Wednesday, April 22, 2015

Confidentiality-Another Reason For Avoiding Probate Via a Revocable Trust

The main component of the estate plan for most people is a revocable living trust that they establish during their lifetime. A properly drawn and funded revocable living trust will enable the surviving spouse and family members to avoid probate, the formal court supervision of an estate proceeding.  The most common reason given for wanting to avoid probate is the cost of a probate proceeding.  Since the court supervises the probate process from start to finish, significant administrative costs and fees are incurred.  These would include fees of the personal representative, fees of the attorney, filing fees and court costs.  However, what, if any, other reasons are there for wanting to avoid probate?

Another major reason to avoid the probate process is confidentiality.  An estate file is a matter of public record.  A review of someone’s estate file will reveal the terms of the Last Will And Testament of the decedent including:

·         who the beneficiaries are (and are not … such as disinherited children),

·         an inventory of the assets and their estimated value on the date of death,

·         any claims of creditors,

·         an accounting of the income and disbursements during administration,

·         the fees of the personal representative and attorney,

·         any litigation contesting the validity of the Will, and

·         the proposed distribution of the estate assets to the beneficiaries, among other information.

Although one can seek an Order sealing an estate file, obtaining such an Order is difficult and is somewhat unusual in estates in recent years.   

Contrast the non-confidentiality of a probate proceeding with the confidentiality of a trust administration.  A court does not supervise a trust administration.  Accordingly, there are no filings with the clerk that become a matter of public record.  Under Nevada law, the Will of a decedent is required to be lodged with the Clerk and becomes a matter of public record; however, the dispositive provisions of a Will in a revocable living trust situation merely provide that any estate asset is “poured over” into the trust. The trust agreement itself is not made a matter of public record.  For a court in Nevada to become involved with a trust administration, the court has to formally agree to assume jurisdiction of a trust via court order.  Courts in Nevada have more than enough to do, and do not want to assume jurisdiction of a trust unless it is absolutely necessary to do so.  Examples of this would be for the court to construe the terms of a trust agreement that are ambiguous and open to more than one interpretation, misconduct by a trustee, and a challenge to the validity of the terms of the trust agreement.

In summary, a primary reason for utilizing a revocable living trust in order to avoid the probate process is to maintain the confidentiality of one’s estate plan.    

-Attorney John R. Mugan

 

Wednesday, April 8, 2015

Updating your Estate Plan Includes Updating Your Ancillary Documents


As your life circumstances change through marriage, children, grandchildren, moving, divorce or other events, your estate plan should be reviewed and updated to reflect your current situation and wishes.
Many clients realize when their situation or circumstances change that the central part of their estate plan (typically a trust or a will) needs to be updated, but forget about the other documents they prepared as part of their comprehensive plan. Other such documents may include a Financial Power of Attorney, Health Care Power of Attorney and/or Directive to Physicians, often referred to as a “Living Will”.  Oftentimes the same person is nominated to serve as, for example, the Successor Trustee and the Attorney in Fact under a Financial Power of Attorney.  If a client changes their successor trustee because that person is no longer a good choice but forgets to also update their Power of Attorney designation, their intentions and wishes may be thwarted as the person they intended to completely remove from their plan is actually still an integral part of it.  In addition to modifying the person or people nominated in a Financial or Health Care Power of Attorney, your wishes regarding end of life decisions might also change. Thus, one’s Directive to Physicians should also be revisited every few years to assure that those are still your wishes.  These documents should also be periodically reviewed and updated to reflect changes in the law governing Powers of Attorney and Health Care Directives.
Below is a brief description of several of the ancillary documents that should be a part of your estate plan which ought to be periodically reviewed on a regular basis along with your will or trust to ensure your estate plan is current and reflects your intent.
1.         Financial Power of Attorney - A Financial Power of Attorney allows you to designate an agent to act on your behalf regarding your financial affairs in the event of incapacity or unavailability.  If you become incapacitated, this document gives another person full legal authority to sign on your behalf and manage your assets and financial affairs.
2.         Health Care Power of Attorney – A Health Care Power of Attorney allows you to appoint someone to make health care decisions for you in the event you are unable to make them for yourself, as well as when you are terminally ill.  This power only becomes effective upon your incapacity.  It contains a statement of your desires and generally speaking gives broad powers of health care decisions to whomever you have named as agent in your Health Care Power of Attorney.
3.         Directive to Physicians (Living Will)- This document lets family members know what type of care you do or do not want to receive should you become unable to make rational decisions due to incapacity.  The Directive to Physicians states that if you have an incurable or irreversible condition that, without the administration of life-sustaining treatments, will cause death within a relatively short time in the opinion of your treating physician, your attending physician is authorized to withhold or withdraw treatment that only prolongs the process of dying and is not necessary for your comfort or to alleviate pain. 
In summary, please don’t forget to review these important documents on occasions when you feel that changes in life have impacted your estate plan.
 

