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Probate

Thursday, March 31, 2016

The Best Ways to Avoid Probate

It is a common misconception that executing a Last Will and Testament will allow your property to pass to your heirs immediately upon death. Unfortunately, this is not the case.  If you have only used a will in your estate plan, your estate will have to undergo the probate process. Probate is the legal proceeding through which a will is validated. It is only after this process is completed that distributions can be made.

What is the problem with probate?

Probate is an age-old process, but, many believe, an inefficient one. Probating a will can take anywhere from a couple of months to a couple of years, depending upon the circumstances surrounding the estate. This lengthy process also results in excessive legal fees that often eat away at the principal of the estate. Therefore, many people look to avoid the probate process entirely. 

How do you avoid probate?

There are a number of tools you can use help you to avoid the probate process completely. The first of these tools is the beneficiary designation. Most financial accounts allow you to designate a beneficiary when an account is opened or even after.  If a beneficiary is chosen prior to the death of the account owner, the proceeds will pass to the designated person without the need for probate.

Another tool that is often used to avoid probate is the trust. Once property is transferred into a trust and a beneficiary (or beneficiaries) is named, the property will automatically transfer upon your death without the need for a legal proceeding.

Another effective way of avoiding the probate process is establishing joint ownership. If there is a joint owner on an account or piece of property, that property will transfer directly to the co-owner upon your death. This can be done on an account by naming a joint owner and on a piece of real property by establishing a joint tenancy or a tenancy by the entirety, which is usually reserved for married couples.

It should also be noted that most states exempt small estates from undergoing the probate process. So, if you can keep your estate small by spending down or making gifts while you are alive, your heirs might benefit in the long run.

If you have any questions relating to what will happen to your property in the event of your incapacity or death you should seek the advice of a qualified Las Vegas estate planning attorney today.


Monday, July 27, 2015

What to Expect When Probating a Multi-Jurisdictional Estate

I was named executor for my uncle, who has property not only in Nevada, but in several other states as well. How does this work? 

Serving as the personal representative or executor/executrix of a Nevada estate can quickly become an unexpectedly complex task. Oftentimes, these duties are bestowed upon families members or close friends who want nothing more than to do a thorough and timely job on behalf of their departed loved one. However, for a decedent with property scattered across the United States – or the globe – engaging in the ancillary probate process will likely require the involvement of an experienced Nevada probate attorney. 

Ancillary probate

If the deceased passed away leaving the majority of his or her property in the state of Nevada, the probate process should be commenced within that jurisdiction. To get started, the executor must appear at the County Clerk’s office within 30 days of the death of the testator (the person who made the will). If no will can be found, an adult Nevada resident (e.g., friend or family member) may appear and petition to serve as the personal representative. From there, the executor/representative will begin the process of inventorying the decedent’s real and personal property. 

All personal property (i.e., anything that is not land) is subject to probate proceedings in the state where the decedent died. Therefore, even if the decedent owned a piece of artwork or watercraft in another state, title transfer of those assets can be accomplished by a Nevada probate judge. 

Real property, on the other hand, will require proceedings known as “ancillary probate.” Every state maintains its own ancillary probate process, and will in most cases work remotely with the executor to accomplish a deed transfer pursuant to that state’s laws. During the course of the ancillary proceedings, the Nevada probate judge will also oversee the process to ensure the other jurisdiction is working in a timely manner. 

One way to avoid the hassle of ancillary probate proceedings for surviving loved ones is to place out-of-state property in trust, which will allow the property to pass seamlessly to the intended beneficiary upon the death of the grantor. For help with this, contact an experienced Nevada estate planning attorney today!

If you were recently named as an executor and would like to discuss your duties and obligations in this role, please contact the Las Vegas estate planning attorneys at the Stone Law Offices today: (877)800-3424. 

Friday, July 10, 2015

Firestorm Erupts Following Death of Jazz Legend B.B. King

Are will contests common? What kinds of allegations are usually made by beneficiaries when objecting to a will? 


