Monday, December 5, 2016

'Tis the Season


As we near the end of 2016 and Christmas approaches, our thoughts turn to those less fortunate.  Many of our clients express their desire to give to those in need and the various charitable institutions whose missions are to help those who cannot help themselves. However, some clients are unsure of how much to give, which charities to give to, and how they can make sure that the donation they make actually benefits those in need. 

A website designed to assist donors in choosing charities outlines four questions to ask of a charity before deciding whether to donate:
  • Does the charity match your passion?
  • Is the charity fiscally responsible, ethical and effective?
  • Do you trust it enough to give without strings attached?
  • Does the charity have strong leadership?

Even with that guidance, choosing a charity (or charities) to donate to, how much to give to each charity, or when to make a gift can be difficult. Why not make one donation to one fund (which allows for an immediate charitable income tax deduction and which can be added to over time), which can grow tax free, enable you to make charitable contributions or gifts to multiple charities over time, and utilize the experience of experts to help you determine what charities you would like to give to, and leave a philanthropic legacy for your loved ones?  All these things can be accomplished by using a popular charitable vehicle called a Donor Advised Fund, or “DAF.”

A DAF is basically an account set up at a financial institution or charity that allows donors to make a grant which qualifies for an immediate income tax deduction, but which can be distributed to multiple charities over a period of time.  The money contributed to a DAF can be invested and grow tax free, and multiple family members may be advisors to the fund to recommend different charitable contributions.  The experts at the institution which holds the DAF can help you and your family choose qualified charities and assist in the philanthropic process.

To discuss a DAF, and how a DAF might become part of your family’s philanthropic legacy, please contact an attorney at JEFFREY BURR, LTD. today.

-Attorney Rebecca J. Haines



Monday, November 21, 2016

AFR's for December

The Section 7520 rate is 1.8%
  Annual Semi-annual Quarterly Monthly
 
Short-term 0.74% 0.74% 0.74% 0.74%
Mid-term 1.47% 1.46% 1.46% 1.46%
Long-term 2.26% 2.25% 2.24% 2.24%

Tuesday, November 15, 2016

President-elect Trump and the End of the Death Tax – Not So Fast

Now that Trump won the Presidency, some are excited and some are frightened as to what this means for the United States of America. Interestingly for our law firm as an estate planning practice is that the repeal of the federal estate tax is found in President-elect Trump’s tax plan. With a Republican led Congress in both the House and Senate, some may assume that all of Trump’s tax proposals will easily be pushed through. However, it may not be that simple. Republicans have 51 seats in the Senate, which is not enough of a majority to invoke cloture. Cloture is the procedure by which the Senate can vote to set an end to a debate without rejecting the bill, amendment, or other matter that it has been debating. To invoke cloture, 60 votes in the Senate would be needed. Thus, it is possible that proposed legislation to repeal the estate tax might be “filibustered” in the Senate.

Historically, the last administration that pushed to repeal the estate tax was in 2006 under the Bush administration. The Republican-controlled Senate was not able to gather the 60 necessary votes. Thus it is reasonably foreseeable that the repeal of the estate tax is not in sight. In fact, many of the legislative proposals that President-elect Trump has been promoting may not be a sure thing without more than a simple majority of Congressional votes.


Wednesday, November 2, 2016

PROPOSED 2704 REGULATIONS (GIFT & ESTATE TAX DISCOUNTING)

Our office recently sent a letter to our clients who could potentially be affected by proposed changes to Section 2704 of the Internal Revenue Code, which may eliminate valuation discounting for gift and estate tax purposes. It is not too late to schedule an appointment to discuss the implications on your estate plan if this new regulation is implemented.

As a brief background, the US Treasury has recently issued Proposed Regulations that could have a dramatic impact on your estate planning by eliminating valuation discounts. For wealthy people looking to minimize their future certain estate tax, this is critical.  If you are concerned about protecting a family business, family investment assets, or real estate from having to be sold in order to pay the federal estate tax at your death, then it is worth investigating this. 


Act Now: Time is of the essence. Once the Proposed Regulations are effective, which could be as early as year-end, the ability to purposely structure discounts on assets of your estate might be substantially reduced or eliminated, thus curtailing your tax and asset protection planning flexibility.  Properly planning with this technique takes time to structure the various steps of the transaction.  It is important to start as soon as possible in order to complete the planning before the regulations are finalized.  

Please call our office today at 702-433-4455 to schedule an appointment to review your estate plan.

Thursday, October 20, 2016

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.  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.


Friday, October 14, 2016

Nevada Remains a Top-Ranked Dynasty Trust State

A local law firm recently published a chart which named Nevada as one of the top two jurisdictions that are best for establishing Dynasty Trusts.

A Dynasty Trust is a special trust created to last for multiple generations.  They use what is called the generation-skipping transfer tax exemption under the Internal Revenue Code (currently $5.45 million per person) to pass family wealth to multiple generations without being eroded by estate taxes at each generation, which is what happens without a Dynasty Trust.  In Nevada, a dynasty trust can last for one day less than 365 years.

Other advantages of a Dynasty Trust include:

  • ·         Protecting trust assets from potential creditor claims against beneficiaries;
  • ·         Reducing a grantor’s estate by the amount of the gift transferred to the trust, plus the appreciation from those assets; and
  • ·         Removing the value of the trust assets from a number of succeeding generations’ estates for estate tax purposes.
To discuss whether a Dynasty Trust is right for you, please contact the attorneys at Jeffrey Burr, LTD. today.

-Rebecca J. Haines, Esq. 

Tuesday, October 11, 2016

Proposed §2704 Regulations to Take Away Discounting

In an effort to keep you informed of developments in federal gift and estate tax laws, we are writing to tell you of a potential change in the law.  By way of background, when Congress passes provisions of the Internal Revenue Code, they authorize the United States Treasury to issue regulations as further interpretation and enforcement of the Code.   The regulations that are the subject of this post are of particular interest for single clients with an estate greater than or approaching $5.5 million or married clients with combined estates greater than or approaching $11 million.

Proposed Regulations Issued: The Treasury (IRS) has recently issued Proposed Regulations that could have a dramatic impact on your estate planning by eliminating valuation discounts. For wealthy people looking to minimize their future certain estate tax, this is critical.  If you are concerned about protecting a family business, family investment assets, or real estate from having to be sold in order to pay the federal estate tax at your death, then it is worth investigating this. 

Act Now: Time is of the essence. Once the Proposed Regulations are effective, which could be as early as year-end, the ability to purposely structure discounts on assets of your estate might be substantially reduced or eliminated, thus curtailing your tax and asset protection planning flexibility.  Properly planning with these types of techniques takes some time to structure the various steps of the plan.  It is important to start right away.

What are Discounts Anyway? Here’s a simple illustration of discounts and what the proposed regulations are attempting to take away: Andrew has a $20 million estate which includes a $10 million family business. He gifts 40% of the business to a special irrevocable trust to grow the asset out of his estate. The gross value of the 40% business interest is $4 million.  Since an owner of the business with a minority position cannot force a sale or redemption of its interest, the non-controlling interest in the business transferred to the trust is worth less than the pro-rata value of the underlying business. Thus, the value should be reduced to reflect the difficulty of marketing the non-controlling interest.  As a result, the value of the 40% business interest transferred to the trust might be appraised, net of discounts, at $2.4 million. The discount has reduced the estate by $1.6 million from this one simple transaction.  The proposed regulations will eliminate the ability to take the discounts for lack of control and lack of marketability, meaning that the IRS would require that the sale of 40% of Andrew’s business to a trust or family member must have a price tag of $4 million and no less.

Election Impact: If the Democrats win the White House and the Democratic estate tax proposals are enacted, the results will be devastating to wealth transfer planning.  Pundits have predicted that a Democratic White House could affect down-ballot races and flip the Senate to the Democrats. The current administration’s estate tax “wish list” includes the reduction of the estate tax exemption to $3.5 million, elimination of inflation adjustments to the exemption, a $1 million gift exemption and a 45% rate.  However, the current Democratic presidential candidate’s plan would impose a 50% tax rate on estates above $10 million, a 55% tax rate above $50 million, and a 65% tax rate on estates over $500 million.  The Democratic plan will most likely include the array of proposals included in the current administration’s Greenbook which seek to restrict or eliminate GRATs, note sale transactions to grantor trusts, and more.  Wealthy taxpayers who don’t seize what might be the last opportunity to capture discount planning, might lose much more than just the discounts. They might lose many of the most valuable estate tax planning options. 

