Some of our clients ask, "Do I (or we) really need a trust? Can't we just make everything payable on death to our children?" The answer depends on your situation and on how much you want to plan for various events that may be unlikely.

Potential advantages of a trust:

  1. The trust avoids probate, along with other will substitutes.
  2. Their is no discrimination against a successor trustee who is not a Nevada resident whereas there is discrimination against a successor will Administrator (but non Executor) who is not a resident of Nevada.
  3. You can provide for your own potential disability.
  4. You can provide for unlikely situations such as one of your children dying before you do.
  5. You can control distribution of money to a young person, rather than giving them a great deal of money as soon as they turn 18 and thus are legally an adult.
  6. If real estate is passing under a trust (or a will) to a person not your spouse or child the real estate transfer tax is avoided. (It is also avoided under Nevada's Transfer on Death Deed.)
  7. If real estate is passing under a trust and the heirs intend to sell it immediately, a title insurance company may not issue title insurance until it is satisfied that no creditors of the decedent (the person who died) have a claim on the property. In this case NRS 164.025 would allow the new trustee of the Trust to publish a Notice to Creditors giving them 90 days to make a claim after which no claims could be made a against the property. This is somewhat faster than a probate proceeding and much cheaper.
  8. BUT THE SUCCESS OF A TRUST DEPENDS ON THE INTEGRITY AND COMPETENCE OF YOUR SUCCESSOR TRUSTEE. In most cases there is a trusted family member to be the Successor Trustee. Unfortunately, it is expensive to get a bank or other professional trustee to be the trustee. Likewise making sure a Will is given effect requires and honest, competent Executor. In extreme cases the person writing a Will might want to NOT name an executor which will require more lawyer control of the estate. 

Important Consideration: Who Gets The Money When You Die?

Most clients have a simple answer such as "our children." But, as lawyers we have to ask you to consider the unpleasant and unexpected: what if your child does not survive you? Who would get the money in that case?

Additional Information On Trusts

If your trust or will provides that when you die your money will go to a child or grandchild and provides nothing further, the child or grandchild will receive the money when he or she is 18 or when you die whichever is later. In many cases giving an 18 year old hundreds of thousands of dollars is not the brightest idea.

A trust (or even a will that contains what is called a testamentary trust) can provide that your successor trustee (the person who manages the property after you die) will hold money for a minor or young adult until that person reaches a certain age. Some of our clients like the idea of distributing money to a young person in two or three installments at different ages, so that if the young person wastes the first installment, hopefully, they will be wiser about the second or third distributions. Some of our clients provide for distributions to young people after certain achievements such as graduating from an accredited four year college, or getting a professional degree. If money is held back from young person older than 18 our clients usually specify that the trustee can disburse money to the young person for educational and medical expenses, and, perhaps, for support.

After you die (or after both you and your spouse die) the successor trustee may have the job of immediately distributing all of your assets to the beneficiaries, or the successor trustee may have the job of keeping assets for a young person as discussed in the above paragraph. Do you want person to be successor trustee or do you want two or more people to share that responsibility? Keeping in mind that the unexpected may happen, can you name back-up successor trustees in case the person you want to be successor trustee cannot or will not do the job?

If the successor trustee may have to hold property for young people to reach a certain age, what investments guidelines do you want to set out for the successor trustee? Should the successor trustee be restricted to investing only in government gauranteed debt such as treasury bill or FDIC insured certificates of deposit? Or do you want to give the successor trustee more discretion to invest?

Almost all of our clients want their trust to make them the original trustee (person in charge of their financial assets). In the simplest situation, the trust doesn't mention a successor trustee until the original trustee(s) die. However, some peoples' brains fail before their bodies. If there is no trust provision for disability, the original trustee(s) (the person or couple who set up the trust) will remain in charge of their assets unless their relatives (or the state) petition a court to appoint a guardian of the person's assets on the grounds that the person is no longer mentally able to handle their own affairs. This can be a humiliating process.

Therefore, some of our clients, typically those in their sixties or older, provide in their trust for a simpler process. A typical case is a couple with three children. the couple might decide that while both are alive collectively they will be able to manage their own affairs. But they might decide, for example, that after the first to die does in fact die, their three children, by a majority vote, may replace the survivor with the successor trustee (who would typically be one or all of the children). Or they might require the children to get one or medical medical opinions that the survivor cannot manage his or her own affairs. In this way the successor trustee can step in without the unpleasantness and expense of a court guardianship proceeding.