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How to Leave Assets to Children

When considering wills and inheritances, most people think about adult inheritors, however, there are situations where children will be left with property and other assets. Leaving assets to minor children (under age 18) can be trickier from a legal standpoint, as individuals under 18 are not usually able to understand the complexities that come along with monetary gifts. Even more, some children inherit monetary gifts that involve more intricate planning and management, such as stocks, CDs, real estate, and other investments.

While most people know that it is wise to name a guardian in their will for their minor children, most people do not realize that this named guardian will not automatically be able to manage the children’s inherited money. Once you die, your will goes through probate, at which point a guardian is named for your child. This will usually be the person you name. As for inheritances, the court will be in control of this money--not the guardian--until the child reaches 18. When the child reaches legal age, the court will disburse the inheritance as one lump sum.

Once this child reaches legal age, this money is completely theirs, and unless they are willing to let a trustworthy adult help them manage it, chances are that money will not be managed as well as it could be. While some people may consider opening a custodial account for a minor, this also may not be the best method of leaving money to a child. In custodial accounts, a designated custodian, not the court, will be named to manage the funds. However, all of the money will still be disbursed to the child once they reach legal age.

To avoid money management issues, it may be best to set up a living trust for your child. In your will, you can also name someone who will manage the inheritance until the child takes over. Using this option, the trust will not be handled by the court. Revocable trusts are set up while you are alive and you decide who will inherit the money and at what age. With revocable trusts, the person you choose to manage the money will still have power even if you become incapacitated. (This is not always the case with irrevocable trusts).

All assets that are in a trust are protected from the courts. This is beneficial because court hearings and other legal technicalities can be expensive, thus reducing the value of the inheritance. Trusts also protect the money from irresponsible spending, as you are able to name a trustworthy individual who will manage the money. Even more, assets in trusts are protected from creditors. This is especially important should a divorce proceeding come into the picture.

Seek an Attorney

If you have questions about estate planning or would like to start planning your estate, contact Clear Counsel Law Group to set up a consultation. The attorneys are Clear Counsel know how to help plan estates based on individual needs.

How to Choose the Right Executor for Your Estate

How to Choose the Right Executor for Your Will

When it comes to planning your estate, it is necessary to designate an executor. This person, or institution, will be responsible for clearing all of your debts, as well as carrying out your final wishes. Choosing the executor of your estate is one of the most important decisions regarding estate planning, so careful consideration should be given as to who best would serve this role.

The individual who assumes this responsibility should work diligently and promptly to finalize all of your final earthly matters, as well as allocating assets appropriately to beneficiaries. Even more, ensuring family harmony will be another responsibility of this person, as family friction can be especially high during times of grieving.

Some of the responsibilities of the executor, include:

Filing documents to probate court to ensure the validity of the will (this is typically required by law)

Paying final bills, funeral costs, and taxes with estate funds

Canceling credit cards and notifying government agencies of the death (post office, banks, and Social Security)

Filing final income tax returns

Allocating possessions to the heirs designated in the will

Because of the complexity of an executor’s responsibilities, the person you choose should be well organized, trustworthy, dependable, and good with preparing and filing paperwork.

Who to Choose

Typically, most people will name a family member as the designated executor, usually a spouse or child. In some cases, a close friend could be chosen if you do not have a relative that could take on the role. If the executor you choose lives out of state, be sure to check state laws that may require an out-of-state executor to be a relative. Also keep in mind that third parties can be designated as executors if you do not have a friend or relative that you feel can take on the role, especially if the estate is larger in size.

When choosing an executor, be sure that this person is emotionally capable of fulfilling such an important duty. Some individuals handle death better than others, while others may not be able to take on such a significant responsibility like that of an executor. Always be sure to ask the individual you have chosen if they accept the role, as sometimes individuals do not feel comfortable taking on the associated responsibilities.

Cost of an Executor

If a family member or close friend is designated as the executor, chances are that they will take on the responsibility for free. However, you can set aside a monetary gift for them if you decide to do so. If a third party is designated, such as a bank, this institution will charge a fee that is determined by your state. In most states, the fee will depend on the size of your estate and will range from one to five percent of the estate’s value.

If you have any questions about estate planning or choosing an executor, contact Clear Counsel Law Group to talk with one of our experienced probate attorneys.

Estate Planning / Probate - 11/21/2014

7 Ways to Protect Assets from Creditors

When it comes to planning your estate, it is not always easy deciding where your assets will go once you are gone. Not only should you try to reduce your estate taxes as much as you can, it is also important to protect your assets from creditors. But be careful, because some measures to protect your assets may be considered fraudulent under the Uniform Fraudulent Transfer Act. If an asset transfer occurs with the intent to defraud or hinder a creditor, it is considered a “fraudulent conveyance.” Below are 7 safe methods you can use to protect transferred assets from being claimed by creditors.

1. Outright gifts – By giving an outright gift to an heir, it is protected from creditors. However, be aware that you will lose control over the asset, including all economic interest.

2. Family Limited Partnerships (FLPs) – Limited partnerships within a family means that each partner pays taxes independently of each other. So when assets are involved, when one of the partners die, the assets left to the limited partner will be more difficult for creditors to access to cover debts. Only the limited partner’s interest can be reached by creditors in most cases.

3. Inter Vivos qualified terminable interest property – This trust is to be created for your spouse while you are alive. Once created, it qualifies for the gift tax marital deduction. When your spouse dies, the QTIP trust will be a part of his/her estate. If your spouse does not have enough assets to cover federal estate taxes, only then will the QTIP assets be used to fulfill taxes.

In the case that you survive your spouse, the QTIP assets that you established for your spouse will now fund a family trust. This amount will be equal to the estate tax exemption, which is currently $1.5 million. Any assets left over after this transfer will be assigned to you under the marital trust law, and because it qualifies for the marital deduction, there will be no federal estate tax on these assets at the time of your spouse’s death.

Because assets that enter a family trust do not qualify for estate taxes, it is beneficial to set up your QTIP trust in this manner. This structure protects your assets from creditors because assets moved to a family trust for a surviving spouse’s benefit are not subject to federal estate taxes. This is because these family trust assets are not legally part of the surviving spouse’s estate.

4. Irrevocable life insurance trusts (ILITs) – For federal estate tax purposes, insurance proceeds in ILITs are not considered part of your estate. This trust protects insurance proceeds during and after your death from creditors.

5. Qualified personal residence trusts (QPRTs) – With a QPRT, you can transfer a residence, either primary or vacation, to a living trust. With this trust, you reserve the right to live in the residence for a set number of years that is determined by using IRS tables. The “remainder interest,” the amount of time that you can remain living in the residence, is calculated by taking the value of the property, minus your term interest’s value. The QPRT protects a residence from the gift tax through your $1 million gift tax exemption.

6. Charitable remainder trusts (CRTs) – In this type of trust, a percentage of assets are provided to a “grantor” annually for his/her lifetime. When the grantor dies, his or her spouse will become the CRT annuitant for the remainder of his or her lifetime. After both grantors have passed, the remaining CRT assets are given to charity under the “remainder interest” qualification.

7. Grantor retained annuity trusts (GRATs) – With a GRAT, a donor makes a donation into a trust. For the remainder of the fixed term of this trust, the donor will receive an annual payment. Once this term has ended, selected beneficiaries will receive any remaining value of the trust as a gift.

Estate planning is very complex. Protecting yourself and your family should be your top priority, so speak with an experienced probate attorney at Clear Counsel to discuss your options.

Estate Planning / Probate - 11/20/2014

Why and How to Avoid Probate

When a person dies, his or her assets are going to need to be distributed one way or another, as well as debts paid. While a will is usually there to determine who receives what, sometimes a will is never created. If this is the case, the court will decide how assets are to be allocated.

