Everyone who wants to accomplish complete estate planning objectives should consider and implement a living trust-centered plan. A living trust-centered plan is the only type of estate planning that can meet all of the elements of our “definition” of effective estate planning.
Black & LoBello’s definition of effective estate planning:
- I want to control my property while I am alive.
- I want to take care of myself and my loved ones if I become disabled.
- I want to give what I have to whom I want, the way I want, and when I want.
- If I can, I want to save every last tax dollar, professional fee, and court cost possible.
Probate in Nevada starts when you have $20,000 or more in your name which is not much. For this reason alone, many people should consider a living trust-based model for their estate planning needs.
Reason One: Control
The most important element of Black & LoBello’s definition of estate planning is control. The most important step to gain control of your assets is to create an effective estate plan. If you do not write your own plan, the state will write it for you.
If you die without an estate plan, you are deemed to have died intestate. In this case, state laws direct how your assets are to be inventoried, valued, and distributed. If you should become incapacitated without affecting formal planning for that event, there is another set of states laws that directs what will happen to you and your property.
State laws also control other aspects of one’s life and property. For example, joint tenancy property may be tied up in the courts if one of the joint tenants becomes incapacitated or if there are creditor problems. To exercise estate-planning control, you must take responsible action to implement and use your own estate plan to dictate your wishes, rather than leaving it to the state.
Reason Two: Incapacity
After control, the definition of estate planning addresses incapacity. Statistics show that the odds of suffering a debilitating mental or physical disability are about six times greater than the odds of dying. Because of the great risk of incapacity it is imperative to plan for such a life-changing event.
Through proper and effective planning, you can control how you are cared for during incapacity. Additionally, you may purchase long-term health care and/or disability insurance or implement savings plans. It is also possible to leave instructions about physical care in the event of incapacity.
Estate plans can succinctly direct how property and money should be used for the incapacitated and your loved ones, thereby overruling the state laws. In order to exercise this control, one must do so while still competent.
Reason Three: Giving Your Property to Whom You Want
After you have controlled your property while you are alive, and have planned for your incapacity, you can look forward to giving your property to others at a time or times of your choosing. The trust maker is able to transfer property during life as well as at death through the use of an effective trust plan. Nevada law allows the trust maker to control his property, and to pass it in the manner he chooses to the beneficiaries with amazing latitude and flexibility. However, you must initiate the process while still capable to do so.
Reason Four: Planning for Taxes and Expenses
The final part of Black & LoBello’s definition of estate planning addresses taxes, fees, and costs. One of the most famous quotations about taxes comes from Judge Learned Hand who wrote:
“Anyone may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one’s taxes.” (Gregory v. Helvering, 69-F.2d 809)
While saving on taxes and expenses is an important aspect to effective estate planning, be assured that Black & LoBello will not recommend actions that will compromise the first goal of maintaining control. Even if you do not have a taxable estate, probate costs can run anywhere from between three to twelve percent of the GROSS value of your estate. The secret of good planning is to reduce taxes and costs while always retaining control.
Tiffany N. Ballenger, Esq.
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