A question often presented to me by some clients is whether or not there is an inheritance tax imposed upon the client’s beneficiaries after his or her death.  Both in Nevada and federally, there is no tax imposed upon a beneficiary who receives a deceased person’s property.  Currently, there are a minority of states that do impose such a tax.  The tax rate usually depends upon who inherits the property, and property passing to a decedent’s spouse or to other close relatives is typically taxed at a very low rate or not taxed at all.

Inheritance tax should not be confused with estate tax.  The difference between inheritance and estate tax is a matter of who is responsible for paying the tax.  Estate taxes are levied on the total value of a decedent’s property and must be paid out before distributions are made to the decedent’s beneficiaries.  Whereas, the inheritance tax is calculated separately for each individual beneficiary, and the beneficiary is responsible for paying the tax.  Fortunately, Nevada does not impose an estate tax upon a decedent’s property.  Federally speaking, there is an estate tax, but there are significant exemptions that currently exist.

If you should have further questions regarding estate tax, inheritance tax, or estate planning matters please feel free to contact the attorneys at Jeffrey Burr.

Attorney A. Collins Hunsaker

Going to court is an expensive proposition in almost all situations because of attorney fees and court costs.  Court is also often time-consuming as reflected in the adage “Justice grinds slowly”. Probate Court is no exception. One of the main advantages of creating a revocable living trust during your lifetime is to avoid probate when you die.

When one dies with a revocable living trust that has been properly funded, the probate process can be avoided. Normally, a court is never involved with the supervision of a revocable trust when the creator of the trust dies. However, there may be times when a court will become involved in a trust administration (i.e. there is a dispute among the parties, the trust agreement is ambiguous, the trustee is acting improperly, et cetera). If there is a possible disagreement on a trustee’s desired course of action, is it always necessary to go to court even though you would like to avoid the cost of doing so?  The answer is no.

A possible alternative is a Notice of Proposed Action.  Under Nevada law, a trustee can mail out a written Notice of Proposed Action to certain prescribed adult beneficiaries of the trust. The Notice must state certain things, including but not limited to a description of the proposed action, an explanation of the reason for taking the action, and the time within which objection to the proposed action may be made. The time provided for objecting cannot be less than 30 days after the notice of proposed action is mailed to the beneficiaries.  A beneficiary may object to the proposed action by mailing a written objection to the trustee within the time stated in the notice.  If no beneficiary timely objects to the proposed action, the trustee can proceed with the proposed action and is not liable to any present or future beneficiaries with respect to that proposed action. Accordingly, the mailing of a Notice of Proposed Action by a trustee is usually far preferable than immediately going to court to have a disagreement settled by the court. If no timely objection is made to the Notice of Proposed Action, the dispute over the proposed action has been settled without incurring the court costs and attorneys fee of going to court.

- Attorney John Mugan

Probate is a court-supervised estate proceeding under which the probate assets of the decedent are controlled by the terms of the last will and testament of the decedent.  Probate is a lengthy, complicated and expensive procedure that is a matter of public record.  Probate should be avoided if possible.  The most common way to avoid probate is for the decedent during his or her lifetime to establish a revocable living trust and transfer his or her assets that would trigger a probate proceeding into the trust.  When the decedent dies, probate is avoided.  Administration of the trust is not court supervised, and is much quicker, simpler, far less expensive and confidential.  In such a case, the trust agreement, not the last will and testament of the decedent, is the key document that controls the ultimate disposition of the trust assets. The last will and testament of an individual who has created a revocable living trust is merely a “pour over will” that bequeaths (“pours over”) any probate asset into the trust and is administered pursuant to the terms of the trust.  Nonetheless, there is a law in Nevada that requires any person having possession of the last will and testament of a person they know is deceased to deliver it to the Clerk of the District Court which would have jurisdiction of the matter within thirty (30) days after learning of the death of the decedent.  The Clerk of the District Court currently charges an eighteen dollar ($18.00) last will and testament filing fee.

Most individuals are not aware of this law.  An individual such as a surviving spouse or child who has possession of the decedent’s last will and testament and has failed to file the will within the thirty (30) day period usually becomes very concerned when they learn of the law. What are the consequences?  The good news is there are no criminal or civil penalties or fines for failure to timely file the last will and testament with the Clerk of the District Court, and there are no “last will and testament filing police” actively enforcing the law and pursuing a person who violates the law. Also the Clerk of the District Court will not inquire as to when the person filing the last will and testament learned of the death of the decedent.  The law states that any person who fails to comply with the law without reasonable cause is liable to any person interested in the will for damages the interested person may sustain by reason of the failure to file the will. Accordingly, a person having possession of the last will and testament of a person they know is deceased should always deliver it to the Clerk of the District Court even if it is past the thirty (30) day period.

Attorney John Mugan

Please join us for:

Dementia/Alzheimers and the Law
Presented by Attorney Corey J. Schmutz

Thursday August 15, 2013
3:00 PM

Vintage Park at San Martin
7230 Gagnier Blvd.
Las Vegas, NV 89113

Snacks & refreshments will be served.
1 approved CEU credit for nurses and social workers

Please RSVP to Sandy Simpson at 433-4455

The recent Supreme Court decision in Windsor v. U.S., a case taking issue with the treatment of federal estate taxation for a married same-sex couple, has effectively struck down Section 3 of the Defense of Marriage Act, most often referred to as DOMA, retroactively.  Due to this decision, married same-sex couples can now enjoy a number of federal tax advantages including:

• Filing a joint federal income tax return
• Re-filing tax returns as “Married Filing Jointly” for recent tax years
• Ability to elect IRA or other qualified retirement plan “stretch” provisions
• Use of the federal marital deduction for lifetime, gift tax-free transfers to the other spouse
• Gift splitting for annual exclusion gifting
• Portability of the a decedent’s spouse federal estate tax exemption

According to the current IRS rules, the determination of whether a couple is married is a matter of state law of the couple’s current residence.  Without further guidance at this time, a same-sex couple married in a state which allows same-sex marriage, but not currently residing in a state which does not recognize such marriage, like Nevada, may not be considered married for federal taxation purposes.  It is anticipated that the IRS will issue guidance on these issues.  Many experts take the position that it is very likely that the IRS will recognize any legally performed same-sex marriage no matter where the couple might currently reside.

At Jeffrey Burr, we can assist same-sex couples, married or otherwise, evaluate their estate planning needs and tailor a plan accordingly. Feel free to contact the law firm of Jeffrey Burr for a free consultation.

-Attorney Collins Hunsaker