Estate Planning

Avoid the Pitfalls of Beneficiary Designations

It may seem simple to leave your property to your heirs. You make a will or a trust, you do a transfer-on-death deed for your real estate, you put your kids on your bank account, you designate beneficiaries for your life insurance and retirement accounts, and you’re done.

If only things were that simple. The result you wanted can be seriously foiled, if all the above elements are not carefully coordinated.

After you consider the following, we hope you’ll agree that it’s best to consult a qualified attorney. That’s the person you need to help you construct an estate plan that will do what you want it to do.

A pitfall: Conflict between deeds and wills or trusts

If your will or trust conflicts with a deed for real property, the law will resolve the conflict for you by following the deed, not the will or trust. This can produce unintended results.

Suppose Mary wanted to divide her property equally between her two children, John and Jane. She recorded a beneficiary deed for John so he could inherit the house. She wrote a will leaving money to her daughter Jane that was roughly the same value as the house.

Subsequently, however, Mary forgot about John’s deed. She made another will that split everything equally between John and Jane.

On Mary’s death, John ended up getting significantly more than Jane. The portion of the second will including the house would be invalidated because the earlier deed would supplant the will. So John got the house through the deed, plus half the money through the will. Jane got half the money only. That was not what Mary intended and the unfairness damaged John’s and Jane’s relationship.

A similar pitfall: Conflict between beneficiary designations and wills or trusts

Financial accounts can transfer automatically to people of your choice, avoiding probate, if you designate beneficiaries by means of “transfer on death” (TOD) through your broker. But you must not depend on your will to change TOD designations. The beneficiary designations establish a contract between the holder of the account and you. When you pass, the holder is legally obligated to transfer your account to the beneficiaries you designate, regardless of what your will says. The designations, like deeds, supplant wills.

So if you have named your spouse as a beneficiary of, say, a retirement account, and then you get divorced and forget to change the beneficiary designation, your ex-spouse – and neither your new spouse nor your children nor anybody else – will receive the account proceeds when you die, regardless what your will says.

Underage beneficiaries and guardianship proceedings

Suppose your financial advisor calls to alert you that you have not designated beneficiaries on your accounts and that if you don’t do so, your estate will have to go through probate when you pass. By making TOD designations, your beneficiary would simply present a death certificate and the assets would transfer to him or her without the need to go to court. That sounds good. So you follow your advisor’s suggestion and designate your beneficiaries.

In the meantime, your lawyer drafts a good will for you. This will, as good wills should, contain a subtrust providing for underage beneficiaries. Your lawyer, echoing your financial advisor, explains that the subtrust is intended to avoid the necessity of court proceedings.

Your efforts to avoid court will be defeated, however, if you choose an underage beneficiary to receive your financial account through TOD. Guardianship proceedings would still be necessary to administer the money until the beneficiary came of age.

It would have been better to route the gift to the underage beneficiary through a will or trust and not through TOD designation. If wills or trusts are properly drafted, they contain provisions to administer the underage beneficiary’s inheritance privately and thereby avoid the court guardianship proceedings.

Another pitfall: Disabled beneficiaries and government benefits

The pitfall here is similar to the one above. If your beneficiary is disabled and gets a TOD (or any other kind of) inheritance, the inherited money could jeopardize the beneficiary’s entitlement to government benefits. Most benefits programs are “means-tested.” To be eligible, recipients must own practically nothing. If your beneficiary were suddenly to inherit, he or she would lose benefits and end up having to pay for care until the inheritance was spent. That could involve a lot of money!

Rather, like for underage beneficiaries, the disabled beneficiary’s inheritance should be routed through a will or “supplemental needs trust” (SNT) that imposes restrictions on spending. With those restrictions in place, the benefits would keep coming, and the inheritance assets could be used to pay for “extras” that benefits don’t cover. These extras might include payment of real estate taxes, upkeep of a residence, or vacations, or a flat-screen television. The inherited money would be managed by a trusted person and the disabled beneficiary would still continue to receive the crucially important benefits.

Bank accounts and disabled or underage beneficiaries

The pitfall is the same as above. If you have designated underage or disabled beneficiaries by making your accounts “payable on death” (POD), court proceedings will be necessary in the case of the underage beneficiary, or the inheritance could jeopardize or eliminate the disabled beneficiary’s government benefits.

“Spendthrift” beneficiaries

The problem is likewise similar here. If your beneficiary has a gambling habit or drug addiction, or if he or she needs bankruptcy protection from creditors, and if he or she inherits without trust protections, the inheritance could be lost to the beneficiary’s detriment.

Joint tenancy of real property

It may be tempting to avoid probate by putting real estate in your beneficiaries’ names as joint tenants. But if multiple people own real estate jointly, all must agree on what is to be done with the land and all should contribute equally to property maintenance expenses. This can create disputes. A better solution might be to subject the property to probate, to dispose of it in orderly court proceedings.

