Key Takeaways

• Dying without a will (intestate) subjects the estate distribution to state laws, which prioritize the decedent’s closest relatives, namely spouse and children, but can lead to unintended outcomes for non-traditional family members or partners.
• Probate courts oversee the administration of estates without wills, appointing administrators to manage and distribute the decedent’s assets according to state laws, which may vary significantly depending on the domicile and location of assets.
• Non-probate assets, including life insurance, jointly held properties, and accounts with designated beneficiaries, bypass probate and can be directly transferred to beneficiaries, an important consideration in estate planning to avoid intestacy.

The Consequences of Dying Intestate

Dying intestate triggers the use of state’s intestacy laws, which often favor the decedent’s spouse and children. Intestate succession laws dictate how a deceased person’s assets are distributed among heirs such as the spouse, children, parents, or siblings. If there are no children, the surviving spouse typically receives all the property in many cases. This is a common situation in inheritance laws.

However, intestate succession can lead to unexpected and often unsettling outcomes. Stepchildren, long-term partners, and individuals in a common law marriage often do not automatically inherit under intestate laws without additional legal proof or proceedings. This can result in family disputes, uncertainty for loved ones, and the possibility of unintended beneficiaries receiving the estate.

Understanding Intestacy

To understand the impact of intestacy, we first need to understand what it means. Intestacy occurs when a person passes away without making a valid will. In the absence of a will, state intestacy laws provide the framework for determining who inherits a person’s assets, which generally prioritizes relatives.

Assets are typically distributed in shares to the decedent’s family members such as a surviving spouse, children, and other relatives. However, the estate may pass to the state if no relatives are located. Furthermore, if the deceased owned real estate in different states, the property is subject to the intestacy laws of the state where it is located. Survivors may even need to outlive the decedent by a certain period to inherit.

State Laws and Variations

Intestacy laws can significantly differ from one state to another, affecting how an estate is divided and distributed after someone’s death without a will. For example, the decedent’s state of domicile is the primary jurisdiction that governs the distribution of personal property under intestacy laws, regardless of where assets are located.

When an individual owns property in multiple states, each state’s intestacy laws apply locally. This can lead to different rules for real estate, intangible personal property, and tangible personal property. Additionally, community property states differ from separate property states in terms of asset distribution.

In the absence of legal heirs, the estate might escheat to the state, meaning the state inherits the assets.

The Role of Probate Court in Intestate Cases

The probate court plays a fundamental role in handling intestate cases. When a person dies without a will, the probate court steps in to process and review the estate assets of the deceased person. In the absence of a last will, the probate court appoints an administrator, providing them with ‘letters of administration’ to act on behalf of the estate.

The probate court supervises the administrator to ensure the proper settlement of debts and distribution of the remaining assets to the legal heirs. The entire process is conducted in accordance with state intestacy laws, ensuring that the decedent’s estate is handled appropriately.

Appointment of Personal Representative

If there is no will, the probate court will appoint a personal representative to oversee the estate. This individual will be responsible for managing and distributing the assets of the deceased. State laws set out a list of eligible people for this role, and the court appoints someone based on the priority list when there is no will specifying an executor. Often, the surviving spouse is the first in line to serve as the personal representative or administrator of the estate.

The appointed administrator oversees the estate, identifies and collects the deceased’s assets, pays off debts and taxes, and distributes the remaining assets to legal heirs. Legal support services assist the personal representative through various tasks including contacting heirs, inventorying assets, paying taxes, and distributing property.

Distribution of Assets

After debts are settled, the probate court directs the appointed administrator to distribute the remaining assets to beneficiaries as per state law. The distribution of assets follows a set hierarchy, prioritizing the surviving spouse, followed by children, and then other relatives.

In probate proceedings for intestate estates, solely owned properties without a named beneficiary are distributed according to state’s intestate succession laws. State laws create a distribution framework for intestate succession, establishing a hierarchical structure of beneficiaries that typically begins with the surviving spouse and direct descendants.

