California + Nevada Estate Planning attorney, Tiffany Ballenger Floyd, answers some of the most common Trust and Estate Planning FAQs (frequently asked questions) she receives…
The PB Law Planning Team: Tiffany Ballenger Floyd, Becky DeCoite, and Kat Arthur.
What is Estate Planning?
When someone passes away, his or her property must somehow pass to another person.
In the U.S., any competent adult may choose how to distribute their assets after death.
A solid estate plan minimizes taxes and settlement costs while coordinating the transfer of your home, business, and other assets. It also addresses what happens to your investments, retirement accounts, and life insurance if you die or become disabled.
Importantly, a good plan includes health care instructions if you’re ever unable to make those decisions yourself. This ensures someone you trust can step in and carry out your wishes.
Why is it Important to Establish an Estate Plan?
Sadly, many individuals don’t engage in formal estate planning because they don’t think that they have “a lot of assets”. Also, some mistakenly believe that their assets will be automatically shared among their children when they pass.
If you don’t undergo proper estate planning, the state’s intestacy laws will take over upon your death or incapacity. This often results in the wrong people getting your assets as well as higher estate taxes.
If you die without establishing an proper estate plan, your estate would undergo probate, a public, court-supervised proceeding. Probate can be costly and delay asset distribution for months—or even years.
Without a clear estate plan, your family may argue over who should manage your affairs. This conflict can cause lasting tension and unnecessary legal battles among loved ones. Further, it is not unusual for bitter family feuds to ensue over modest sums of money or a family heirloom. Read on for more on Probate, below.
Wait – Isn’t Estate Planning Just for Rich People?
No! Estate planning isn’t just for multi-millionaires or families with large trust funds.
Many people incorrectly believe that only the wealthy need estate plans. In reality, estate planning provides protection, clarity, and peace of mind for families at all income levels.
An estate plan ensures your wishes are honored and your loved ones are protected.
What is Probate?
Probate is the legal process for transferring assets after someone dies.
It’s often seen as messy, expensive, and slow—and for good reason.
Here’s the key: If you use only a Will, your estate will likely go through probate. That means everything you own could be delayed and tied up in court.
Read more about Wills vs. Trusts…
Why Should I Avoid Probate?
#1 – Probate is Time-Consuming:
- In Nevada, the average timeline for probate is 13+ months!
- This includes simple estate administered thru set-aside administrations.
- According to the a 2023 publication by the State Bar of Nevada, a “routine” Summary or General Probate Administration case (without disputes or complexities) takes a minimum of 10 – 12 months, with a much longer timeline if complications arise or the estate is more complex.
- In California, the average probate takes up to 18 months.
- According to the Judicial Branch of California, while CA law aims for a one-year timeline, the reality is it can take much longer, especially for complicated estates.
#2 – Probate is Expensive:
- On average, legal fees/costs for probate are 10 x more expensive than a properly maintained trust-based plan.
#3 – Probate Results in a Lack of Control:
- The probate court is in control of the process until the estate has been settled and distributed.
- During probate, courts often freeze assets for weeks or months while sorting out the estate.
- This delay can make it hard for your family to cover everyday living expenses.
- If you have a spouse or children, they may struggle financially without immediate access to funds.
- Proper planning ensures your loved ones have the support they need while your estate is settled.
How Do I Avoid the Probate Process?
Joint assets, or assets w/ beneficiary designations may avoid probate—but not always.
Thus, the gold standard for avoiding probate is using a Revocable Living Trust. These trusts are especially helpful in states where probate is slow or costly, like Nevada, California, and Washington.
For example, trusts are commonly needed when:
- If you own any Real Estate (especially important if you have properties in multiple states)
- If you own a Business
- If you’re a Parent (especially if you have minor children or children with special needs)
- If you are part of a Blended Family
- If you have a more complex Estate and/or Tax situation
With proper estate planning, your assets can pass to loved ones without going through probate. A well-maintained trust plan ensures the process is faster, less expensive, and fully private.
What’s Included in a Typical Estate Plan?