Joint bank accounts

The intent to avoid probate here is similar to a joint tenancy of land, but putting your bank account in your and your children’s names exposes the funds to risk that should be avoided. Once a person is named as a co-owner of a bank account, that person has immediate and unfettered access to the funds. The funds are thus exposed to misappropriation by the joint-tenant child, or they can go instead to the child’s creditors in bankruptcy, or to ex-spouses in divorce proceedings.

It would be better to create a power of attorney that allows a trusted agent access to bank-account funds for your benefit while you are alive. Then, for when you pass, you could name beneficiaries via a POD designation with the bank – but remember the warnings above regarding underage or disabled or spendthrift beneficiaries. Those beneficiaries’ access to funds should be protected by a trust.

A lot of moving parts

Each of the estate-planning strategies above could work well in and of themselves, but, taken together, may have an adverse impact. Crafting a plan that combines and coordinates the various strategies requires expertise and care. That care is worth taking, to safeguard the wealth you have built up over the years. Don’t risk a result you don’t want. Call on us to design a plan that harmonizes all the moving parts, so the gears will work together and you will leave the legacy you intended.

If you have questions or would like to discuss your personal situation, please don’t hesitate to contact us. Please contact our Reno office by calling us at (775) 853-5700.

Estate Planning

Reassessment of an Estate Plan Is Necessary Following the Death of a Spouse

The passing of a spouse is not only a very emotional challenge but can be financially difficult as well. It is common for one spouse to handle family tax and estate plans, and a widow(er) may be looking at a complex financial situation with more questions than answers. It is a mistake to think that a complete estate plan needs no further action after a spouse’s passing. Many times there are decisions to make and act on within a set timeframe. Prioritizing the review and reassessment of your finances and estate plan is a must.

Start by taking an inventory of your current bills; making a plan that covers those expenses for the next six to twelve months. If your spouse’s social security monthly benefit is higher than yours and your marriage was ten years or more, petition to receive the higher dollar amount. Put off making big decisions if at all possible during this time. Adapting to the loss of a loved one can cloud good decision-making, and allowing for time to analyze decisions may even find you developing new financial goals. However, identify and act on those decisions with deadlines, particularly the portability election on the decedent’s estate tax return and any probate timelines. Be particularly careful during tax time and work closely with your tax preparer to understand both your deceased spouse and your taxes. It is not uncommon for a widow to discover previously unknown accounts.

If you have a solid relationship with your family attorney and financial advisor, reach out to them for guidance. These professionals are well versed in the processes that accompany the loss of a spouse. If you are not familiar with these individuals, make appointments to meet with and review your current situation. Ask for strategy options and see how they fit into what may become your forward plans. Re-evaluate your investments and match needs to risk tolerance. Many widows are happy with a lesser return if stability is the offset. Be sure you are content with your investment philosophy before making significant changes, carefully weighing professional input.

Keep your formal estate plan updated. Laws change, and so has your situation. Ensure that all beneficiaries on IRAs, life insurance, and some investment accounts reflect your current wishes. If necessary, update your power of attorney for both financial and medical directives. When outright gifting to your children, remember it may create problems if there were to be a later divorce. An ex-spouse can lay claim to the gifted property, which you can lose in a lawsuit. Speak with your estate planning attorney as trusts are a beneficial entity to manage and protect property of significant value. Trusts are also worth considering to protect substantial assets that do not have a beneficiary designation to bypass probate and protect your heirs.

Take stock in your home, weighing your financial situation and your emotional connection to your home. Does it make sense to stay in your current residence? Is it financially possible to do so? Even if the home is mortgage-free, maintenance and upkeep of the home and property can become overwhelming and expensive. Alternatively, many widows prefer to remain in the home with longstanding memories of their spouse and children growing up in the environment. Even though it may make economic sense to move, the emotional ties to the property may be in the best interest of the widow to preserve.

census.gov

According to a Fidelity Investments survey, most Americans who find themselves widowed are female, and nearly seventy percent will retain a new financial advisor within the first year of the death of their spouse. Regardless of why this happens, it is clear that amending financial goals and revisiting the estate plan are likely to be the actions of a widow. Predictions are that women will inherit close to thirty trillion dollars of intergenerational wealth transfers over the next few decades. Becoming educated about family financial decisions for all widows(ers) is of the utmost importance, particularly for women who tend to outlive their husbands.