However, if the deceased person leaves no will and has no identifiable heirs, the remaining assets may revert to the state, which is what happens if you die without proper arrangements in place.

Non-Probate Assets and Their Impact on Intestate Succession

In contrast to probate assets, non-probate assets do not pass through probate court when a person dies without a will. These assets include life insurance policies, banking accounts with named beneficiaries, and assets in a living trust. Non-probate assets that bypass probate when someone dies intestate include trusts, life insurance, financial accounts, joint tenancies, and assets with payable on death or transfer on death designations.

When assets have designated beneficiaries, they bypass the probate process and are directly transferred to those beneficiaries without the need for a will. This means that revocable trusts, which can be altered or revoked by the grantor during their lifetime, and irrevocable trusts, which can’t be changed and remove assets from the grantor’s taxable estate, can both help avoid probate.

Life Insurance Policies

Life insurance proceeds bypass the probate process and are directly distributed to the designated beneficiaries. The money paid out through life insurance death benefits is generally not considered taxable income for the beneficiaries. To claim the death benefit, beneficiaries must submit a request to the insurance company along with the necessary documentation such as the death certificate and policy number.

Beneficiaries can choose to receive the life insurance death benefit as a lump sum, annuity payments, or installment payments. The policyholder has the freedom to specify who the beneficiaries are and may include individuals, trusts, charities, or businesses in their life insurance policies. Beneficiaries can be altered, and the policyholder may dictate what percentage of the death benefit goes to each beneficiary. However, any payouts from an Accelerated Death Benefit or remaining balances on loans against the policy’s cash value may decrease the final payout of the death benefit.

Joint Tenancy Properties

Joint tenancy with right of survivorship is another type of non-probate asset. Joint tenants with Right of Survivorship (JTWROS) must be specified when registering or transferring a land title to establish this right. The grantor is the one who transfers a property title and grants the right of survivorship, either by purchasing property jointly or by using a Survivorship Deed to add another joint tenant.

The right of survivorship ensures that upon the death of one owner, their interest in the property automatically passes to the surviving joint owner(s), bypassing probate. Joint tenancy prevents individual owners from transferring their interest in the property to someone else without disrupting the joint tenancy.

The right of survivorship generally applies to residential or commercial properties, including single-family houses, townhouses, duplexes, condos, apartments, pieces of land, and farms.

Intestate Succession and Family Dynamics

Intestate succession laws, including intestate succession law specifics in each state, can significantly impact family dynamics. Here are some key points to consider:

• In states that fully recognize domestic partnerships, a registered domestic partner inherits the same as a married surviving spouse.
• However, even in cases of estrangement, intestate succession laws can lead to a surviving spouse inheriting the entire estate if there are no children.
• In community property states, the surviving spouse may inherit a portion of the estate.

These laws can have complex implications, so it’s important to consult with a legal professional to understand how they apply to your specific situation.

Intestate succession laws incorporate ‘right of representation,’ allowing children or grandchildren to inherit in place of a deceased heir. However, the rules of intestate succession consider various groups differently, including adopted children, stepchildren, and children born through artificial insemination. If someone dies without a will and has no spouse, the children, including those who may be estranged, will receive the estate. Estrangement does not affect the legal right of an estranged spouse or child to inherit from the deceased person’s estate under intestate succession.

Spouses and Children

Surviving spouses and children are usually the first in line to inherit under intestate succession laws. These laws typically grant the first priority of asset distribution to the surviving spouse, followed by the children and other close relatives. A surviving spouse is defined as the individual who was legally married to the deceased person at the time of death. Furthermore, registered domestic partners inherit the same as a married surviving spouse in states that recognize such partnerships.

Other Relatives and Unmarried Partners

Intestate succession laws generally do not provide inheritance rights to unmarried partners, friends, and charities, as they prioritize legal marriages and blood relationships. However, common-law spouses may inherit if they can prove their common-law relationship in states that acknowledge it, and registered domestic partners can inherit similarly to married spouses in states that recognize domestic partnerships.

