The main reason many Nevada residents may create an estate plan is to implement tax-saving strategies that can limit the estate taxes their heirs may have to pay. However, there are other, non-tax reasons estate planning should be used.
A trust is a relatively common estate planning tool that individuals in Nevada and throughout the country can use. Their structure will largely determine how they are taxed and how they are controlled. It will also play a role in determining if assets in the trust are protected from creditor claims. Generally speaking, a trust can be defined as revocable or irrevocable. A revocable trust can be amended or terminated at any time by the person who has created it.
For parents in Nevada whose children have special needs, it is important to create an estate plan. In many ways, this estate plan is not very different from the estate plan anyone else would create. The parents still need to consider the same essential components which are a will, a trust, financial and medical powers of attorney, a HIPAA authorization and an advance health care directive.
When Nevada residents think about planning for the future, they may be concerned about how estate taxes could affect the beneficiaries of their estates. There are a number of ways that people can help to reduce the tax burden by taking some steps to plan ahead. One of the first steps that many people take is to distribute part of their estate during their lifetime by making gifts. There is a federal lifetime estate and gift tax exemption of approximately $11.2 million dollars, twice that for a married couple. In addition, people can give away up to $15,000 annually to each recipient without needing to pay gift taxes.
Nevada residents and others who are creating their estate plans may want to consider including a domestic asset protection trust, or DAPT. These trusts offer a variety of benefits such as protection from creditors as well as privacy from those who may want to know the details of an estate plan. It can also be helpful for those who plan on transferring money to minors or to those who are immigrating to the United States.
Nevada residents and others may want to amend their trust or amend one on behalf of a parent. The first step is to ensure that a trust's terms can be changed. In many cases, the terms can be amended assuming that the proper procedures are followed. Depending on the trust's language, it may be possible for an attorney-in-fact (AIF) to make changes if the creator of the trust doesn't have the mental capacity to do so.
In the past, Nevada residents with substantial estates who expected their heirs to owe federal estate taxes often planned for the expenses by creating irrevocable life insurance trusts. These trusts paid for life insurance policies funded with small gifts to pay the premiums every year. When the time came, the life insurance would cover tax bills.
When people in Nevada plan for the future, IRAs can be an important part of that planning process. This is true whether people are planning for their retirement years or thinking about the distribution of the remainder of the account as part of their estate. Because of the different ways that inherited and individually owned IRAs are treated under the law, some people may wish to consider naming a trust the beneficiary of their IRAs after death rather than an individual person.
Some people in Nevada might want to create a trust for a family member with special needs who gets government benefits. These trusts can be a way to continue helping a person who has special needs without jeopardizing that person's access to those benefits.
An integral part of estate planning involves taking into account current interest rates: Certain types of trusts can be beneficial to the citizens of Nevada during times of low-interest rates, while other types of trusts are better suited for times of high interest rates. With that being said, the past few years, past decade actually, have been dominated by low interest rates, yet this is about to change. As a matter of fact, current interest rates are rising, and they are not showing any signs of slowing down.