TRUST ATTORNEY LAS VEGAS | TRUSTS & MORE
TRUST ATTORNEY LAS VEGAS | TRUSTS & MORE
Hello and welcome to trusted the podcast where we talk about anything that requires you to trust others. I am your host, Blake Johnson. I last time, uh, we, we had the podcast, we spoke about estate planning and today I want to continue on that trend and we’re going to talk about a key part of any estate plan and that is trusts. Uh, so if you remember from a state planning, um, you know, that’s planning for your future. It’s planning for, you know, you get incapacitated if you die early. I’m planning on, you know, how you can accomplish your goals, um, through, you know, the, the legal side of things. Anyway, we work with your financial advisor and CPA to help get you a full plan from the tax side, from the financial planning side. Uh, but let’s talk today about trusts. So what is a trust?
Um, there’s really, um, well let’s talk first about myths. So really there’s a, there’s usually a lot of myths out there about trust. You know, it’s only for the super wealthy and you know, you have the trust fund kids, um, that come into play. Uh, you know, that’s what you see. The kids who inherit a bunch of Trust Attorney Las Vegas money, have tons of its, get spoiled, don’t work and spend their parents, um, you know, life’s work essentially. And really that’s not the case. You know, trust is not just for the super wealthy. Now there’s two main types of trusts. We have what’s called a revokable, sometimes referred to as a living trust. And then you have an irrevocable trust. Now the difference is a revokable trust as the name implies, means it can be revoked. It also can be amended, whereas an irrevocable trust cannot be revoked.
It cannot be amended. So once you set it up, you can’t change it. So, you know, people ask all the time, well, why would we even ever do a irrevocable trust? There’s a lot of advantages there. Um, you know, it’s kind of over the scope, uh, of what I want to talk about today. But the short of it is, you know, if you’re looking for, uh, you know, a state tax planning, you know, you want to avoid paying estate taxes, you want to, um, you know, have some asset protection. Get those, uh, assets out of your name so they’re not going to be subject to lawsuits. That’s where irrevocable trust can be a great estate planning tool. Now today I want to focus mostly on the revokable trust. It’s also referred to as a living trust. And what those are primarily is it’s a tool to avoid, um, going, having your assets go through probate when you pass away.
Uh, now probate is the court proceedings to, um, to distribute assets to the rightful people. Now, if you, if you died and you haven’t done any planning, you’re going to let the state in which you reside at the time of your death decide who is going to get your assets. Uh, each state has what’s called intestacy laws. Basically just means you know, the, the order of who gets what. I’m so most states, depending if you’re a separate property state, meaning that everything is assumed to be your separate property that’s titled in Your name versus a community property state, which means that everything that’s title in your name, if it was acquired after the marriage, is presumed to be owned by you and your spouse jointly. Uh, and then after that it’s, you know, we talk about, uh, you’re going to see things like, uh, owned half by, you know, the spouse and half by the kids.
Now, if those kids are not from that marriage, you can see that being a big problem. Um, well if you have a will, now you’re going to be able to decide who gets your stuff instead of leaving it up to the state. We still have to go through probate court. Probate court is a mess. You do not want to do it. It’s very costly. I’d say minimum, you’re going to spend 5% of the estate value on attorney’s fees and court costs and it’s going to tie up the assets for a long, long time, you know, minimum, I’d say six months. Um, if you have real estate, uh, you can plan on at least a year and a half to get that taken care of. Now each state is different. Each state has a different process. They have different laws on how that is done. Uh, but that’s the general guidelines I found for Nevada and Utah, which are the two states.
I primarily practice him. Um, now if you own property in different states, you know, let’s say, um, you know, you own a house in Nevada and you know, like a lot of my clients, they have a cabin in Utah. Well guess what? Now we have to open to probates, one in Utah, in one in Nevada, you know, just not an ideal ideal situation. So, you know, how can we avoid that? Well, we set up a trust. So what does a trust look like? Well, there’s three main parties to a trust. You have the trust store that is the person who set up the trust. So typically that would be, you know, mom and dad. Um, or are you by yourself if you’re not married, then you also have a trustee. A trustee is the person who is like a manager or um, you know, the CEO of a business.