Yet, without a will or legal adoption, stepchildren are generally not recognized as heirs under state intestacy laws.

Estate Planning Solutions for Avoiding Intestacy

To avoid the challenges of intestacy, it’s essential to engage in estate planning. Estate planning solutions, such as drafting a will and establishing trusts, can help prevent intestacy and ensure personal wishes are fulfilled regarding asset distribution.

Drafting a will allows individuals to determine the distribution of their assets post-mortem, including naming guardians for minor children. It is essential to regularly review and update a will to reflect changes such as marriage, divorce, birth of children, or a significant shift in financial status, ensuring the document accurately represents current wishes.

Drafting a Will

Drafting a will is a critical part of estate planning. A will ensures personal wishes are fulfilled regarding asset distribution, such as who should inherit property or money, and appointing guardians for any minor children. However, adding someone to an account for assistance with management can inadvertently transform probate assets into non-probate ones, thus diverting them from the intended beneficiaries outlined in the will.

When property is held in joint tenancy with right of survivorship, it bypasses the will’s instructions and is transferred directly to the surviving joint tenant, which may not align with the decedent’s desired asset distribution. To ensure assets are distributed according to the will, it is advisable to:

• Create agency accounts, which permit manageability without affecting their classification as probate assets.
• Detail the payment sources for any debts and estate taxes in the will.
• Appoint an executor to administer the estate.

Establishing Trusts

Establishing a trust is another effective solution to avoid intestacy. Trusts can be used to:

• Protect and preserve assets
• Offer a secure way to manage an estate for both current needs and future generations
• Allow for customization and control over the distribution of wealth
• Enable individuals to dictate the terms of asset transfer

Trusts can help minimize federal or state taxes, providing a tax-efficient way to transfer wealth to beneficiaries. For instance, if a life insurance policyholder designates a minor as a beneficiary, a trust may be needed to manage the financial payout until the minor comes of age, avoiding unwanted outcomes such as a minor receiving proceeds outright at age 18.

Legal Support from Ascent Law

Planning your estate can be complex and overwhelming, which is why it’s helpful to have experienced legal support. Ascent Law, an estate planning attorney, specializes in providing legal services for estate planning, addressing the complexities involved in creating wills, trusts, and other estate documents. The firm is dedicated to ensuring that each client’s unique concerns are met with tailored legal solutions, emphasizing a client-centered approach.

Ascent Law’s Services

Ascent Law provides a full spectrum of estate planning services, including:

• Drafting wills and trusts
• Creating powers of attorney and advance healthcare directives
• Assisting with probate and estate administration
• Establishing guardianships and conservatorships
• Planning for business succession

With over two decades of experience, Ascent Law offers a wide range of legal services, highlighting their commitment to addressing client concerns in estate planning and probate matters.

The firm guides personal representatives through responsibilities such as inventorying assets, paying taxes, and distributing property. They assist with the probate proceedings necessary for the orderly transfer of property in the individual’s name at the time of death. For small estates under Utah law, Ascent Law facilitates title transfer using Small Estate Affidavits to bypass probate. They also offer support in resolving disputes between beneficiaries and personal representatives during estate management.

Client-Centered Approach

Ascent Law ensures a personalized approach to legal services, promoting clear communication and understanding with clients. The firm is known for providing extensive support, ensuring clients are well-informed and assisting across varying legal challenges while addressing client-specific concerns.

The firm is dedicated to relieving client stress by adeptly handling the legal intricacies involved with the distribution of a deceased’s assets. Professionalism and heartfelt support during challenging times are among the positive feedback Ascent Law receives from clients.

Summary

To recap, dying without a will or dying intestate can have serious implications on how a deceased person’s assets are distributed. It can lead to family disputes, uncertainty for loved ones, and the possibility of unintended beneficiaries receiving the estate. However, with effective estate planning, including drafting a will and establishing trusts, individuals can ensure their assets are distributed according to their personal wishes.

