Thursday, December 17, 2015

Happy Holidays from JEFFREY BURR

Instead of posting one of our attorneys' great blogs, we want to take this opportunity to wish all of our clients, friends and referral sources a very Happy Holiday and prosperous 2016!    It's not too late to start off the new year right - we are here and ready to help with your estate panning needs.

All of us at Jeffrey Burr

Thursday, December 10, 2015

Planning for Digital Assets

More and more estates these days include digital assets in two main categories: devices and accounts.  Typically both devices and accounts have controlled access which requires a password.  You might only have a handful of devices that require passwords, such as a smartphone, home computer, laptop, tablet, and a home security system.  But the number and variety of accounts could be very surprising if you were to count them out.  Online banking (brick & mortar, and online-only), e-mail accounts, social media Facebook, Twitter, Instagram, LinkedIn), online shopping and their related consumer credit accounts (Amazon, Ebay, retail store websites), life insurance, investment accounts, online photo storage or cloud backup services, blogs and websites that you manage, photo or video sharing websites (YouTube, Vimeo, Flickr), and media purchasing sites such as GooglePlay, AmazonPrime, and iTunes.

Many of these accounts may contain information that you would like to pass on to the beneficiaries of your estate.  This could include the transfer of wealth from an online investment account, to sharing photos and videos from your life, to enjoying the songs, movies, and TV shows that you have purchased online.

The great question is this: If you were to pass away, would those who are named to handle your affairs be able to access these devices and accounts?  Unfortunately, in many cases the answer is “No” unless careful preparation is made.  The law is trying to keep up but there is no clear and reliable guarantee that your Executor or Successor Trustee will be able to access your digital assets through operation of law.  However, a court order won’t do much good to unlock your smartphone or laptop.  And in fact, your online accounts may be inaccessible by your Executor even with a court order depending upon each account’s terms of service agreement.

So what’s the solution?  A homemade solution might include storing your account ID’s and passwords somewhere safe, yet accessible, when you are gone.  You could use a password protected file on your computer, so long as you provide the password to the file and to your computer to your Executor.  There are online services and applications that can be used to store your password information.  This can be helpful even during life to keep track of your various and often related or derivative passwords.

Our firm will soon be unveiling an online document/information storage service for our clients with Everplans.  [] This service has demonstrated to be an intuitive and secure location to save not only passwords and instructions for digital assets, but also a service to store and access information and instructions for many elements of your life including: estate planning documents, degrees and certifications, instructions for your pets, religious affiliation and instructions on your funeral or memorial service.

Monday, November 30, 2015

Don't Forget to Plan for your Pets

Most people are aware that a good estate plan should contain provisions to distribute assets to loved ones while avoiding probate.  Have you thought about what will happen to your pets?  It is important to include provisions in your estate plan to address what will happen to your pets in the event of your death.  This can include who will care for your pets if something happens to you and can also include financial distributions to care for your pets. Although you cannot directly leave money to your pet, you may leave money to their caretaker.  Nevada law also specifically allows for pet trusts to be established.  This type of planning can give you the peace of mind that your family, including your beloved pets, will be taken care of should something should happen to you.   

If you are a pet owner, call one of our attorneys at 702-433-4455 to discuss how you can make sure your pets are included in your estate plan.

Tuesday, November 24, 2015

AFRs for December 2015

The Section 7520 rate is 2.0%

Annual Semi-annual Qtly Monthly
are as follows
Short-term 0.56% 0.56% 0.56% 0.56%
Mid-term 1.68% 1.67% 1.67% 1.66%
Long-term 2.61% 2.59% 2.58% 2.58%

Friday, November 13, 2015

A Trust Offers Flexibilty And Certainty Where Other Planning Techniques Fall Short

The question I am often asked is "do I really need a trust?" This is usually followed by a statement along the lines of "I have named beneficiaries to receive all of my accounts and the only other asset I own is my house." The short answer is: an estate of any size can benefit from a trust. Simply put, having a trust allows you to decide who will receive your assets, when they will receive your assets, and the manner in which your assets will be distributed to them.