What You Should Do: Contact your planning team. A collaborative effort is essential to effective planning at this level. Your estate planning attorney can review strategic wealth transfer options that will maximize your benefit from discounts while still meeting other planning objectives. Projections completed by your wealth manager could be essential to confirming how much planning should be done and how. Your CPA will have vital input on wealth transfer options, federal and state income tax implications, and more. Your insurance consultant can show you how to use life insurance to backstop some of the planning strategies, in coordination with the financial forecasting done by your wealth manager, to maximize both the tax benefits and your financial security. 

We are including a link to a recent New York Times® article which discusses the proposed regulations and the affected planning in more detail.


If you are interested in learning more about the planning that could be terminated by these proposed regulations, we invite you to contact our office to set up a consultation to discuss an example of this type of discounting planning and whether this type of planning fits your individual situation.  More information will be posted to the blog about that date when it has been determined.

Attorney Jason C. Walker

Monday, September 26, 2016

Planning for the Unexpected ... Divorce

The recent news of the “Brangelina” (Brad Pitt and Angelina Jolie) split has me thinking...even the perceived “match made in Heaven” can end in divorce. The unexpected can become reality. So no matter how improbable divorce may be for you, plan for the unexpected.

Nevada is a community property state, and there is a presumption in Nevada that property acquired during marriage is community property and, therefore, subject to an equal division upon divorce. Some property, however, is not considered community property, unless commingled with community property. For instance, property brought into the marriage is generally the separate property of the spouse who owned the property prior to marriage. Also, inheritance is generally separate property.

How do we make sure, then, that commingling doesn’t happen? How do we deal with appreciation? How are mortgage payments treated? How are premium payments on life insurance, or 401(k)/IRA contributions treated? What do we do with family owned businesses?
Sometimes these questions are left unconsidered, whether because of premarital bliss, naivety, or some other reason. But as the news of Brad Pitt and Angelina Jolie’s divorce shows, the outcomes of human relationships are unpredictable. Sometimes (or many times) unexpected things happen, and we should be ready when they do.

Contact an attorney at JEFFREY BURR, LTD. to make sure you have the right plan and discuss with us your options for a separate property trust, a domestic asset protection trust, or other community property and separate property issues.



Wednesday, September 21, 2016

Join us for NBI Seminar on 10/6/16

Please join Jason Walker, Esq. and Collins Hunsaker, Esq. at their upcoming NBI seminar on October 6th.  Jason and Collins are scheduled to speak to attorneys, certified public accounts, and financial planners regarding:

·         Estate and Gift Tax Laws
·         Taxation of Trusts
·         Revocable Living Trust based plans versus Will based plans
·         Structuring Separate and Joint Revocable Living Trusts



Here is a link to the seminar webpage so you can read more and register: Revocable Living Trusts from Start to Finish

We hope to see you there!

Tuesday, August 30, 2016

If I’m Not Leaving Millions, Do I Need an Estate Plan?


Even if you are not a celebrity or self-made millionaire, failing to plan properly will leave a huge mess for your family.

Some ways to make sure that your family is not scrambling to find assets upon your passing or spending thousands of dollars in court and attorney fees to transfer those assets to your beneficiaries are:

1.  Make sure you at least have a simple Will.

The Will tells a court who you would like your Executor to be, or person that you would like to manage and oversee the probate process.  If you fail to nominate someone, the court will nominate someone for you.  A Will also directs the court to distribute assets to your named beneficiaries in accordance with the terms you lay out.  If you do not have a Will, the state substitutes its own estate plan for yours by distributing your assets according to the state’s intestacy statutes – which may inadvertently disinherit those who you actually wanted to leave your assets to. 

2.  Determine if a Living Trust is good for you.

Living Trusts enable you to bypass the court probate process entirely.  They enable for a smooth transition of assets from you to your beneficiaries after you are gone.  Another benefit of the Living Trust is that it can provide for means to take care of you if you are ever incapacitated. 

3.  Title your Assets Properly.

If you have a Living Trust, it is important to “fund” the Trust with your assets. This means that you must transfer title of bank accounts, investment accounts, real property and vehicles into the name of the Trust. Otherwise, your family will have to probate the assets left in your individual name.  Life Insurance and Retirement Plans should have updated beneficiary designations, which can include your Trust.