The importance of having a valid will and undertaking estate planning cannot be overstated. It allows you to control the distribution of your assets, take care of your loved ones, and leave a lasting legacy. By taking steps now, you can provide peace of mind for yourself and your family, knowing that your final wishes will be honored.

Frequently Asked Questions

What are the disadvantages of dying without a will?

Dying without a will can lead to the distribution of assets according to state laws, leaving loved ones with unexpected tax bills and potential conflicts among heirs. It can also result in the need for court administration to unlock certain assets, complicating the process for the family.

Why people don t have a will?

Many people don’t have a will because they either don’t think they have enough assets, are unsure how to create one, want their next of kin to automatically receive everything, or believe they are too young to have one. Ultimately, some just don’t want to have a will.

What happens if you die and have no family?

In the event of no family, the county may provide a burial in a cemetery, often referred to as a “potter’s field.” In the absence of relatives, the estate may go to the state.

What percentage of Americans die without a will?

Roughly 68 percent of Americans pass away without a valid will, indicating a widespread lack of estate planning and legacy preparation. This underscores the importance of creating a will to ensure one’s wishes are carried out.

What does it mean to die intestate?

Dying intestate means passing away without a legal will, resulting in the state’s intestacy laws determining asset distribution.

A trust is the legal relationship between one person, the trustee, having an equitable ownership or management of certain property and another person, the beneficiary, owning the legal title to that property. The beneficiary is entitled to the performance of certain duties and the exercise of certain powers by the trustee, which performance may be enforced by a court of equity. Most trusts are founded by the persons (called trustors, settlors and/or donors) who execute a written declaration of trust which establishes the trust and spells out the terms and conditions upon which it will be conducted. The declaration also names the original trustee or trustees, successor trustees or means to choose future trustees. The assets of the trust are usually given to the trust by the creators, although assets may be added by others. During the life of the trust, profits and, sometimes, a portion of the principal, called the “corpus”, may be distributed to the beneficiaries, and the remainder to is usually distributed upon the occurrence of an event, such as the death of the creator. A trust may be created as an alternative to a will in order to avoid probate and higher taxation. There are many types of trusts, including “revocable trusts”, created to handle the trustors’ assets (with the trustor acting as initial trustee), also called a “living trust” or “inter vivo trust”, which only becomes irrevocable on the death of the first trustor; “irrevocable trust,” which cannot be changed at any time; “charitable remainder unitrust,” which provides for eventual guaranteed distribution of the corpus (assets) to charity, providing a substantial tax benefit. There are also “constructive” and “resulting” trusts declared by a court for equitable reasons over property held by someone for its owner. A “testamentary trust” can be created by a will to manage assets given to beneficiaries.

Types of Trusts

A trust is a legal document that can be created during a person’s lifetime and survive the person’s death. A trust can also be created by a will and formed after death. Once assets are put into the trust they belong to the trust itself (such as a bank account), not the trustee (person). They remain subject to the rules and instructions of the trust contract. In essence, a trust is a right to money or property, which is held in a fiduciary relationship by one person or bank for the benefit of another. The trustee is the one who holds title to the trust property, and the beneficiary is the person who receives the benefits of the trust.

Revocable Trusts

Revocable trusts are created during the lifetime of the trust-maker and can be altered, changed, modified or revoked entirely. Often called a living trust, these are trusts in which the trust-maker:
• Transfers the title of a property to a trust
• Serves as the initial trustee
• Has the ability to remove the property from the trust during his or her lifetime

Revocable trusts are extremely helpful in avoiding probate. If ownership of assets is transferred to a revocable trust during the lifetime of the trust-maker so that it is owned by the trust at the time of the trust-maker’s death, the assets will not be subject to probate. Although useful to avoid probate, a revocable trust is not an asset protection technique as assets transferred to the trust during the trust-maker’s lifetime will remain available to the trust-maker’s creditors. It does make it more somewhat more difficult for creditors to access these assets since the creditor must petition a court for an order to enable the creditor to get to the assets held in the trust. Typically, a revocable trust evolves into an irrevocable trust upon the death of the trust-maker.