Most people understand that a trust is preferable to a will in that a trust avoids probate. Of course, assets titled in joint tenancy and assets having a beneficiary designation will also avoid probate. Both of these techniques will result in a property automatically passing to the surviving beneficiary without probate. If, however, your joint tenant and/or designated beneficiary should predecease you, then any such property becomes subject to probate once again unless and until you take further action with respect to the ultimate disposition of the property.

A beneficiary, pay-on-death (POD) or transfer-on-death (TOD) designation will cause the timing of the distribution to occur upon an account owner’s death. Joint tenancy is also widely used as a tool to pass property upon a person’s death. The designation of joint tenancy, however, brings with it much more than simply being a gift upon death. Adding someone as a joint tenant to your property, gives that person present access to your property up to the whole thereof. For this reason, care should be taken in setting up joint tenancy unless you intend for your joint tenant to receive current rights in your property or you trust the person implicitly to carry out your wishes with respect to the disposition of such property both during your life and upon your death.

Assuming your joint tenant and/or named beneficiary survives you, the whole of the subject property will pass to such person upon your death. In other words, these probate avoidance techniques do not allow you to direct the timing or the manner of the distribution. For example, you cannot provide that the property be paid out to them over time or upon attaining certain ages, etc. In addition, should your joint tenant and/or designated beneficiary be a minor, he or she is unable to receive the property until someone takes steps to have a formal guardian of such minor appointed through the court.

If real property is indeed the only asset that is left for you to make provisions for upon your death, Nevada law allows for the execution and recordation of a deed upon death.  While this may seem like a quick and easy solution to provide for the disposition of real property, it also carries with it certain drawbacks. The way the law is currently written, creditors reserve the right to assert claims against the property for 18 months following death. Consequently, a beneficiary of a deed upon death is realistically precluded from transferring or selling the property for a minimum of 18 months since title companies have been reluctant to insure title until after the creditor period has fully run.

While one or more probate avoidance techniques may be useful for certain assets in specific instances, there is simply no other estate planning technique that affords the same level of flexibility as a trust. A trust lets you determine the exact moment of when the desired gift will be made to the intended recipient. It allows you to give property outright or to maintain property in trust to be gifted out over time as you may direct. In the case where a beneficiary should predecease you, the trust can provide for any number of successive beneficiaries.  It provides for orderly administration and distribution under the care of the person you appoint to act as your trustee.  In short, a trust provides a canvas for you to design a plan to accomplish all of your estate planning objectives without the unintended consequences and/or pitfalls associated with other planning techniques.  Thus, there is no real substitute for setting up a trust.

Wednesday, November 4, 2015

Happily Ever After… Round Two.Estate Plan Considerations for Blended Families

According to the U.S. Census Bureau, blended families now outnumber traditional families. Blended families come in all shapes and sizes, where at least one spouse has at least one child from a prior marriage or relationship.  Due to the variety of situations and dynamics of each unique blended family, a cookie-cutter estate plan will not suffice to accomplish each individual family’s goals.  It is important to discuss your family situation with an estate planning professional who can personalize a plan for you and your family which will enable you to meet your family’s needs and address any concerns you may have.  For blended families, below are several items to consider as you and your loved ones plan for the future and preserve your legacy.

Questions you may ask yourself when creating a new estate plan for your blended family may include:
·         1.  How can I provide for my children from a previous relationship and for my new spouse?
·         2.  How do I ensure my children’s inheritance is protected?
·         3. Am I bringing significant separate property into the marriage that I want to keep apart from my community estate?

In creating your new estate plan, it is important to evaluate your goals and priorities regarding how (and to whom) you want to distribute your assets after you are gone.  An individual may leave their assets however and to whomever they please.  In our experience, clients typically want to provide for their children and spouse.  Providing for both in a blended family setting however can be complicated.

Our experience is that in many cases a surviving spouse of a blended family ends up re-designing or amending the estate plan for only his or her children’s benefit.  The only way to get around that is to leave assets in trust.

In addition to deciding how and to whom you would like to gift your estate, it is necessary to decide who would be best to serve as your trustee, executor, agent, etc.  If your children and spouse get along, nominating a child and the spouse to serve together in these capacities may be a good option.  However, if you think tensions will arise, nominating an independent third party (an impartial corporation, professional, or non-family member friend), will eliminate any potential friction caused by naming one or the other member of your family as trustee, agent or executor.

