Monthly Archives: August 2010

Nevada Probate for Dummies®, Part One

“For a man may do his work with wisdom, knowledge and skill, and then he must leave all he owns to someone who has not worked for it. This too is meaningless and a great misfortune.” –Ecclesiastes 2:21

What happens to your belongings when you die? In Nevada, the answer largely depends on what preparation and planning you do while you are alive. It also depends on the size of your estate. For those who do not create a trust during their lifetime, or for those who do not put all their property into their trust, a court may oversee the process of transferring assets from the deceased to those who are entitled to inherit.

Nevada has four levels of probate or estate administration.

  1. Affidavit. If the deceased owned $20,000 or less, had no real property and no debts, the heirs can present a simple affidavit with a death certificate to a bank, DMV or the like in order to transfer title. In this case there is no need to file anything in court.
  2. Set Aside. If the deceased owned $100,000 or less, the heirs can petition the district court to set aside the estate to the heirs or beneficiaries without any court supervised administration. This procedure is relatively simple and economical.
  3. Summary Administration. If the deceased owned between $100,000.01 and $200,000, the will must be lodged with the court and the person designated the personal representative or executor must conduct a formal, court supervised procedure to administer the estate, pay the debts and distribute the remaining assets to the heirs. If the deceased did not have a will, a relative or other interested person may petition to administer the estate. The assets would go to the relatives of the deceased in accordance with Nevada’s laws of intestate succession.
  4. General Administration. If the deceased owned more than $200,000, the estate must be administered under court supervision, as in a summary administration. The only difference between the two is that in a general administration, there is a longer period of time in which creditors have to file claims against the estate.

Sharon Parker

FOR DUMMIES® is a registered trademark of Wiley Publishing, Inc.

Nevada Living Will Lockbox

The Nevada Secretary of State (“SOS”) has created a website for Nevadans to confidentially upload and store their medical directives and powers of attorney.  The website, livingwilllockbox.com, can be accessed through the SOS website.  By storing your advance directive in the lockbox you and your health care providers may retrieve a copy of the advance directive during an emergency or illness.

The lockbox will retain declarations concerning life-saving treatment (NRS 449.535-690), durable powers of attorney for health care decisions (NRS 449.800-860), and do-not-resuscitate orders (NRS 450B.420).  This service is free.  The registrant must fill out a Registration Agreement, which is a basic two-page form, and provide a copy of the advance directive to the SOS office.  Agents, including attorneys, may fill out the registration form on behalf of the registrant.  The agents must state that they are authorized to act on behalf of the registrant.

After receipt of the advance directive, the SOS will send a wallet card with a registration number to be used by the registrant or agent to access the documents.  In order to access the documents, there is a webpage which asks for the registration number.  The website urges registrants to provide their directive(s) to their family, friends (if named as agents) and health care providers.  By sharing this information with trusted associates you can be assured that your wishes will be honored.  The SOS reminds registrants not to provide Social Security numbers, driver’s license numbers, or other identifying information on any of the registration material.

Jason Morris

Nevada Probate for Dummies®, Part Two

My dad just died. He named me the personal representative of his will. Now what?

What is involved in probating a loved one’s estate? Many people feel overwhelmed when they lose a relative or friend, and find themselves in the unenviable position of having to grieve the loss of their loved one, arrange the funeral, deal with difficult relatives, figure out how to pay bills and take care of the deceased’s house, pets, etc.—and on top of all that, they have to find a lawyer to help them deal with the estate.

If the value of the deceased’s possessions exceeds than $100,000, it may be necessary to initiate a probate. Probate means a legal proceeding in which the court has jurisdiction to administer and distribute the assets of a deceased person to those who are legally entitled to the estate.

There are several basic steps to a probate. Once the will has been admitted to probate and an executor or “personal representative” has been appointed to administer the estate, the personal representative must ascertain what assets the deceased owned that need to be included in the probate. Assets subject to probate are those that are titled in the name of the deceased and that are not held in joint tenancy (such as a joint bank account), or that don’t have a beneficiary designation (such as an insurance policy). Assets held in the name of a trust are not subject to probate, either.

The personal representative must file an inventory within 60 days of his or her appointment listing all the assets. The personal representative must publish notice to creditors and send copies of the notice to all known creditors. Legitimate debts of the deceased must be paid from the estate. All tax returns must be filed and taxes paid, if any. Often it is necessary or desirable to sell the assets; and in the case of real property, the sale is subject to confirmation by the court.

Finally, when the estate is ready to be distributed and closed, the personal representative must file an accounting of his or her work on the estate, and petition the court for an order allowing distribution of the remaining assets—less fees and costs of estate administration—to the persons designated in the will to receive the estate. Usually that would be the spouse or children of the deceased.

In some ways, the probate process is simple, but it can also be very complex depending on the circumstances. A good lawyer can help to make the process much easier.

Sharon Parker

FOR DUMMIES® is a registered trademark of Wiley Publishing, Inc.

Nevada Trust Income Subject to California State Income Tax

A Nevada trust may become subject to California state income tax depending on the residence of the trustee or beneficiaries of the trust.  An individual is a California resident if he or she is in that state for other than a temporary or transitory purpose, or if he or she is domiciled in California but is outside the state for a temporary or transitory purpose. Cal. Code Regs., tit. 18, § 17014, subd. (a).  California regulations provide that the income of a trust is subject to California income tax “if the fiduciary or beneficiary (other than a beneficiary whose interest in such trust is contingent) is a resident, regardless of the residence of the settlor.”  § 17742(a). Therefore, even if the trust creator (settlor) is a Nevada resident, the trust income can be subject to California tax based on the residence of the trustee or beneficiary.

If a Nevada trust has two trustees, one trustee is a Nevada resident and one trustee is a California resident, then one-half of the trust income is subject to California income tax.  Where the taxability of trust income depends on the residence of the fiduciary and there are two or more fiduciaries, the taxable income is apportioned according to the number of fiduciaries resident in California.  § 17743.

For those who may be considering a California financial institution as a trustee, this could subject the trust to California tax.  The California regulations specify that “the residence of a corporate fiduciary of a trust means the place where the corporation transacts the major portion of its administration of the trust.”  If the trust company or financial institution will conduct the majority of its trust administration within California then the trust income will be subject to California tax.

Jason Morris