Irrevocable Trust

An irrevocable trust is one that cannot be altered, changed, modified or revoked after its creation. Once a property is transferred to an irrevocable trust, no one, including the trust maker, can take the property out of the trust. It is possible to purchase survivorship life insurance, the benefits of which can be held by an irrevocable trust. This type of survivorship life insurance can be used for estate tax planning purposes in large estates; however, survivorship life insurance held in an irrevocable trust can have serious negative consequences.

Asset Protection Trust

An asset protection trust is a type of trust that is designed to protect a person’s assets from claims of future creditors. These types of trusts are often set up in countries outside of the United States, although the assets do not always need to be transferred to the foreign jurisdiction. The purpose of an asset protection trust is to insulate assets from creditor attack. These trusts are normally structured so that they are irrevocable for a term of years and so that the trust-maker is not a current beneficiary. An asset protection trust is normally structured so that the undistributed assets of the trust are returned to the trust-maker upon the termination of the trust provided there is no current risk of creditor attack, thus permitting the trust-maker to regain complete control over the formerly protected assets.

Charitable Trust

Charitable trusts are trusts which benefit a particular charity or the public in general. Typically charitable trusts are established as part of an estate plan to lower or avoid the imposition of estate and gift tax. A charitable remainder trust (CRT) funded during the grantor’s lifetime can be a financial planning tool, providing the trust-maker with valuable lifetime benefits. In addition to the financial benefits, there is the intangible benefit of rewarding the trust-maker’s altruism as charities usually immediately honor the donors who have named the charity as the beneficiary of a CRT.

Constructive Trust

A constructive trust is an implied trust. An implied trust is established by a court and is determined by certain facts and circumstances. The court may decide that, even though there was never a formal declaration of a trust, there was an intention on the part of the property owner that the property is used for a particular purpose or go to a particular person. While a person may take legal title to a property, equitable considerations sometimes require that the equitable title of such property really belongs to someone else.

Special Needs Trust

A special needs trust is one that is set up for a person who receives government benefits so as not to disqualify the beneficiary from such government benefits. This is completely legal and permitted under the Social Security rules provided that the disabled beneficiary cannot control the amount or the frequency of trust distributions and cannot revoke the trust. Ordinarily, when a person is receiving government benefits, an inheritance or receipt of a gift could reduce or eliminate the person’s eligibility for such benefits. By establishing a trust, which provides for luxuries or other benefits which otherwise could not be obtained by the beneficiary, the beneficiary can obtain the benefits from the trust without defeating his or her eligibility for government benefits. Usually, a special needs trust has a provision that terminates the trust in the event that it could be used to make the beneficiary ineligible for government benefits. Special needs have a specific legal definition and are defined as the requisites for maintaining the comfort and happiness of a disabled person when such requisites are not being provided by any public or private agency. Special needs can include medical and dental expenses, equipment, education, treatment, rehabilitation, eyeglasses, transportation (including vehicle purchase), maintenance, insurance (including payment of premiums of insurance on the life of the beneficiary), essential dietary needs, spending money, electronic and computer equipment, vacations, athletic contests, movies, trips, money with which to purchase gifts, payments for a companion, and other items to enhance self-esteem. The list is quite extensive. Parents of a disabled child can establish a special needs trust as part of their general estate plan and not worry that their child will be prevented from receiving benefits when they are not there to care for the child. Disabled persons who expect an inheritance or other large sum of money may establish a special needs trust themselves, provided that another person or entity is named as trustee.

Spendthrift Trust

A trust that is established for a beneficiary that does not allow the beneficiary to sell or pledge away interests in the trust is known as a spendthrift trust. It is protected from the beneficiaries’ creditors, until such time as the trust property is distributed out of the trust and given to the beneficiaries.