How a spouse passes, whether from a lengthy disease battle or taken quickly, matters not. The grief is still there. How long and deep the grief varies significantly among individuals. While it is essential to address time-sensitive decisions, it is best to make significant financial changes when a widow feels emotionally intense and clear-minded to avoid making regretful decisions. Professional guidance and advice are of the utmost importance to fully understand your situation and the decisions you need to make. While the process can be complex, even heartwrenching, it is of utmost importance to your future to handle what is before you competently. If you have questions or would like to discuss your personal situation, please don’t hesitate to contact us. Please contact our Reno office by calling us at (775) 853-5700.

Elder Law, Estate Planning

Understanding the Role of an Elder Law Attorney 

As seniors grow older, the dependency on their family to handle financial and health matters rises. They often believe that their family members will be able to take care of any issues that arise. While consulting with loved ones about plans and wishes can be beneficial, relying solely on them can cause problems in the long run for both seniors and their families.

Instead, it is best to seek the advice of an elder law attorney when it comes to putting proper planning in place. The issues around retirement, wills, and estate planning are often complex. Working with a legal professional can help seniors navigate these details to ensure that decisions and plans are suited to their specific situation.

Having legal arrangements in place related to retirement benefits, assets, and determining who will be responsible for the welfare of an aging loved one can also help to avoid family disputes, and ensure that assets are preserved as intended. And although we’d like to assume family members always have seniors’ best interests at heart, legally binding arrangements also protect against abuse and financial exploitation.

But it isn’t just seniors that benefit from working with a legal professional. Elder law attorneys can also assist heirs and beneficiaries by ensuring that assets don’t fall into wrongful hands due to debts, divorces, or other extenuating circumstances. They can also help beneficiaries avoid the long and complicated probate process.

Elder law attorney expertise

Elder law attorneys have the expertise to help seniors and their loved ones navigate all of the legal issues impacting the elderly. They can help clients to better understand Medicare and Medicaid programs and laws, and assist clients and families with all of the legal aspects of planning, including drafting wills, estate plans, and trusts.

Below is a list of some of the services elder law attorneys provide:

  • Medicaid Eligibility, Applications, and Planning
  • Medicare Eligibility and Claims
  • Social security and disability claims and appeals
  • Long-term care planning
  • Financial planning for long-term care
  • Drafting wills and trusts
  • Medical Power of Attorney
  • Financial Power of Attorney
  • Elder abuse case management
  • Patient rights
  • Nursing home issues and disputes
  • Establishing and managing Estates and Trusts
  • Tax advice and planning strategies
  • Probate services
  • Asset protection

… and more

Seniors tend to procrastinate planning due to the unpleasant associations of illness and death. Elder law attorneys can alleviate that discomfort by facilitating family conversations and shifting the focus to the positive benefits of planning and preparedness. Cost can also deter seniors from seeking legal advice and services, however, failing to plan can ultimately end up being far more expensive.

No matter the issue at hand, seniors and their loved ones will benefit from working with a legal professional. If you’d like to learn more about how elder law services can help you or an aging loved one, contact our firm today. If you have questions or would like to discuss your personal situation, please don’t hesitate to contact us. Please contact our Reno office by calling us at (775) 853-5700.

Elder Law, Estate Planning

How Do I Know if I Need a Trust?

This article will help you decide if a trust fits your particular circumstances. For example, maybe you have a disabled child and you want a trust to permit that child to inherit without losing government benefits. Maybe your own or your spouse’s health is heading into difficulties, and you can foresee eventually needing long-term care benefits. Trusts can avoid an expensive, public, and lengthy probate process before your beneficiaries can inherit after you pass. Or, you might be in the classic “trust fund” situation, where you’re concerned that your children won’t be able to manage money wisely.

All these are excellent reasons to consider a trust. But what kind of trust? A quick count shows there are at least thirteen different varieties. Which one is best suited to your needs? Call us.

Here’s the basic idea behind trusts, to help you understand why you might or might not need one.

What is a Trust?

Think of a trust like a treasure chest. You originally bought property or earned money in your own name. You then transfer those assets into the trust’s name – into your treasure chest, in other words. The trust treasure chest becomes a legal entity separate from you, which now holds your property in its, and no longer in your, name.

Then you identify people who will occupy the three roles involved in managing trust property. First, you are the grantor, or settlor, or trustmaker – all those words mean the same thing, the “you” in this case. Second, you appoint a trustee. That person or entity is responsible for managing trust assets and following directions contained in the trust document. Third, you decide whom you want to receive trust assets – your beneficiary or beneficiaries, in other words.

In legal terms, a trust is a fiduciary agreement among you the original property owner, your trustee, and your beneficiary. The trust document contains instructions for what you want to be done with trust property, both for how you want it invested and, also, for how you want trust assets to be distributed when you pass. Trusts are, thus, a highly efficient hybrid between a power of attorney, an asset-management vehicle, and a last will and testament, all rolled into one legal entity and document.

There are two basic kinds of trusts to understand before they split off into their thirteen-or-more different flavors: revocable or irrevocable trusts.

