Who can be the executor or personal representative in probate in Nevada?

The person with power to handle an estate is called an executor (if there is a will), administrator (if no will or if the person appointed by the court is not named in the will), or personal representative (whether or not there is a will).

A person qualified to act as personal representative must be eighteen years old, never convicted of a felony (although there may be some exceptions), and if not appointed by a will, must also be a Nevada resident.

If a named executor has passed away or does not want to serve, the court will look to Nevada law to appoint someone else in order of priority. This includes the surviving spouse, children, parents, siblings, grandchildren, any family member entitled to a distribution from the estate, the public administrator, creditors, family members not entitled to distributions from the estate, and finally any person who is qualified.

Does the executor get paid from the estate?

If the will provides specific instructions about the executor receiving payment, the executor will get paid the amount stated in the will, or he or she can decline to receive payment under the will. Instead, the executor can choose to receive payment allowed by law.

If the will does not say anything about compensation, or if there is no will, Nevada law allows the executor or personal representative to receive payment based on the size of the estate. The fee (as of 2018) is 4% of the first $15,000 of the estate; 3% of the next $85,000; and 2% of any amount over $100,000.

These fees are paid in addition to any amount that the executor or personal representative inherits from the estate, if he or she is a beneficiary. The personal representative’s pay is an administrative expense of the estate, and therefore it is paid before most other debts and payments to beneficiaries.

What does the executor or personal representative do in a probate case?

The personal representative must inventory (and have appraised), collect, protect, maintain, and manage the assets so that they can be used to pay the decedent’s debts and distribute to the beneficiaries with the court’s approval.

The personal representative has a duty of good faith to the estate, which means he or she cannot spend the money or distribute it to heirs without a court order allowing it. He or she should file any required tax returns and notify the attorney for the estate of additional assets are discovered during probate that were not previously reported.

How do I know if property is owned by tenants in common?

Probate is required when property is owned by two or more people who have not specified that they own the property in “joint tenancy,” “joint tenancy with a right of survivorship,” or “community property with a right of survivorship.” Therefore, knowing how property is titled is an important step in determining whether property title can only be changed through the probate process.

Common title statements for tenancies in common are “[name], an individual man,” “[name], a single woman,” “John and Jane Doe as tenants in common,” and “John and Jane Doe, husband and wife.”

Property and bank accounts can be titled as tenants in common.

What percentage of property do I own as a joint tenant?

Joint tenancy may only be owned in equal shares. For example, if there are two joint tenants, they each own 50%, and if three, they each own 33 1/3%. When three people own a property in joint tenancy, and one person dies, the two remaining owners increase their ownership from 33 1/3% each to 50% each.

Will I be taxed on my inheritance in Nevada?

There are two types of taxes possible on an inheritance, but they are rare. The two types are inheritance tax (sometimes called death taxes or estate taxes) and income tax.

Nevada does not have an inheritance tax. The federal government (IRS) may impose an inheritance tax is the value of the deceased person’s entire estate is over $5.5 million (as of 2018). Otherwise, no tax will be due. If there is a tax, the portion of tax that results from the property you inherit will usually be payable from your share. This is a complicated topic that requires the assistance of an attorney and tax accountant.

For income tax, this is usually an issue in three situations: inherited retirement accounts, real estate, and inherited businesses.

For real estate, the price paid plus the amount invested to improve the property equals the “basis” in the property. You only pay income tax on property you inherit if it is sold for more than the fair market value at the date of the deceased’s death. This is because you inherit at a “stepped up basis.” For example, if your mom purchased real estate for $50,000 and made $50,000 improvements, her basis is $100,000. At her death, the property is worth $200,000. You inherit it and the government treats you as having a basis of $200,000. If, six months after her death, you sell for $250,000, you have potential income tax on $50,000. Without stepped up basis, you would have tax on $150,000 (sale price of 250 minus your mom’s basis of 100). There are many exceptions to paying income tax on property, so you will want to work with an experienced attorney and tax accountant when selling inherited property.

You can potentially have income tax liability on joint tenancy property when one tenant passes away. If you own a home in joint tenancy with your mother, you inherit your mother 50% share when she does. Your mom’s share gets a stepped up basis, but your share does not. For example, assume you purchased the property for $100,000. You and your mom have a basis of $50,000 each. If the property is worth $200,000 at the time of her death, the stepped up basis on her share is $100,000. Your basis on your half is still $50,000, for a total basis of $150,000. If you sell for $200,000, you may owe income tax on $50,000. Again, this has exceptions; consult your attorney or tax accountant.

Trust property and property titled in community property get a “double step up” in basis, just like the first example.

Does community property have to go through probate? What is community property?

Nevada is one of a handful of states that has community property laws that impact married couples. Community property laws say that property and assets owned by a married couple belong to each spouse equally, unless they have a written agreement like a prenuptial agreement that states otherwise or another exception applies (for example, when a spouse inherits property or money during the marriage, it is separate property unless he or she combines it with community property).

Community property must go through probate unless it is titled “Spouse 1 and Spouse 2, community property with a right of survivorship,” or is titled in a joint trust. Title that simply says, “Spouse 1 and Spouse 2, community property” must go through probate to change title into the name of the surviving spouse.

There is a trust but the assets were not transferred into it. Can probate be avoided?

A trust is only valid if it is “funded,” or in other words, has assets in it. Funding a trust means changing title of property to show the trust as owner, such as “John Doe, Trustee of the Doe Family Trust.” For many reasons, a trust may be drafted and signed but not funded. For example, a person may make a trust, fund it with their home, but when they refinance the mortgage on that home, the new lender will require that the trust name be removed temporarily. Then the owner dies, and the trust is not funded with the home.

Assets outside of a trust must be probated. There is a small exception in Nevada that can avoid this issue. If the trust has an “Exhibit A” or other attachment that specifically lists the trust maker’s assets, that list can be used to get an order from the probate court that puts the assets in trust as they were intended to be. This still requires a court proceeding, but it is much less expensive and complicated than a full probate case that would otherwise be required.