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Nevada Revocable Living Trust vs. Will… What Do I Need & Why?

Nevada Revocable Living Trust vs. Will… What Do I Need & Why?

When most people think about estate planning, a Will is what comes to mind.   However, most people need more planning than can be provided by a Will- especially in Nevada. 

This article explores my recommendations as to what you should consider when putting together a comprehensive Estate Plan, including key differences between a Will and a Revocable Living Trust, as well as why you probably want to avoid Nevada probate.

What’s in a Comprehensive Estate Plan?

One of the most important things that you can do in your life to preserve and to pass on your wealth to your family (or whomever you wish!) is to create an effective- and efficient- Estate Plan.   A comprehensive plan ensures that your desires are adhered to and that your estate is protected if you become incapacitated or pass away- ideally without the necessity, hassle & expense of guardianship and/or probate litigation.

A comprehensive Nevada Estate Plan typically includes the following documents:

  • Revocable Living Trust
  • Pour-Over Will
  • General and/or Specific Power of Attorney (for Financial Decisions)
  • Nevada Durable Power of Attorney for Health Care Decisions (customized specifically according to your wishes) & Nevada Statutory Advanced Directive (NRS 449.535 to 449.690)
  • Stand-Alone HIPAA Release
  • Living Will
  • Affidavit Authorizing Final Disposition (under NRS 451.024 AND 451.650)
  • Personal Property Memorandum

What is a Revocable Living Trust?

A Revocable Living Trust (RLT) is the foundation to a comprehensive estate plan. A properly formed and funded RLT can avoid the probate process altogether and will serve streamline the administration of your estate while preserving its value.   Like a Will, a Revocable Living Trust will spell out “who gets what” (and how).  Unlike a Will, this usually occurs without any court involvement (probate).  I discuss more details of RLTs later in this article- but first let’s explore Nevada Wills & Probate.

Nevada Wills

In contrast to a Revocable Living Trust, a Nevada Will is a one-way ticket to probate court. Why???  A Will is not a separate legal entity (like a Revocable Living Trust), but merely an instrument that tells the Court who to give your estate to after passing.  A Will only applies AFTER your death - a Will doesn’t address any lifetime issues, (such as planning for your incapacity or mental disability).   

In your Will, you can appoint whomever you wish to act as Personal Representative (Executor) of your estate after you pass away.  However it is usually the estate’s probate lawyers who control the actual distribution of your property, which can be both expensive & frustrating.

A Will is a necessary document in that it you can nominate Guardians for Minor Children (if applicable).

After you pass away, your Will must be filed with the probate court and is subject to the entire probate process in order for its provisions to be carried out.  This can cost your estate a significant amount of money (and time/hassle/frustration for your family – sometimes several years). 

So- what exactly is Probate? Why do I want to avoid it?

The short answer: Probate can be lengthy & time-consuming, bureaucratic, frustrating & expensive.

The long answer:  The Probate process is – very basically- the process of gathering, accounting, & distributing a deceased person’s property --- the legal process of re-titling assets from the name/estate of the dead person to their heirs.  Probate is subject to state statutory rules & proscribed timelines enabling all interested parties to come and make their claims against the estate (creditors).  On average, the Nevada probate process takes 13 months (can range from 6 months to many years, if the estate is contested).   

The Court then decides how the proceeds of the estate shall be distributed.    Again- a Will does not avoid probate!  If the deceased person had a Will, the Court typically follows the Will’s provisions regarding estate distribution.  If there was no Will, the Court then looks to Nevada laws regarding Intestate Succession (your “heirs at law”).  The state intestate laws dictate “who gets what” ---meaning that none of your desires/wishes are considered.   The Legal Aid Center of Southern Nevada's Civil Law Self-Help Center website provides an excellent & detailed overview of the probate process in Clark County, Nevada here.