The Revocable Trust

A revocable trust can be thought of like a treasure chest with an open lid. As grantor/settlor/trustmaker of a revocable trust, you can get at trust assets freely.

You yourself can also occupy all three roles in a revocable trust – grantor, trustee, and beneficiary. If need be, you can also tinker with trust terms, by freely amending them to change the directions, beneficiaries, or trustees. Or, you can revoke the whole thing. Before that point, though, the trust document will be there to take care of everything you want it to.

If you should meet with an accident and lose capacity, the terms of your trust will designate a person to step in on your behalf and, thus, avoid the need to go to court to get a guardian for you. The trust will also direct who inherits, thus keeping your affairs private and out of probate court. This feature is especially important if you (formerly) and then the trust (after you created it) own real property in various states. The savings in court costs in that situation could be significant.

The Irrevocable Trust

This is the trust for you if you’re seeing the need for Medicaid long-term care benefits in your future, or you work in a field where suits are common, such as owning a small business or in the construction industry.

The disadvantage to an irrevocable trust, however, is that you will be sacrificing all or almost all control over trust assets, unlike in the revocable-trust situation. Once an irrevocable trust is established, you as grantor/settlor/trustmaker cannot directly alter the terms and, generally speaking, your access to trust money is restricted or entirely precluded – as is required in order to enjoy the potent benefits of this kind of trust.

Think of an irrevocable trust as being like the treasure chest with the locked lid. Your trustee – who generally cannot be you – is the one with the key. You yourself can no longer reach your assets. This relinquishment of control is necessary to shelter your assets from creditors or to protect your assets when entitlement to government benefits would otherwise require you to spend almost all you own first.

There are ways to draft an irrevocable trust carefully, so you can still exert your will over how assets are to be used. Just as in the revocable situation, you can impose conditions that must be met before a beneficiary can receive funds. You can designate how trust income is to be used for specific purposes like college tuition, business start-up, or travel. You can also authorize a person or entity as a “trust protector,” who can alter trust language, correct drafting errors, or create a new similar trust if the law changes.

And there you have the basics. Now you’re ready to decide whether you need a credit shelter trust, or a charitable trust, or a qualified terminable interest trust, or a blind trust, or – just come see us to figure out all the rest!

Trust Caveats

Some sophisticated trusts do convey tax benefits, but, for the most part, IRS considers revocable trusts to be invisible. You as grantor/settlor/trustmaker will still pay tax on the revocable-trust income, albeit at your individual rate and not at the prohibitive trust rate.

As for estate taxes, trusts have no effect – but, at least regarding federal estate taxes, those are currently moot for most people. They are not incurred until the value of the estate exceeds $11.4 million as of 2019. Some states do impose estate and/or inheritance taxes; for those states, please consult this website:

Also, keep in mind that revocable trusts provide no protection against creditors. If you lose a legal action, a judge can force you to change the beneficiary of your trust to the winner. Irrevocable trusts are free from that kind of interference.

Still, irrevocable trusts must be established long before you run into that kind of trouble. If you create such a trust while credit problems are looming or have already arrived, you risk that your trust will be undone as a fraudulent conveyance.

Trust Your Attorney

Consult lawyers like us, who have experience and expertise in the trusts and estates area. Custom-constructing a treasure chest to fit your specific needs is a job for our specific skills.

If you have questions or would like to discuss your personal situation, please don’t hesitate to contact us. Please contact our Reno office by calling us at (775) 853-5700.

Estate Planning

Why Estate Planning Is Important to Younger Adults

Most young adults don’t consider estate planning a priority. Young adults in their twenties and thirties often think they don’t own enough to constitute an estate. However, an estate is the total of all you own – money, investments, real estate, vehicles, business interests, digital assets (including cryptocurrency), and other personal belongings. No matter how much or minor, you own your possessions need to go somewhere after you die. You may not think you will die young, but if the coronavirus pandemic has taught us anything, it is that life is uncertain. It is a myth that estate planning is just for the rich and the old.

What legal documents constitute an estate plan?

Some documents may vary depending on your wealth or financial structure; however, everyone should have a will. At the time of your death, everything you own becomes your estate. Your estate will go through a probate process where the court will determine what happens to you everything you own that doesn’t have a co-owner or beneficiary. Because the probate court will inventory your assets and notify and pay creditors, your will is a public record. If you have a will, the probate court will use it as a guide. In the absence of a will (dying intestate), the court will use state intestacy laws to determine who inherits your assets.

What does a will establish in an estate plan?

A will designates two critical things. The first is the naming of your executor. An executor is responsible for carrying out the instructions in your will, making payments on any outstanding debts, distributing assets to named heirs, and filing your final taxes. Second, if you have dependents, your will names the guardian and backup guardian to provide care for them. The naming of an executor and guardian for a dependent can only happen in a will.

