Is a Trust Required to Avoid Probate in Nevada?
While a revocable living trust is a common estate planning tool for avoiding probate, using a trust is not the only way to avoid probate in Nevada. To be clear, we prepare many, many living trusts at my law firm. As an estate planning attorney, family trusts are the foundation of most good estate plans that I see.
Nevertheless, you can avoid a time-consuming probate proceeding upon your death in various ways.
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Listing Beneficiaries to Avoid Probate in Nevada
There are assets that, by their nature, avoid probate. These include life insurance, IRAs and other retirement accounts, and annuities, to name a few. This is because typically, and I should say only when, designated beneficiaries are listed. When a beneficiary is listed, by contract, the life insurance proceeds or retirement account funds pass directly to the named beneficiaries. No probate necessary.
However, it is important to name contingent or secondary beneficiaries just in case the primary beneficiary dies before you. If the primary beneficiary predeceases you and no secondary beneficiary is listed, the proceeds will usually end up in probate court.
Bank Account Beneficiary Designations
Similar to a life insurance policy, banks and other financial firms, allow you to list beneficiaries on bank and brokerage accounts. These are typically referred to as pay-on-death (POD) accounts, transfer-on-death (TOD) accounts, or an in-trust-for (ITF) accounts. Such accounts go by different names at different financial institutions, but work essentially the same way.
As explained above with a life insurance policy, it is important to name a contingent beneficiary on the account just in case the primary beneficiary dies before you do. And as long as a beneficiary survives you, the account can pass to the beneficiary.
Transferring Real Estate upon Death
In Nevada, you can now place a beneficiary on title to real estate so that the property will transfer on death of the owner. This is completed by recording a “deed upon death.” Some states refer to it as a “beneficiary deed.”
In any case, such a transfer-on-death deed may list beneficiaries much like a bank account. The deed is recorded with the county recorder, but does not transfer title to the property until your death. At that time an additional document is filed along with your death certificate and the transfer to the beneficiary is triggered.
In the meantime, you still have full rights to and control of your property. You can mortgage it or sell it whenever you like.
Joint ownership, specifically joint tenancy with right of survivorship can avoid probate by automatically passing to the surviving joint tenant. However, this really delays the inevitable, as the property will need to go through probate on the survivor’s death unless they do something.
Nevada is one of a few community property states. A married couple can also hold title to real property as community property with right of survivorship. This is similar to joint tenancy.
Trusts Work in a Similar Way
Of course a living trust also works by way of listing beneficiaries that ultimately inherit the assets. And since heirs or devisees are listed in the document, no probate is required for the assets properly placed within the trust. There are also advantages to the trust.
One key benefit to a trust over the other methods of avoiding probate discussed above is flexibility. With a well drafted trust document, you can plan for many contingencies that are often just too difficult to spell out in a beneficiary designation form given to you by the bank or your life insurance agent.
Another benefit to a trust concerns asset protection. Because of the spendthrift provision normally found in living trusts, the assets are protected from creditors of your beneficiaries as long as the assets remain in the trust.
Frequently Asked Questions:
What are Trustee responsibilities?
A trustee must follow the terms of the trust agreement. They owe a duty of loyalty to each named beneficiary without showing preference. They may publish a notice to creditors and make sure that final income tax returns are filed.
What if I don’t have a Trust?
If you die without employing any of the above estate planning strategies for passing assets outside the probate process, your property will likely be admitted to probate. The court will appoint an executor to handle everything needed to complete probate. The executor will usually hire an experienced probate lawyer to help.
What if I only own a car and small bank account?
If your assets consist of a vehicle and relatively small bank account without a payable on death designation, a small estate affidavit may be used for the transfer of assets to avoid probate in Nevada.
Related Articles:
Reasons Assets Don’t Avoid Probate in Nevada
What if you die without a Will?
Conclusion
So you can see that there are different ways to avoid probate in Nevada. However, given their flexibility and advantages, revocable living trusts are often the recommended method of passing on one’s estate. Call today to speak to an experienced estate planning lawyer.