Simply put: with a Will, your beneficiaries end up with less money (due to higher costs involved in probate), at a later date, with much more hassle & red-tape (vs. a properly funded Revocable Living Trust based plan).  

So now that you’re convinced you want to avoid probate at all costs, let me explain more about the ins & outs of a Revocable Living Trust-based estate plan. 

How Does the Revocable Living Trust Avoid Probate?

A Nevada Revocable Living Trust prevents your estate from having to be submitted to the probate process primarily because the Revocable Living Trust is a separate legal entity created during your life to hold your estate assets.  However, you still control everything (unless you become incapacitated/pass away).  

A Revocable Living Trust that is properly “funded” (meaning it owns title to your property) avoids the probate all together.  This is because the Revocable Living Trust owns the assets and there is no estate (property) that is subject to probate per Nevada law.

How Does a Revocable Living Trust Work?

When you form your RLT, several things are specifically stated within the Trust document:

 (1)        You designate the Trustee (usually you – or in the case of a married couple, usually the husband and the wife are the trustees);

(2)        You designate one or more Successor Trustees, which are persons you’ve designated to step into your shoes upon your incapacity/death, so that they may legally handle the trust’s business.

 (3)        You designate the Lifetime Beneficiary(ies).  If you’re not married, you’re usually the trust’s sole lifetime beneficiary.  If you’re married & create a trust jointly with your spouse, both spouses are typically the lifetime beneficiaries.

 (4)        You specify who inherits your estate after you pass away. These are the “death beneficiaries”. You can additionally state how the beneficiaries receive their inheritance (outright, %’s at certain ages, in an asset-protection trust, etc.)

(5)       Trusts can do a lot more than this, such as minimize gift & estate taxes, protect beneficiaries with special needs, etc. 

Trust Administration: While you’re Alive (& not incapacitated)

As you typically serve as sole Trustee, you have complete control & custody over all trust assets. Because you’re also typically the Lifetime Beneficiary, you can use all assets as you wish, allowing you to retain full & unconstrained control.  As “Grantor” (creator) of the trust, you can typically amend/revoke/restate the trust in its entirety, allowing for a maximum degree of flexibility.  

Trust Administration: Upon Incapacity

The trust spells out its legal definition of incapacity & the steps involved in appointing someone to take the reins (the Successor Trustee/s).  As you’re still the Lifetime Beneficiary, trust assets are to be used solely for your own benefit.

Trust Administration: After Death

Upon your death, the designated Successor Trustee becomes the current trustee of the trust.  The Trustee is bound by the terms of the Trust & has a legal duty to follow its terms.  The Trustee is usually responsible for gathering the trust’s assets (with the option to liquidate as needed) and then distributing the assets to the trust’s death beneficiaries.  The Successor Trustee then closes out the Trust after the final distribution is made.  That’s it!  

ALL OF THIS HAPPENS PRIVATELY, WITHOUT COURT INVOLVEMENT- saving the estate a good deal of money (attorney’s fees, court costs/fees, publication fee, appraisers fees, etc., etc.) but also a tremendous amount of time & hassle for your family or other beneficiaries.

 

 

Will

 

Revocable Living Trust

Names beneficiaries?

Yes

Yes

Confidential/no public record filings

No

Yes

Avoids Probate Court?

No

Yes

Efficient & private administration after your death?

No

Yes

Provisions made for your estate during your incapacity or mental disability?

No

Yes

Nominates custodial guardians for minor children?

Yes

No

Whether you choose a will or a trust you should seek the advice of your trusted professional advisor team (including an attorney well-versed in Estate Planning issues, a tax professional & financial advisor).  Making this a priority now can save money and precious time later.

-Tiffany Ballenger Floyd, Esq., Nevada Estate Planning Attorney (also licensed in California) © 2017 Phillips Ballenger, PLLC

Phillips Ballenger is located in Las Vegas, NV and serves clients in the Las Vegas, Summerlin, Henderson, and Boulder City areas.



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