Monday, December 31, 2012

Will an Umbrella Protect You from a Lightning Strike?

We all have heard the overused phrase that “we live in a litigious society.”  For many of us, being a named defendant in a lawsuit can be compared to being stuck in a lightning storm with an umbrella – an unsettling proposition.  Even if a person believes that he or she is not at fault for another’s damages or injuries, that person is relying on what many believe is an imperfect justice system to find the truth. 
 
Some believe that his or her auto or homeowner’s insurance, professional liability insurance, or an umbrella insurance policy will satisfy any potential liability that could arise in his or her personal or professional life.  However, there are numerous judgments that have exceeded the coverage limits provided by an individual’s personal liability insurance.  Furthermore, it appears that the cost for professional liability insurance and umbrella insurance continually increases while such coverage is becoming more narrow and limited in its protection from the potential range of tort liability.  Typically, professional liability insurance and umbrella insurance does not cover claims arising out of employment related lawsuits, breach of contract claims, or claims arising out of a business endeavor.  If the court assesses punitive damages, those damages will not be paid by a person’s umbrella insurance.
 
Nevada has been nationally recognized as a leader in passing powerful asset protection laws.  A number of these laws provide automatic protection with little or no action required to be made on behalf of the individual.  Some of these statutorily protected assets include money, not exceeding $500,000 in present value, held in an IRA and all money, benefits, privileges or immunities accruing or in any manner growing out of any life insurance policy.  In addition, Nevada has a generous homestead exemption of $550,000.
 
Other favorable Nevada asset protection laws require a person to implement certain legal entities such as corporations, professional corporations (PC), and limited liability companies (LLC).  These legal entities provide a person with asset protection when properly structured and operated. For example, a physician might choose to operate his or her medical practice within a PC while owning rental property in an LLC.  The physician’s patient who successfully sues for a medical malpractice claim cannot look to the rental property as a means to satisfy his or her judgment.  Under Nevada law, a judgment creditor’s sole remedy with regards to a person owning a membership interest in a LLC is a charging order.  A charging order does not grant the judgment creditor the ability to force distributions or assume a voting interest in the LLC.  Rather, a judgment creditor is only afforded the actual distributions, if and when made, to the debtor member of the LLC.
 
With its continued statutory improvement in each Nevada legislative session, the Nevada self-settled spendthrift trust, or more commonly known as the Nevada asset protection trust (NAPT), has become an increasingly popular tool in providing asset protection.  The NAPT is an irrevocable trust.  In basic terms, a trust is a legal relationship in which one person – the trustee – holds assets for the benefit of another – the beneficiary.  The person who creates the trust is known as the settlor.  Under Nevada law, a settlor is able to create a spendthrift trust which provides a way for the settlor to secure his or her property by shielding such property from potential creditors’ claims.  After a period of time (two years) after which an asset has been transferred to the NAPT, the property becomes exempt from creditor levy or attachment.  For example, a physician creates a NAPT in which he or she transfers a non-retirement brokerage account valued at more than $250,000.  More than two years elapses at which time the physician is involved in a multivehicle collision in which he or she is found to be at fault.  The damages awarded by the court exceed the coverage limits of both his or her auto insurance and umbrella insurance policies.  The $250,000 brokerage account is not available for use in satisfying the court awarded damages due to the fact they are held in the NAPT.
 
While we firmly advocate that all individuals and businesses should carry adequate insurance, it is also reasonable and prudent to take advantage of Nevada laws that allow you to further protect your assets. It is always possible that you could face a judgment in excess of insurance limits – or face a judgment for something that is not covered by insurance.
 
Everyone should seek the advice of competent and experienced legal counsel to see if sophisticated asset protection planning is right for them.
 