For blended families it is essential to create a comprehensive and integrated estate plan where trusts, powers of attorney, last wills and testaments, life insurance beneficiary designations, and retirement plan beneficiary designations all align so that your wishes will be followed when you are gone.

We strongly suggest that you plan ahead in some fashion so that when these documents speak for you when you can no longer speak for yourself, your wishes are carried out and all of your loved ones are provided for in an orderly fashion.  If you wish to discuss your priorities and goals in creating an estate plan for your family, please call us for a free 30 minute in office consultation.

-Attorney Rebecca J. Haines

Wednesday, October 28, 2015

Equitable Remedies and Judicial Activism: A Dangerous Combination

Legal remedies are judicial remedies that parties have by right as set out in law and statutes. These remedies are based on the law and statutes.  A judge simply enforces the right as established by law.

In contrast to legal remedies, equitable remedies are remedies, usually non-monetary, which a court fashions when the judge believes existing legal remedies do not adequately redress the injury or situation. Equitable remedies were developed at the time of King Henry VII in order to provide more flexible responses to changing social conditions than possible in existing laws and statutes. Equitable remedies are based on concepts of fairness and equity as determined by the judge.  Such a determination oftentimes is largely dependent on the judge's personal beliefs and attitudes.

The traditional role of a court is to interpret and enforce the Constitution and valid laws as written. The court was not to rewrite the law or impose the court's personal viewpoints regarding the law, but to take the law as written and apply it to the case as long as the law was not unconstitutional.  Federal and state legislatures created the laws; courts interpreted and enforced them. Judicial activism is the belief that judges can and should creatively reinterpret the Constitution and laws to meet the vital needs of society when the federal and state branches of government and legislatures fail to do so.  Again, this is based on the personal beliefs and viewpoints of the court as to what the vital needs of society are and how they should be met. Judicial rulings in cases of judicial activism are oftentimes based on the personal or political considerations of the judge rather than on existing law.

Unfortunately, the combination of a court having the right to fashion an equitable remedy and judicial activism can prove to be a potentially dangerous combination, especially in estate planning. A decedent does not want a judge to substitute what the judge personally believes is a fair living trust or will. For example, a decedent may have 4 adult children and leave his or her assets to the children equally; however, the trust provides that 3 of the children receive their shares immediately while the share of the 4th child remains in trust for the child's benefit.  A judge may believe it is not "fair" that the 3 children receive their shares outright while the 4th child does not. Fortunately, there is a legal principle that the intent of the decedent as expressed in the complete trust agreement or will must be followed.  Nonetheless, the combination of equitable remedies and judicial activism opens the door to judges inserting their personal beliefs and considerations into a myriad of cases.

Monday, October 12, 2015

Estate Planning Mistakes to Avoid

As an estate planning attorney, I often find it of interest to read about a celebrity’s estate plan.  Celebrity estate plans can provide both good and poor examples of what should and should not be done by all of us.  Recently, I came across an interesting article entitled “7 Estate Planning Lessons from Celebrities” which brought focus to this very topic.  I would recommend reading it as the lessons provided are applicable to those with significantly less wealth than the celebrity examples found in the article.  To bring focus to just two of the seven lessons provided in the article, I would like to focus on the estate plans of Philip Seymour Hoffman and Heath Ledger.  

Philip Seymour Hoffman didn’t want his children to become “trust-fund kids.”  However, it is reasonable to conclude that Hoffman had a desire that his children’s reasonable needs be met with his wealth.  Against the advice of his attorneys, Hoffman’s estate plan was to leave his entire estate to his long-time girlfriend Mimi O’Donnell.  It was Hoffman and O’Donnell’s mutual understanding that she would use his wealth to provide financially for the children, in her absolute discretion.  This plan had two significant flaws.  First, because Hoffman and O’Donnell were not married, the transfer of Hoffman’s estate to O’Donnell was taxable for estate tax purposes.  Second, without proper instructions and guidelines as would typically be found in a trust agreement, there is no guarantee that O’Donnell will use Hoffman’s wealth in a manner that Hoffman would have approved of in relation to the upbringing of his children.  Lesson to be learned from Hoffman’s estate plan is to not leave your estate to one person without proper guidelines and instruction in a legally enforceable document like a trust.