4.  Keep an Updated Asset Inventory.

One of the most difficult parts of distributing a person’s assets after they are gone is figuring out exactly what that person owned before they passed away.  Keeping an updated asset inventory will enable your family to effectively take over without having to scramble to figure out if or where you held investment accounts, stock, real property, etc.


While it may seem counter-intuitive, investing in setting up an estate plan now with an experienced estate planning attorney will save your estate (and your family) money in the long run.  So to prevent a mess for your family, even if you are not a celebrity or self-made millionaire, take the time now to meet with an estate planning attorney and determine the best estate plan for you.  

Monday, August 22, 2016

AFR's for September

The AFRs Annual Semi-annual Quarterly Monthly
are as follows
Short-term 0.79% 0.79% 0.79% 0.79%
Mid-term 1.22% 1.22% 1.22% 1.22%
Long-term 1.90% 1.89% 1.89% 1.88%

Tuesday, August 9, 2016

Nevada's new Commerce Tax

You may have recently received a “Welcome Letter” from the Nevada Department of Taxation notifying you of the newly enacted Commerce Tax laws.

The Commerce Tax is a new tax levied annually on each business entity that (1) does business in Nevada, and (2) earned gross revenue in Nevada for the fiscal year that exceeds $4,000,000. However, even exempt entities or business entities whose gross revenues in a fiscal year do not exceed $4,000,000, will be required to take certain actions before the August 15th deadline.

Exempt entities must file the Exempt Status Entity Form using the Tax ID number provided in the Welcome Letter. You can submit the Exempt Status Entity Form to the Department of Taxation by mail or through the Nevada Tax Center system. After submitting the Exempt Status Entity Form, your exempt entity will be in compliance with the Commerce Tax laws and will be removed from further Commerce Tax related mailings.

The list of entities exempt from the Commerce Tax is limited to:    

 Natural person, unless such person is engaged in a business and files Schedule C, E (Part 1) or F with the federal tax return;
 Governmental entity
 Non-profit organization pursuant to section 501(c) of the Internal Revenue Code;
 Business entity organized pursuant to NRS 82 or NRS 84;
 Credit union
 Grantor trust, excluding a trust taxable as a business entity for federal tax purposes;
 Estate of a natural person, excluding an estate taxable as a business entity for federal tax purposes;
 Certain REITs – Real Estate Investment Trusts
 REMIC – Real Estate Mortgage Investment Conduit
 Passive Entity*
 Entity, which only owns and manages intangible investments, such as stocks, bonds, patents, trademarks
 Participant in an exhibition NOT required to obtain state business license (NRS 360.780)
 Any person or entity which is prohibited from taxing pursuant to Constitution or law

Our office has been assisting many of our clients with this newly adopted Commerce Tax. If you have questions regarding how to file, or if you are exempt or non-exempt, we suggest contacting your attorney, accountant or calling the Department of Taxation.

Attorney Jason C. Walker

Friday, August 5, 2016

LLC Operating Agreements


Even single member LLC’s should have operating agreements.  The importance of an operating agreement seems obvious when unrelated parties are partners in an LLC; but the need seems less apparent when there is one member or if the member of the LLC is a husband and wife or a joint trust.  Having an operating agreement is a tangible item that demonstrates the intent that the LLC be treated as a legitimate business.  A creditor attempting to pierce, or reverse pierce, the veil of the LLC is likely to use the lack of an operating agreement to try to prevail in litigation.

The operating agreement should also be updated from time to time to reflect changes in ownership or management.  For instance, in estate planning matters we often have clients assign their ownership of their LLC to a revocable trust or a Nevada On-Shore Trust (domestic asset protection trust). The resulting change in ownership or a change in the named manager should be updated in the operating agreement with an amendment to the operating agreement or a restatement of the operating agreement. 


Attorney Jason C. Walker

Wednesday, July 20, 2016

Determining The Validity Of Your Will During Your Lifetime

One of the common fears of clients when doing their estate planning is that the terms of their last will and testament and/or their revocable trust will not be followed after their death.  In this regard, there are a limited number of legal theories to challenge the validity of a will or trust of a decedent.  The two most common legal theories are: (1) the decedent lacked the necessary legal capacity at the time the will (testamentary capacity) or trust (contractual capacity) was created, and (2) the decedent was unduly influenced by someone at the time the will or trust was created. 