They’re the ones who make all the final, uh, financial decisions. You know, how to invest the money, who gets what according to what the trust documents say. And then lastly, you have the beneficiary there, the person who’s actually going to receive the money or the funds from the trust. Uh, now when you set up a living or a revokable trust, you are all three. You’re the trust or because you set it up, you’re the trustee because you are the one who manages those assets. And then you’re also, you’re the beneficiary while you’re living. You want to continue to spend your own money. Now, if you do an irrevocable trust, you might be the trust door. Um, and you may be the beneficiary, but somebody else might be the trustee or you might just only be the trust or you set it up for, uh, you know, your child’s benefit.
And you have somebody else, be the trustee to get it out of your name and get that asset protection. Um, now even on that living trust, that revokable trust, if you are, um, the trust or trustee and beneficiary, when you die, you still remain the trust door. And then the trustee is the person that you’ve named as the successor trustee. They step up into that role and that doesn’t have to be the same person as the beneficiary. So at that point you would have three separate people. You know, let’s say you have young kids, um, you would be the trust or then you pass away your successor trustee steps in. So maybe that’s a sibling, maybe it’s close, trusted friend, and they’re going to manage the money for the benefit of your small children until they reach the age at which the trust says that they get access to that money.
Um, now when you die, instead of going through court, what happens is once we have a death certificate, then the successor trustee signs a simple affidavit saying, hey, I accept the role of trustee. And the original trustee died. And so that’s why I’m taking over and they send that to the bank. They, we send it to the county where the property is located and record it. And now that person has access to all the accounts and all the property and can administer the trust the way that you wanted it to happen. Now, don’t choose this trustee lightly because they are going to be in charge of all the Trust Attorney Las Vegas money. They have full access to everything. Now they have a fiduciary duty to follow the terms of the trust. But you know, if they go and spend all the money or, or liquidate it to an account in The Bahamas, you know, or Grand Cayman, good luck trying to get it back.
You know, this, the beneficiaries or the guardians of the beneficiaries can always sue the trustee to get the funds of the trust back. Um, but it’s not always, um, you know, a real possibility. So be very, very careful on who you, you choose to be trustee of your trust. Now, um, the, the most probably, you know, a common question after what is a trust is when do I need a trust? Well, that’s a good question. Um, because you know, there is still a minimum standard and you know, if you don’t have any money, you don’t have any real beneficiary, you don’t have small kids, then you know, yeah, you probably don’t need a trust. A will would work just fine. But if you own a home, you don’t have to own it outright. If you purchased a home and you’re, even if you’re still paying on the mortgage, you need a trust, at least in the state of Nevada and the State of Utah because they have, they have laws in their probate that says that once you own that real property and you’ve guy has to go through probate to transfer to the right people.
Now that does not include property that’s owned jointly. That would go to whoever you name a, if it’s titled the Right Way, joint tenants with right of survivorship. But typically, um, we still would want to go in the trust because what happens if both of you die, you may have the potential for a double probate. So we want to avoid that all together. Another big step of when you need a trust is if you have small children and you have a significant amount of life insurance that’s going to pay out, um, for their benefit. If you don’t do any planning, those kids will get all that money when they turn 18. So think back to when you’re an eight year old kid. If you got trust money, um, you know, saying the amount of $500,000 or $1 million, I don’t care if you’re the most responsible 18 year old in the world, it’s gonna cause you to make some dumb decisions.
K you’re going to want to go out and buy a new car. That’s typically how long does the trust money last? As long as it takes the 18 year old to get from here to the nearest car dealership. So please, um, you know, think about this, you know, do some planning, you know, planning for your kids, motivate them to go to school if that’s something that’s important to you. And you can structure the trust however you want, you know, make it monthly distributions. They get nothing till they’re 65, so they have to work their whole life. You know, it’s endless possibilities as far as that go goes. Another key thing for a trust is, um, you know, if you don’t want to pay the government any money through probate, um, you know, that’s, that’s a smart one. Uh, if you have to worry about estate taxes, trusts are a great tool to do that.