 

Thursday, December 27, 2012

CHOOSING YOUR CORPORATE TRUSTEE

In many cases, clients choose to name a professional trustee to serve either as the initial trustee or successor trustee of one or more of their trusts.  The modern trend toward the use of professional trustees is likely the result of the complexities involved in: 1) the way a trust may be structured; 2) the management of certain types of assets contained in the trust; and 3) the application of the current tax rules and regulations to the trust.  A professional trustee is typically comprised of a Bank’s trust department or a separate trust and investment company that specializes in the administration of trusts.
 
A professional trustee is an alternative to naming a personal trustee, such as a family member or friend.  One reason some clients choose to shy away from naming a personal trustee is to avoid placing a burden on their families and friends.  Being a trustee involves a great deal of work on the part of the trustee and can be quite disruptive to a person’s life.  Another reason clients may consider a professional trustee is to avoid contention among the beneficiaries, such as in the case where one child is named as the trustee of funds being held in trust for the benefit of another child.  In that situation, the child trustee may feel pressure to approve a distribution that may not otherwise be exactly in line with the terms of the trust.  Conversely, if the child trustee refuses to make a distribution requested by a beneficiary child, it may create ill feelings among the siblings.
A professional trustee, on the other hand, is a neutral third-party.  It is a fiduciary whose primary focus is on the language of the trust and doing what is in the best interest of the beneficiaries, both current and remainder.  It is unbiased and acts objectively when it comes to favoring any one beneficiary over another.  Consequently, a professional trustee will not cave to pressure or have any qualms saying no to a beneficiary when it finds that a distribution request is not authorized by the trust.  A professional trustee handles each distribution request cautiously and often has committees in place to approve distribution requests that follow the provisions of the trust.  To that end, a professional trustee ordinarily complies and maintains back-up documentation to support why a particular distribution is being made in case there is ever a dispute.
 
There are several advantages of utilizing a professional trustee aside from those considerations mentioned above.  A professional trustee is just that—a professional who is in the business of acting as trustee.  A professional trustee is well versed on what steps need to be taken in the administration of various trusts, while an individual trustee would normally be subject to some degree of a learning curve in ascertaining and prioritizing what needs to be done.  Because a professional trustee keeps abreast of current laws and is able to read and interpret complex trust agreements, it usually does not require as much guidance as an individual trustee who is without any formal training in this area.  As such, a professional trustee can generally step in and administer the assets while keeping overall costs down.
Of course, a professional trustee is entitled to take a fee for its management services, which are customarily computed upon the value of the assets subject to its oversight on an annual basis.  Most professional trustees have a standard fee schedule included in the trust administration package.  The fees may differ as they pertain to various aspects of the administration process, including making investments, performing tax services and dealing with specialty assets, such as businesses, commercial properties and rentals to name a few.  While some may see the charging of fees as an apparent disadvantage of using a professional trustee, it should be noted that any trustee has the right to take an appropriate fee from the trust, regardless of whether the trustee is an individual or a professional.  For example, it is not at all uncommon for a child trustee to be deemed entitled to receive as much compensation as a professional trustee for performing like services.
 
It is good practice to interview your choice of professional trustees to confirm that the manner in which the trust will be administered matches with your expectations.  You will want to feel comfortable with the professional trustee's approach since some may be more "hands-on" than others.  Depending on the character of the trust assets, it may also be important to find out if the professional trustee is willing and equipped to handle certain non-investment properties that may involve a specific area of expertise. 
Choosing a trustee is not a “one size fits all” decision.  In many instances, it may make perfect sense to rely upon a family member, friend or trusted advisor, such as an accountant or attorney, to serve as trustee of a trust.  Some clients may even prefer to use a hybrid arrangement by naming one or more individual and professional trustees to serve in particular circumstances.  In other situations, there may be clear reasons that lend a trust to management by a professional trustee.  Similar to entering into a relationship with any trustee, taking steps to clarify your expectations at the outset will go a long way in making sure that you select a professional trustee that most effectively meets your needs.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Tuesday, December 18, 2012

Affidavit of Successor Trustee

Assume John Smith established the John Smith Revocable Trust during his life with himself as the Trustee of the Trust.  There are Trust assets with a bank or other financial institution, the records of which list the trustee as John Smith.  John Smith dies, and under the terms of the Trust agreement Mary Jones is the successor trustee of the Trust. How does Mary Jones as successor trustee gain custody and control of the Trust assets? 

