Tag Archives: Wills

Morris Presents on Benefits of Trusts

View More: http://jessilemay.pass.us/woodburnwedgeThe free, semi-annual Family Estate Planning workshop series, sponsored by the Community Foundation of Western Nevada, begins on Wednesday, September 19, 2018. The eight-week workshop series features different presenters addressing all topics related to estate planning.  The workshops are held every Wednesday at the Sierra View Library at 10:30 a.m. and 1:30 p.m. Jason Morris has presented since the program’s inception in 2010.  He will speak on the benefits and advantages of trust planning on October 10, 2018.  Call 775-333-5499 to register for the workshop series now.

What Does a Surviving Spouse Receive if Omitted from the Will?

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In my previous blog regarding lost wills, I discussed a client whose husband’s original will was lost. One discerning reader asked what happened to the client—wouldn’t she inherit everything from her husband anyway? In that case, I wish it had been so. Unfortunately for the client, that was not the case, even though it had been her husband’s intention.

Since the later will could not be offered for probate, we had to go back to his previous will, which was made before his marriage and left everything to his siblings. All was not lost, however. Where a person marries after making a will and his spouse survives him, Nevada law provides that the will is “revoked as to the spouse,” provided that the deceased spouse did not make provision for the surviving spouse by marriage contract or otherwise make it clear in the will that he intentionally omitted her.  The technical term for the inadvertently omitted spouse is a “pretermitted spouse”, from the verb “pretermit” which means to leave undone or to neglect. The law also provides for pretermitted children, i.e., children born after the deceased makes his or her last will.

The term “revoked as to the spouse” does not mean that the wife received all of the deceased’s property. The rule about a pretermitted spouse has to be read together with Nevada’s laws regarding persons who die without wills. In my client’s case, her husband owned the property in question before their marriage; it was his separate property. Since he died without surviving parents or children, one half of his separate property was allocated to her as his pretermitted spouse, and the other one half was allocated as provided in the will he made before their marriage.

That was not the end of the story. We contacted the relatives, explained the situation to them and requested that they disclaim their interest to our client, since that was her husband’s intent per his later, lost will. One of the deceased’s siblings was willing to do so. The rest refused; they thought they were going to get a big windfall. Since our client had maintained the property for twenty years, paid all taxes and maintenance, and born all losses, we obtained court approval to shift their share of the proceeds of the sale of the property to her in compensation for her labor and out of pocket costs. All’s well that ends well, I suppose; but the loss of the husband’s true last will and testament caused a huge legal mess that could have been avoided if the original had been maintained.

If you have a question about your rights under a will as a pretermitted spouse or child, contact a qualified probate attorney.

Bleak House

Bleak House Jarndyce

“There are two motives for reading a book; one, that you enjoy it; the other, that you can boast about it.” -Bertrand Russell

As both a lover of great literature and a probate lawyer, I put Bleak House by Charles Dickens on my “to read” list years ago. My father had mentioned it to me several times, noting with amusement that the estate lawsuit at the heart of the novel didn’t end until the money ran out. At 989 pages, it’s not what you’d call a weekend read, but I finally hunkered down and plowed through it. While it is anything but a positive reflection on lawyers and the legal system of nineteenth century England, it is wicked funny and a great read. (Plus, I can boast about it.) G.K. Chesterton is quoted on the back cover as saying it was “Perhaps his best novel…when Dickens wrote Bleak House he had grown up.”

The novel opens on the fog that engulfs the Chancery Court in London where probate cases were adjudicated. The case of Jarndyce and Jarndyce has been in probate for generations; people literally are born into the suit and die before it is resolved. Dickens is pretty vague about the particulars of the case. One character tells us, “‘Why, yes, it was about a Will when it was about anything. A certain Jarndyce, in an evil hour, made a great fortune, and made a great Will. In the question how the trusts under that Will are to be administered, the fortune left by the Will is squandered away; the legatees under the Will are reduced to such a miserable condition that they would be sufficiently punished, if they had committed an enormous crime in having money left them; and the Will itself is made a dead letter.”

Many of the novel’s characters are beneficiaries under the will and spend their lives waiting for the lawsuit to be resolved. One unfortunate young man, Richard, drives himself to an early grave in his obsession to see the suit completed. Miss Flyte, another beneficiary, keeps a series of birds locked up in a cage, intending to let them free when she is free of the lawsuit and receives her inheritance.

Dickens is merciless about the purpose of all the delay: “The one great principle of the English law is, to make business for itself. There is no other principle distinctly, certainly, and consistently maintained through all its narrow turnings. Viewed by this light it becomes a coherent scheme, and not the monstrous maze the laity are apt to think it. Let them but once clearly perceive that its grand principle is to make business for itself at their expense, and surely they will cease to grumble.” Thus, as one character dryly remarks, “Equity sends questions to Law, Law sends questions back to Equity; Law finds it can’t do this, Equity finds it can’t do that; neither can so much as say it can’t do anything, without this solicitor instructing and this counsel appearing for A, and that solicitor instructing and that counsel appearing for B; and so on through the whole alphabet, like the history of the Apple Pie.”