Although quite young at the time of his death, the 28 year-old actor Heath Ledger had a will when he died in 2008.  Apparently, Ledger had drafted his will previous to the birth of Ledger’s daughter leaving his entire estate to his parents and sisters.  Fortunately, Ledger’s family did the right thing by allowing the entire estate to pass to his daughter.  The result of Ledger not taking the time to update his will after the birth of his child could have been ugly with the worst case scenario of Ledger’s daughter receiving nothing from her father’s estate.  The lesson to be learned from Ledger’s estate is that as certain life events occur, a review and update of your estate plan should take place.

Wednesday, September 23, 2015

AFRs for October 2015

The Section 7520 rate is 2.0%
October 2015  Annual Semi-annual Quarterly Monthly
Short-term 0.55% 0.55% 0.55% 0.55%
Mid-term 1.67% 1.66% 1.66% 1.65%
Long-term 2.58% 2.56% 2.55% 2.55%

Wednesday, September 16, 2015

Tom Clancy’s Estate and the Importance of Planning for Blended Families

Tom Clancy, renowned author, died on October 1, 2013. Tom died with an estate worth approximately $83 million. Tom was survived by his wife, Alexandra Clancy, a daughter born to Tom and Alexandra and four adult children from Tom’s prior marriage.

When Tom died, he left a Last Will and Testament (“Will”) that governed the disposition of his probate assets. The Will provided that his probate estate is to be divided into thirds – one-third to his wife in trust (the “Marital Trust”), one-third to his wife and all of his children in trust (the “Family Trust”) and one-third to his children from his prior marriage in trust (the “Children’s Trust”).

Due to the size of Tom’s estate and his estate planning elections, Tom’s estate is required to pay a significant amount in estate taxes, apparently approximately $16 million. Tom’s personal representative (aka executor) allocated a portion of the taxes owed to Alexandra’s inheritance. Alexandra objected and claimed that based on a codicil that Tom executed, which amended the terms of his Will, Tom’s intent was that no portion of her inheritance would be responsible for the estate taxes. Rather, Alexandra claims the entire burden should be borne by the portion going to Tom’s four adult children from his prior marriage.

As a result of Alexandra’s claim, a dispute ensued between her and Tom’s adult children. On August 21, 2015, a Baltimore judge ruled in favor of Alexandra, a decision that is likely to cause a protracted legal battle.

This case provides a prime example to blended families of the importance of engaging in appropriate estate planning. Relationships can be finicky, especially relationships between a child and his or her step-father or step-mother. Estate planning should not be a straw that breaks the camel’s back and ruins that relationship. Not only that, disputes between children and their step-parents can erode the hard-earned estates of the deceased parent through legal fees, which could be avoided with appropriate planning. 

If you have a blended family and do not have the appropriate estate planning in place, please contact our offices to further discuss your situation. 

Wednesday, September 9, 2015

Crummey Indeed; Providing Proper Crummey Notices to Beneficiaries of an ILIT is Essential to Preserve Tax Benefits.

A highly regarded estate tax-savings tool utilized in estate planning is the Irrevocable Life Insurance Trust, commonly referred to as an “ILIT”.

Establishing an ILIT allows proceeds from a life insurance policy to escape estate taxes upon the death of the insured.  Under the current income tax laws, proceeds from a life insurance policy are paid to the beneficiaries of the insurance policy entirely income tax free.  For estate tax purposes, however, if you are the owner of a life insurance policy, the proceeds from that policy are included in your taxable estate on your death, and therefore become subject to the estate tax.  For example, if you are single with estate assets (other than life insurance) valued at $5,000,000, and if the proceeds of a life insurance policy payable on your death amount to $2 million, the estate tax due is approximately $628,000.

