TRUSTS
Trusts are set up instead of using wills for many different reasons:
TRUSTS TO AVOID PROBATE:
In general if property has a title and the owner dies it will take probate to transfer title to the person who inherits UNLESS there is already in place a will substitute, as for example, if the property is held in joint tenancy or in a Payable on Death account. (See section on Wills.)
Probate is the process in which a will is taken to court and the property distributed according to the will. There are three problems with probate:
(1) Probate is usually expensive. Most attorneys charge the greater of an hourly rate or several percent of the value of the property distributed under the will. Probate fees in Nevada are not set by statute; people are free to negotiate with attorneys on the probate fee. Few people can handle a probate proceeding without hiring an attorney.
(2) Probate is time consuming. Even for uncontested probates it take months for the process to be completed.
(3) Probate is public. Probate records are open to the public. Leave your 19 year old daughter $300,000 in your will and that is a public record.
In contrast, a trust provides for the transfer of property outside the court system. Many people can handle the distribution of property in a trust without an attorney. But, if an attorney were required the attorney could help out with much less work and theoretically could charge a lot less. Trust transfers can proceed quickly and privately after death.
My law firm drafts these trusts for a flat fee of $675 which is much lower than what many other attorneys will charge for the same document. Note that each piece of real estate transferred to the trust must be recorded in the county recorder's office in the county the real estate is located in. In Clark County, the recorder's office was charging a varying fee depending upon the format of the deed, usually $45 or less. My firm will record the deed for the client (in Clark County only) if the client wishes in exchange for a flat fee of $50, this includes the recording fee charged by the recorder's office.
It is important to note that some attorneys work with a financial investment firm and that the chief interest of this team is to steer you into investing with them. My firm does not offer investment advice or sell investment products. If I draft your trust I am only interested in helping you avoid probate and plan who gets your money and property when you die. How you invest your money is your business.
Probate can be effectively avoided with such a trust if the client(s) keep in mind certain rules, the most important of which are:
1) All property with a title such as real estate and financial accounts must be titled in the name of the trust.
2) At the time the trust is set up assets with a title such as real estate and financial accounts must be re-titled in the name of the trust.
3) When assets with a title are later acquired they must be titled in the name of the trust.
TRUSTS TO HANDLE MINOR'S MONEY:
People under 18 years of age are not considered legally competent to make contracts. Wills that anticipate minors may inherit money usually incorporate a provision providing that a specific person will hold the minor's money in trust until the minor reaches 18 or an older age. The provision may also contain guidelines as to what the money can be spent on for the minor's benefit until the minor is given the money. In the situation just mentioned there are trust provisions within a will. In other situations a trust document, not a will, controls the minor's money.
TRUSTS TO PROTECT THE BENEFICIARY AGAINST
SPENDING ALL THE MONEY:
One of the simplest ideas to prevent a person from quickly running through a large amount of money is to give it to the person in portions. For example, a will or trust could provide 1/3 of the sum be given to the person on reaching the age of 18, 1/3 upon reaching the age of 22, and 1/3 upon reaching the age of 25.
PROTECTING TRUST ASSETS AGAINST CREDITORS:
Nevada does offer a type of family trust designed to mimic some aspects of an offshore trust designed to protect family assets from creditors. The Nevada laws regarding these types of trusts can be found in the Nevada Revised Statutes ("NRS") sections 166.010-166.170, et. seq. These statutes are collectively referred to as: "The Spendthrift Trust Act of Nevada". At this time our firm does not offer this type of trust as they are far more complicated and expensive than the kinds of trusts we currently handle.
PROTECTING TRUST ASSETS AGAINST THE IRS:
Unfortunately, there is no legal way to place your assets offshore out of reach of the IRS (Internal Revenue Service). If you are a U.S. citizen you owe taxes on your income even if earned abroad.
TRUSTS TO MINIMIZE ESTATE TAXES:
Until and unless estate taxes are permanently abolished, there will always be a demand among the wealthy for lawyers to devise inheritance plans that minimize estate taxes. Such estate planning is expensive and needs to be updated frequently as the laws concerning estate taxes are constantly changing. The IRS website stated on 5/2/08: "Most relatively simple estates (cash, publicly traded securities, small amounts of other easily valued assets, and no special deductions or elections, or jointly held property) with a total value under [$2,000,000 in 2008] do not require the filing of an estate tax return. (This means no estate tax is owed for estates less than $2,000,000 in 2008.) The estate tax exemption is supposed to increase to $3,500,000 in 2009; the estate tax is supposed to be abolished in 2010, but then re-instated in 2011. The outcome of the 2008 federal elections will probably determine the future situation with respect to estate taxes. Welcome to the strange politics of the estate tax. At this time our firm does not draft trusts to minimize estate taxes.