The term “estate plan” is often used by Nevada residents, but the degree of understanding of the term by the persons who use and repeat it is uncertain. In simple words, an estate plan is a series of choices by about how a person’s assets are distributed after the person’s death. However, because each person’s financial status is unique, the choices that constitute an estate plan for one person may look nothing like another person’s choices, even if the two had similar assets.
Most estate plans begin with the drafting of a will. A will is a set of instructions about how to disperse the assets of a person after death. That person is usually referred to as the testator. If the required formalities are present – a written document, the testator’s signature, the signatures of the testator and two witnesses – the court must distribute the decedent’s assets as directed in the will.
Trusts and other devices
Very few people die leaving only one or two heirs. An individual’s heirs might include a spouse, children, grandchildren, siblings, siblings’ children, friends, charities – the list may grow quite long. The testator may wish to divide his or her assets in different ways. Some heirs may receive significant assets such as shares in a family business or a piece of commercial real estate, or a significant amount of liquid assets. In any event, a simple will may not allow enough flexibility in how the assets are distributed.
The testator can solve this problem by putting assets in one or more trusts. A trust that is created while the testator is alive is called an intervivos trust; a trust that comes into existence after the testator dies is called a testamentary trust. Both kinds trusts serve different purposes, and those purposes are too numerous to enumerate in a brief blog post.
Very wealthy people can expect to pay a significant federal estate tax. By using trusts and various lifetime transfers, a person can virtually eliminate the federal estate tax on his or her estate.
Is a lawyer needed to prepare an estate plan?
Except for small estates, an experienced estate planning attorney is a necessity when preparing an estate plan. The laws of trusts and estates are in constant flux, and only a knowledgeable lawyer can be expected to possess the depth of knowledge required to craft an estate plan that satisfies these laws and ensures that the testator’s wishes are satisfied.