Sadly, will contests are an all-too-common component of the will probate process, particularly in high-profile families or surrounding high-net-worth estates. In today’s post, we explore the burgeoning issues surrounding the death of jazz icon B.B. King, who passed away in Las Vegas on May 15, 2015, was ultimately laid to rest in Mississippi following a festive memorial parade down Beale Street in Memphis, Tennessee. Nonetheless, the party was abruptly drawn to a close as surviving family members quickly initiated objections to the structure of his Last Will and Testament – particularly highlighting Mr. King’s choice to name his long-time business manager as executor and manager of the entire estate. 

Basics of Objections by King Family 

Much of Mr. King’s estate is arranged in trust, and as such will not be revealed publicly. However, nearly all trusts are accompanied by a pour-over will, which governs the disposition of property inadvertently left out of the estate or acquired after death. This document, which becomes part of the public record through the probate process, names Mr. King’s business manager as the executor of his entire state – to the exclusion of his 11 surviving children and 35 grandchildren. 

At the heart of the objectors’ claims are the startling allegations of mistreatment and the allegedly intentional poisoning of Mr. King prior to his death. Further, high-profile attorneys for four of the King children have asserted that the business manager prevented family from visiting the ailing legend in his final days, as well as siphoned nearly $1 million from his bank accounts using a power of attorney. 

Following several hearings in Clark County court, Judge Gloria Sturman refused to allow the will contests to continue – stating that there was not enough evidence at the time to remove Mr. King’s chosen executor from the position. In a statement by the court, “[h]e worked his entire life to provide for his family….The thing he left for you is his amazing body of work. Somebody has got to make sure that his legacy is protected."

If you would like to create or update your estate plan, please do not hesitate to contact estate planning attorney Craig Stone at the Las Vegas Stone Law Offices today: 877-800-3424. 

Friday, June 26, 2015

Basics of Charitable Giving in a Nevada Estate Plan

Are there special concerns to consider when including a charity in an estate plan? 

 

When it comes to estate planning, charitable giving is virtually a win-win for all involved. For the testator, it can mean significant tax savings if the transfer meets certain criteria. For the charity, it means a welcome boost in capital and an opportunity to advance the mission of the organization. However, this notable endeavor should not be pursued casually, and an experienced Nevada attorney should always be consulted before implementing charitable giving into an estate plan. 

Benefits of testamentary charitable gifts

Any transfer of money into a non-profit, tax-exempt organization will be free from the confines of both estate tax and income tax, making it the perfect component to a well-drafted estate plan. Oftentimes, testators have several charities they hold near and dear to their hearts, and a charitable giving plan can be easily implemented to not only maximize tax savings but provide each recipient with a much-needed donation. 

Options in charitable giving

Making an outright gift to a charity through a Last Will and Testament is one (simplified) way to arrange for the transfer. The funds will be transferred to the charity upon the death of the grantor, and will not be included in the calculation of the decedent’s gross estate. Likewise, the charity will not be subject to any sort of estate tax or income tax on the gift, as it is completely tax-exempt. 

Another option is to donate an Individual Retirement Account to a favorite charity, which is easily accomplished simply by adding the charity as the beneficiary upon the death of the accountholder. The funds will pass outside of the gross estate, will not be subject to any sort of taxation on either end, and will be immediately available to the charity upon the death of donor (i.e., no formal probate process is required). 

Lastly, testators with more elaborate estate planning goals may wish to consider one of the many trust options geared toward charitable giving. A Charitable Remainder Trust (CRT) makes certain inter vivos distributions to individual beneficiaries during the life of the donor (or for a certain term), with the remaining trust corpus earmarked for the charity upon the death of the grantor or expiration of the term. Other options include a Charitable Lead Trust (CLT) or a Pooled Income Fund (PIF), the latter of which is maintained by the charity itself. 

If you are interested in implementing a charitable giving component to your estate plan, please do not hesitate to contact Stone Law Offices in Las Vegas, Nevada right away by calling (877)800-3424. 

Tuesday, June 17, 2014

WHAT IS ESTATE TAX "PORTABILITY" & HOW DOES IT AFFECT ME??

IRS Provides “Last Chance” Extension for Small Estates That Want Portability.

At the end of 2012, the entire country watched as major changes were made to income tax  laws with the adoption of the American Taxpayer Relief Act of 2012 (ATRA). The act also made significant changes in estate tax laws.