Um, you know, really those are the three main, main reasons of, or triggers that help you determine that you need to do a trust. Now, um, next question is, you know, what goes into the trust, what assets do I put in there? The short answer is everything that you possibly can. This is what we call funding. The trust that’s transferring assets from your individual name into the name of the trust is probably the most overlooked part of doing an estate plan. A, you know, a lot of attorneys just like to do the actual document writing and they don’t want to get involved with the transfers because that’s, you know, a little bit more work and they can’t really charge for it as much. Um, but it is probably the most, it is, it’s the most important part of the planning process because even if you have this great plan in place and you don’t transfer the assets into the trust, the plan won’t work because we’ll still have to go through probate court.
So what do we do? You know, make sure you get the deeds for your house and you transfer them to the trust. So you sign a new deed. It’s sending it from you individually to you as trustee of your trust. You’re going to change the name on your bank accounts. Uh, you know, most banks, there’s a handful who, who make you change account numbers, but most banks will just change the name on that trust or on that account to the name of your trust. And then you don’t have to worry, um, about, uh, you know, changing account numbers or the difficulties that, that go with that. Um, investment accounts. If it’s an investment account that is non retirement, you can transfer it to your trust. You want to name the trust as a beneficiary on your life insurance policies. You want to make sure any businesses that you own are transferred into the trust, uh, because if you don’t, then the court’s going to be making decisions about your business.
And you know, that’s probably not a good idea since they know nothing about your business and how it needs to be run, uh, especially to try and get anything done quickly. It’s not gonna happen. Um, like, uh, the biggest, um, one that, uh, you can run into problems with his retirement accounts. So 401ks your Iras, Roth, Iras, those kind of things, we call that qualified money. Um, it cannot be transferred into the trust while you’re living because it needs to be owned by an individual. Now if you are married in most circumstances and depending on your situation, you probably want to name your spouse as the beneficiary of that retirement account because of the tax advantages that come along with it. And then depending on what your goals are, you may even name your kids is the backup beneficiary and then the trust is the third beneficiary.
But if you’re, you know, wanting to make sure that, um, you know, the kids can’t touch the money until a certain age, then we want to name the trust as the beneficiary so that the trustee can oversee it and make sure that the money is invested properly and distributed at the certain ages that they’re supposed to. If not, as soon as the kids turn 18, they could force that retirement account to be liquidated and cause big tax consequences, not to mention, spend the rest of the money on, on dumb things. So, um, that’s a big one where you probably want to double check, you know, call your attorney when you’re trying, when you’re filling out those forms and make sure they get filled out properly so that your estate plan actually is gonna work the way that you want to do that. Um, because you know, those retirement accounts, especially once you come into retirement can be a big portion of your estate.
So that’s all we have today about trusts. Um, you know, just to review, we talked about what a trust is, the two different types, they are revokable versus irrevocable. Uh, it’s not just for the super rich. You know, the Times you, you need to trust the two big ones are small kids that you have a life insurance money or other money that’s going to be left to them. Or if you buy a house and then how do we fund the trust, make sure the money actually gets in the trust name that properties get in the trust name. If you can accomplish those three things, um, do them the right way, then you’re on the right track to getting your estate planning order. I think that’s the good foundation for any estate plan is putting a revocable trust in place. As your estate grows, you may add other trusts, those irrevocable trust we talked about for asset protection and for a state tax planning. And you know, we build from there. Like I said last time, and a state plan is an ongoing Trust Attorney Las Vegas process. It’s not just death planning. Uh, so I hope you’ve enjoyed this episode. Once again, this is trusted and I’m your host, Blake Johnson. Thank you for tuning in and we’ll talk to you next time.