With an ILIT, on the other hand, the $2 million policy is removed from your taxable estate because the policy is owned by the trust. Thus, in the above example, placing the policy in a properly drafted ILIT would completely eliminate any estate tax on your death, while freeing up the entire $2 million for your heirs.  In combination with the favorable income tax laws, an ILIT can ensure that the proceeds from a life insurance policy escape both income and estate taxes. Additionally, contributions to an ILIT in the form of premium payments can also be made gift-tax free.

To enjoy those tax savings, it is imperative that you send the appropriate “Crummey” notice to the beneficiaries of your ILIT if required.  “Crummey” notices are required any time you make a gift to your ILIT.  In order to claim the gift tax annual exclusion (the amount that you are permitted to gift each year without incurring gift taxes) for gifts made to your ILIT, you must notify the ILIT beneficiaries of their right to withdraw such gift. Only by giving appropriate notice to these beneficiaries of their immediate right of withdrawal will you be able to claim the gift tax annual exclusion under the Internal Revenue Code.  Otherwise, you may incur gift tax liability.

To give appropriate notice, you can send a letter to the beneficiaries of your ILIT with the following information:

1.   A statement that a gift was made to the ILIT;
2.   Amount of gift that is subject to the particular beneficiary’s right of withdrawal;
3.   Amount of time the beneficiary has to exercise the withdrawal right before it lapses;  and
4.   A request that the beneficiary notify the trustee if he or she wishes to exercise the withdrawal right.

In addition, to keep adequate records, you may also want to send a separate receipt of acknowledgment. Each beneficiary can sign and give it back to you, stating that they received the required notice of their right to withdraw.  As previously mentioned, if these notices are not sent you may incur gift tax liability.

An ILIT is an excellent tool that can save you and your estate potentially hundreds of thousands of dollars in estate and gift taxes, if the proper formalities are strictly adhered to.  If you have questions about whether an ILIT is right for you or if you have been properly preparing the requisite Crummey notices, contact one of our attorneys at (702) 433-4455.

-Attorney Rebecca J. Haines

Thursday, August 27, 2015

Do Not Forget State Inheritance-Estate Tax In Your Estate Planning

The primary death tax concern in most estate planning situations is the federal estate tax.  Generally speaking, federal estate tax is based on the dollar value of the trust-estate of the decedent, is due nine (9) months after the date of death, and is taxed at a forty percent (40%) tax bracket.  The good news is that the federal estate tax equivalent exemption for deaths occurring in the 2015 calendar year is Five Million Four Hundred Thirty Thousand Dollars ($5,430,000.00).  In other words, if the net taxable estate is Five Million Four Hundred Thirty Thousand Dollars ($5,430,000.00) or less, there is no federal estate tax.  Also the federal estate tax equivalent exemption is indexed for inflation, so theoretically the amount of the exemption should increase each calendar year.  Because of the large dollar amount of the exemption, federal estate tax is oftentimes not a major factor in the estate plan of many people.

However, there is a potential second death tax when a person dies.  Some U. S. states levy their own death tax called an inheritance or estate tax.  Currently six (6) states have an inheritance tax, fifteen (15) states have an estate tax, and two (2) states have both.  Most eastern states have an inheritance or estate tax, while most western states, including Nevada, have no inheritance or estate tax.  The two (2) western state exceptions are Washington and Oregon.

Unlike the federal estate tax, state inheritance tax is based on the amount a beneficiary inherits and the beneficiary’s relationship to the decedent.  Also inheritance tax is usually the personal liability of the beneficiary.  With inheritance tax, there are often different rates and different exemption amounts for spouses, children or siblings.  State inheritance or estate tax rates are lower than the federal estate tax rate of forty percent (40%).  The state with the highest maximum estate tax rate is Washington at twenty percent (20%) followed by eleven (11) states with a maximum rate of sixteen percent (16%).  Nebraska has the highest maximum inheritance tax rate of eighteen percent (18%) followed by Kentucky and New Jersey at sixteen percent (16%).