Why to Avoid Probate

Probate can be slow – Probate is not usually a quick process, as it is handled through the court system. In simple cases, probate can be completed in as little as six months, however it can sometimes take up to a year to be settled. If an individual has a complicated estate or someone in the family contests the will, the probate process can be drawn out to two or more years. Because the probate process can be time consuming, it often creates tension within family members who are named in the will to receive inheritances or other assets.

Probate can be expensive – What many people do not realize is that probate is not free. The court takes a percentage of the estate’s worth to handle the costs of the probate process. In some cases, probate courts need to hire lawyers to protect minor children’s inherited assets. While each state charges differently for probate fees, it is generally expensive to go through the probate process at all; in fact, the probate fee can be as much as 10% of the estate.

Probate is public – Because the probate process goes through the court system, any information involving an estate becomes public record. If someone in the public chooses to, they can search these records to see what an estate consisted of. What this means is that whatever assets were left and distributed is public knowledge. So for instance, if you inherited gold coins from your grandma, people can find this out through public records. The availability of this information can make individuals targets for burglaries.

How to Avoid Probate

While most people instinctively create a will to name heirs, there are other methods of distributing valuable assets and property upon death. Instead of developing a will, a living trust can be established. A living trust allocates assets and property in a private manner that will entirely bypass the probate process. There are no probate fees or unwanted publicity regarding assets and property. When a living trust is created, a trustee is named and will be in charge of managing the assets of the trust. This trustee will notify the beneficiaries of their inherited assets and will allocate as necessary. And because a living trust does not need to go through probate, the process to distribute valuable assets will be much quicker than if a will was used.

Contact an Estate Attorney

If you would like to know more about living trusts, contact the estate attorneys at Clear Counsel Law Group. The attorneys at Clear Counsel understand that your family’s security is your number one priority, and would like to help you create a secure way to manage your assets and property. Call today to set up a consultation.

Estate Planning / Probate - 11/18/2014

Every Parent Needs A Will.

Most people don’t want to think about their own demise. For parents with young children it can be emotionally draining to think about your kids growing up without you. However, it is important to plan who will take care of your children if you pass away unexpectedly, especially if you are a single parent. Even if you are married and your spouse is able to care for your children, you need a will in the event you both pass away at the same time and to ensure all your assets are passed on appropriately.

What Happens If I Die Without A Will?

If you die without a will the state will use the rules of intestacy to determine how your assets are divided. Also, if your spouse has also died or you are a single parent, the court will determine who will raise your children. These are very scary things to think about. That is why it is important to prepare a will that addresses these issues. Depending on the complexity of your estate you may also need other items such as a trust.

What Should I Put In My Will?

The first item that a will should address is who will care for your children. Your will should first state that your spouse shall have sole custody if you pass away and then name a guardian if both you and your spouse are dead or if you are a single parent. It is important to think carefully about who to name as the guardian of your children. The person you choose should be physically and emotionally able to handle raising your children and your children should have some form of connection to him or her. It is also wise to name an alternative guardian if the first choice is no longer available. It is best to talk to the people you are thinking of naming to ensure they are willing to accept the responsibility

The second item that your will should address is how to dispose of your assets. Your will should first state that all your assets shall be given to your spouse if he or she is living. In some states if you die without a will, your assets are split between your spouse and your children. Your spouse then has to involve the court to spend the children’s assets before they reach 18. Your will should then name a custodian of your assets if you and your spouse are both dead or if you are a single parent. The custodian does not have to be the same person as the guardian. Some people think it is easier to have the guardian also be the custodian so he or she can use your assets to pay for your children’s expenses. However, others prefer to have a separate custodian especially if the guardian is not good with money. The drawback to this arrangement is that the guardian will have to seek the approval of the custodian to use the funds, which can be a hassle. Your will should also designate at what age you wish your children to have control of their inheritance. The default rule is 18 but most teenagers are not mature enough to handle a sizeable inheritance. A better rule of thumb is 25 but every situation is different.