The value of establishing an advance healthcare directive for young adults

All young adults should have an advance healthcare directive, also known as a medical directive or living will, which includes a durable healthcare power of attorney. These legal documents specify your healthcare wishes if you are permanently incapacitated or for end-of-life healthcare and designate who will make those decisions on your behalf according to your instructions. In addition, it is imperative to include a HIPAA privacy authorization form for your durable healthcare power of attorney or trustee. The form permits medical and healthcare professionals to disclose pertinent health information and medical records to your healthcare proxy.

While it may be uncomfortable to contemplate being unable to make decisions for yourself as a young adult, accidental injuries, heart disease, cancer, and strokes, to name a few, are becoming all too prevalent in young American adults. Making plans while you are competent and able is a prudent course of action and can bring you a sense of calm, knowing you have confronted the possibility and have a plan in place.

The value of a revocable living trust for young adults

Some young adults will have enough assets, real estate, or business interests to make a revocable living trust worthwhile. This trust type avoids the probate process, ensuring privacy. There is no limit to the number of times you can amend a living trust. You may change asset distribution or add assets as you acquire more throughout your life. An estate planning attorney can help you determine if your financial situation and age warrant the setting up of this type of trust.

You probably have more assets than you realize. To assess your situation, inventory all of your belongings which typically includes but is not limited to:

  • All bank accounts in your name and their approximate balances
  • All investments you own
  • Any property or real estate you own
  • Any retirement plans you have, including pensions
  • Any insurance policies you carry
  • Any retirement plans, including pensions, you own
  • Businesses you own, whether in part or whole
  • Valuable personal property such as your grandmother’s wedding ring, a collection of trading cards, or a grandfather clock
  • Digital assets such as cryptocurrency, income-generating online storefronts, influencer accounts, or income-producing subscription accounts like TwitchTV
  • Include all email accounts, login URL’s including user names and passwords where you receive critical communications
  • All outstanding debts

Once you realize the scope of your belongings and assets, you can begin formulating your estate plan. First, consider who you want to receive your possessions and think about secondary beneficiaries, especially over time, as early estate planning requires frequent reviews and updates in the event of deaths, marriage, divorce, or the birth of a child.

Once you have an inventory and have begun thinking about who should handle things upon your passing and who you want as beneficiaries, it’s time to sit down with an estate planning attorney. Working with an estate planning attorney is easier than ever now, as COVID-19 increases the use of video and smartphone conferencing that streamlines legal planning. Estate planning attorneys like us can create a plan that best suits your situation, even if you aren’t sure what to do. Proper legal documents can save your loved ones from an expensive probate trial should someone contest your will. Even as a young adult, it is best to start planning now, even if it is just with some primary documents.

We would be happy to discuss your needs in a confidential setting that you are comfortable with – by video, over the phone, or in person. Please contact our Reno office by calling us at (775) 853-5700.

Estate Planning

A Guide for Completing Your Estate Plan

As you may expect, the older population far outpace the younger counterparts in estate planning, however, 19 percent of those over age 72 and 42 percent of those between 53 and 71, according to survey data — lack any type of estate plan.

Although managing these details can seem daunting, and even depressing, the task becomes far less unpleasant with proper understanding and planning. Estate planning is essential for seniors and for their family members to be prepared in the event of a loved one’s illness or passing.

If you or an aging loved one have been putting off estate planning, start with the basics and learn why it’s important take the focus off of the negative and shift it to the positive benefits.

Understanding the meaning of “estate”

In addition to the fear factor of planning for illness and death, many seniors dismiss its importance because they don’t understand what “estate” means, or they believe it applies only to those with significant wealth. In reality, an estate includes anything a person owns — homes or other properties, bank accounts, automobiles and additional assets, and ownership of any licenses or patents. 

A person’s estate also includes any liabilities such as mortgages. These debts will need to be settled before loved ones or beneficiaries receive any compensation or death benefits. An estate plan encompasses more than distributing assets and settling debts, however. It also outlines decisions about healthcare and other key things.

The estate plan’s role in self-advocacy

Estate plans help seniors establish important guidelines that allow them to advocate for themselves. This is essential for seniors who wish to retain their independence and protect their assets. In addition to creating wills and other important documents, an estate plan allows seniors to have a say in the quality of their long-term care — whether at home or in an assisted living facility — and to qualify for associated government benefits to help pay for that care. It also helps them to protect their life savings and outline their wishes should they become incapacitated. 

Elder law attorneys can help clients develop strategies to enable seniors to better advocate for themselves in these scenarios.

What’s included in an estate plan?