What happens if the decedent dies a resident of the state of Nevada where there is no inheritance or estate tax, but the beneficiary is a resident of New York where there is estate tax?  Which state law controls, Nevada or New York?  With one exception, the state law of the residence of the decedent at the time of death, not the state law of the residence of the beneficiary, controls as to the applicability of state inheritance or estate tax.  In the above example, Nevada law controls since it was the residence of the decedent at the time of death so there would be no state inheritance or estate tax.  The one exception is real estate located in another state.  In the above example if the decedent owned real estate in New York or some other state that has an inheritance or estate tax, the state law where the real estate is located would control at least as to that real estate.
John R. Mugan, Esq.

In summary, although federal estate tax is oftentimes not a major estate planning consideration due to the amount of the federal estate tax exemption under current federal law, one must not overlook possible state inheritance or estate tax.  This is particularly true if one owns real estate outside the state of Nevada.  

Thursday, August 6, 2015

Do I Really Need An Attorney To Prepare My Estate Plan?

Friends and family often ask me if they really need an attorney to prepare the estate planning documents.  There are many forms on the Internet or online services that offer do-it-yourself planning.  I admit, these forms are services are much cheaper than paying for an attorney…at least on the front end.
The problem with doing your own estate planning documents is that you lack the legal advice that comes with estate planning documents.  This legal advice is an important part of your estate plan; it ties all the legal documents and assets together into an integral, working plan.  If you make a mistake in your estate planning documents or in how your assets are held, those mistakes cannot be fixed once you are deceased. 
I will admit that, as an attorney, I am biased in writing this post; however, as the attorney in the office that handles most of the probate cases, this year I have seen an increase in awful estate planning documents.  Its only August and I have already seen a large number of invalid or incorrect wills, incorrect deeds and invalid trusts.  I may be biased, but when mistakes are made, I end up fixing them on the back-end.  These errors lead to very expensive probates and often times assets passing to unintended beneficiaries. 

Here is a list of the top mistakes I have seen this year:
  • Improper witnessing of the will (missing language the Nevada law requires to admit the will to probate)
  • Improper titling of real property between spouses
  • Failure to designate beneficiaries in the will or trust
  • Beneficiaries acting as the witnesses the will
  • Failure to fund a trust
When a person has a serious illness, they go to a doctor.  Everyone accepts that fact that you need medical advice (not from google) to make sure you get the proper medical treatment.  Estate planning is similar, if you choose to do-it-yourself you may end up doing more harm than good.  You need an attorney to draft proper documents, integrate assets into those documents and to make sure all the pieces fit together properly.   Make sure your documents can speak for you when you can no longer speak for yourself.

Attorney – Corey J. Schmutz

Wednesday, July 29, 2015

Avoiding Family Disputes: Utilizing Lists Disposing of Personal Property in Your Estate Plan

Oftentimes the most treasured pieces of property in an estate are those items which you do not hold formal legal title to. Unlike a car or home where ownership is evidenced by a title or deed, there are typically no such records for family heirlooms such as china dishes, jewelry, photo albums or vinyl records signed by the Beach Boys.

When the owner of these personal property items dies, the items are generally given to the beneficiaries named in the owner’s will or trust. But oftentimes the items are given by way of general provisions. For example, a will may provide that half of a person’s entire estate will go to Son and the other half will go to Daughter. In that case, half of the personal property items will go to Son and half will go to Daughter. The executor ultimately decides how to allocate the personal property items between Son and Daughter ,which may cause a rift between Son and Daughter if they do not see eye to eye on who gets what. They may ultimately decide to go to court to resolve their dispute, which costs time and money. The person creating the will or trust could specifically designate which items of personal property will go to Son and which will go to Daughter to avoid this outcome; however, this can be difficult because people collect, lose, and gift personal property items to family and friends throughout their lives. Thus, what a person owns in terms of personal property is not static. Because of this, drafting a specific provision for each personal property item in a will or trust would likely be inefficient, as the document would need to be continually updated to reflect a current inventory and disposition of that inventory.

Fortunately, Nevada law does not require this kind of drafting and instead offers an alternative, which allows a will or trust to reference another document known as a "List Disposing of Tangible Personal Property". This list is legally binding and can govern the disposition of personal property items.