In this situation, sometimes a bank or financial institution will request a copy of the complete Trust agreement, along with a death certificate of the deceased trustee.  However, one of the advantages of a revocable trust is confidentiality, namely never making the complete Trust agreement a matter of public record like you are required to do so with a Last Will and Testament in an estate proceeding.  A copy of the complete Trust agreement will contain the dispositive provisions (who the beneficiaries are and what their shares are) and may contain other provisions such as the disinheritance of a child.  This information is not the concern or business of the bank or financial institution.  All the bank or financial institution should be concerned with is the successor trustee provisions of the Trust.  The response to the bank is an Affidavit of Successor Trustee, sometimes referred to as a Certificate Of Incumbency.  This is a document which Mary Jones as successor trustee would sign that states in part that: (1) John Smith established the John Smith Revocable Trust and the date of the Trust agreement; (2) John Smith died and his date of death; (3) Mary Jones is the successor trustee under the terms of the Trust agreement, and (4) Mary Jones accepts the trusteeship and agrees to serve as trustee. A death certificate of John Smith is attached to the Affidavit.  The Affidavit can then be shown to the bank or financial institution as proof of the death of John Smith and further proof of Mary Jones being the successor trustee of the Trust.  The bank or financial institution will make a copy of the Affidavit or scan it into its records, and remove the name of John Smith as trustee and list the name of Mary Jones as the trustee on its records of the Trust assets.  The bank or financial institution will then do whatever the new trustee, Mary Jones, instructs them to do regarding the Trust assets.       

What about real estate is owned by the Trust?  A search of the public records regarding the real estate will list John Smith as the trustee.  Accordingly, if Mary Jones as the successor trustee tries to distribute or sell the real estate or place a mortgage or deed of trust thereon, the title company and bank would check the public records and want John Smith as trustee to sign the relevant documents.  This is impossible since he is deceased.  In a case where the Trust owned real estate, you add to the Affidavit of Successor Trustee a statement that the Trust owned the real estate and set out certain pertinent information regarding the real estate including its legal description.  You then record the Affidavit with the county recorder in which the real estate is located.  Upon recording, the county officials (recorder, treasurer, assessor, etc.) will change the public records regarding the real estate by removing John Smith as trustee and listing Mary Jones as the trustee. Any search of the public records after the recording of the Affidavit will show that Mary Jones is the successor trustee and the one who has legal title to the real estate.  
In summary, a successor trustee can obtain control and custody of the Trust assets when the prior trustee dies through an Affidavit of Successor without having to disclose all of the terms of the Trust agreement.     
 
 
 

 

Friday, December 7, 2012

Estate Planning for Young Families

There is a common misconception that estate planning is only for individuals or families with significant wealth.  Estate planning is a necessity for families with minor children.  There are several important objectives in creating an estate plan for young families:

·        Selecting the guardian of minor children upon the death or incapacity of the parents

·        Providing financially for minor children if the parents become incapacitated or deceased

·        Choosing a manager over the family’s finances if the parents become incapacitated or deceased

·       Minimizing contention between extended family members

·       Determining how and when assets should be distributed to children or others (such as what age children receive outright distributions)

·       Avoiding court proceedings upon the incapacity or death of the parents (probate, guardianship)

It is important to consider each of these issues and discuss them with an estate planning attorney.  The failure of parents to prepare an estate plan can be devastating to the children and extended family members upon the death or incapacity of the parents.  Without written direction from the parents in properly created estate planning documents, minor children can get caught in the middle of expensive and time consuming court proceedings.  If you have any questions regarding your estate planning documents or have not yet created an estate plan to protect your family, please call our office today for a free consultation.  Once you have a plan in place, you will have the peace of mind that your family will be protected.     

