Roughly, there are 6 major reasons people set-up trusts:

1) Avoiding Probate is the reason mosts trusts are set-up. Wills are only given effect through a court proceeding called probate and this process usually take at least six months and sometimes years and usually costs about 3% of the dead person's assets. 

2) Controlling how or at what age your beneficiaries get their assets. Most of our clients are horrified at the thought of their 18 year old kid suddenly having control of a half million dollar inheritance. 

3) Protecting their Beneficiaries' Inheritance. Traditionally American law allows you to condition a gift to anyone upon that person receiving it free of their creditors.

4) You can plan for your own disability. You can provide for your children, either on their own judgment or with letters or affidavits from doctors, to take over your financial affairs when you are unable to, without having to set up an expensive guardianship process.

The trusts we do at Reed & Mansfield and which are typically paid for by Legal Plans can accomplish these first 4 goals. 

5) Protecting your own assets from creditors. This has traditionally been prohibed by American law. Some states, including Nevada, allow an asset protection trust. This type of trust is very complicated and you cannot be your own trustee. We don't offer this trust. Figure on spending thousands of dollars to set it up and hundreds if not thousands of dollars annually to maintain it. 

6) Minimizing Federal Estate Taxes. As of February, 2025, US Bank said this about federal eatate taxes: "The estate tax exemption amount, currently $13.99 million per individual, is scheduled to “sunset” at the end of 2025 and revert to pre-TCJA levels, which is an estimated $7 million per individual (adjusted for inflation). The maximum federal estate tax rate will remain 40%." Couples or individuals having less than these amounts of assets don't have to worry about estate planning to minimize federal estate taxes. We will have to see what Congress does before the end of 2025 to know the maximum estate amount that escapes federal estate tax. We don't offer estate tax planning. 

In addition to these major reasons for setting up a trust, real estate in Nevada which passes under a trust or a will to someone other than a spouse or child avoids the real estate transfer tax. This goal is accomplished  by the trusts we do. 

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. Professional trustees such as brokerage companies typically charge 1-2% of assets annually, but are worthwhile in many cases, especially as they provide investment advice, and because they can save a family member from having to deal with a difficult beneficiary.  

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.

Two problems for couples in estate planning are:

  1. Wife (or it could be Husband) has 2 kids from a previous marriage. Wife is concerned that if she dies first, Husband will either spend all of their money—if all of it is in a common trust—or Husband will re-marry or acquire new girlfriend and leave the trust money to her and thus Wife’s kids will never inherit from Wife.

    One solution to this concern, especially if Wife has some separate money of her own, is for the couple to set up two trusts. One would be the typical couples’ trust where after the first one dies, the survivor owns it all, and when they are both gone, what is left would go to children or other relatives. The second Trust would just be Wife’s trust and upon her death, her children would receive the money in Wife’s trust. This solution should have the Wife and Husband agree on the division between the two Trusts and ideally Husband should sign Wife’s separate Trust stating that he agrees the property is Wife’s trust is her separate property. Ideally, H should get his own attorney to review this separation.

    Or we could have a situation where both Husband and Wife have separate property and children from a prior marriage. In this case we could to three trusts: on with the Husband’s separate property; one with the Wife’s separate property and one with their common property. In such a case each of them would sign on the other’s trust stating that, for example, Wife agrees that the property in Husband’s Trust as spelled out in the Trust is his separate property and visa versa.
     
  2. Even if Wife and Husband do NOT have any children from a prior marriage, Wife might worry that if she dies first, Husband will re-marry or get into a relationship with a younger woman and their children will not receive an inheritance or will receive a much smaller inheritance that Wife would wish. In such a case the couple could divide their assets into two Trusts and both would be Co-Trustees of each Trust. While both are alive, they can use funds in either Trust for themselves. But after the first one of the dies, all of the assets in one of the Trust would be given to their children. After the first of them dies, the survivor would continue to own all of the assets in the other trust. Of course, for this option to be a good one, the couple would need to have enough money to allow both for a gift to their children when the first one dies AND for the support of the survivor.
     

Costs of multiple Trusts:

When we do a single trust for one or two people, we charge $1,000 plus notary fees and recording fee and this includes putting one item of real estate into the trust, doing one or two pour-over Wills, and doing health care powers of attorney and directives to physicians. This fee also includes talking to our clients about their estate plan desires. But a second or third Trust is just a single document and we have already discussed with our clients their estate plan desires. Therefore, we only charge $400 for an additional trust to address concerns such as those set forth above.

Many legal plans that pay for a Trust will also pay for an additional Trust.