To be legally binding, the list must contain the following:

1. The date the list is executed;
2. A title on the document indicating its purpose (such as, "List Disposing of Tangible Personal Property");

3. A reference to the will or trust to which it relates;
4. A reasonably certain description of the item to be disposed of and the beneficiaries; and

5. The handwritten or electronic signature of the person disposing of the property.

This list may be prepared before or after a will or trust is executed and it can be altered or amended at any time.

To take advantage of this statutory provision that allows for the disposition of tangible personal property by list contact one of our attorneys and we can help you to create a comprehensive estate plan where these most treasured items will be disposed of according to your wishes, thereby reducing the potential in-fighting among your beneficiaries.


Wednesday, July 22, 2015

Marriage Equality Creates Estate Planning Opportunities and Consequences

The recent decision of the U.S. Supreme Court in Obergefell v. Hodges  made clear that same-sex couples have the right to marry nationwide.  In so holding, all states must formally recognize same-sex marriages that were legally entered into in other states.  In addition, states cannot deny applications for marriage licenses for individuals of the same gender.
The ruling clarifies that same-sex married couples now have the same legal rights that are enjoyed by opposite-sex couples.  It allows same-sex married couples to take advantage of estate planning techniques historically afforded only to husband and wife.  At the same time, it also raises issues concerning the property rights and obligations of same-sex couples who have already been married for a number of years.
While marriage equality may now be universally recognized across the nation, state laws of descent and distribution are no substitute for creating a customized estate plan that clearly reflects one’s wishes. State laws often produce undesired or unintended results, especially in an area where legal rights have only just been pronounced and may apply retroactively.  Good reasons apply equally to all persons to proactively plan for the orderly distribution of their estate in documents that will be legally respected in the event of death or incapacity.
Please contact us for a free 30 minute review of your estate plan to make sure it follows your wishes.

Wednesday, July 15, 2015

The Necessity of a Will In Estate Plans With A Revocable Living Trust

The main component of the estate plan for most people is a revocable living trust that they establish during their lifetime. The terms of the revocable living trust control the disposition of any asset titled in the name of the trust.  Trust assets can include real estate, investment accounts, financial accounts, stocks and bonds, certificates of deposit, vehicles and other personal property.  The revocable living trust can also be the joint owner of an asset, most commonly with an individual.  When the individual dies, the revocable living trust becomes the sole owner of the asset and the asset is subject to the terms of the trust.   The revocable living trust can also be the designated beneficiary of an asset such as a life insurance policy, a retirement plan and an annuity.  The proceeds are payable to the trustee of the revocable living trust, and again the ultimate disposition of these proceeds are controlled by the terms of the trust.  An asset can also contain a payable on death (POD) designation wherein the asset is payable to the trust upon the death of the owner.  So why should one have a last will and testament if they have established and funded a revocable living trust? 
Even when a person establishes a revocable living trust, unfortunately periodically one or more of the person’s assets such as a vehicle or a bank account or even real estate does not get properly re-titled into the revocable living trust for whatever reason.  In this situation, when the trustor dies the vehicle or bank account or real estate is in the name of the deceased trustor alone and the disposition of the asset is controlled by the terms of the last will and testament of the decedent.  Accordingly, even an estate plan that has a revocable living trust always includes a last will and testament.  The will is oftentimes referred to as a “pourover will”, as it provides that any asset is “poured over” into the revocable living trust to be held in trust and disposed of pursuant to the terms and conditions of the revocable living trust.   
In summary, one’s estate plan should always include a last will and testament even though the person has established a revocable living trust.  Although the goal is to never have to use the last will and testament, it is a safety net, providing that an asset not properly titled in the name of the revocable living trust at the time of death shall pass to the trust to be disposed of pursuant to the terms and conditions of the revocable living trust.   

-Attorney John R. Mugan


Tuesday, July 14, 2015

Burr, Mugan listed in 2015 Mountain States Super Lawyers Magazine

Congratulations to Jeffrey Burr and John Mugan for once again being name in the 2015 Mountain States Super Lawyers Magazine.  Read more here:

Jeffrey L. Burr
John R. Mugan

Friday, July 10, 2015

Suggestions to Simplify and Strengthen Your Existing Estate Plan

If you have been keeping up on the reading of our newsletters, blog posts, and other mailers, you might have noticed that we have been urging our clients to review their current estate planning documents with their estate planning attorney.  Undoubtedly, it is very likely that if your estate plan has not been updated prior to 2009, that updates to your existing plan are warranted.  Either changes in the laws governing your estate planning documents or changes in your life or the lives of your beneficiaries’ are the catalyst for these necessary updates.