Let’s just say it will not endear you to lawyers or the legal system; but mercifully, the 21st century American probate court little resembles its 19th century English counterpart. Our system is geared toward the timely resolution of disputes; and to the extent it fails, I have found that it is generally because angry litigants—not courts—want to use the legal system to wage Pyrrhic battles.

While the lawsuit in Bleak House forms the backdrop of the case, and gives Dickens the opportunity to train his savage wit on the English legal system, the heart of the story is not really about the lawsuit itself. Bleak House offers a wonderful panorama of characters and richly interwoven plots and subplots. It is partly narrated by Esther Summerson, one of the main characters, an orphan whose family origins are shrouded in mystery. It features unforgettable characters such as Lady Dedlock, the proud and aristocratic wife of Sir Leister Dedlock, who harbors a painful secret; Mr. Tulkinghorn, Sir Leister’s scheming lawyer who spends much of the novel hot on the tracks of Lady Dedlock’s secret, and whose death late in the narrative briefly turns the novel into a murder mystery; and Mr. Skimpole, the financially improvident rascal who remorselessly sponges off others while feigning a child-like innocence about the ways of the world.

Bleak House is well worth putting on your bucket list. And if you don’t want to invest the time reading it, I am informed that it was turned into a brilliant mini-series by BBC, though I have not seen it—yet. I’m putting it on my “to watch” list.

Separate Assets, Joint Problems

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Some married couples enjoy living together while keeping their financial assets separate. Separate ownership of assets can be advantageous in some instances, but oftentimes loving couples misunderstand the results of holding separate assets.  The Wall Street Journal recently highlighted four potential pitfalls for couples maintaining separate accounts:

  1. The assets are not necessarily separate under Nevada law.

Simply having your name on an account does not mean the account is yours alone.  Under Nevada law, pursuant to community property principles, all of your earnings and wages after marriage are the property of both parties.   This is true even if you have your paycheck deposited into a separate account.

Nevada inheritance laws can surprise couples. If you die without a will and leave a surviving spouse, no children and surviving parents, your parents are entitled to a portion of your estate.  Many spouses intend for their entire estate to go to a surviving spouse.  However, unless that desire is set forth in a will or trust, the state may direct otherwise.

  1. Separate accounts most often mean lack of communication.

Communication between spouses is critical.  Many spouses have separate retirement accounts and manage those accounts in isolation.  This isolated planning can undermine the couple’s financial objectives and their combined risk tolerance.  Regularly, I meet with clients where both spouses are unaware of accounts or policies that one spouse possesses.  These omissions could cause the account proceeds to go missing or remain unclaimed for long periods of time.

In addition, holding similar investments in two separate accounts can be more costly.  Combining the separate holdings may result in lower advisory fees.

  1. Separately-owned property may be at greater risk in bankruptcy or a lawsuit.

Nevada has very liberal exemptions for bankruptcy purposes.  These protections can be utilized best by conferring with an attorney who focuses on asset protection planning.

Joint ownership can make your assets less appealing to creditors.  Creditors loathe joint assets in which they will hold only a one-half interest.  Separately-owned property is less-protected from creditors.  The home is the primary asset to hold jointly or through a trust.

  1. Separate accounts are more difficult to administer.

The death of a loved one causes plenty of heartache.  Maintaining separate account causes needless headaches too.  The time delay in accessing separately-owned accounts can lead to draining financial stress.  Many financial institutions demand formal court orders before allowing access to financial accounts, even when such orders are not necessary.  At a minimum, couples should maintain a joint checking or savings account to make sure the day-to-day expenses can be satisfied.

Careful with Deathbed Planning

As death looms, people become much more focused on arranging their affairs.  Even those with few assets will develop a laser-like focus on leaving a suitable legacy.  There are pitfalls to death-bed estate plans or revisions to existing plans.  In a perfect world, an estate plan is constructed carefully after much thought and revisions are made regularly.  However, lawyers and financial advisors are often solicited to make changes when a client fears an imminent demise.

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Recently, I helped clients update their revocable living trust after the wife was diagnosed with terminal cancer.  They created their trust 20 years ago and had not made any updates since that time.  In the intervening years, one of their five children had passed away and numerous grandchildren had been born.  The prior version of their trust provided that if one of their children predeceased them, the surviving children would receive the estate equally.  The clients instead wanted the trust share that would have passed to the deceased child to be held in trust for the deceased child’s children or the clients’ grandchildren.  If nothing had been done, the clients would have disinherited their grandchildren.

When making near-death amendments or creating new estate plans, advisors and clients must consider the income tax ramifications. A common mistake is to transfer a home or real property to children or grandchildren prior to death.  Such a transfer results in loss of the step-up in basis of the property to the date-of-death fair market value.  The child or grandchild receiving the property steps into the shoes of the transferring parent or grandparent and takes the transferor’s basis in the property.  Usually, the basis is much lower than the present day fair market value.  When the child or grandchild sells the property, he or she will incur a much higher capital gains tax than necessary.

Finally, to avoid a contest, a medical or mental competency examination can assure that the client is competent to make the change.  These exams can be administered by the client’s regular physician.  By using their normal physician, the client will feel more at ease and the physician will already have a history with the client and be able to differentiate whether the client lacks capacity.

Death-bed planning can be done effectively but there are numerous considerations and precautions to follow.