Please contact us at 702-522-0696 to discuss your estate planning needs, especially if you have young children. We can help you prepare simple documents that will give you peace of mind about your family’s future if you pass away.

Estate Planning / Probate - 08/29/2014

Delaware's Digital Death Law Blazes Trails for Consumer Rights.

Delaware has enacted a law on digital death that is the first of its kind in the nation. The statue provides a deceased person’s (or incapacitated) executor (or guardian) access to his or her digital accounts and to be an authorized user of the accounts.

This is a huge deal since big corporations, including amazon and apple, have previously insisted that at your death your digital "self" including your library of digital media, can not be passed along to your inheritors. While this law does not specifically allow for passing on digital goods to inheritors beyond anything stated in the EULA, it begins clearing the way for laws around the inheritance of digital assets.

The law reads as follows:

Except as otherwise provided by a governing instrument or court order, a fiduciary may exercise control over any and all rights in digital assets and digital accounts of an account holder, to the extent permitted under applicable state or federal law or regulations or any end user license agreement. A fiduciary with authority over digital assets or digital accounts of an account holder under this chapter shall have the same access as the account holder, and is deemed to (i) have the lawful consent of the account holder and (ii) be an authorized user under all applicable state and federal law and regulations and any end user license agreement. (emphasis added)

Thus, the executor or guardian would have access to the person’s email, music, photos, and other digital content. In passing the law, the Delaware legislature noted that people’s lives are increasingly conducted on-line and that their assets are increasingly stored in the “cloud”. Under current probate and estate laws, it is difficult for executors to gain access to a deceased person’s digital assets. Specifically, the legislature stated:

Recognizing that an increasing percentage of people's lives are being conducted online and that this has posed challenges after a person dies or becomes incapacitated, this Act specifically authorizes fiduciaries to access and control the digital assets and digital accounts of an incapacitated person, principal under a personal power of attorney, decedents or settlors, and beneficiaries of trusts.

However, the law is not as sweeping as it appears. The statute specifically states that it is subject to federal and state laws as well as end-user license agreements. Both Apple and Google end-user licenses do not appear to allow this type of activity. Moreover, both end-user licenses state that they are governed by the State of California not Delaware. Therefore, it may be difficult for an executor in Delaware to obtain access to a deceased person’s Gmail or iTunes accounts. Google actually has a “digital afterlife” service whereby a person can set up how his or her accounts will be handled after his or her death. Consequently, Google may ask the courts to defer to its established services and not recognize the Delaware statute. Moreover, some advocates are opposed to the Delaware law because they believe it violates the privacy rights of the people who communicated with the dead person. For example, the executor may read emails to and from the deceased person that contain information subject to professional rules of confidentiality or are simply very private matters.

Although novel, the Delaware law does not currently have a lot of “teeth”. Its effectiveness will likely be tested in court, at which point it will be clearer as to what powers an executor has access a deceased person’s digital assets.

Estate Planning / Probate - 08/28/2014

Estate Planning and Probate for Timeshares

Timeshares can be a headache for estate planning and probate attorneys as well as their clients! If not treated appropriately they can cause excess time and fees for everyone involved.

Many timeshares are real estate interests which means that they are deeded. Other timeshares are a contractual “right to use”. If a person dies with a timeshare interest in his or her name, there may have to be an additional probate in the state where the timeshare is located. This is called an ancillary probate and can cost up to several thousand dollars in attorney fees and court costs.

Nevada Probate and Timeshares

In Nevada, if the timeshare is a deeded interest there must be a probate in Nevada because the interest is real property. However, if the value of the timeshare (or the entire estate in Nevada) is less than $100,000, a special petition to the court by the beneficiary may allow the estate to be “set aside” and distribution made without further court proceedings. If the timeshare is a contractual “right to use” and the value of the timeshare is less than $20,000, the beneficiary can use an Affidavit of Entitlement without any court proceedings to transfer the timeshare to his or her name. However, the rules are different in each jurisdiction. Therefore, you should consult an attorney in the city where the timeshare is located to ensure the probate is done correctly.

