When the national media reported in April that the famous musician Prince died without a will, it did not shock me. Take a quick poll around your office and you will be surprised at how many people have not prepared a will.
Planning ahead for what will happen if you die should be just as important as planning ahead for any other major life event.
A typical will spells out some basic directions for what is to happen upon our death, such as who the administrator (executor) of the estate will be, who the desired beneficiaries are, how the assets are to be divided among them and if there are minor children, who will be asked to become their guardian.
Even appointing the administrator of an estate can devastate a family. If there is no will and therefore no one has been appointed to be the executor, the probate court will appoint a person to serve as the administrator.
The possible problem here is that anyone with an interest in the estate, including creditors, could file a claim to be appointed the administrator. That means that in theory, a nonfamily member could be in the race to manage the estate’s affairs estate.
In Nevada, if you die without a will (intestate), the Nevada Intestate Laws will take control. According to Nevada Intestate Laws, here’s what happens when you die with:
■ Children but no spouse, parents or siblings – children inherit everything.
■ Spouse but no children, parents or siblings – spouse inherits everything.
■ Parents but no children, spouse or siblings – parents inherit everything.
■ Siblings but no children, spouse or parents – siblings inherit everything
■ A spouse and children – spouse inherits all of your community property and one-half or one-third of your separate property, and children inherit one-half or two-thirds of your separate property.
■ A spouse and parents – spouse inherits all of your community property and one-half of your separate property, and parents inherit one-half of your separate property.
■ A spouse and siblings, but no parents – spouse inherits all of your community property and one-half of your separate property, and siblings inherit one-half of your separate property.
But these rules only address what happens to the estate assets held in your name. These rules do not address what happens to assets such as life insurance policies, individual retirement accounts, 401(k) or other retirement accounts and assets held in joint tenancy with right of survivorship. These assets will pass to the designated beneficiary or the surviving co-owner of the asset.
So, here are some things to consider if you lack a will:
1. Meet with an attorney and have a will prepared. If you don’t have one prepared, you are creating a problem that your surviving family will have to deal with.
2. Get a living trust. Wills direct only the disposition of your estate to your desired beneficiaries. Unfortunately, they do nothing to avoid probate. Probate can be expensive and time consuming for your family. A simple living trust that has been properly funded will allow your assets to transfer to your desired beneficiaries without probate.
3. Review who you have designated as beneficiaries of life insurance policies and retirement plans. Also, confirm that personal and real estate is titled to accomplish your wishes.
These steps will not insure that everything will go smoothly in the administration of your estate. But failure to take these steps will almost certainly result in frustration and additional cost to your surviving family.
Chris Wilcox is the taxation and transition partner and co-founder of JW Advisors, a Las Vegas-based consulting firm specializing in business financial consulting, litigation support and forensic accounting, assurance and tax services. To reach him, call 702-304-0405.