Author Archives: Sharon M. Jannuzzi

Nevada Legislature Gives Creditors the Right to Reach Non-Probate Assets

Posted on September 6, 2011 | Leave a comment

What happens when someone dies with insufficient assets to
pay his or her creditors? What if the deceased had bank accounts in joint tenancy, or gave a family member a deed to his house effective on death—thus transferring assets without need of a probate proceeding?

It used to be that creditors could not make a claim against such assets; they were limited to estate assets, or if the decedent had created a revocable trust during his lifetime, to assets of the trust. However, if the decedent titled his property in joint tenancy, so that at his death, the property would be transferred to the other joint tenant by operation of law, creditors were out of luck: there was no way to reach such an asset.

The good news for creditors is that the Nevada legislature has recently passed
legislation designed to fix this problem. If an estate has insufficient assets
to satisfy the creditors’ claims made against it, the new law will allow
creditors to recover from those who receive assets outside of probate. In other
words, if Dad left you $15,000 in a joint bank account, you cannot take his
name off the account and go spend the money, if he left unpaid medical bills
that his estate cannot pay. Either the personal representative of the estate,
or the creditor himself, can initiate a proceeding designed to recover the debt
from the proceeds in the joint account.

The new legislation goes into effect October 1, 2011. If you need assistance with this issue, you should contact a qualified Nevada probate attorney.

By Sharon M. Parker, Esq.

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Posted in Asset Protection, Probate, Wills

Upside Down and Topsy Turvy

Posted on January 18, 2011 | Leave a comment

It is unfortunately all too common these days that a house or other asset is worth less than the mortgage owed on it. What happens if the owner dies, leaving the upside down asset to a spouse or children?

There’s good news and bad news. The good news is that the heirs of the deceased can still inherit title to the asset via probate (if it is held in the deceased’s name) or via a deed from the successor trustee (if it is held by a trust). The bad news is the lender will not simply allow the heirs to make payments on the same mortgage. The lender’s agreement to loan was with the deceased, based on his or her credit history and income. Any heir would have to pay off the debt or obtain a new loan; and the trouble is, of course, that a lender will not want to lend more than the asset is worth.

Is there a solution? If the asset is significantly over-encumbered, it doesn’t make sense to bother transferring title to the heir. Instead, you can just allow the asset to be foreclosed upon or repossessed. If the asset has some sentimental value and is not significantly over-encumbered, you can pay off the debt, or pay it down to an acceptable level and borrow the rest—if your credit is good and you are able to get a loan. I had a client whose mother died, leaving a luxury car worth about $39,000 with a debt of $42,000. My client was herself wealthy and decided simply to pay off the debt and take title to the car. Not many people can afford to do this, however.

If you are confronting this issue, you should contact a qualified Nevada probate attorney.

By Sharon M. Parker

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Posted in Probate, Trusts, Wills

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Will I Be Disinherited If I Challenge the Will?

Posted on January 3, 2011 | 2 comments

Most wills and trusts contain a provision that says something like this: “If any beneficiary hereunder shall attack this last will and testament, such beneficiary’s share shall be thereby revoked and such beneficiary shall receive nothing” or “If anyone shall challenge this document, I leave such person $1.00.” This type of clause is known as a “no contest” or “in terrorem” clause; the latter is Latin meaning to frighten someone. In other words, the person making the will or trust includes this clause in order to scare beneficiaries or would-be beneficiaries from initiating a legal challenge or contest to the will or trust.

Are no contest clauses actually enforceable? In Nevada, they are enforceable, but with some significant caveats. First, no heir will be disinherited for asking a court to enforce the terms of the will, or enforcing that person’s legal rights under the will or trust. Moreover, it is perfectly legitimate for an heir to petition the court for instructions with respect to how the will should be interpreted. Second, regardless of the no contest clause, an heir who, in good faith, has probable cause to believe that the will was invalid, may bring an action challenging the will without fear of being disinherited, provided that he or she meets the standards set forth in Nevada’s probate code.

Does this defeat the intention of the person who made the will? Hopefully not. No contest clauses are designed to threaten family members who got less than their “fair” share—for example, where someone is intentionally omitted or got less than his brothers or sisters. The trouble is that if no one could legally challenge a will without being disinherited, then many families would be out of luck in situations involving undue influence. For example, a caretaker or perhaps a girlfriend or recently acquired spouse may unduly influence a sick or dying person, swaying or even coercing the susceptible testator to execute a will leaving nothing to family members. Nevada’s law on no contest clauses is intended to balance the interests of those who are of sound mind and memory and want to give uneven shares to their family members with the interests of those who are sick and susceptible to undue influence when they execute their wills.

If you have questions, you should contact a qualified Nevada probate attorney.

By Sharon M. Parker, Esq.

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Posted in Probate, Wills

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Do It Yourself Estate Planning?

Posted on October 22, 2010 | Leave a comment

               Some years ago a woman called me in distress. Her neighbor, Mary, had died leaving some handwritten “final instructions”. The instructions were entirely in Mary’s handwriting and were signed, notarized and dated. Mary and her late husband had both prepared handwritten wills leaving all their property to charity. After her husband’s death, Mary had crossed out some provisions and written changes in the margins. Mary had named her neighbor the executor of her estate, but Mary’s family had already begun to plunder her house. The neighbor had no idea if the “final instructions” was a valid legal document.

                 Are handwritten wills valid in Nevada? Yes, provided they meet the following requirements: they must be signed, dated, and the material provisions must be in the handwriting of the testator. We were able to probate Mary’s will, and her neighbor was appointed the representative of her estate. However, the estate was unnecessarily complicated by the way in which the will had been written. It took significant time and effort to petition the court for instructions as to the validity and interpretation of the will and of the changes made in the margins, which reduced the amount of money available to the ultimate beneficiary of the estate.

                 Many people are reluctant to do any estate planning because they do not want to face their own mortality. Others are reluctant to pay an attorney to prepare a will or trust because they think they can save money by writing their own will. While a handwritten or “holographic” will is valid in Nevada if it meets the statutory criteria, you may save your personal representative a great deal of trouble—and your heirs a great deal of money—if you pay a professional to do the job right.

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Posted in Estate Planning, Probate, Wills

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