Friday, November 30, 2012

Fiscal Cliff. Part 2.

As Jason, mentioned in his blog, we are writing more on the estate and gift tax consequences of the fiscal cliff.  While all of us are hopeful that there will be a political compromise with respect to both income and estate and gift taxes between now and year-end, it is likely that this will probably not be sorted out until 2013, with the compromise to be retroactive to January 1, 2013.
 
If Congress fails to act, and the gridlock continues, as of January 1, 2013, the following will occur with respect to gift and estate taxes:
 
  • The federal estate tax and gift tax exemptions will drop to only $1,000,000 (a drop of $4,125,000 from the current $5,125,000);
  • The generation skipping transfer tax exemption will drop to a little over $1,000,000– making gifts to grandchildren more expensive; and
  • The estate, gift tax and generation skipping transfer tax rates will increase to 55% for the highest brackets (a 20% increase from the current 35% rate).
  • The Nevada estate tax will return.
While, there is no “one size fits all” solution to this issue, we recommend that you maximize your gifting this year by making year end gifts so that you can pass more assets free of estate and gift taxes. 
 
Many clients do have a concern that if they gift too much away they could run out of assets.  Popular solutions to this have been (1) have a spouse as a beneficiary of the trust and assume that as long as the spouse is alive the donor can derive indirect benefit by being supported by the spouse while the spouse is being supported by the trust, and (2) forming a Nevada asset protection trust, which we call a Nevada On-Shore Trust (a “NOST”), since the IRS has ruled in at least one case that the contributor can be a discretionary beneficiary and actually receive the benefit of trust assets if and whenever they may need it. 
 
It is important for you to schedule a time to meet with one of our attorneys to develop a personalized plan that meets your estate planning needs. Please contact us as quickly as possible if you have any questions or if we can be of assistance between now and year end.
 
Attorney Rick Cunningham
 

Wednesday, November 21, 2012

Thanksgiving Wishes – and Fiscal Cliff

First of all, I want to wish a Happy Thanksgiving to all of our faithful blog readers. (I think we are up to twelve).  As a firm we are thankful for our wonderful clients, trusting referral sources, and wonderful staff.  We wish all of you a joyous weekend filled with family time, football, turkey, pie, and consumerism.

I’m sure we will write more on this next topic in the next week or so because it deserves some attention; but now that the election is over and the political climate is at least a little more certain, many people have expressed concern about the estate and gift tax and how they are affected by the “fiscal cliff” everyone is talking about.  I have located a really nice article in Forbes that summarizes the impact of the fiscal cliff on estate and gift taxes. 
Attorney Jason Walker

Friday, November 16, 2012

How will Obama’s Re-election Affect the Estate and Gift Tax Laws?

With President Obama elected to a second term, the uncertainty of the election is behind us. However, uncertainty persists regarding the estate and gift tax exemption set to expire on December 31, 2012, and revert to a top tax rate of 55% on anything over $1 million. If the exemptions expire, the new rate will be a dramatic adjustment from the current top rate of 35% on anything over $5 million per person. 
Given the financial crisis facing the nation at year end along with the continuation of a divided Congress, it is unlikely that the President and Congress will work together to extend the current estate and gift tax rates. Therefore, it is imperative that you move quickly to take advantage of these favorable gift and estate tax planning strategies prior to year end. To schedule a consultation call 702.433.4455.  