A properly executed estate plan typically includes a Last Will and Testament, Living Will, and Medical and Financial Powers of Attorney. Let’s take a look at what each of these things is and the purposes they serve:

  • Last Will and Testament: Allows a person to determine who will inherit assets and appoint an executor who will make sure wishes are carried out.
  • Living Will: Allows a person to choose the type of care he or she wants should they become hospitalized and/or incapable of making decisions independently. A Living Will would, for example, outline a person’s wishes about certain medical treatments, such as blood transfusions, or whether or not they wish to be resuscitated.
  • Medical Power of Attorney: Appoints someone — generally a spouse or family member — to make decisions on a person’s behalf about medical care and treatment.
  • Financial Power of Attorney: Appoints someone — also typically a spouse or family member — who can make financial decisions on a person’s behalf. This includes allowing access to bank accounts to ensure bills and mortgages continue to get paid in the event of illness or incapacitation.

Establishing Trusts

Estate planning also includes provisions for developing Trusts. Trusts allow seniors to set aside money for specific people or charities while avoiding the long, drawn-out process of probate. This allows heirs and beneficiaries to receive intended inheritances much more quickly.

While many trusts are revocable, meaning the senior can change or terminate the trust at any time, irrevocable trusts are often used to protect the assets of a senior. Whether an irrevocable trust is right for your situation depends on a number of factors, including your health, what type of care you wish to receive and how you will pay for any care you may need in the future.

If you or your loved one has been avoiding this important planning measure, now is the time to begin. Being proactive increases options and makes the process far less stressful than trying to initiate planning or make important decisions during a health crisis or death. 

Cost is another reason seniors often cite for avoiding planning. However, elder law attorneys can tailor plans to specific needs, making them more affordable. If you have questions or would like to discuss your personal situation, please don’t hesitate to contact us. Please contact our Reno office by calling us at (775) 853-5700.

Elder Law, Estate Planning

Estate Planning Tips to Keep Your Plan Current

Studies have found that over 64% of Americans don’t have an estate plan. Many Americans over the age of 65 believe they lack the knowledge necessary to adequately plan for retirement and are not knowledgeable about basic retirement tools, like 401ks. If you don’t have a proper plan in place, or if your plan is decades old, don’t hesitate to contact a local estate planning attorney to start the process of protecting your loved ones’ futures. Here are a few quick estate planning tips that will help you learn more about this important area of law.

It is not only for the rich and famous.

Many Americans equate estate planning with large complicated assets and estate tax loopholes. This could not be further from reality. And while it’s true that the estate tax won’t impact the vast majority of us, you still need a comprehensive plan in place. Estate planning encompasses so much more than taxation issues or complex wealth.

If you die with no estate plan, the state steps in.

The problem with the lack of an estate plan occurs when the state’s “intestacy” laws kick in and dictate how your assets are split up and passed on to your heirs. Creating an estate plan is the only sure method to make sure that your specific wishes are carried out. With no strategy, your kids might be in limbo or worse yet, in conflict. Proper preparation can also protect your family from lenders and lawsuits. No family wants to deal with debt collectors and mounting bills when they are mourning the loss of a loved one.

Your estate plan makes sure that your charities get the donations you intended to make.

An estate plan enables you to donate to a charity with confidence. Do you wish for part of your real property, personal property, or assets to go to a favorite charity? If that’s the case, the only real way to be charitable in passing is with an estate plan.  And, in case you do have worries about taxation, charitable estate planning could yield you tax breaks that you otherwise may not qualify for.

Estate plans are a must for unreliable relatives.

Sometimes, adult children aren’t as stable or responsible as you would wish. If you are concerned about your kids having total control over their inheritance, then you may even leave the funds in a trust, which allows somebody else (the trustee) to make decisions regarding how the money is utilized. This can shield your children from blowing through their inheritance as a result of bad decision-making, substance abuse issues, or just plain excess spending.

For unconventional families, estate planning is a non-negotiable

Estate preparation is vital for unconventional families. If you are part of a non-traditional or blended family, you will need an estate plan to ensure that your assets are distributed to those you consider your closest relatives. Or, if you are in a relationship aside from a conventional marriage union, your estate would skip your partner and pass to your parents or some other blood relations unless you have an established estate plan. Making certain that this does not occur is reason enough to hire an experienced estate planning attorney. If you have questions or would like to discuss your personal situation, please don’t hesitate to contact us. Please contact our Reno office by calling us at (775) 853-5700.

Elder Law, Estate Planning

Estate Planning for the LGBTQIA+ Community

To protect our loved ones and our assets, estate planning is important to any individual regardless of orientation. In the LGBTQIA+ community, estate planning can legally protect against discrimination even if others are reluctant to recognize your relationship and your desire to permit your partner to make decisions for your care should you become unable to. Estate planning can also create mechanisms that financially provide for your partner as well.