Important documents within a comprehensive estate plan include:
- A Revocable Living Trust, including:
- Schedule of Assets for the Trust
- Certification of Trust
- (more about Revocable Living Trusts in the FAQs below)
- Pour-Over Will
- Financial / General Durable Power of Attorney
- Health Care Documents, including an Advance Health Care Directive and HIPAA Release, Living Will, and Health Care doc registrations;
- Nominations for Custodial Guardians for Minor Children
- Certification of Trust
- Personal Property Assignments + Personal Property Memorandum
- Assignment of Business Interests to your Trust
- Deeds + Real Estate Documents transferring your real estate to your Trust (or another entity, as appropriate)
There are other important documents that may be included in your plan, depending on your specific situation.
What is a Trust?
Simply put: a trust is a legal arrangement that creates a separate entity to own and manage assets.
The trust follows specific terms you set in advance. As there are hundreds of trust types, it’s important to choose one that fits your goals and situation. One of the types of trusts is a revocable trust.
By far, the most well-known type of trust is the Revocable Trust. There are also lots of other types of trusts, including:
- Irrevocable Trusts for Advanced Estate & Tax Planning
- Asset Protection Trusts to Shelter your Assets
Read more about different types of trusts..
What is a Revocable Trust?
The most common type of trust in the U.S. is the Revocable Living Trust. It’s also known as a Family Trust or Living Trust.
A Revocable Living Trust is a private document, created by you. You outline what happens if you’re incapacitated or if you pass away.
- The person who creates the trust is called the “Grantor” or “Trustor”.
- The Grantor appoints a Trustee to manage assets for the Beneficiaries.
- Often, the Grantor also serves as both Trustee and Beneficiary during their lifetime.
- The trust holds legal title to your assets and provides a mechanism to manage them.
- The fact that it is “revocable” means that you can make changes or even terminate it.
- It’s often the case that married couples form joint trusts. This is especially true in community property states like Nevada, California, and Washington.
A Revocable Living Trust is a separate legal document from a Will. However, it often works alongside a Will—called a Pour-Over Will—to carry out your wishes.
There are many reasons for establishing a trust-based estate plan, including:
- Trusts help avoid probate and guardianship court.
- Trusts can help reduce estate taxes.
- A trust-based estate plan allows you to name guardians for minor children.
- It can also help protect assets for your heirs.
- Importantly, trusts allow you to plan ahead for incapacity.
Read more about Revocable Living Trusts…
How Do I Ensure my Kids are Taken Care of?
This issue is critical! It’s vital that your estate plan addresses issues relating to your kids’ care and upbringing.
Most importantly, you want to nominate permanent – and temporary– custodial guardians for any minor children.
- Choose a guardian who shares your values and the qualities you want instilled in your children.
- Your contingency plan should list who will manage your assets and who you’d nominate as guardian for your children
- The person, or trustee, in charge of the finances need not be the same person as the guardian (or caretaker).
- In many cases, it’s wise to name different people to create checks and balances in your estate plan.
- You will also want to give consideration to the age and financial condition of a potential guardian. Some guardians may lack child-rearing skills you feel are necessary.
- If you’re married with young children, plan for the possibility that both of you could pass at the same time.
If you fail to plan, a court will decide who manages your finances and raises your children! This process is costly, time-consuming, and may result in someone named who you wouldn’t have chosen as Guardian. Talk to your estate planning attorney about how to address this important scenario.
Some additional topics you may want to think about:
- If you have young children, consider a plan that supports your spouse financially after your death. Term life insurance can provide this support, with death benefits paid into a trust.
- You may also want to provide counseling or guidance if your spouse isn’t comfortable handling finances or legal matters.
- Finally, it’s important that your trustee or spouse knows who to contact for help. Our estate planning attorneys help assemble a trusted team of advisors to support your family.
Will I Lose Control over my Property if I Create a Revocable Living Trust?
Don’t worry—creating a Revocable Living Trust doesn’t change your control over your assets. Transferring assets into the trust typically doesn’t affect how you manage or use them.
Why?
- As trustee, you can still handle your assets just as you did before creating the Revocable Living Trust.
- Your income taxes won’t change—you’ll continue filing the same 1040 as before.
- There’s no need to get a new Tax ID Number for a Revocable Living Trust.
- Because it’s revocable, you can modify or cancel the trust at any time.
- Also, if you become incapacitated, your chosen agents can act on your behalf under the trust’s terms.
- Finally, upon you death, the trust becomes final, and your successor trustee will carry out your wishes.
What Happens to my Mortgage if my Home is in a Revocable Trust?
