Avoiding Probate with a Set Aside Petition
Probate is the legal procedure your estate goes through after a loved one passes away (the “decedent”). The court will oversee the process of appointing someone to be in charge (known as the “personal representative”). The personal representative ensures creditors of the decedent who file timely claims are paid and supervise the distribution of assets of the estate to the proper heirs or beneficiaries.
Pros and Cons
Probate has several advantages including the ability to challenge the Last Will and Testament if you believe the decedent lacked capacity at the time of its execution or if the document was the result of undue influence. This process is known as a “will contest”. In addition, probate prevents creditors who do not file a claim within the time provided in a creditor’s notice to pursue recovery of the debt.
The personal representative will then have the opportunity to challenge any creditors if a claim is disputed. Unfortunately, probate administration is a slow process that will delay the transfer of assets to your beneficiaries. In addition, probate is a matter of public record, so a will is open to public scrutiny.
Non-probate Assets
Non-probate assets are not required to be administered through probate. This category of assets avoids probate because they have a beneficiary designation. For example, Payable on Death Bank Accounts, life insurance, IRAs, 401(k)s, and annuities are not subject to probate administration if they contain beneficiary designations.
Set Aside
Probate may not be required in certain circumstances. If the value of the decedent’s estate does not exceed $100,000, the estate may be set aside without administration. In determining the value of the estate, the court will consider the fair market value of the decedent’s assets at the date of death less all enforceable liens and encumbrances. A petition seeking the set aside of assets cannot be filed until more than 30 days after the decedent’s death.
Creditors
Even though the assets which are set aside are not subject to probate administration, this does not necessarily permit the estate to be distributed directly to the beneficiaries or heirs. Instead, the estate is set aside first for the payment of certain expenses in the following order: the payment of the petitioner’s attorney’s fees and costs incurred relating to filing the petition; then, to the payment of funeral expenses, expenses of last illness, money owed to the Department of Health and Human Services as a result of payment of benefits for Medicaid; and then, to the payment of any other creditors.
However, if there is a surviving spouse and/or minor children, the Court has the discretion to set aside the entire estate to the spouse or children without the payment of any creditors “except as the court finds necessary to prevent a manifest injustice”. This latter situation may arise when the value of the estate, when combined with the value of non-probate transfers for the benefit of the surviving spouse and/or minor children exceeds $100,000.
Heirs and Beneficiaries
In the event there is no surviving spouse and/or minor children, then the court will order the assets set aside in accordance with the beneficiaries designated in the decedent’s will. In the event a will has not been executed, then the Nevada laws of intestate succession control how the assets are distributed to the heirs.
The disadvantage of Set Aside
The set-aside procedure can be used even when there is real estate that was owned by the Decedent. Once the set aside is completed, a certified copy of the order approving the set aside is recorded with the Clark County Recorder’s Office and this has the effect of transferring the property to the heirs or beneficiaries.
For example, a home may be worth $300,000 at the date of death but if the decedent did not pay down the mortgage principal significantly and the outstanding balance was $225,000, then set aside would be available. However, this may not always be the best way to address real estate.
If you are interested in learning more about when a set aside may not be the best way to handle real estate owned by a decedent, please don’t hesitate to contact us at (702) 798-4955 or info@wordpress-577196-3860567.cloudwaysapps.com.
For more than 30 years, Attorney Lee A. Drizin has practiced in the areas of estate planning, probate, trusts, guardianship, and real estate matters representing clients throughout the state of Nevada.
Drizin Law is providing this information for educational purposes only. It should not be construed as legal advice or a legal opinion as to any specific facts or circumstances. This information is based on general principles of Nevada law at the time it was created and you should be aware laws frequently change. Moreover, the laws affecting you may differ depending on the circumstances. You should consult with a qualified attorney in your own state or jurisdiction concerning your particular situation. Review of this information does not create an attorney-client relationship.