Tax By-Pass Trust

A tax by-pass trust is a type of trust that is created to allow one spouse to leave money to the other while limiting the amount of federal estate tax that would be payable on the death of the second spouse. While assets can pass to a spouse tax-free, when the surviving spouse dies, the remaining assets over and above the exempt limit would be taxable to the children of the couple, potentially at a rate of 55 percent. A tax by-pass trust avoids this situation and saves the children perhaps hundreds of thousands of dollars in federal taxes, depending upon the value of the estate.

Totten Trust

A Totten trust is one that is created during the lifetime of the grantor by depositing money into an account at a financial institution in his or her name as the trustee for another. This is a type of revocable trust in which the gift is not completed until the grantor’s death or an unequivocal act reflecting the gift during the grantor’s lifetime. An individual or an entity can be named as the beneficiary. Upon death, Totten trust assets avoid probate. A Totten trust is used primarily with accounts and securities in financial institutions such as savings accounts, bank accounts, and certificates of deposit. A Totten trust cannot be used with real property. It provides a safer method to pass assets on to family than using joint ownership.

To create a Totten trust, the title on the account should include identifying language, such as “In Trust For,” “Payable on Death To,” “As Trustee For,” or the identifying initials for each, “IFF,” “POD,” “ATF.” If this language is not included, the beneficiary may not be identifiable. A Totten trust has been called a “poor man’s” trust because a written trust document is typically not involved and it often costs the trust maker nothing to establish.

Advantages and Disadvantages of Living Trusts

Regardless of whatever else you may have heard there are only two ways to avoid probate: don’t die and don’t own anything. The living trust attempts to accomplish the second way of avoiding probate, no one having yet discovered how to accomplish the first. As an estate planning tool, a living trust is neither inherently good nor inherently bad. It has certain advantages and certain disadvantages. Whether its use is appropriate depends upon the particulars and is a matter for individual determination. But first, a little background. Probate is simply the procedure for transferring a decedent’s assets, either by that person’s will or by state statute if there is no will. In the overwhelming majority of cases, the system functions smoothly and without undue delay or expense. It is the rare, but sometimes colorful case in which the estate is tied up for years and burdened by enormous legal fees and administrative expenses – whether because of a will contest or other disputes among the heirs or because of disputed claims against the estate – that provides grist for the mill of the “avoid probate” industry. You might not know it from the sales pitches, but a “living trust’ is nothing new as an estate planning mechanism. It has been around for years under the more traditional names “revocable trust” and “inter vivo trust,” literally, a trust “between the living.” If it tells you nothing else, the Latin name tells you that the concept is very traditional. A living or revocable trust is one created by a person while living that may be revoked or modified by that person without the consent of any other person. The creator of the trust, called the “settler” or “grantor,” can be his or her own trustee and can designate a successor trustee or trustees in the event of incapacity or death. The settlor is typically the beneficiary of the trust during his or her life, and designates in the trust document who will be the beneficiaries upon his or her death.

The use of a revocable trust “to avoid probate” requires that the trust be funded with all or substantially all of the settlor’s assets during the settlor’s life. It is in this way that the revocable trust enables the settler to follow the aforementioned advice, “don’t own anything.” The assets have passed from individual ownership to ownership by the trust. Thus, when the settlor dies there is nothing in the estate (assuming no further acquisitions) and nothing to “probate,” even though the settler, as beneficiary, has enjoyed the use of the trust assets during his or her life. There can be additional advantages of such trusts, beyond probate avoidance. For example, if the settler is successful in avoiding probate, the size and distribution of the estate can be kept confidential, unlike probate proceedings which are matters of public record. Also, the assets of a living trust can typically be distributed to beneficiaries sooner than is possible in the probate of an estate. Living trusts also can be an excellent way of keeping records and managing property. Another argument for living trusts is that confidentiality of trust provisions and avoidance of court procedures tend to reduce the likelihood of the equivalent of a will contest.