When a will or trust is so challenged, one of the main problems is that the person who made the will or created the trust is now deceased.  The maker of the will or trust is no longer available to confirm that these are their intentions, that they have the necessary legal capacity, that they are not being unduly influenced, and if necessary explain to the court or jury the reasons for the terms of their will and trust such as why a child is disinherited.  This unavailability of the maker of the will or trust may lead to speculation on the part of the judge or jurors, and the substitution of their judgment of what they believe the will or trust should provide such as a child should not be disinherited.  At least as to wills, there is now a solution to this problem in Nevada.

For many years under Nevada law, the maker of a will, trust or other writing constituting a testamentary instrument could have a court determine any question of validity arising under the instrument and issue a declaration of rights. In other words, a Nevada court could issue a declaratory judgment as to the validity of a will or trust. Specifically, the law is Nevada Revised Statute 30.40(2). However, until recently this statute has been construed to mean that such a determination and declaratory judgment of the validity of a testamentary instrument by a court could not take place until after the death of the maker. This has now changed as to wills. The 2015 Nevada legislature passed a law that states if a declaratory judgment is entered under Nevada Revised Statute 30.40(2) during the lifetime of a decedent declaring a document to be the valid will of the decedent, the validity of that will is not subject to challenge after the death of the decedent. Of important note is this does not prevent the person from later revoking the will or making a new will during their lifetime.


However, of particular concern is that the Legislature did not include trusts in the new law.  This is most unfortunate in that revocable trusts are the primary estate planning tool in this day and age as opposed to wills.  One saving grace may be that in most instances the will is executed the same day as the trust.  Accordingly, a determination by the court during the lifetime of the maker that a will is valid should at least indirectly assist in later establishing the validity of a trust that was signed on the same day as the will was signed by the now deceased maker.  A potential problem is that a trust may be amended or restated after the date the will is signed.  Hopefully, a similar law for determining the validity of trusts during the lifetime of the trustor will be enacted in the next session of the Nevada Legislature. 

Tuesday, July 19, 2016

AFR's for August

August AFRs Annual Semi-annual Quarterly Monthly
are as follows
Short-term 0.56% 0.56% 0.56% 0.56%
Mid-term 1.18% 1.18% 1.18% 1.18%
Long-term 1.90% 1.89% 1.89% 1.88%
The Section 7520 rate is 1.4%

Wednesday, June 29, 2016

Melina Barr-Nicolatus Celebrating 30 Years with Jeffrey Burr


Longevity says a lot about a firm.  Longevity of its employees in particular.  We have several long-term employees, but our longest running employee is Melina, who is celebrating 30 years with Jeffrey Burr this June!  Melina Barr-Nicolatus started with Jeffrey Burr as a paralegal in June of 1986 and has been a support beam of this firm ever since.

We wish Melina a very Happy 30th Anniversary with Jeffrey Burr Ltd.  Here's to many more years.

Friday, June 24, 2016

The Power of Sentimental Value

Sentimental value can sometimes be worth more than economic value. Having represented family members fighting over family mementos worth little or nothing money-wise, we have come to realize the power of sentimental value.

Nevada, like many other states, allows a person to dispose of his/her tangible personal property by a written list referenced in the person’s will or trust. These lists allow a person to designate individual recipients of certain pieces of tangible personal property. The person can change the list as many times as he/she wants during his/her life. However, we oftentimes find the lists are never completed. In some cases the result is family dissension – often over the most unassuming items.

Sometimes the cure to the potential family discord is simply completing the tangible personal property list that accompanies most wills and trusts. If you have promised a certain piece of tangible personal property to someone and you still wish to leave that property to that person, complete your tangible personal property list accordingly. This can facilitate the administration of your estate or trust when you die and hopefully prevent frivolous lawsuits that consume potential inheritances.

For more information about the tangible personal property list, contact the attorneys at Jeffrey Burr, Ltd.


            

Wednesday, June 22, 2016

Congratulations Jeff Burr on being one of those named Top Attorneys in Mountain States Super Lawyers for 2016 for Estate Planning and Probate.  Jeff has been named since 2007.