 

Tuesday, November 13, 2012

No Contest Clauses


A no contest clause is a provision in an estate planning document that states that if a beneficiary challenges the legality of the estate planning document (or any part of it) then such a beneficiary will lose his or her share.  A no contest clause is intended to discourage beneficiaries from initiating frivolous lawsuits.  
We are asked about no contest clauses in two situations, (1) when a client is concerned that a problematic family member may cause trouble after his or her death, or (2) when a client who is a beneficiary of a will or trust is concerned about how the trustee or executor is managing the trust or estate and is concerned that they will lose their inheritance if they complain or file petitions in court.
The general rule is that a court must enforce a no contest clause, except for specific circumstances.  There are statutory exceptions to the enforcement of a no contest clause.  A no-contest clause will not be enforced if the beneficiary is asking the court to construe the terms of the trust or enforce the beneficiary’s rights under the trust.  In addition, a no contest clause will not be enforced if a beneficiary is seeking a court ruling seeking the construction or legal effect of the trust. 
There is one additional statutory exception to the enforcement of a no-contest clause.  A no-contest clause will not enforced if a beneficiary seeks to set aside the trust and the action is instituted in good faith and based on probable cause that would have led a reasonable person, properly informed and advised, to conclude that the trust is invalid. This is a fact intensive test and there will need to be sufficient evidence to demonstrate that there was probable cause.  For example, probable cause may be found if a trust was amended to disinherit a child immediately before the settlor’s death and the settlor was taking a significant amount of pain medication.
In the last legislative session, the Nevada legislature strengthened no contest clauses.  The type of beneficiary conduct that can trigger a reduction or elimination of a beneficiary’s share has been greatly expanded.  A settlor (the person establishing the trust) can set forth specific conduct in the trust document.  Under Nevada law, a share can be eliminated for conduct other than formal court action and conduct that is unrelated to the trust itself.  The statute sets forth the following examples of such non-trust related conduct:
(1)          The commencement of civil litigation against the settlor’s probate estate or family members;

(2)          Interference with the administration of another trust or a business entity;

(3)          Efforts to frustrate the intent of the settlor’s power of attorney; and

(4)          Efforts to frustrate the designation of beneficiaries related to a nonprobate transfer by the settlor.

This statute has not been tested in the courts and it is unclear how broad the scope of the non-trust related conduct may be for the no contest clause to be upheld.  We believe that this question may result in more litigation regarding no contest clauses.
In conclusion, in the estate planning contest we recommend that you have a no contest clause.  While there are some instances where they may not be upheld, they are a good deterrent for litigation.  In the litigation and trust administration context, it depends upon the specific facts of the case.  It is best that you meet with us to evaluate the proper steps to protect yourself from the effect of a no contest clause.
 
Attorney Richard T. Cunningham

Wednesday, November 7, 2012

Advantages of a Living Trust


There has been a lot of discussion regarding the advantages of having a living trust, especially in terms of avoiding probate.  Probate can be a long costly process involving delays in gaining access to funds to pay bills and expenses, as well as making distributions of money and property to the heirs.  Another topic that has been a recent focal point of discussion is the impending reduction in the estate tax exemption amount, coupled with an increase in the estate tax rate.  Beginning January 1, 2013, the estate tax exemption will be reduced from $5.12 million to $1 million, while the estate tax rate on the excess (over the exempt amount of $1 million) will increase from 35% to 55%.  The result is going to be a very large estate tax unless the law is changed in the near future.
Among its other advantages, setting up a living trust can provide a variety of opportunities to minimize overall estate taxes.  One technique available to married couples involves the use of a credit shelter or bypass trust.  Since husband and wife are two individuals, each spouse is entitled to receive the benefit of the exemption amount in place at the time of his or her death.  Under a living trust, the exemption amount of the first spouse to die may be directed into a credit shelter or bypass trust that will pass free of tax upon the death of the second spouse.  When the second spouse dies, his or her estate can not only exclude from taxes the exemption amount in effect at such time, but also the entire value of the credit shelter or bypass trust that was funded with the first-to-die spouse’s exemption amount.