A major disadvantage of a living trust is the cost associated with its preparation and funding. The paperwork is more complex for a living trust than for a will and the attorney’s fee is typically larger. Property that passes by title, for example, real estate and vehicles, has to be transferred formally from individual ownership to trust ownership. More paperwork and more expense. Beneficiary designations to property such as insurance policies and bank accounts may also need to be changed. For an estate with fairly extensive property and complex dispositions, the cost of preparing and funding a living trust can be two or three times the cost of a will with equivalent dispositions. People who choose a living trust over a will are essentially doing much of their own probate before their death, similar to the way that some people plan their own funerals. As a result, they are paying costs and performing work now that would otherwise be deferred until after death and then paid by their estate and performed by their Personal Representative. There is nothing wrong with this of course, as long as a person realizes that is what he is doing. Additionally, the formalities of setting up and funding a living trust must be observed and records kept to reflect that observance throughout the settlor’s life if the transfer of the assets is to occur smoothly and without probate when the settlor dies.

Again, more paperwork and transaction expenses to keep the trust current. Unfortunately, many people lack the self-discipline necessary to keep their affairs in the order required by a living trust after they have established one. The costs to set up, maintain, and administer a living trust are generally at least the same as the costs of a will plus probate. With a living trust those costs are loaded toward the front end, with a will toward the back end. On occasion, there is a distinct advantage to opening a probate case even where the decedent had a trust and all the decedent’s property had been placed in the trust. The probate process allows for publication of a “Notice To Creditors,” which in effect imposes a very short statute of limitations on claims against the estate. Trust administration procedures do not provide for this, so any claims against the trust are subject only to their ordinary limitations periods.

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A trust is a legal entity that holds title to and manages assets for an intended beneficiary. A Living trust is distinguishable from other trusts in that you, as the grantor, can make changes to the trust or revoke it entirely during your lifetime. You can also act as the initial trustee of your living trust. Living trusts are most often used to avoid the probate process that comes along with passing property through a will. Because assets are owned by the trust, and not by you, they pass by the terms of the trust upon your death, making probate unnecessary. Trusts are complicated documents and estate planning attorney can help you navigate through the legal nuances. In order to pass through the trust and avoid probate, assets must be re-titled into the name of the trust. For instance, if you want to place your home in the trust, you must change the deed so that the trust is named as owner. Once the deed is changed, it should be recorded with the registrar of deeds, and is subject to the same fees as any real estate transaction. These fees vary by state. You can check with your local registrar of deeds for your state’s fees associated with a deed transfer. Whether or not you choose to hire an attorney to draft your living trust, you will be responsible for the expense of titling assets to the trust. A living trust is an estate planning document created during one’s lifetime. A revocable living trust goes into effect during one’s lifetime and provides a way to manage one’s assets during his/her lifetime and to dispose of assets after they pass away. There are many reasons a living trust is preferable to a last will and testament. For example, when you create a living trust, you can avoid the time and expense associated with probate. While the estate’s assets are in probate, they may be frozen – a living trust avoids this as well. Individuals also choose to make a living trust to minimize tax consequences and for privacy concerns.

Types of Trusts In Utah

A trust is a legal document that can be created during a person’s lifetime and survive the person’s death. A trust can also be created by a will and formed after death. Common types of trusts are outlined in this article. Once assets are put into the trust they belong to the trust itself (such as a bank account), not the trustee (person). They remain subject to the rules and instructions of the trust contract. In essence, a trust is a right to money or property, which is held in a “fiduciary” relationship by one person or bank for the benefit of another. The trustee is the one who holds title to the trust property, and the beneficiary is the person who receives the benefits of the trust. While there are a number of different types of trusts, the basic types are revocable and irrevocable.