A common questions we get is whether your mortgage has to be transferred to your trust. Typically, you do not transfer your mortgage to a trust.
Many people also ask if transferring property to a trust will cause the lender to call the loan due.
The good news: Federal law generally prevents lenders from doing this when transferring your residence into a Revocable Trust. For more info, see: Section (d) (8) of the Garn-St. Germain Act of 1982.
How Can I Protect my Spouse’s or Kids’ Inheritance?
Worrying about your kids doesn’t stop when they turn 18!
At Phillips Ballenger, we offer creative, customized estate planning options to address this important issue. One key decision is whether your beneficiaries should receive assets outright or through a trust with specific terms:
- Trust distributions can be based on age, financial need, education, or even behavior.
- We often recommend discretionary trusts to keep assets in the family and provide creditor protection for your beneficiaries.
- Too often, young adults inherit large sums before they’re ready to manage them responsibly.
- Just think—how would you have handled a large inheritance at 18?!
Our attorneys can craft trust provisions to protect your children, spouse, and other loved ones from future financial risks.
Read more about Asset Protection Planning…
Do I Have to Transfer Everything I Own to My Trust?
Not necessarily. I typically break down assets into two general categories: (1) Ownership Driven and (2) Beneficiary Driven.
#1 – Ownership-Driven Assets = Transfer to Trust
Examples: Bank Accounts, Real Estate, Brokerage Accounts
#2- Beneficiary-Driven Assets = May Name Trust as Beneficiary
Examples: Retirement Accounts, Life Insurance, POD / TOD Accounts
- Retirement accounts (i.e. 401(ks), IRAs, etc.) are transferred via a beneficiary designation. They can’t be owned by a trust.
- Life insurance or annuities: Can be paid directly to a spouse can provide quick access to cash for expenses.
- However, be cautious when naming minors or beneficiaries with poor money habits.
- Without planning, they could receive a lump sum at age 18—ready or not.
- A trust can manage and protect those funds until your beneficiary is truly prepared.
- Payable-on-death (POD) accounts: Can pass directly to named beneficiaries.
- However, it’s important to know that this only works upon death, and the account funds may be difficult to reach during an incapacity.
- Again, be careful with naming children, grandchildren, or anyone else who may need additional guidance in proper financial management, as receiving lump sums can often cause more harm than good…
These factors highlight why working with an experienced estate planning attorney is so important.
A seasoned estate attorney can guide you and help transfer the right assets into your trust or other entities.
Learn more about our personal approach to the estate planning process…
What Happens if I Become Incapacitated?
Many people mistakenly believe a spouse or adult child can automatically step in if they become incapacitated. Not true!
To manage your finances, they must petition the court to declare you legally incompetent. That means you—and your family—could end up in Guardianship court. This process is often slow, expensive, and emotionally draining. Even if the court appoints your preferred person, they may need annual approval for every financial decision.
Statistically, a person is six times more likely to become incapacitated than to die in any given year.
If you want someone to step in without court involvement, proper legal planning is essential.
Work with an experienced estate planning attorney to create documents that authorize a trusted person to act for you. This person can be a Successor Trustee and/or a Power of Attorney (POA). This is typically done through a Financial Durable Power of Attorney—also called a General POA.
A well-drafted POA ensures your family is supported if you’re ever unable to act. Your POA should be able to pay bills, access accounts, manage investments, and refinance your home if necessary.
Many believe a simple Will protects them if they become incapacitated—but that’s not true! A Will only takes effect after you die.
How Can I Ensure my Health Care Decisions are Handled?
Incapacity planning isn’t just financial—it’s also critical to plan for your medical care. The law lets you appoint someone you trust to make health decisions if you can’t.
You do this through a Health Care Power of Attorney—also called an Advance Health Care Directive.
In addition to your Health Care Power of Attorney, you should also have 2 other important documents:
- A HIPAA Release, which authorizes your agent(s) to talk to hospitals/doctors about your care & condition if you become incapacitated.
- A Living Will outlines your medical treatment preferences if you become terminally ill or permanently unconscious. It addresses decisions like whether to use life-sustaining or extraordinary measures.
Finally, Nevada offers a free service to store your Health Care documents for emergency access by providers and authorized agents. Learn more about the Nevada Living Will Lockbox.