Another advantage worth mentioning is that the credit shelter or bypass trust can still be a financial resource for the support of the surviving spouse, yet it is not included in the surviving spouse’s estate.  Additionally, the assets in the credit shelter or bypass trust can increase in value and all of the appreciation will likewise avoid inclusion in the estate of the surviving spouse.  Thus, setting up a living trust in this manner might end up shielding more than just the exemption amount of the first spouse to die assuming those assets have appreciated in value by the time the second spouse passes away.
 When faced with the potential of a large estate tax, the above approach may be preferable to simply leaving everything to the survivor at the death of the first spouse.  This is true even though one spouse can leave everything to the other spouse free of estate taxes due to the unlimited marital deduction.  The downside of relying entirely upon the marital deduction to avoid taxes is that the exemption of the first spouse is entirely wasted and all of the couple’s money and property is taxed at the death of second spouse when only one spouse’s estate tax exemption remains available for use.  Thus, planning with a living trust allows the couple to shield the maximum amount of money and property from estate taxes based upon the respective exemption amounts available to each spouse in his or her year of death.

Attorney Kari L. Stephens

Tuesday, October 30, 2012

AFR's for November 2012

The Section 7520 rate is 1.0%
November AFR's
Annual
Semi-annual
Quarterly
Monthly
Short-term
0.22%
0.22%
0.22%
0.22%
Mid-term
0.89%
0.89%
0.89%
0.89%
Long-term
2.40%
2.39%
2.38%
2.38%

Wednesday, October 24, 2012

30th Annual Caregiver Conference

Just a reminder that the 30th Annual Caregiver Conference is going on today, October 24, 2012 from 8:30 - 4:00 at United Healthcare, Bldg 2716 at 2700 N. Tenaya Way.  Make sure to stop by our booth!
 

Tuesday, October 23, 2012

Congratulations!

Congratulations to  Jeff Burr, John Mugan and Bob Clark for their inclusion in the list “Top Lawyers 2012” by the Desert Companion magazine!




Friday, October 19, 2012

Does Having a Will Avoid Probate in Nevada?

In my last blog post, I discussed the two best reasons for avoiding probate court, (1) time and (2) cost.  I often get asked by clients whether having a will is sufficient to avoid probate in Nevada.  The question is usually asked by children of a deceased parent who are facing the time consuming and expensive probate process because proper estate planning did not take place during the parent’s lifetime.  My answer, in short, is that in Nevada having a will is not enough to keep a person out of probate court at their death. 

A will is a legal instrument that determines how assets are to be divided at a person’s death.  Wills are an effective way to accomplish this goal.  However, if a person only uses a will, a probate will be required for the distribution of those assets that do not automatically transfer to another person, such as with real property.  With only a will, children and other beneficiaries can be stuck with a time consuming and expensive probate case.
There are several effective estate planning techniques which can be implemented to completely avoid probate.  For example, a person can create a revocable trust.  This estate planning tool allows a person to not only to avoid probate and designate beneficiaries of their choice; it also helps protect a person in the case of incapacity prior to their death and can accomplish some estate tax planning.  One can also make an effort to avoid probate by making arrangements for the automatic transfer of assets, such as by naming designated beneficiaries on bank and other investment accounts.

Each method of avoid avoiding probate has advantages and disadvantages.  It is important to speak with an estate planning attorney before making any decisions to make certain your planning is done correctly and your goals are successfully met.  If you have any questions about avoiding probate and setting up your estate plan, feel free to contact one of our attorneys for a free ½ hour consultation.

Wednesday, October 10, 2012

THE TIME IS NOW - THE END IS NEAR!!

 This title could be read on a poster in the stands at a football game, or on a sandwich board worn by a person on the streets in a big city.  I do not mean to sound like a religious fanatic.  What I am referring to is that this is the last few weeks of your lifetime wherein the $5 million lifetime gift tax exemption is available for estate planning (that we know of).  We have “blogged” about this topic before, so I’ll spare our loyal readers from any more of my comments on this.  But I will provide you a link to a great article that accurately discusses why there is very little time left to delay if a person intends to make a gift during this calendar year.  Please read this free article from the Wall Street Journal written by Mr. Charles Passy.
 

Tuesday, October 9, 2012

Seniors United Luncheon

Wednesday, October 10, 2012 at 12:00 noon

at the Clark County Library, 1401 E Flamingo Road.
 