Avoiding Probate

The easiest way to avoid this problem is to set up a revocable living trust for your assets. An estate planning attorney can assist you in creating the trust. Once the trust is created, you will transfer the timeshare interest into the trust and the trust becomes the legal owner of the timeshare. As the living beneficiary of the trust, you can use the timeshare while you are alive. Upon death, the trust continues to be the owner and probate is not required. The timeshare interest will then be transferred to the death beneficiary according to the terms of the trust.

Maintenance Fees for Timeshares After Death

It is important to keep in mind that all timeshares come with a maintenance fee obligation whereby the owner is required to pay annual fees to maintain the timeshare. If a person dies without a trust, the obligation to pay the maintenance fees transfers to the estate and then to the person who inherits the timeshare. With a living trust, the obligation to pay the fees stays with the trust but then transfers to the death beneficiary. Oftentimes the person who inherits the timeshare doesn’t want the property. A beneficiary can refuse the inheritance. The timeshare will remain the property of the estate or the trust and the timeshare company will foreclose if the maintenance fees are not paid. If the beneficiary has taken title but doesn’t want the property, the best solution is for the new owner to contact the timeshare company and try to give the property back to the timeshare company. The new owner will not receive any funds but he or she will be relieved of the maintenance fee obligation. If the property is in a valuable location, the new owner may be able to sell it for a small value on a resale website or rent the unit to cover the costs of the maintenance fees. Beware of any companies that offer to assist in selling timeshare interests for an upfront fee. They are almost always scams.

If you own a timeshare, it is important to contact an estate planning attorney and put the timeshare in a living trust so you do not inadvertently burden your loved ones. If you have inherited a timeshare, it is important to contact an attorney in the jurisdiction where the timeshare is located to determine your options.

Estate Planning / Probate - 07/25/2014

The Separation of an Heir's and an Estate's Claims for Wrongful Death

When a loved one is killed by the fault of another, a claim for wrongful death may arise. Nevada Revised Statute 41.085 splits wrongful death claims in two subparts; claims by the heirs and claims by the Estate. Generally, the heirs can recover damages for grief, sorrow, loss of support, companionship, and the deceased’s pain and suffering whereas the Estate can recover damages for medical expenses, funeral expenses, and any other penalties the deceased could have recovered to pay his debts.

Although these claims are technically separate, a suit for wrongful death should be brought by the heirs and the Estate at the same time, because if claims are alleged at separate time, the second set of claims might be barred. In Alcantara v. Wal-Mart, a man was fatally assaulted in a Wal-Mart parking lot.[1] The deceased’s Estate and some of the heirs sued Wal-Mart for negligence and a jury found Walmart was not negligent. After the suit ended, Alcantara brought a second suit against Wal-Mart as an heir. Wal-Mart moved to dismiss the second suit arguing claim preclusion and issue preclusion.

Claim Preclusion

Generally, claim preclusion bars lawsuits where a final judgment has been entered in a prior lawsuit which involved the same parties and the same claims that could have been brought in the first place. The Supreme Court found that claim preclusion did not bar Alcantara’s suit because her claims were specific and necessarily different from the prior claims brought. However, this finding did not end the inquiry because Wal-Mart was also moving to dismiss based on issue preclusion.

Issue Preclusion

Issue preclusion prevents a second suit when the second suit brings identical issues to the first case, the first case reached a ruling on the merits, the party to the second suit was in privity with the first, and the issues were actually litigated. The Nevada Supreme Court found that all four elements were met and the suit was barred by issue preclusion. The issues were identical, a final ruling was reached, and the issues were actually litigated. The only factor that required great consideration was whether Alcantara was in privity with the Estate and heirs from the first suit. Privity exists if someone’s interests are adequately represented by the first suit. In this case, the Court found that Alcantara’s interests were adequately represented by the first suit because as a beneficiary of the Estate, the Estate was acting in her best interests and on her behalf. Accordingly, Alcantara’s entire lawsuit was dismissed.

