Revocable Living Trust:
A Revocable Living Trust (RLT) is also known as a “Living Trust” and/or “Family Trust”. It is created to hold the Grantor’s (Trust Creator’s) assets for the duration of that person’s lifetime. Typically, the Grantor retains control over all of the trust assets, as long as he/she is alive & well. A RLT dictates who the assets should be distributed to (the Beneficiaries) after death, and who should oversee making those distributions & managing the trust assets if the Grantor is unable to do so (the Successor Trustee).
A revocable trust can be modified by the grantor. It is called a revocable trust because the trust can be revoked or modified at any time during the grantor’s life and does not become irrevocable until the grantor passes away. You may be thinking, “what in the world would I put in a trust?!”, especially if you don’t own a home or any significant property. This is a common misapprehension, but it should not deter you from establishing an estate plan. A properly funded trust avoids the probate process- which applies to all estates over $20Kin Nevada! (Probate also applies to any estate that owns any real property (real estate), even if the equity in the property is non-existent). Creating a trust is a foundational step in preparing you and your loved ones for the inevitable. Also, it is very important to establish a trust so that as you progress and build your wealth you have a safety net already in place. Therefore, if you come into a windfall of wealth or inheritance, your assets can be easily added to the trust.
To simplify further, think of a bucket, as time goes on, you keep putting stuff in that bucket and once you are gone, your things are disbursed amongst those whom you chose to give when you were alive. Now, it can be more advanced than that (i.e. estate tax planning, subsidiary entities, etc.). For now, let’s keep things basic.
I have recognized the importance of having a trust. I am not wealthy nor do I have real property to place into a trust. However, that does not mean I am not planning on having any of those things, and if something happens to me, it is nice to know that my family would not have the burden of sorting this out in probate court. Furthermore, I recognize that securing the foundations of estate planning early-on is much easier than leaving things up to chance (or up to the discretion of a court!).
A Revocable Living Trust isn’t the only document you need, however. The following are other ancillary documents that should typically be included in a Nevada Estate Plan:
Pour-Over Will – A Pour-Over will is a special type of Last Will & Testament used in conjunction with a trust-based Estate Plan. It can save the day when the grantor of a trust fails to transfer property into the trust (which unfortunately, happens often over the years). A Pour-Over Will simply states that any assets that have not been funded (placed into) into your trust should go there when you die. More importantly, however, a Pour-Over Will document nominates guardians/custodians for minor children, in the event you’re unable to care for them.
Durable Power of Attorney (POA) for Financial Decisions– Your Power of Attorney designates an individual to make any legal and/or financial decisions for you on your behalf if you become incapacitated, for any assets owned outside of your trust (or if you don’t have a trust).
HIPAA (Health Insurance Portability and Accountability Act of 1996) Release – This document is vitally important in the event you become incapacitated. HIPAA was created in 1996 by the US Congress to protect the privacy of your health information. The act prohibits your health care providers from releasing your health care information unless you have provided your health care provider with a HIPAA release form. Without a HIPAA release, your health care providers can be prohibited from discussing any aspect of your medical information with anyone- even your spouse, parents, or immediate family members. Without a HIPAA release, the decision makers you’ve nominated to act may be unable to act on your behalf (because they’re unable to get information released from a doctor/hospital); this can result in your family members having to petition a Nevada Guardianship Court for authority to act, which is an unnecessary nightmare.
Durable Power of Attorney (POA)for Health Care Decisions –This document names an individual of your choosing to make decisions involving your health care or any directives for life preservation (or removal of same). In the most basic form, a health care power of attorney merely says, "I want this person to make decisions about my health care if I am unable to do so”. However, it can be further customized to indicate your specific wishes as they relate to your health care.
Living Will - A Living Will accompanies the Durable POA for Health Care Decisions. It is an advanced directive to your physicians or caregivers if you can’t speak for yourself. This document has no power after death, and is only meant for end-of-life medical care (it doesn’t have anything to do with property disbursement). This way, your specific wishes regarding health care treatment and/or end-of-life choices are documented so that your nominated Health Care Power of Attorney knows what your wishes would be in the event you can no longer communicate them.
Memorial Instructions – This document will direct how you want your remains and funeral to be conducted. Do you want to be cremated, buried, or maybe a completely different way to be memorialized (buried at sea?!)- anything you’d choose is memorialized in this document. Also, it is in this document that you can disclose how and if you want a funeral or a service and/or if you would like your organs donated. This is a sort of last wishes list, and can be as creative as you would like.
Personal Property Memorandum – A personal property memo allows you to you to give certain mementos or items to a specific people (upon your passing), without having to formally update your trust. For example, you can say that your favorite watch is to go to your sister. This document can be updated by you in the comfort of your own home (it doesn’t’ need to be witnessed or notarized, unlike most of the documents listed above). Anything mentioned in this document is protected under the same estate guidelines as anything else incorporated in your estate. This can also help to eliminate the issue of splitting up your things when you pass. If your things are itemized out beforehand, your heirs or beneficiaries do not have to go through the process of dividing things up (& possibly fighting about items) afterwards.
-by Laura Bown (Law Clerk /JD Candidate, 2018, Boyd School of Law, UNLV) with Tiffany Ballenger Floyd, Esq. (Nevada & California Estate Planning Attorney), Phillips Ballenger, PLLC
Photo by Priscilla Du Preez on Unsplash