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