Many clients are surprised to learn that their current trust may be unnecessarily complex given some not-so-recent changes to the federal estate tax laws.  Since 2011, a feature of the new estate tax laws is the concept of “portability” of the federal estate tax exemption between married couples.  In simple terms, portability of the federal estate tax exemption between married couples means that if the first spouse dies and the value of the estate does not require the use of all of the deceased spouse’s federal exemption from estate taxes, then the amount of the exemption that was not used for the deceased spouse’s estate may be transferred to the surviving spouse’s exemption so that he or she can use the deceased spouse’s unused exemption plus his or her own exemption when the surviving spouse later dies.  Even more simply stated, portability provides relief from the complex A-B trusts that were commonly drafted prior to 2011.  Relief from the complex A-B trust structure means that your spouse will not have to be subject to onerous and unnecessary complexity that involves significant time and expense upon your death; but requires an update to your existing trust if it still contains the A-B trust provisions.
In 2009, laws at the state level were overhauled in the areas affecting your general durable power of attorney and health care power of attorney.  Failure to update these documents may potentially cause unnecessary delay, during what can already be a very difficult time, while you are incapacitated.

It has been our experience in reviewing existing estate plans with our clients that certain life events have caused their plans to become ineffective or inconsistent with their present intents and desires.  It is important that you take an inventory of your assets while checking title on these assets.  If you have sold or refinanced your home or opened new financial accounts, then you may want to verify that title is held by your trust.  It would also be prudent to verify the beneficiary designations on assets like life insurance policies and IRAs or other qualified accounts.  The underlying purpose of these suggestions is to ensure that your estate does not become subject to probate upon your death.

In addition to a change in a client’s asset inventory, certain life events such as the death of a loved one, children reaching adulthood or the birth of grandchildren may cause you to reevaluate your existing estate plan and consider other updates.  Lastly, there are a number of other important considerations that may cause you to strongly consider updating your existing plan.  The following is a short list of such considerations:

  • Trusteeship – Many clients with outdated plans have other family members or corporate trustees appointed to serve as a Successor Trustee of their current trusts which might have been the chosen route when the children were still minors.  Upon review, many clients discover that the person currently nominated as trustee in the trust is not needed to serve in this capacity because the children have now reached a point of maturity that they can now be trusted to serve in this capacity.  In the alternative, you may want to consider the appointment of a professional trustee to avoid argument and contention amongst your children.
  • Divorce Protection – It is an unfortunate reality that a child’s marriage may end in divorce.  What may be more unfortunate is that the inheritance that you may have provided for that child might become subject to the divorce settlement if not protected ahead of time.  While you may not be able to accurately predict whether a child’s marriage will end in divorce, by updating your trust with “divorce protection provisions” you can have added peace of mind that regardless of the success of a child’s marriage the inheritance left to him or her will be protected.
  • Asset Protection for You – Do you have concerns about your estate being eroded away due to potential frivolous lawsuits or other unforeseen liabilities?  Nevada is recognized as the leading jurisdiction in the legal area of asset protection.  Please be aware that to achieve asset protection through the use of a trust may require the creation of an additional trust that is commonly referred to as a Nevada Asset Protection Trust. 
  • Asset Protection for Your Heirs – Do you have concerns that the inheritance you will be leaving behind to your heirs may become subject to the claims of their creditors?  Your trust can be updated to incorporate provisions that would be designed to provide substantial asset protection for the benefit of your heirs.  Unlike providing asset protection for you, you may be able to update your existing trust to provide these protections.

A. Collins Hunsaker
If it has been years since you have had your estate plan reviewed by your estate planning attorney or you have concerns that your existing plan may not be designed to meet your present intents and desires, we strongly encourage you to call our office to schedule a consultation for a review.

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
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.