Some people in Nevada may think that the word "estate" in "estate planning" implies that a person needs to be wealthy in order to have an estate plan. However, an estate plan is important for all adults regardless of their income or assets. All estate plans are different, but they may have some elements in common.
With rising estate tax and gift tax exemptions, the qualified personal residence trust is less common than it once was, but some people in Nevada still have a QPRT as part of an estate plan. With a QPRT, the owner transfers ownership in the home to a beneficiary but retains the right to continue living in the home for a fixed period of time. A QPRT can remove the value of the home from the estate and reduce the taxes on the home.
Nevada residents who have created an estate plan may not have taken beneficiary designations into account. These forms may have been filled out along with a lot of employment paperwork, and people could forget about it. Therefore, beneficiary designations may need reviewing regularly. Otherwise, a person may fail to remove an ex-spouse or add a new one. There are a few points to keep in mind when choosing a beneficiary.
A survey of hundreds of entrepreneurs found that many were poorly prepared in terms of estate planning. Only about a quarter had a will while 80 percent lacked a financial power of attorney. Fewer than 15 percent had a living trust and nearly two-thirds had no documents at all. Nevada entrepreneurs can help protect their businesses and families with these types of documents.
People in Nevada can use irrevocable trusts keep control of assets that have been intended for their loved ones. Irrevocable trusts offer multiple advantages, such as tax savings, and may be more beneficial to use than revocable trusts or wills.
A charitable split-interest trust is one way that Nevada residents can donate to charity as well as providing an income for beneficiaries. These types of trusts have several other advantages as well. They can create income from properties that are not profitable because property can be placed in the trust and sold as tax-exempt. There are income tax exemptions for a charitable trust, and it can also result in a reduction in estate tax and gift tax.
Nevada residents who are creating an estate plan may want to consider setting up an IRA trust for their retirement account. An IRA trust can protect an account from creditors. It can also specify how distributions are made to beneficiaries. This may be useful if the beneficiaries are likely to be irresponsible with money or if they are very young. For example, a person who inherits a retirement account at the age of 18 or 21 may not know how to effectively manage money.
When Nevada residents are planning their estate, including their heirs in the process can be a critical part of a successful outcome. These types of conversations can be emotionally challenging, but for people with substantial assets, doing so is important for personal and family futures.
Creating an estate plan is a smart move for Nevada residents. However, it may not be enough to simply create the plan and forget about it. As both personal and professional events unfold throughout the year, a will or trust may need to be altered to reflect any changes that may have taken place. Individuals should look to see if beneficiary designations need to be changed or if the plan is still tax-efficient.
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.