PB Law Blog... Trusts and Stuff

The Nevada’s Homestead Exemption Protection law provides homeowners with an excellent asset protection device.  Nevada defines a “homestead property” as: Land with a dwelling on it; a mobile home whether or not the underlying land is owned by the mobile home owner; and/or a unit (such as a condo).  This protection is only available for one’s primary residence, not investment properties or second homes.

The amount of protection from creditors is the equity associated with the property up to the limit of $550,000.  A homesteaded property is not subject to forced sale on execution or any final process from any court, except as otherwise provided by subsections 2, 3 and 5, and NRS 115.090 (and unless otherwise provided by Federal law.)  Furthermore, judgments cannot be executed against homesteaded properties, as defined by In re Contrevo, 23 Nev. Adv. Op. No. 3, March 8, 2007.

Remember, this protection is not automatic.  You must record a valid homestead claim/declaration.  If you have previously recorded a homestead declaration, but later refinanced the property or quitclaimed it to your living trust, please ensure that that you still have a valid declaration recorded.

If your residence qualifies for the exemption (as provided above), and you record the appropriate forms per NRS 115 , the equity in your residence up to $550,000 will be protected from creditors’ claims. Of course, a homestead declaration does NOT protect homeowners from any mortgage or deed of trust (including junior lien holders such as second mortgages or HELOCs).  Also, it does not protect against super-priority lien holders such as HOA fines.

The Clark County Assessor’s website is a wonderful resource for more information on Nevada’s homestead law, as well as information regarding completing the Homestead Declaration Form.

-Tiffany N. Ballenger, Esq.

Existing law allows a judgment creditor to obtain a writ of execution, attachment or garnishment to levy on the property of a judgment debtor or defendant in certain circumstances (NRS 21 and 31). What this means in laymen’s terms is that if you are sued, and the creditor wins, they have the right to collect on that judgment by taking certain property (real property and money held in bank accounts) and even garnishing wages. Nevada provides some protection, however: certain property is exempt from execution and therefore cannot be the subject of such a writ. (NRS 21.090)

This new law, which applies to civil actions, provides that a certain amount of money held in apersonal bank account that is “likely to be exempt from execution” is not subject to a writ of execution or garnishment except in certain circumstances; it provides a procedure to execute on property held in a safe-deposit box; it revises the procedure for claiming an exemption from execution on certain property; and makes various other changes to provisions governing writs of execution, attachment and garnishment.

Specifically, Section 3 of this Bill provides that $2,000 (or the entire amount in the account, whichever is more) held in the personal bank account of a judgment debtor which is likely to be exempt from execution is not subject to a writ of execution or garnishment and must remain accessible to the judgment debtor except in certain circumstances. Monies that are deemed “likely to be exempt from execution” are defined as Social Security Benefits, Veterans’ Benefits, Federal Retirement Benefits and specific types of annuities and all other benefits protected by Federal Law. Section 3 further provides immunity from liability to a bank which makes an incorrect determination concerning whether money is subject to execution. Section 4 of the Bill delineates that if a debtor has accounts with multiple institutions, the writ may attach to all money in the various accounts, and then the debtor may claim any exemption that may apply.

Section 5 of the Bill provides the method of execution of property held in a safe deposit box. It further goes on to revise the form for the writ of execution to include notice to banks of whether the judgment is for support of a person (child or spousal support).

Section 7 of the Bill provides additional exemptions from execution provided by Nevada law (NRS 21.090), such as proceeds received from a private disability insurance plan, money in a trust fund for funeral or burial services, unemployment benefits, PERS benefits, money paid for vocational rehabilitation, and public assistance benefits.

Finally, the Bill revises the procedures for claiming an exemption from execution, and for objecting to such a claim of exemption, such as various forms for writ of execution, attachment, garnishment and notice requirements.

This new law further bolsters Nevada’s already generous stance on asset protection. In addition to generous homestead protection ($550,000), non-ERISA retirement protection ($500,000), and the Nevada Spendthrift Trust statute, Nevada has stepped forward to protect its citizens as they attempt to rebuild in one of the worst economic environments in modern history.

-Tiffany N. Ballenger, Esq.

Many people are confused by advance directives. They are unsure what type of directives are out there, and whether they even need directives at all, especially if they are young. There are several types of advance directives. One is a living will, which communicates what type of life support and medical treatments, such as ventilators or a feeding tube, you wish to receive. Another type is called a health care power of attorney. In a health care power of attorney, you give someone the power to make health care decisions for you in the event are unable to do so for yourself. A third type of advance directive for health care is a do not resuscitate order. A DNR order is a request that you not receive CPR if your heart stops beating or you stop breathing. Depending on the laws in your state, the health care form you execute could include all three types of health care directives, or you may do each individually.

Establishing a Life Estate is a relatively simple process in which you transfer your property to your children, while retaining your right to use and live in the property. Life Estates are used to avoid probate, maximize tax benefits and protect the real property from potential long-term care expenses you may incur in your later years. Transferring property into a Life Estate avoids some of the disadvantages of making an outright gift of property to your heirs. However, it is not right for everyone and comes with its own set of advantages and disadvantages.

“I just need a simple will.”  It’s a phrase estate planning attorneys hear practically every other day.   From the client’s perspective, there’s no reason to do anything complicated, especially if it might lead to higher legal fees.  Unfortunately, what may appear to be a “simple” estate is all too often rife with complications that, if not addressed during the planning process, can create a nightmare for you and your heirs at some point in the future.   Such complications may include: