Wednesday, July 1, 2015

Nevada Improves its Trust Decanting Statute

Trust decanting.  It’s a fancy and fascinating sounding topic, right?  Well, maybe only to my estate planning peers.  Nevada updated its trust decanting statute this last legislative session and the changes become effective on October 1, 2015, and can be found in Senate Bill 484.
 
You may have heard of decanting for liquids.  Let’s say that I don’t like the container that is holding my lemonade.  I can take my lemonade and pour it, or decant it, into a nicer container.  Maybe it’s a nice glass pitcher.  Perhaps it’s an etched crystal carafe in which it can better breathe. 
Of course nobody really decants lemonade.  I’m pretty sure decanting is reserved to liquor and wine.

But it’s an analogy to what is available for an irrevocable trust.  Trust decanting allows an irrevocable trust’s assets to be poured to another irrevocable trust.  Often, the goal of the decanting is to change some quality of the original trust or to fix something that was overlooked.  Nevada’s statutes detail what is permitted to be changed in the new or second trust and the changes in our state law are an attempt to remain competitive with other states that cater to capturing trust business.
A few examples of why someone might want to decant a trust:

  • To cure some administrative language, such as the addition of a Trust Protector or Trust Consultant.  A Trust Protector or Trust Consultant can be advantageous for a long-term generation skipping trust in order to be able to change trustees, add charitable beneficiaries, etc. 
  • To remove a mandatory income interest for a beneficiary (except for marital deduction, charitable deduction, or grantor-retained annuity trusts).  This could be useful if a beneficiary was entitled to mandatory income distributions, converting the trust to discretionary distributions could be better for the beneficiary if the beneficiary is thinking of divorcing or if the beneficiary is having creditor problems.
Nevada’s decanting statute also makes clear that an irrevocable trust that was created in another state, but which has the ability to change situs to Nevada, is eligible to fully utilize Nevada’s decanting statute.  The statute also confirms that the Trustee of the original trust is permissible to be the settlor of the second trust.
 
The statute governing trust decanting in Nevada is NRS 163.556.

- Attorney Jason C. Walker

Friday, June 19, 2015

AFR's for July

The Section 7520 rate is 2.2%
July Annual Semi-annual Quarterly Monthly
AFR's
Short-term 0.48% 0.48% 0.48% 0.48%
Mid-term 1.77% 1.76% 1.76% 1.75%
Long-term 2.74% 2.72% 2.71% 2.70%

Tuesday, June 2, 2015

Nevada Expands Probate Avoidance

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 fees and costs include fees of the personal representative, fees of the attorney, filing fees and court costs. However even when a person establishes a revocable living trust, periodically one or more assets such as a vehicle or a bank account does not get properly re-titled into the revocable living trust.  In this situation, when the trustor dies the vehicle or bank account is in the name of the deceased trustor alone.  Can probate still be avoided?  The answer is maybe, depending on the value of the asset or assets.

Under existing Nevada law, specifically NRS 146.080, if the gross value of such asset does not exceed $20,000.00 and does not include an interest in real estate, the person entitled to succeed to the property may execute an Affidavit showing the right to such property. This person, the claimant, is usually the trustee of the revocable living trust or the surviving spouse.  The Affidavit, along with a death certificate, is furnished to the institution having custody and control of the asset no sooner than 40 days after the date of death, and the institution is required to change ownership of the asset accordingly without the necessity of probate.  For example, a vehicle or bank account titled in the name of the decedent at the time of death will be re-titled by the DMV or the financial institution per the terms of the Affidavit. 

The gross value limitation amount of $20,000.00 under NRS 146.040 was increased in the most recent Nevada 2015 legislative session.  The law was amended to raise the gross value limitation amount to $100,000.00 if the claimant is the surviving spouse and to $25,000.00 for any other claimant. Also under the amendment, the value of a vehicle is not counted against the new gross value limitation. This amendment is effective October 1, 2015.

Also under existing Nevada law, specifically NRS 145.110, if the gross value of an estate after deducting any encumbrances does not exceed $200,000.00, the Court may order summary administration of the estate as opposed to a complete probate proceeding.  This amount was increased to $300,000.00 in the Nevada 2015 legislative session.  Again, this amendment is effective October 1, 2015. 

In summary, a probate proceeding may in some situations be avoided in Nevada even if the trustor dies with an asset or assets that normally would require a probate proceeding. However, the best and safest way to avoid probate is to establish and properly fund a revocable living trust during one’s lifetime.

-Attorney John R. Mugan

 

Friday, May 29, 2015

Solicitation for Copy of Deed

In Clark County, Nevada, (where most of our clients live) it is very easy to obtain a copy of your recorded property deed.  If our office helped you transfer your house into your trust, then you should have received a copy of your deed from us when the recording was complete.  But many clients, including myself, have received "junk mail" soliciting to provide a copy of your deed for a processing fee.  The mail is very official looking and convincingly informs the recipient of the reasons why you need a copy of your deed.

You do not need to fall for this solicitation.  Hopefully you immediatey realized that you already have a copy of your deed.  But if you have misplaced your deed, it is not a trajedy.  You don't have to have your original document to later sell the property.  But the main reason that you can ignore this type of solicitation is that the Clark County Assessor's website allows you to view and print a copy of your deed for freeNo charge!  No processing fees at all.

To access the county records, visit the Assessor's website link here.

I have included a redacted copy of the solicitation letter that many clients have received.

If you have any questions or need assistance locating a copy of your deed, please contact our office.

Jason C. Walker

Wednesday, May 20, 2015

Dave Ramsey Luncheon

 
Jeff Burr had the pleasure of sitting with talk show host Dave Ramsey during his luncheon held on May 7, 2015 at Brio at Town Square.  The firm was also one of the sponsors of the luncheon and want to thank Mr. Ramsey for a fantastic event.

Wednesday, May 13, 2015

Donor Advised Funds: A Flexible Approach to Charitable Giving

Donor-Advised Funds (“DAFs”) have become one of the most popular charitable giving vehicles in the United States over recent years due to the simple, powerful, and highly personal approach to giving they make possible.
 
DAFs are basically accounts set up at a financial institution or charity that allows donors to make a grant and receive an immediate tax benefit in the form of an income tax deduction.  Once the fund is set up with you as the advisor, the contribution is placed into an account where it can be invested and grow tax free. At any time thereafter you can select the legally recognized charities to make grants and contributions to.
 
Several other benefits of a DAF include:

·         Little or no initial costs, start up fees and costs are often covered by the sponsoring organization and the fund can be established immediately.

·         The tax deduction limit is fifty percent (50%) of adjusted gross income, as opposed to only thirty percent (30%) for private foundations.

·         All annual tax reporting is handled by the Donor Advised Fund, there is nothing for the individual to report.

·         The valuation of the gift is generally fair market value.

·         You as the donor may recommend grants and investments, however the DAF sponsor or fund administrator has legal control and makes all the final decisions.

·         There is no minimum required payout per year, as opposed to the minimum five percent (5%) required payout per year for private foundations.

·         Donors may name advisors to recommend grants and investments and successors to those advisors.

If you are interested in creating a Donor Advised Fund or have other questions about maximizing your charitable giving, please feel free to contact our office.
 

Wednesday, April 29, 2015

AFRs for May 2015

The AFRs Annual Semi-annual Quarterly Monthly
are as follows
Short-term 0.43% 0.43% 0.43% 0.43%
Mid-term 1.53% 1.52% 1.52% 1.52%
Long-term 2.30% 2.29% 2.28% 2.28%