiving as their portion of the estate.

Estate planning advice in the new year

The start of a new year may be a good time for Nevada residents and others to review their estate plans. In 2020, there will be a presidential election, and shifts in political philosophy could have tax and other estate planning consequences. For instance, some believe that estate tax rates could increase as the estate tax exemption goes down. While it is important to note that nothing is certain before it happens, it is generally a good idea to be proactive in case something does change.

Ideally, individuals will review their current estate plans with a CPA or another financial adviser. This professional may be able to help someone create a strategy that minimizes his or her tax bill without the need to make large gifts. One potential strategy may be to create a spousal lifetime access trust (SLAT). Creating a domestic asset protection trust (DAPT) may also be an option assuming it is available where the trust is domiciled.

The new year is the perfect time to review your estate plan

As the new year gets underway, you may be thinking of certain matters you need to address to ensure a happy year ahead. You may think of diet changes you want to make, doctor appointments you need to schedule and personal matters you need to update. In particular, you may want to ensure that your estate plan still contains the correct information to reflect your wishes.

By having already created an estate plan, you have set yourself and your family up on a solid path. The information in your plan can help your loved ones navigate tricky affairs in the future, including how to handle your estate after your passing. However, if you do not update the information periodically, it could become useless.

The importance of estate planning for business owners

Business owners in Nevada and throughout the country will ideally take the task of estate planning seriously. Doing so may help to ensure that a company is successful after the original owner no longer owns or operates it. While many people wait until later in life to put together such a plan, it may be best to do so as early as possible. A company owner can start the planning process by naming potential successors long before any changes need to take place.

A trust makes it easier to ensure that business assets are transferred in a quick and relatively easy manner. It may also make it possible to minimize or avoid paying estate or other taxes on assets a person owned or transferred at the time of his or her death.

How to account for the SECURE Act

In 2019, the federal estate tax exemption was $11.4 million. In 2018, there were only 1,900 families that were subject to this tax, which means that it has become less of an issue for most people who are creating their estate plans. Typically, Nevada residents and others are more concerned about limiting capital gains taxes or otherwise making a plan as easy to carry out as possible. However, the SECURE Act may require individuals and families to adjust their current plans.

For example, it may be best to name a spouse as a primary beneficiary on an IRA. This is because beneficiaries who aren't a person's spouse will now have to use the funds in an inherited IRA within 10 years. By allowing the spouse to retain a portion of the account balance, a child or other beneficiary may pay less in taxes.

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