Estate Tax Portability

One important change is that the estate tax portability law is now permanent.  Estate tax portability means that the unused portion of the first-to-die spouse’s estate tax exemption passes to the surviving spouse.  The current estate tax exemption is $5.34 million ($5 million with adjustments for inflation).  This means that a married couple’s total estate tax exemption is currently $10.68 million.  For example, a husband dies with $2 million in separate assets.  He has $3.34 million remaining in his estate tax exemption, which passes to his wife, giving her a total of $8.68 million in estate tax exemption.  Without portability, the husband’s remaining exemption might have been lost if the couple had not implemented special tax planning techniques as part of their estate plans.

How Do You Claim the Portability?

This is where married couples and estate executors can get into trouble.  The estate tax portability rule only applies to decedents dying after December 31, 2010, and not automatic.  In order to claim the remainder of the first-to-die spouse’s estate tax exemption, the surviving spouse or the deceased spouse’s estate executor must file an estate tax return soon after the death, usually within nine months after date of death.  If this filing deadline is missed, then the couple will not get the benefit of estate tax portability.  Missing the estate tax filing deadline can result in hundreds of thousands of unnecessary and avoidable estate taxes.

In a recent report in The Wall Street Journal, estate planning experts expressed concern that executors of small estates may be unaware of the estate tax return filing requirement and may believe that an estate tax return is unnecessary if the deceased spouse’s assets fall under the $5.34 million exemption amount. To preserve portability, however, the estate tax return must be timely filed after the first spouse’s death.  Alternatively, married couples can utilize a special trust, referred to as a “credit shelter trust” or “bypass trust” to prevent forfeiture of their individual exemptions.  This planning technique must be undertaken when both spouses are still alive.

 The Consequences of Failing to File an Estate Tax Return

As a simple example, consider a husband and wife who have a total of $8 million in assets, owned equally by the spouses ($4 million each).  Upon the wife’s death, the wife’s share is left to the husband and estate’s executor files a timely estate tax return and the wife’s $5.34 million in estate tax exemptions passes to the husband.  When the husband dies, his entire $8 million estate passes to his heirs tax free, even though his personal estate tax exemption is only $5.34 million.  If portability is not claimed, then $2.66 million of the husband’s estate will be taxed (the current rate is 40 percent).  The husband’s heirs would be required to pay approximately $1,064,000 in estate taxes which could have been avoided if the wife’s estate executor had filed an estate tax return within the time limit.

Even if both spouses together have assets under the current $5.34 million exemption, it is still a good idea to file an estate tax return after the death of the first spouse.  Filing the estate tax return and preserving the portability benefit protects the surviving spouse’s heirs in the event the surviving spouse receives a windfall during his or her lifetime that raises his or her assets above the $5.34 million exemption level.

What If You Have Already Missed the Deadline to Elect Portability?

Portability was originally enacted as a “temporary” concept for persons dying in 2011 and 2012, but was made “permanent” in the 2012 Tax Act that technically took effect on January 1, 2013.  Further, the IRS did not provide proper guidance or rules on how to elect portability until 2013-2014.  As a result, many surviving spouses and executors did not timely file the decedent’s estate tax return to elect portability for decedents dying prior to 2014.

Due to the delay in providing a “permanent” law and proper guidance on the filing of the portability election, the IRS issued Revenue Procedure 2014-18 which provided an automatic extension of time to make the portability exemption for the estates of decedents that died before January 1, 2014, that otherwise fall below the decedent’s exemption amount for having to file an estate tax return.  In effect, the IRS is giving taxpayers a “last chance” / “second bite at the apple” to put portability in place for the surviving spouse if they did not timely prepare an estate tax return after the decedent’s date of death.  In order to qualify for the automatic extension, the following requirements must be met:

  • The taxpayer is the executor of the estate of a decedent who:
    • has a surviving spouse;
    • died between on or between January 1, 2011 - December 31, 2013; and
    • was a citizen or resident of the U.S. on the date of death;
  • The taxpayer was not otherwise required to file an estate tax return based on the value of the gross estate;
  • The taxpayer did not file an estate tax return within the time prescribed by law for filing an estate tax return required to elect portability;
  • A person permitted to make the election on behalf of a decedent must file a complete and properly prepared Form 706 on or before December 31, 2014; and
  • The person filing the Form 706 must state at the top of the Form 706 that the return is "FILED PURSUANT TO REV. PROC. 2014-18 TO ELECT PORTABILITY UNDER CODE SEC. 2010(c)(5)(A)."