The cautionary tale of Alcantara’s situation is that it is best for all heirs and the Estate to bring their wrongful death claims together, so they don’t risk a later suit being barred. Alcantara missed out on the opportunity to make her own claims against Wal-Mart because she had not joined in the first suit. If she had the opportunity to bring her own claims, she may have been able to present a case for loss of companionship, grief and sorrow, or other damages that were specific to her. The opportunity to do that was forever lost.

If you are faced with the loss of a loved one possibly due to the fault of another, give our experienced probate attorneys at Clear Counsel Law Group a call to set up a consultation.

[1] 130 Nev. Adv. Op. 28, April 3, 2014.

Personal Injury / Probate - 04/21/2014

Probate in Nevada

When dealing with the unfortunate loss of a loved one, family members are often faced with the daunting task of locating and deciding what to do with the property of the deceased. There may be homes to be sold, creditors to pay, and money to be distributed. This is known as the probate process which can be an extremely complicated and frustrating task. The good news is that an experienced attorney can make the process simple and easy for you.

Types of Probate Administrations in Nevada

There are four different types of probate administrations in Nevada, depending on the value of the decedent’s assets. In each case, a personal representative will be appointed and that person will be in charge of collecting all of the assets and making sure that they are passed to their rightful heir. In certain cases, the personal representative will also be charged with making sure that creditors of the decedent are paid.

First, if the person who passed away had less than $20,000.00 in assets and no homes or land, then the probate process is called an “Affidavit of Entitlement.” This is a streamlined process which a knowledgeable attorney can complete for you fairly quickly. The Affidavit of Entitlement process cannot be started until forty days after death.

If you don’t know what assets your loved one had or you don’t know the value, then a “Special Administration” petition can be filed with the Court.

Second, if the person who passed away had less than $100,000.00 in assets, a “Set Aside” proceeding can be used. The value of the estate can include personal property, homes, or land. This process can be started 30 days after death. Minimal court involvement is necessary for this process.

Third, if the person who passed away had assets valued at less than $200,000.00 then a “Summary Administration” will be needed. This process is significantly more complicated than the first two and requires following procedures for giving notice to creditors of the decedent and paying claims that meet certain criteria.

Fourth, if the person who passed away had assets over $200,000.00 then a “General Administration” will be conducted. Because of the large amount of money involved, this process is the most complicated and involves a significant amount of court supervision. In certain cases, the court requires that the personal representative buy a bond to ensure that they don’t mishandle assets. However, if you hire a reputable law firm, the bond requirement is often waived.

In each case, the personal representative will be held responsible for payment of all damages caused by their mishandling of the estate’s property. For that reason, it is extremely important to make sure that you hire an attorney who has handled many probate matters and will carefully guide you through each step. A skilled attorney will also assist the representative in transferring titles of property, including homes and cars, to their rightful owner. If the title to a home or car is not properly transferred into the beneficiary’s name, it is still owned by the decedent and will be susceptible to foreclosure or repossession and there is nothing the beneficiary will be able to do about it. But, if the title is properly transferred, then the beneficiary will have authority to deal with banks and lenders because they are the properly documented owner by inheritance.

What if I don't know the value of assets?

If you don’t know what assets your loved one had or you don’t know the value, then a “Special Administration” petition can be filed with the Court. This process gives a personal representative authority to investigate into the decedent’s property to determine what property they owned and what it was worth. After the Special Administration is complete, the probate can be transferred into one of the four types named above, and the assets can then be distributed.

The attorneys at Clear Counsel Law Group handle many probate matters in all different categories. Clear Counsel Law Group has the knowledge, expertise, and experience to guide you through the probate process as quickly and painlessly as possible. If you would like to know more about probate, please visit our Probate Section.

Probate - 02/10/2014

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