Tuesday, June 21, 2016

AFRs for July

The Section 7520 rate is 1.8%
July AFRs Annual Semi-annual Quarterly Monthly
are as follows
Short-term 0.71% 0.71% 0.71% 0.71%
Mid-term 1.43% 1.42% 1.42% 1.42%
Long-term 2.18% 2.17% 2.16% 2.16%

Wednesday, June 15, 2016

Dangers of Outright Distributions


Many clients feel that once their children or grandchildren reach a certain age, they will have obtained a financial maturity that will enable those beneficiaries to make good financial decisions and not spend their inheritance in one visit to a casino.  Thus, in many estate plans beneficiaries are entitled to receive their inheritance all at once when they reach a certain age, or to receive portions at certain ages. While a beneficiary at age 25 or 30 may very well be financially mature, there are dangers besides a beneficiary’s propensity to spend money to consider when crafting an estate plan.

When a beneficiary is entitled to an outright distribution, those assets may become subject to more than a beneficiary’s spending habits; a judgment creditor can seize an inheritance to satisfy a claim, a bankruptcy court can seize an inheritance to pay creditors and costs of the bankruptcy proceeding, a divorce court may award some or all of an inheritance to that beneficiary’s soon-to-be ex-spouse, or if the beneficiary fails to create his or her own estate plan and something happens to him or her, the inheritance may become subject to a probate.  If a minor is the beneficiary of an outright distribution, they will receive a check when they are 18, with no limitations in place for how they can spend it.

Rebecca J. Haines. Esq.
To avoid those potential dangers, among others, you can direct through your estate plan documents that a beneficiary’s inheritance be held in trust for their benefit, with distributions to be made in the discretion of the trustee.  By making distributions to a beneficiary discretionary rather than mandatory, the inheritance is protected because the money is not in the beneficiary’s pocket to spend or give away.  Allowing the inheritance to stay in trust will also allow the assets to grow, enabling your beneficiary to receive more than what they were originally entitled to over time.

At JEFFREY BURR, LTD. our attorneys have worked with many clients and their families to determine the best estate plan for the preservation of their legacies and protection of their beneficiaries.  To discuss the best estate plan for your family, contact us today.




Thursday, June 9, 2016

Non-Judicial Settlement Agreements in Nevada


One of the primary reasons a person creates a revocable trust is to avoid probate, the formal court supervision of an estate proceeding, upon their death.  The goal is to have no court involvement whatsoever in the affairs and administration of the trust.  Even with the creation of a revocable trust, there are situations in the past that a Nevada court was required to become involved in the trust administration process.  For example, the creator of the revocable trust who is also the trustee becomes incapacitated or dies, and all of the nominated successor trustees under the terms of the trust are unable to serve for whatever reason.  In that situation, there is no successor trustee to administer the trust.  In the past, it was necessary to petition the court to assume jurisdiction of the trust and appoint a successor trustee.  However, this is no longer necessary.  In July of 2015, the Nevada legislature passed a law that allows for the resolution of certain matters relating to a trust without court approval through the use of a non-judicial settlement agreement. The law was effective October 1, 2015.  The matters that may be addressed through a non-judicial settlement agreement are:

1.  The investment or use of trust assets;
2.  The lending or borrowing of money;                                       
3.  The addition, deletion or modification of a term or condition of the trust;
4.  The interpretation or construction of a term of the trust;
5.  The designation or transfer of the principal place of administration of the trust;                                     
6.  The approval of a trustee’s report or accounting;
7.  The choice of law governing the construction of the trust instrument or administration of the trust, or both;
8.   Direction to a trustee to perform or refrain from performing a particular act;
 9.  The granting of any necessary or desirable power to a trustee;  
10.  The resignation or appointment of a trustee and the determination of a trustee’s compensation;  
11.  The merger or division of trusts
12.  The granting of approval or authority, for a trustee to make charitable gifts from a non-charitable trust;              
13.  The transfer of a trust’s principal place of administration;
14.  Negating the liability of a trustee for an action relating to the trust and providing indemnification therefore; and
15.  The termination of the trust.