Our lunch sponsor will be Judge Ann Zimmerman. Our speaker is James O’Reilly with Elder Law Services/Jeffrey Burr, LTD. He will be discussing solutions for seniors.

Tuesday, October 2, 2012

Should I fund a 529 Plan or create a Gifting Trust?

For some, implementing a gifting strategy is an important aspect of the estate planning process.  While the costs of education seem to be continually increasing, many people are considering implementing a gifting strategy that will provide financial assistance for the education of a child or grandchild.  More common ways to implement this strategy normally requires a person to choose between creating a 529 Plan or an irrevocable gifting trust.

A 529 Plan account is a college savings plan created under state law.  After tax dollars are contributed to the 529 Plan account.  Although there is no federal income tax deduction for these contributions, these after tax dollars contributed grow federal income tax free for the beneficiary of the account.  The money must only be used for higher education tuition, fees, books, supplies, required equipment, and room and board (subject to certain rules).  If the beneficiary does not use all the funds, the beneficiary can be changed to another child or grandchild.  If any of the money is used from the 529 Plan account for nonqualified expenses, such funds will be subject to income tax and a 10% penalty on the earnings of the account.  For this cause, it is important not to overfund the 529 Plan in the event that there is significant excess beyond that needed for qualified educational expenses held in the account which would be potentially subject to penalty.
The alternative to the 529 Plan is the creation of an irrevocable gifting trust.  The gifting trust would be created by a parent or grandparent for the benefit of a child or grandchild.  A trust could be funded with any form of property (i.e. cash and cash equivalents, real property, LLC membership interests, etc.).  The funds in the trust do not grow federal income tax free.  The trust will be required to pay income tax on its earnings to the extent income is not distributed.  However, the gifting trust allows for greater flexibility in its use allowing the trustee to make discretionary distributions to the beneficiary not only for education but additionally for health, maintenance, and support or other legitimate reasons.  The gifting trust could exist for a term of years, for the beneficiary’s life, or until the beneficiary finishes his or her education at which time the trustee could distribute all remaining trust property free of any penalties.  Thus, a person could fund the gifting trust with more than may be necessary to assist with educational costs without fear of being subject to penalties.
 
If flexibility and control are more important than potential income tax benefits afforded by a 529 Plan, a gifting trust may be more appropriate. 

For more information regarding gifting trust, please call our Henderson or Las Vegas office to schedule a free consultation with any of our attorneys.


 

 

Thursday, September 27, 2012

30th Annual Caregiver Conference

JEFFREY BURR
is proud to sponsor the

30th Annual Caregiver Conference
Wednesday, October 24, 2012
8:30 am - 4:00 pm
at
United Healthcare Building 2716
2700 N. Tenaya
Las Vegas, NV 89128
 
5 CEU's approved for nurses and social workers
 
Call (702) 407-1100 or (702) 363-7566
for more information

Tuesday, September 18, 2012

Lunch & Learn

Lunch and Learn
"Elder Abuse & Guardianship"
Presented by Corey J. Schmutz, Esq.
 
Thursday, September 20, 2012
12:30-1:30 p.m.
H2U Mountainview Hospital Office
3150 N. Teneya Way, Suite 114
Las Vegas, Nevada
 
Reservations Required!  Please call 233-5474 to reserve your spot.

Wednesday, September 12, 2012

Why Avoid Probate?


Typically, estate planning attorneys use trusts and other instruments to help their clients avoid probate court.  Clients often ask, why it is important to avoid probate court?  The two best reasons for avoiding probate court are (1) time and (2) cost. 
Probating a deceased person’s estate is a long process.  For a normal probate estate beneficiaries can expect to wait six months to a year before the process is completed and the assets are distributed.  The reason the process is sluggish is because probate requires several steps and a large amount of court involvement.  Several of the steps require mandatory time-waiting periods giving creditors and other parties time to become involved in the proceedings.  For example, before assets can be distributed to beneficiaries, a notice to creditors must be filed.  All creditors are given a 90-day time period in which they can file creditor claims against the estate.  Extra steps are also required if real property must be sold or interested parties object at any time during the probate proceedings.  The end result is that from start to finish probate takes a significant amount of time.