The decision whether to elect portability is confusing and involves many factors, including the type and extent of your assets, what state in which you may live in the future, the need for asset protection, and the language in your existing estate planning documents.  You are invited to contact us for a complimentary appointment to discuss whether you should elect portability, either for a spouse who has previously died or in the future as part of your existing estate planning.


Tuesday, December 10, 2013

Welcome - The Laws of the Harvest

Welcome to the grand "re-launching" of our website and my very first formal blog!! It has been a long, interesting journey in bringing our former website up-to-date, learning about all of the new social media options, and, most of all, getting back to basics in drafting the content.  My goal was to create a resource that was interactive with clients and advisors (and the merely curious), while serving to educate and inspire you to think about wealth in a more holistic manner, and motivate you to take the next steps in creating an estate or business plan that was truly a reflection of your purposes, passions, goals, and dreams.  In that regard, I hope you find our website and this blog to be valuable.  Check back often as it is a work-in-progress and will surely be better with your feedback.

When pondering how to start this blog, I thought I would begin with the end….that is, the story that I tell at the end of most of my speaking engagements.  Typically, I close my comments with the "Laws of the Harvest", a set of guiding principles that I believe are present in all aspects of our lives - financial, work/business, and most importantly, our relationships.  I invite you to contemplate where these principles apply in your life:

  • Law #1 - You will always reap what you sow.  If you want an apple tree, you have to plant an apple seed; you can't plant an orange seed.  In life, finances, and business, it is critical that you identify your goals and objectives, i.e., where you want to go.  Until this is done, it is impossible to determine the action steps needed to achieve your goals, much less be able to determine when you have arrived at your destination.  In effect, if you want long-term financial security, you have to decide what that looks like and live a life consistent with that goal.  Similarly, if you value truthfulness, hard-work, fun, mindfulness or connection in your relationships, then you have to model those same values through your own life.  Plant the seeds you want and you will get the same back.
  • Law #2 - You will always reap much later after you sow.  If you plant an apple seed in the morning, you don't get an apple tree by that afternoon.  Reaping the harvest comes much later, after you have tended, nurtured, and cared for your tender sapling.  Even after you identify your goals and the action steps to get you there, you have to monitor the progress and adjust for the "head-winds" and incidents of life.  You will have constant changes in family members (births, deaths, divorces), changes in family relationships (disagreements, reconciliations, rivalries), changes in laws (just look at the estate and income tax laws over the past 12 years), and changes in assets (windfalls, pitfalls, and potholes).  Change is constant; as such, estate and business planning is not a static, one-time event, but a dynamic, fluid process that you will want to review and update occasionally as your life deals you new cards.  Likewise, the time, energy and presence that you invest in your relationships may take a while to take hold and be returned to you in kind.
  • Law #3 - You will always reap much more than you sow.  If you plant an apple seed, you get much more than an apple tree in return; you get a tree that will produce fruit (more apples!!) for many years.  Eventually, the plans and relationships that you pursue today, and nurture along the way, will be returned to you, both in kind and in abundance.  Persevere, hold-the-line, keep hangin' on……these may all sound cliche, but there is a truth in all of them.  When we live our lives in the present, and properly plan for our futures, we have a significantly greater chance of not only achieving, but exceeding our goals - greater security, control over our lives, more options and choices, confidence in outcome, and closer relationships.  As for me, I would rather live "in the margin" rather than "on the margin."  But, in order for this to happen, I have to plant those seeds today, and tend my garden, until I can reap the harvest of my dreams.

At the end of our lives, we will all leave behind a story…a legacy.  Whether that story is good or bad, intended or happenstance, recorded or remembered, is, ultimately, determined by the seeds of our lives.  What will your story be?

I look forward to this journey, this grand adventure of life.  I hope that, in some small measure, I can be of assistance in your journey.         


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S. Craig Stone II of Stone Law Offices, Ltd. serves clients throughout Clark County, Southern NV, Las Vegas, Henderson, Boulder City, North Las Vegas, Summerlin, Carson City, Reno, Washoe County, and Nye County. Also serving clients with asset protection nationwide.



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