John R. Mugan, Esq.
For a non-judicial settlement agreement to be valid, the agreement must not violate a material purpose of the trust, and the terms and conditions of the agreement must be ones that can be properly approved by a court.  Also it must be signed by all “indispensable parties.” An indispensable party is one who would need to consent to the change proposed by the non-judicial settlement agreement had the agreement instead been submitted to the court. This is usually all beneficiaries and parties interested in the trust.


A non-judicial settlement agreement is another tool in which to avoid court involvement in the affairs of a trust in Nevada. 


Wednesday, May 18, 2016

AFR's for June

  Annual Semi-annual Quarterly Monthly
June AFRs
Short-term 0.64% 0.64% 0.64% 0.64%
Mid-term 1.41% 1.41% 1.41% 1.41%
Long-term 2.24% 2.23% 2.22% 2.22%

Friday, May 13, 2016

The Importance of Business Succession Planning

Business succession planning is a topic that many business owners sweep under the rug – waiting until they absolutely have to address it, if they do so at all. These business owners give little attention to succession planning. They think it’s an issue that will work itself out. But what they don’t realize is that statistically most businesses fail to successfully transition to subsequent generations. Indeed, less than one-third of businesses successfully pass to the second generation, and that proportion is substantially less for the third and fourth generations and so on. In our experience, family conflicts are the primary contributor to unsuccessful business succession. The main family conflicts concern (1) the unwillingness to change traditions and adapt, which is required to operate a successful business, (2) the interjection of emotion in what should be logical business decisions, (3) the unrestrained willingness to hire unqualified family members, and (4) the lack of family unity. Unaddressed, these conflicts can relegate a business to the category of failed business succession, where statistics say two-thirds of businesses end up. However, with proper planning and counseling an otherwise prosperous business can be passed from generation to generation providing benefit to each.
Michael D. Lum
If you are a business owner and have not planned your business succession or have not visited the topic in a while, please contact an attorney at JEFFREY BURR who can help introduce you to a team of professionals and participate with your current advisors to help you plan for business succession.



Tuesday, May 3, 2016

Limited Liability Companies

Limited Liability Companies (“LLCs”) are a type of business entity recognized in all fifty states. LLCs provide the protections of a corporation and the flexibility and tax advantages of a partnership.

An LLC possesses the corporate characteristic of limited liability for all its members.  This characteristic generally shields the individual LLC members from personal liability beyond their investment or capital commitment to the LLC for the debts and obligations of the LLC.  Thus, members are protected from being liable for debts incurred by the company, but the company’s assets are also protected from a member’s individual creditors.  In Nevada (along with only a handful of other states), a charging order is the exclusive remedy for creditors of LLC members, which means that those creditors can generally only get money or property that is actually distributed to the liable member.  The manager of the LLC, or the controlling member or members of the LLC, has some flexibility in withholding distributions to ensure that the creditor of the liable member does not get the company’s property.  Additionally, an LLC possesses the income tax flow-through attributes of a partnership, avoiding the double taxation problems typically associated with traditional corporations.


The LLC also has extremely valuable estate planning uses, such as for gifting and reducing estate tax liability, protecting family assets, and insurance planning considerations.  Thus, the LLC is an extremely versatile tool from both business and estate planning perspectives. To determine whether an LLC could work for your business or as a part of your integrated estate plan, contact one of the attorneys at JEFFREY BURR today.

Wednesday, April 27, 2016

Don't Leave Your Heirs to Make Decisions About Your Legacy - Have a Plan

We are left to wonder how Prince would have wanted his estate / legacy divided?  Will his wishes be met?  Read the article published by wealthmanagement.com, a division of Trust and Estates Magazine: 

Friday, April 22, 2016

Parents, Grandparents and Disabled Children - Coordinated Planning

The Census Bureau tells us that 1 in every 6 families now has a disabled person within their extended family.  This means there are an increasing number of disabled adults who will become orphans as their parents age and pass. 

We suggest parents with a disabled child create a formal care plan to prepare for the time when they are no longer able to care for their disabled child.  This plan should address the particular needs of the child, the manner for the delivery of care and how the child’s care needs might be paid for over the expected lifetime of the child. 

These plans are an essential component of an estate plan.  In our experience they are a lot of work, both emotionally and in terms of time and commitment. The care plan should include the child’s adult siblings and grandparents, as these plans work most effectively when they are inter-generational, comprehensive and have coordinated planning goals, especially as to public benefits planning. 