The second reason to avoid probate is its cost.  Because probate requires court involvement, attorneys, executors and other parties are almost always involved.  The usual attorney fees are set out in the Nevada Revised Statutes Chapter 150.  Generally, attorney fees are calculated based on the size of the estate at 4% of the first $100,000, 3% of the next $100,000 2% of the next $800,000 and 1% for the next $9,000,000.  Thus an estate worth $1,000,000 would have attorney fees of approximately $23,000.  Executors and administrators are also entitled to a similar, but slightly smaller fee.  Beneficiaries will also be required to pay court filing and other fees.  Overall probate ends up being an expensive process.
As probate is both time-consuming and expensive, many people successfully avoid probate all together.  This can be done by setting up a proper estate plan.  If you have any questions about avoiding probate and setting up your estate plan, feel free to contact one of our attorneys.

Attorney – Corey J. Schmutz

Wednesday, September 5, 2012

Healthcare Powers of Attorney Seminar


Healthcare Powers of Attorney - Advanced Directives
September 10, 2012 3:00-4:00 p.m.
 
TLC Care Center
1500 W. Warm Springs Rd.
Henderson, NV. 89014
 
Presented By:
A.  Collins Hunsaker, Esq./LLM
 
 
1 CEU credit
 
Please RSVP to Sandy Simpson at 433-4455

 

Wednesday, August 29, 2012

Endangered Species: Grantor Trusts?


A favorite estate planning transaction used by many sophisticated estate planning attorneys across the country involves the use of an “intentionally defective grantor trust” (IDGT).  The “grantor trust” rules of the Internal Revenue Code instruct that a grantor trust is not taxed as an entity separate from the grantor (the person creating the trust) and that the assets transferred to a grantor trust still belong to the grantor for income tax purposes.  The result of transferring assets to a trust that qualifies as a grantor trust is that the person has not made a transfer for income tax purposes.  Many estate planning attorneys use the grantor trust rules to their advantage and they carefully draft a trust that is “intentionally” drafted to qualify as a grantor trust for income tax purposes, yet the carefully drafted trust can also be treated as a completed transfer for the gift tax and estate tax.  Therefore by using an IDGT and transferring appreciated assets to a trust a person can shift the value of the asset from his or her taxable estate for estate tax purposes while at the same time the transfer will not count as a taxable transfer for income tax purposes that could trigger capital gains.

The Obama Administration’s revenue proposal for 2013 recommends a change to the long-standing grantor trust rules.  The proposal would require more consistent treatment of transfers to a grantor trust and would eliminate the powerful estate tax planning that can be accomplished using the IDGT.  The proposal would include assets in a grantor trust in the grantor’s taxable estate and would therefore take away the advantage described above.  The proposal does not purport to affect grantor retained annuity trusts, qualified personal residence trusts, and grantor retained income trusts. 

It is possible that a grantor trust created and funded prior to a change in the law could be “grandfathered” into existing law.  This could bring some great advantage to someone willing to establish an IDGT under current law and fund that trust with sufficient assets this year in order to hedge against any possible changes to the law. 

Luckily, this is only a proposed change in the law that is presented by the Department of the Treasury and hopefully this proposal will never make it into our legislative system.  We will be watching this topic carefully and we hope that the favorable laws that apply to IDGTs can continue on for many more of our clients and that the IDGT will not become an estate planning endangered species. 
  Attorney Jason Walker

Tuesday, August 21, 2012

AFR's for September Announced


 
Annual
Semi-annual
Quarterly
Monthly
 
Short-term
0.21%
0.21%
0.21%
0.21%
Mid-term
0.84%
0.84%
0.84%
0.84%
Long-term
2.18%
2.17%
2.16%
2.16%