How Obergefell v. Hodges Impacted Same-Sex Couples

In 2015 the case of Obergefell v. Hodges made it a fundamental constitutional right to marry, including same-sex couples. The US Supreme Court’s decision to recognize same-sex marriages opens up many previously unavailable legal tools and tax savings that had only been available to “traditional” legally recognized marriages. The Supreme Court ruling further stated that a valid same-sex marriage in one state must be recognized in all states. Note that non-marriage alternatives will not result in the federal government’s recognition of the relationship.

These alternatives include adults in domestic partnerships and civil unions, which are federally not legally recognized as marriage. However, these couples can still receive partnership decision-making privileges and benefits. To do so requires a different type of planning. However, your partnership is characterized, creating a legal framework to protect yourself and your partner is possible.

A married same-sex couple with proper estate planning will receive all state and federal benefits of marriage. Federal benefits include the unlimited marital deduction for federal estate and gift taxes. An unmarried same-sex couple who cannot receive these marital tax benefits can still ensure their partner will receive the legal right to inherit each other’s assets with other legal mechanisms. They will also be able to make health care decisions for one another; however, the legal framework will differ from the legally married couple.

Revocable Living Trust for the LGBTQIA+ Community

In either marriage or a cohabitation arrangement, a revocable living trust permits the couple to nominate each other as trustees, allowing the spouse or partner to manage their loved one’s financial affairs if they become incapacitated. A durable financial power of attorney is another solution to manage the affairs of a loved one if they become incapacitated. The rules and requirements of a durable financial power of attorney vary from state to state, so it is necessary to review and reconfigure this document if you relocate.  In either an LGBTQIA+ marital or cohabitation living arrangement, a health care power of attorney allows you to appoint your partner to make health care decisions on your behalf should the need arise.

Advance Healthcare Directive for the LGBTQIA+ Community

It is imperative to include a HIPAA privacy authorization form for your health care power of attorney or trustee. The form permits medical and healthcare professionals to disclose pertinent health information and medical records to a partner. A durable health care power of attorney can prevent biological family attempts to interfere with a spouse or partner’s ability to make medical decisions for their loved one.  A legally binding durable health care power of attorney can prevent family interference, no matter how well-intentioned it might be.

The Importance of a Will for the  LGBTQIA+ Community with Minor Children

Should a same-sex couple have children, where at least one parent is non-biological, a will is a legal tool to address guardianship of minor children. Your will is the only place to define guardianship of children and name an executor. Many custody battles over LGBTQIA+ parents’ non-biological children occur among families after the biological parent’s death or incapacity.

It is essential to address any previous LGBTQIA+ committed relationship structures before finalizing your estate plan to tie up any loose ends. If you were in a legal union before marriage was an option, you are subject to the patchwork of prior state laws that can have unintended consequences for new estate planning. Before 2015 some same-sex couples married in states that recognized their marriage only to move to states that did not. Believing that their nuptials were non-binding in the states that did not recognize same-sex marriage, these couples may have split up without ever legally dissolving their marriage. Some states even automatically converted registered civil unions or domestic partnerships into legal marriages. The fallout is there are now LGBTQIA+ people who are married and unaware that they are open to the possibility of future claims against their estate from a previous marriage. All previous domestic partnerships, civil unions, or other legal arrangements must be untangled and resolved to protect against these possibilities.

In general, studies find that the LGBTQIA+ community tends to lag behind others in having a will and revocable living trust. These documents are significant for non-married LGBTQ+ people in a seriously committed relationship. State laws will default to granting rights to biological family members absent legal documents to the contrary.

Specific issues unique to the LGBTQIA+ community can potentially make planning more complex. We would be happy to meet with you to discuss how you can properly document your wishes regarding the inheritance of your property, who can make decisions for you if you’re unable to, and who would care for your children should the need arise.  If you have questions or would like to discuss your personal situation, please don’t hesitate to contact us. Please contact our Reno office by calling us at (775) 853-5700.

Estate Planning

How Does Estate Planning Work?

The law describes estate planning as a legal document summarizing the property a person owns and how to distribute these assets when deceased. Property ownership includes individual as well as jointly owned bank accounts, stocks and bonds, retirement accounts, real estate, jewelry, vehicles, your online digital footprint, and even pets. Short of being utterly destitute, you have an estate, and planning for it helps to protect yourself, your family, and your loved ones.

According to Caring.com, fewer Americans than ever are engaging in estate planning. The number of adults who have a will or other types of estate planning documents has fallen nearly 25 percent since 2017. Astonishingly, the demographic of older and middle-aged adults are less likely to have wills and estate plan documents at roughly the same 25 percent rate. Additionally, a growing number of Americans lack the resources and knowledge as to how to get a will. Overall, the prevalence of estate planning documents since 2017 has shown a decrease of almost 25 percent.