For instance, if grandparents wish to remember a disabled grandchild in their Wills and should leave a large bequest for the benefit of a disabled grandchild who is receiving publicly funded medical care, the result is the likely termination of the grandchild’s essential public health care benefits.  Not a good result and certainly not what the grandparent’s envisioned when making their estate plan.

However, grandparents (and other family members, too) in consultation with the child’s parents, could leave a bequest  for the benefit of a special needs grandchild in a Special Needs Trust without the loss of the grandchild’s medical benefits.

In most states, Nevada included, a disabled person can have only $2,000 in assets and still qualify for Medicaid or Social Security Supplemental Security Income (SSI).  These programs, while helpful, and often essential, rarely provide the level of care needed by a disabled person.  With a Special Needs Trust,  the extended family can leave gifts that effectively enhance the quality of life for their special needs child or grandchild and still preserve basic public benefits.

If you are a parent, grandparent, or a sibling of a special needs brother or sister, be sure that your family has coordinated their planning for the preservation of basic public benefits.  Usually, one Special Needs Trust is sufficient for the entire family of a disabled individual.

At Jeffrey Burr, our experienced attorneys have helped many families with the complexities of comprehensive planning for special needs beneficiaries.



Tuesday, April 12, 2016

Holdback When Making Trust Distributions to Beneficiaries

Upon the death of a person who created a revocable or living trust the trust agreement typically provides for distributions of the Trust assets among various beneficiaries.  A beneficiary of a Trust understandably wants his or her inheritance as soon as possible.  Trustees also desire to complete the administration of the Trust, including distributions to the beneficiaries, as quickly as possible after the period for filing creditor claims has expired.  The Trustee may also be a beneficiary or related to the Trust beneficiaries and these interesting “family dynamics” can put additional pressure on a Trustee to distribute the Trust quickly.  Regardless of all these facts and competing interests for a quick termination of the Trust, it is good practice for a Trustee to retain a certain amount of the Trust monies from the final distribution to the beneficiaries. This retention is often called a “holdback.” 

The amount of the holdback depends on the particular facts of each case. Oftentimes there is a final income tax return (Form 1040) of the decedent due the following calendar year that cannot be prepared and filed until after January 31 of the following year.  For example, a person dies on June 1, 2016 with a Trust.  The Successor Trustee is responsible for filing the deceased person’s final Form 1040 (or a state tax return if state income tax is involved) regarding any taxable income of the decedent from January 1, 2016 to the date of death.  This final income tax return is due on or before April 15, 2017, and should be filed by the Trustee or Executor.  However, the decedent’s forms 1099s, W-2s, W-4s, Schedule K-1s, et cetera for the 2016 calendar year will not be issued by the decedent’s employer or other sources of income until on or about January 31, 2017.  And realistically the tax preparer may not complete the income tax return until March or April, depending on their workload.  Accordingly, the Trustee needs to holdback a sufficient sum to pay the fees of the tax preparer and for payment of any income tax that may be due on the decedent’s final income tax return. 

Additionally, the IRS has 3 years from the filing date of a tax return to audit the return.  If there is a likelihood of an audit of the 2016 return or the 2 previous income tax returns of the decedent, there may be additional tax, penalties and interest owed.  If this occurs there will be accountant and attorney fees incurred in an audit.  Additional monies must be held back in the likelihood of an audit.  It is common for a Trustee to retain a holdback until the 3 year audit period has expired, after which the remaining holdback is distributed to the beneficiaries.

Holdbacks are also utilized when a federal estate tax return is filed. (Estate tax returns are required if the estate value is above $5.45 million for a single deceased individual or up to $10.9 million for married deceased taxpayers).


The most important reason for a holdback is that a Trustee is personally liable for any tax due to the extent that Trust assets were under the Trustee’s control, even if the Trust assets have already been distributed to the beneficiaries.  Accordingly, a Successor Trustee should always consult a knowledgeable trust attorney before making distributions.  At Jeffrey Burr, Ltd., our trust administration attorneys have assisted numerous individual and corporate Trustees in performing their duties.   

John R. Mugan, Esq. 
Trust Administration Attorney