“Do I really need to do a Will?” or Do I really need to do a Trust?” are questions that I hear often as a Nevada Estate Planning Attorney. Often, people are wondering if they can “get away” with not paying for a Will or Trust. Usually, the question comes up when the assets that the person owns is minimal or they are tied up in bank and/or retirement and other non-retirement financial investment accounts. While I encourage people to fully assess and determine what their estate planning needs truly are – and then encourage them to address those needs through the appropriate planning mechanisms (such as a Will, Trust, General Durable Power of Attorney and Health Care Power of Attorney and health care directives), there are a few situations where a Will or Trust may not be all that necessary. Today, I’m going to step out of the box and tell you the secrets of what some of those situations are.
1. When a Home is the only significant asset. When a retired person who has no plans or ability to acquire additional income or assets and he or she owns only a home and nothing else of significance, the person may not need to do a Last Will and Testament or a Trust. Creating a Will and having the estate be distributed through the Will in the probate process will certainly take care of the planning need in terms of spelling out who will receive the home following the person’s death. However, the probate process takes a significant amount of time and expense which may not be justified if the home is all there is (note that, if the home is held in joint tenancy with a spouse or some other person as the co-owner, upon the death of the first joint tenant to die, the surviving joint tenant will receive full ownership of the real estate, without the need for any court or other formal proceeding). A Trust (which would avoid the need of a probate proceeding) too may be more expense than is justified in this situation. In Nevada, a good alternative to the above two options would be to do a “Deed Upon Death”.
Deed Upon Death. NRS 111.655 – 111.699 provides for the opportunity for a person, while they are still living, to record a Deed Upon Death in the County Recorder’s office where the real estate property is located. The Deed Upon Death specifies that it is effective upon the death of the current property owner. The Deed Upon Death will specify one or more persons to whom the property will be conveyed to, following the property owner’s death. When the property owner passes away, all the person that is designated to receive the property will need to do is to present a certificate of death and record an Affidavit of Death of the property owner in the County Recorder’s real estate record for the property. When the Affidavit of Death is recorded, the conveyance to the transferee is then effective and the beneficiary becomes the owner of the real estate. If this is the only asset to deal with, the Deed Upon Death will be a very cost-effective means of providing for the passing of property to whomever the property owners wishes to receive it when they pass away.
2. When there are only Retirement Accounts, Bank Accounts and/or Investment Accounts. All retirement accounts, bank accounts and financial investment accounts nowadays will allow you to designate a “pay on death” (P.O.D.) beneficiary on the account. In fact, if you hold any of these accounts (other than retirement accounts) that are not in a trust, you should always designate a pay on death beneficiary (in every case). The pay on death designation will avoid probate of the account. Following the death of the account holder, all the beneficiary will need to do is to go to the bank or financial institution and present identification and a certificate of death of the account holder. After they institution has verified the beneficiary’s identity and the death of the account holder, they will be able to distribute the account proceeds to the beneficiary and close out the account. If there is no pay on death designation and the account is not held by a trust, the only way for the heirs to receive the proceeds of the accounts will be to open up a probate case (which is called an “intestate” estate when there is no Will) and go through the probate process (note that Nevada does have a provision for a small estate that can be handled without probate or an abbreviated probate in Nevada, but, unless it is an actual court order, banks and financial institutions routinely refuse to recognize an “affidavit of entitlement”). Even if you have a trust but you have one or more accounts that are not in the Trust, you should at least do a P.O.D. designation on the account and name the Trust or an individual as a P.O.D. beneficiary.
3. Life Insurance and Annuities. A life insurance policy or annuity through an insurance company will always have a beneficiary designation. The death beneficiary designation will avoid the probate process. Similar to the pay on death beneficiary, the insurance or annuity beneficiary will need to notify the insurance company of the death of the insured, present a death certificate and proof of identification. If the deceased person’s only asset was a life insurance policy, then there should be no need for a Will or Trust, because there will be no assets other than the payout of the insurance policy or annuity.
If there are assets, other than the foregoing types, the person should certainly do a Will or a Trust. In choosing whether to do a Will or a Trust, remember that a Will is a ticket to probate court and a Trust (if properly “funded” with all of the assets) will avoid the probate process and will generally save the family of the deceased a significant amount of time and cost to the estate. Also, do not forget the necessary planning for incapacity through a General Durable Power of Attorney and a Health Care Power of Attorney, which will enable someone to handle your financial transactions and health care decisions if you become incapacitated.
For a free consultation regarding Estate Planning at our Summerlin office, contact R.D. Johnson Law Offices: https://rdjlaw-lv.com/contact/