Las Vegas Trusts and Estates

Inherited Property Can Become a Major Problem

Inheriting commercial real estate can turn into a major financial expense should pollution be discovered onsite.

Two heirs to commercial real estate property discovered their windfalls were actually financial nightmares years after the estate was settled. As detailed by the New York Times in the article "Contaminated Property Makes for Costly Inheritance" the people learned that despite not being responsible for the pollution, they were responsible for the cleanup.

In one case a woman inherited a portion of the property from her father. When she and the other owners went to sell the property an environmental report revealed that previous tenants had left behind pollution that would cost millions to clean up.

In the other case a woman inherited property from her father through a trust. Some 25 years after the trust sold the property the woman was named in a lawsuit that claimed pollutants on the property had resulted in illness. The woman won the legal case, but it cost her $500,000 in legal fees.

An important take away from these stories is that neither was responsible for the pollution on the property, but that does not matter. When property is discovered to be polluted previous owners can often be sued and held liable. Plaintiffs usually go after the previous owner who has the most money.

What this means for heirs is that if inherited property could be contaminated, it is often a good idea to disclaim the inheritance as it could cost more than it is worth. However, disclaiming inherited property must be done quickly so heirs should perform due diligence quickly.

Reference: New York Times (Feb. 19, 2016) "Contaminated Property Makes for Costly Inheritance"

Avoiding Probate When Real Estate Is in the Mix

What has been missing for so long is a means of transferring real estate in a simple, probate-free process. In about half the states, that hole has been plugged.

Probate can be messy, time-consuming and costly. Consequently, many people want to avoid it for their own estates.

Unfortunately, probate is unavoidable if you own real estate and have not done any estate planning.

If you have done estate planning, however, then there are three common ways to transfer real estate without probate.

• Joint Tenancy - This is one of the most common ways that people seek to avoid probate. When someone is made a joint tenant of any real estate, that person automatically takes possession of the property after any other owners pass away. Most attorneys counsel against this, however, as the property can often be attached by any joint tenant's creditors.
• Trusts - Trusts do not go through probate, making them an excellent way to transfer real estate. However, many people do not need a trust for anything else so the expense of getting one is not always worth it.
• Transfer on Death Deed - As AZcentral points out in a recent article, titled "Probate-free real-estate deeds spread across U.S.," transfer on death deeds are another way to avoid having real estate pass through probate. However, they must be properly recorded during life to be effective upon death. Note: these deeds are only available in about half the states.

If you own real estate and would like to avoid probate upon postmortem transfer, then contact an experienced estate planning attorney to discuss these options and determine which is best for you.

Reference: AZcentral (April 13, 2015) "Probate-free real-estate deeds spread across U.S."

Using Trust Funds to Buy a Home in Las Vegas, Nevada

As interest rates rise, more children of high-net-worth families are likely to tap into their trust funds to buy a home.

Buying a home means chaining yourself to a mortgage and the financial institution holding it. This arrangement is oftentimes considered a necessary evil of adulthood. But then again, when there are trust funds available to help, buying a home might not be such a necessary evil at all.

Under the right circumstances, trusts may be tapped to assist you and your loved ones, even when it comes to bypassing the bankers and buying a home in Southern Nevada. This is more and more useful as interest rates rise.

Whether you are the beneficiary of a trust or just out to settle one, you will want to read a recent article in The Wall Street Journal titled “Tapping the Trusty Trust Fund to Buy a House.”

Essentially, a trust can operate in much the same manner as a bank, but without much of the onerous rates, rules, liens and stress. As a trust beneficiary, you can approach the trust for a “mortgage” in the form of a loan from the trust and the trustee can even grant the loan at little or no interest. Sometimes, you can even ask for a full distribution from the trust to finance the whole transaction.

In any event, your access to the trust funds is up to the trustee as guided by the rules of the trust itself. You see, some trusts are not designed to permit this for a variety of reasons, some known only to the person who established the trust. In addition, the trustee may have the interests of other trust beneficiaries to consider. Nevertheless, if there are no such limitations, then having access to trust funds can be a great blessing and provide you with an opportunity to live in paradise.

Depending on the language of the trust and your unique circumstance, the trust itself may be engineered specifically to own the house. Properly structured, ownership by the trust can provide important asset protection from potential divorces, lawsuits and bankruptcies. Alternatively, Qualified Personal Residence Trusts (QPRTs) and Intentionally Defective Grantor Trusts (IDGTs) can be extremely valuable in this regard, even though normally we talk about them in the context of transferring the family home.

If you are ready to create a trust for your beneficiaries, or perhaps are looking for creative ways to help your loved ones buy their first home, these are some options to explore in Nevada.

Reference: The Wall Street Journal (September 19, 2013) “Tapping the Trusty Trust Fund to Buy a House.”