1. The “probate estate” consists of all assets belonging to the decedent which do not pass to other persons or entities by operation of law (such as assets held in joint tenancy or in a living trust) or by operation of contract (such as life insurance).
  2. The female forms, “executrix” and “administratrix”, are sometimes used in court documents, but I hope that no one is offended if we do not use them in this memo.
  3. In legal terminology, the words “property” and “assets” are used interchangeably. Real property outside of Nevada is not subject to the jurisdiction of the Nevada courts, and local legal counsel should be retained where such real property is located.
  4. Nevada law defines “devisees” to refer to beneficiaries under the decedent’s Will whether they receive real and/or personal property. “Heirs” are those entitled to a decedent’s assets to the extent not distributed under the terms of a valid Will under the state’s intestate succession statutes [NRS Chapter 134].
  5. See section 3 of this memo.
  6. See subsection 3.5 regarding court approval for sales.
  7. Funeral costs and the expenses of the decedent’s last illness can be paid without prior court authorization IF there are clearly enough funds to meet all of the estate’s obligations, the creditors’ claim period has expired, and the claimant has filed a verified claim with the probate court.
  8. Federal taxes are discussed in section 4 of this memo.
  9. The standard for making investments is discussed in subsection 3.4 of this memo.
  10. Asset management and other aspects of estate administration are discussed more completely in section 3 of this memo.
  11. Accountings are discussed further in section 5 of this memo.
  12. The Nevada legislature has indicated a desire to have all probate cases closed within six months. Unfortunately, if federal estate taxes are involved, the IRS has at least 18 months from the date of the decedent’s death or nine months from the filing of the federal estate tax return (IRS form 709) to evaluate the estate tax return. For that reason, where an estate tax return is required, it is common for the estate to be open for at least 18 months or even longer.
  13. Accountings are discussed further in section 5 of this memo.
  14. Such as national and state banks, federal savings banks (savings and loan associations), credit unions, thrift companies, etc.
  15. The “net value” is the gross value of the asset less the value of any known liens or encumbrances, including mortgages and other liabilities. The inventory should reflect the net value and how it was calculated.
  16. “Principal” refers to all assets, such as a bank account, stock, car, home, and the like. “Income” refers to revenues generated from the principal, including interest, dividends, rent, royalties, and the like. Income also includes compensation for the decedent’s personal services, such as salary and bonuses. Some payments may include income and principal, such as a mortgage payment which represents both interest and principal.
  17. If the estate is valued at less than $200,000 AND the court allows Summary Administration, the creditors’ claim period is 60 days.
  18. The compensation of an executor or administrator is set by law at 4% of the first $15,000, 3% of the next $85,000, and 2% of the balance. It is called a “commission” in the statute. If you have rendered extraordinary services to the estate, you may be entitled to receive additional compensation.
  19. Attorneys’ fees are set by agreement between the personal representative (you) and the attorneys (us). After a fee arrangement is agreed upon, you are entitled to a written fee disclosure statement. Nevada law does not set a percentage fee for attorneys, and it is usually less expensive if you hire an attorney or firm that bills by the hour rather than charging a percentage fee.
  20. Since the estate’s assets are valued at their net value, a secured creditor’s interest is not generally affected by estate administration.
  21. For example, IRS Publications 559 and 950. These publications explain the duties of an executor, but, whether or not you are appointed as the executor for the settlor’s estate, a trustee may be considered the executor for federal tax purposes.
  22. Internal Revenue Code § 2010(c) provides for an “applicable exclusion”, which is the cumulative amount that can pass free of estate tax. This is sometimes called “the exemption equivalent of the Unified Credit”. The applicable exclusion for estate tax has been: $625,000 in 1998; $650,000 in 1999; $675,000 in 2000; $1 million in 2002 and 2003; $1.5 million in 2004 and 2005; $2 million in2006, 2007, and 2008, $3.5 million in 2009; $5 million in 2010; and $5 million in 2011 and beyond (adjusted annually for inflation). The applicable exclusion was adjusted to $5.12 million in 2012, and $5.25 million in 2013. (For persons dying in 2010, the executor can elect out of the estate tax by electing to accept certain carryover basis rules.)
  23. For federal transfer-tax purposes, “executor” usually means the court-appointed personal representative for purposes of the decedent’s probate estate, but the definition includes each person in possession of the decedent’s assets, which means that the trustee of a decedent’s revocable trust and recipients of other nonprobate transfers can be considered an executor for federal tax law.
  24. The applicable exclusion for gift tax purposes was the same as that for estate tax purposes until 2004, when the applicable gift-tax exclusion for was frozen at $1,000,000, which it remained until 2011 when the gift tax exclusion and estate tax exclusion were re-unified at $5 million (subject to cost-of-living adjustments for 2012 and beyond). The applicable exclusion was adjusted to $5.12 million in 2012 and $5.25 million in 2013.
  25. The “estate” for federal estate tax purposes includes the probate estate, plus most assets passing from the decedent by operation of law or contract, such as joint tenancy assets and life insurance. We can help you determine what assets are to be considered and whether or not an estate tax return is required.
  26. The maximum rate imposed for federal estate tax purposes was, is, and will be: 50% in 2002; 49% in 2003; 48% in 2004; 47% in 2005; 46% in 2006; 45% in 2007, 2008, and 2009; 35% in 2010, 2011, and 2012; and 40% in 2013 and beyond.
  27. The GST tax is imposed at the highest rate imposed for federal estate tax purposes, which is shown in note 26; however, a GST tax rate of zero (0%) applies for 2010. Starting in 2004, the GST exemption has been the same as the applicable exclusion for the estate tax, which is shown in note 22.
  28. For IRS forms: http://www.irs.gov/formspubs/index.html. If you download the IRS forms in Adobe Acrobat format (.pdf files), the printed files will look just like the originals. The Adobe Acrobat reader program is required for this, but it is available free at http://www.adobe.com/products/acrobat/readstep.html.
  29. In some cases, one or more beneficiaries or creditors may be willing to accept a distribution of the estate’s “receivable”.
  30. If you misspend estate funds, you are not only breaching your fiduciary duty and subjecting yourself to civil liability, you may also be committing a crime, such as “conversion” or “embezzlement”. In addition, debts arising from a breach of fiduciary duty may not be dischargeable in a bankruptcy proceeding.