Wednesday, March 25, 2015

JURISDICTION OF THE NEVADA PROBATE COURT

Jurisdiction is the power of a legal body (a court) to hear and make a judgment or ruling on a case.   The Nevada Probate Courts are only able to hear and adjudicate probate cases that come within its jurisdiction.  The Nevada Probate Court’s jurisdiction is set forth in NRS 136.010:

  1. Wills may be proved and letters granted in the county where the decedent was a resident at the time of death, whether death occurred in that county or elsewhere, and the district court of that county has exclusive jurisdiction of the settlement of such estates, whether the estate is in one or more counties.
  2. The estate of a nonresident decedent may be settled by the district court of any county in which any part of the estate is located. The district court to which application is first made has exclusive jurisdiction of the settlement of estates of nonresidents.

In other words, the Nevada Probate Court may hear and make rulings on cases where (1) the Decedent was a resident of Nevada at the date of death or (2) the Decedent was a non-resident but owns property located within the State of Nevada.
Three simple examples illustrate the Nevada Probate Court’s jurisdiction: 

  1. Decedent A was a resident of Colorado and owned a vacation home in Las Vegas, Nevada.  The Nevada Probate Court has jurisdiction over Decedent A’s probate because the Decedent owned real property in Nevada.
  2. Decedent B is a resident of Nevada at the date of Death.  The Nevada Probate Court has jurisdiction over Decedent B’s probate because Decedent B was a Nevada resident.
  3. Decedent C is a resident of Texas and has no assets in the state of Nevada.  However, Decedent C’s children are Nevada residents.  The Nevada Probate Court does not have jurisdiction over Decedent C’s probate because Decedent C was not a Nevada resident and did not own and property in the state of Nevada.

Should you have any questions regarding the Nevada Probate Court’s jurisdiction, feel free to contact our office.

Wednesday, March 18, 2015

AFR's for April

The Section 7520 rate is 2.0%
The AFRs Annual Semi-annual Quarterly Monthly
are as follows
Short-term 0.48% 0.48% 0.48% 0.48%
Mid-term 1.70% 1.69% 1.69% 1.68%
Long-term 2.47% 2.45% 2.44% 2.44%

Wednesday, March 11, 2015

Review and Update of Estate Plan by Surviving Spouse

When a spouse dies, it is important that the surviving spouse review his or her own estate plan and estate planning documents.  In most situations, a married couple nominates his or her spouse to serve as their attorney-in-fact (agent) under their power of attorney for health care decisions and as their attorney-in-fact (agent) under their power of attorney for financial matters.  Under these documents, the person nominated to make health care decisions and to handle the financial affairs for the surviving spouse is now deceased.  Accordingly, it is essential that the surviving spouse review the powers of attorney to insure that there are alternate agents nominated to so serve. 
 
Oftentimes the surviving spouse will desire to update the powers of attorney by making the alternate nominated party or parties under the existing powers of attorney now the primary nominated party or parties and adding new alternate nominated parties. This is also true for nominated successor trustees under the Trust agreement and for the nominated personal representatives under the Last Will and Testament of the surviving spouse. Again, the nominated successor trustee and the nominated personal representative is often the now deceased spouse. 