In their annual survey, Caring.com posed the question to its participants as to why they have put off having estate planning documents, and increasingly people cite a lack of education or the perceived cost of estate planning as the most significant reason. Yet 60 percent of the same respondents think planning their estate is either somewhat or very important. Data shows that as a person’s income increases, their likelihood of having estate planning documents like a will, living trust, or advanced health care directives also increases. Still, the number of people with said documents continues to decrease, even in higher-income groups.

In 2020, study participants in the highest income group show a decrease of 26 percent regarding estate planning documents. Even those Americans with the resources to create a will feel it is something they can put off until later in life, which has disastrous consequences for their loved ones in the case of unexpected death.

caring.com

Estate planning is the process of outlining specific instructions as to how you want your money, and other property dispersed upon your death. It includes decisions about your medical care and final arrangements as well. Wills, trusts, and advanced medical directives are the three primary estate planning documents you need to understand and put into place as soon as possible.

A will instructs how to divide up assets, debt, personal property, and more. A will can cover all of your estate planning needs, however; it does come with a few limitations. First, a court process called probate must be started upon death. During this sometimes lengthy process, a judge oversees the transfer of ownership of your property according to your will. Once a probate is opened, the will becomes public knowledge, as well as the property that the deceased owns. For those who wish to avoid court or who wish to keep their affairs private, a living trust may be the best option.

A living trust takes effect at the moment it is enacted while your will only become effective upon your death. Planning with a living trust can more expensive, but it provides the advantage of avoiding probate court and keeps all of your information (and your beneficiaries’ information) private. Further, a living trust can provide for the management of your assets should you become disabled.

An advanced health care directive, like a living trust, is designed to take effect during your lifetime. This directive stipulates your end of life wishes as well as what should happen if you become incapacitated and unable to make decisions about your medical care.  

A durable power of attorney covers who will make financial decisions for you if you are unable to. You can specify more than one agent, and you can be very specific about what that agent can do on your behalf, including management of online accounts.

If you are ready to discuss your planning needs, we would be honored to help. If you have an existing plan, we would be happy to review that plan to make sure it still works for you given your current health and financial circumstances. We look forward to hearing from you! Please contact our Reno office by calling us at (775) 853-5700.

Elder Law, Estate Planning

The Probate Process Explained

The probate process involves authenticating the deceased individual’s will, assessing the assets, settling debts and taxes, and overseeing the allocation of the inheritance. After an asset-holder dies, the court will appoint a valid will’s executor to administer the probate process. In the absence of a will, the court will appoint a state administrator to handle probate. Probate law varies by state, but there are steps in the process that are common.

First, an executor is appointed and is normally the person named in the will. It is the executor’s responsibility to initiate the probate process. An executor can be a family member, a financial advisor, or any person the testator deemed capable of administering their estate. The executor files the will with the probate court, which initiates the probate process. A court officially appoints the executor as named in the will, giving the executor legal authority to act on the testator’s behalf.

The executor’s function is to locate and oversee all of the estate’s assets and to determine each asset’s value. The majority of the deceased’s assets are subject to the probate court, where the deceased lived at the time of their death. Real estate is an exception, and probate may extend to any county where the real estate is located.

The executor will pay any taxes and debts owed by the deceased from the estate. A notice of death is published, and creditors are given a limited time to make claims against the estate for any money owed to them. If the executor rejects the claim, the creditor may take them to court, where a probate judge will determine the debt’s validity. The executor is responsible for filing the deceased’s final, personal income tax returns. The executor’s last task, via court authorization, is to distribute what remains of the estate to the beneficiaries.

Probate is required for any asset or account that does not have a joint owner or beneficiary named.  If a joint owner or beneficiary is named, then title changes automatically and probate becomes unnecessary.

If a person dies without a will, they are said to have died intestate. An estate can also be deemed instate if the will presented to the court is found to be invalid. The decedent’s assets of an intestate estate follow a similar probate process, beginning with the appointment of an administrator. An administrator functions like an executor, receiving all legal claims against the estate, paying outstanding debts, and the decedent’s taxes.

Administrators must also seek out legal heirs, including surviving spouses, parents, and children. The probate court will determine the distribution of the estate among its legal heirs. In the absence of any family or other heirs, remaining assets go to the state.

The more complex or contested an estate is, the longer the probate process can take to finalize. The longer the process, the higher the cost. Probate without a will typically costs more than probate with a valid will, but neither scenario is inexpensive. Probate court files an estate’s assets as a matter of public record, so if you want to keep your estate private, it is best to pursue other estate planning options such as a trust. 

As estate planning attorneys, we can help you determine what planning tools are best for you. Contact us to schedule time for a private conversation to further determine how we can help. Please contact our Reno office by calling us at (775) 853-5700.