People in Nevada who are creating an estate plan may want to include a trust as part of it. A trust may be revocable or irrevocable. The former can be changed by the creator, also known as the settlor. The latter usually cannot. Irrevocable trusts remove assets from the settlor's control, but increasingly, there have been efforts to find ways to allow them to be modified as well.
It isn't uncommon for couples in Nevada and elsewhere to refrain from having children. This may be because they are worried about their parenting skills, focused on professional pursuits or they simply prefer not to have children. However, it is still important for childless couples to pay attention to their estate planning needs.
Individuals in Nevada who currently have a will might also benefit from having a trust. A will allows a person to dictate where assets go after he or she passes on. It may also be possible for an individual to name a guardian for a child and take other estate planning actions. However, a trust may be the more efficient tool for those who are looking to leave assets to beneficiaries.
Some Nevada residents may be interested in creating a trust as part of their estate planning process, especially because of the greater level of flexibility, privacy and control that it offers. Each trust has beneficiaries but also a trustee who makes decisions about how the trust is managed and its funds distributed. Some trusts may dictate the trustee's actions strictly while others may provide for broader trustee discretion.
Individuals in Nevada and throughout the country can show how much they love their families by creating estate plans. A will can be an effective tool to transfer assets directly to a spouse, child or other relatives after an individual passes. It can also be possible to gift assets while still alive, which can help to reduce estate taxes. Depending on how a trust is structured, property can be protected from creditor claims while still allowing a beneficiary to use it.
In Nevada and across the country, a growing number of Americans are deciding to divorce later in life. While overall divorce rates have gone down, the divorce rate for people aged 50 and up actually doubled between 1990 and 2010, a trend that shows no sign of stopping. Financial advisors have noted some of the changes and concerns that can accompany divorce later in life, including making changes to each spouse's estate plan and retooling their retirement savings to fund separate lifestyles.
Many people in Nevada include their retirement accounts as part of their overall estate plan. In the past, people often planned that the named beneficiary on their individual retirement account, or IRA, could take the distributions from the plan over their entire lifetime. However, with the passage of the SECURE Act, inherited IRAs will be handled differently moving forward. With some exceptions for minor children, spouses and beneficiaries with chronic illnesses or disabilities, the full distribution of an IRA must be taken within 10 years of the death of the primary account owner.
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.
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.
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.