Such a review is not limited to these estate planning documents.  The surviving spouse should also review any insurance policies insuring the life of the surviving spouse as to designated beneficiaries.  Again, the spouse, who is now deceased, is usually the designated beneficiary of the policy.  The surviving spouse needs to be sure that there are alternate designated beneficiaries under the terms of the policy (a revocable trust is a good beneficiary for insurance policies).  Unfortunately, if there is no living designated beneficiary at the time of the death of the surviving spouse, some policies provide that the proceeds are paid to the estate of the insured.  This would in all likelihood result in the necessity of a probate of the estate of the surviving spouse, something we always try to help our clients avoid due to the costs and fees involved with a probate proceeding. 

Additionally, if the surviving spouse has a retirement plan, the designated beneficiary provisions of the plan should be reviewed to make sure that there are alternate designated beneficiaries other than the deceased spouse.

-Attorney John R. Mugan

 

Thursday, February 26, 2015

Estate Planning Essentials

You have likely spent many years accumulating wealth, establishing relationships and caring for your family.  Don’t let that all go to waste by neglecting to plan ahead. By carefully designing and establishing an integrated estate plan, your wealth, relationships and family will be protected.
 
Approximately 55% of American adults do not have a Will or other estate plan in place according to a 2013 survey conducted by LEXISNEXIS, a legal research provider.  Although thinking about and planning for potential incapacity and inevitable death may be uncomfortable, it is essential to assure that your wishes are carried out, your hard-earned money goes where you want it to, and your loved ones have direction and guidance as to your wishes.  These important documents warrant careful thought and planning as they will speak for you when you can no longer speak for yourself. 

If a person passes away without an estate plan, their loved ones and family are left in what could be a sticky situation.  They may not know where to find bank account information to pay that last phone bill, where the keys to a safety deposit box are located, or who was supposed to get the family silver.  While these questions are seemingly insignificant, they have the potential to develop into large family disputes when the person who has the answers to these questions is no longer there.  While under emotional stress of losing a loved one, a family is forced to guess the deceased person’s intent.  The situation is further complicated when the family has to go to court for probate of the estate where Nevada (or the state of the decedent’s death) may have a say in guessing the intent of the decedent.  This process of attempting to discern a deceased person’s intent may last for months and cause unnecessary disputes and tension between loved ones and family members.
 
If you are part of the 55% of American adults who have a Will or other documents in place to speak for you when you pass away, you are already way ahead of the curve.  However, oftentimes when people have executed solely a Will, they neglect to plan for what may happen in the event of incapacity.  Without a document like a living Will which states who you would like to act for you when you can no longer make decisions for yourself, family members may fight over who will take care of you and Nevada (or the state of your residence) may step in and choose someone who you would never want to be in that position of trust.  If you have a living Will, you can name a person (or persons) who will step into your shoes and assure that you are taken care of.  This person will enable you to maintain your standard of living, help provide for any dependents you have, and prevent your family from having to guess at what you would have wanted while under emotional stress and time constraints. 
 
These potential messes can generally be avoided with a comprehensive estate plan, wherein your wishes and intent are explicit.  Please contact our office for a FREE 30 minute Trust or Will consultation so you can plan and be prepared.
 
-Attorney Rebecca J. Haines

Wednesday, February 18, 2015

Planning for Aging Parents and Family Pets

When putting together our estate planning, it is natural for us to plan for our descendants and other persons whom we wish to be benefitted by our legacy.  We may also want to include provisions for certain charitable organizations that are meaningful to us.  Our population is changing such that estate planning considerations are also expanding to less traditional classes of beneficiaries, such as aging parents and family pets.  The older generations are living longer, and people are finding themselves caring for an aging parent, relative or friend.  Persons in care-giving roles may want to think about including their aging parents in their estate plans to ensure there is no disruption in their parents' ongoing care and/or diminution in their parents’ quality of life.  In addition, some pet owners go to great lengths to provide a high level of care for their pets.  To them, it is important to make arrangements for the continued care of their pets should their pets outlive them.  For the owner’s peace of mind and the security of the pet, an estate plan may include a reasonable monetary bequest to a caregiver who could in turn use the funds to care for the pet.