Revocable Trusts

Revocable trusts are created during the lifetime of the trust-maker and can be altered, changed, modified or revoked entirely. Often called a living trust, these are trusts in which the trust-maker:
• Transfers the title of a property to a trust
• Serves as the initial trustee
• Has the ability to remove the property from the trust during his or her lifetime\

Revocable trusts are extremely helpful in avoiding probate. If ownership of assets is transferred to a revocable trust during the lifetime of the trust-maker so that it is owned by the trust at the time of the trust-maker’s death, the assets will not be subject to probate. Although useful to avoid probate, a revocable trust is not an asset protection technique as assets transferred to the trust during the trust-maker’s lifetime will remain available to the trust-maker’s creditors. It does make it more somewhat more difficult for creditors to access these assets since the creditor must petition a court for an order to enable the creditor to get to the assets held in the trust. Typically, a revocable trust evolves into an irrevocable trust upon the death of the trust-maker.

Irrevocable Trust

An irrevocable trust is one that cannot be altered, changed, modified or revoked after its creation. Once a property is transferred to an irrevocable trust, no one, including the trust maker, can take the property out of the trust. It is possible to purchase survivorship life insurance, the benefits of which can be held by an irrevocable trust. This type of survivorship life insurance can be used for estate tax planning purposes in large estates; however, survivorship life insurance held in an irrevocable trust can have serious negative consequences.

Asset Protection Trust

An asset protection trust is a type of trust that is designed to protect a person’s assets from claims of future creditors. These types of trusts are often set up in countries outside of the United States, although the assets do not always need to be transferred to the foreign jurisdiction. The purpose of an asset protection trust is to insulate assets from creditor attack. These trusts are normally structured so that they are irrevocable for a term of years and so that the trust-maker is not a current beneficiary. An asset protection trust is normally structured so that the undistributed assets of the trust are returned to the trust-maker upon the termination of the trust provided there is no current risk of creditor attack, thus permitting the trust-maker to regain complete control over the formerly protected assets.

Charitable Trust

Charitable trusts are trusts which benefit a particular charity or the public in general. Typically charitable trusts are established as part of an estate plan to lower or avoid the imposition of estate and gift tax. A charitable remainder trust (CRT) funded during the grantor’s lifetime can be a financial planning tool, providing the trust-maker with valuable lifetime benefits. In addition to the financial benefits, there is the intangible benefit of rewarding the trust-maker’s altruism as charities usually immediately honor the donors who have named the charity as the beneficiary of a CRT.

Constructive Trust

A constructive trust is an implied trust. An implied trust is established by a court and is determined by certain facts and circumstances. The court may decide that, even though there was never a formal declaration of a trust, there was an intention on the part of the property owner that the property is used for a particular purpose or go to a particular person. While a person may take legal title to a property, equitable considerations sometimes require that the equitable title of such property really belongs to someone else.

Special Needs Trust

A special needs trust is one that is set up for a person who receives government benefits so as not to disqualify the beneficiary from such government benefits. This is completely legal and permitted under the Social Security rules provided that the disabled beneficiary cannot control the amount or the frequency of trust distributions and cannot revoke the trust. Ordinarily, when a person is receiving government benefits, an inheritance or receipt of a gift could reduce or eliminate the person’s eligibility for such benefits. By establishing a trust, which provides for luxuries or other benefits which otherwise could not be obtained by the beneficiary, the beneficiary can obtain the benefits from the trust without defeating his or her eligibility for government benefits. Usually, a special needs trust has a provision that terminates the trust in the event that it could be used to make the beneficiary ineligible for government benefits. Special needs have a specific legal definition and are defined as the requisites for maintaining the comfort and happiness of a disabled person when such requisites are not being provided by any public or private agency. Special needs can include medical and dental expenses, equipment, education, treatment, rehabilitation, eyeglasses, transportation (including vehicle purchase), maintenance, insurance (including payment of premiums of insurance on the life of the beneficiary), essential dietary needs, spending money, electronic and computer equipment, vacations, athletic contests, movies, trips, money with which to purchase gifts, payments for a companion, and other items to enhance self-esteem. The list is quite extensive. Parents of a disabled child can establish a special needs trust as part of their general estate plan and not worry that their child will be prevented from receiving benefits when they are not there to care for the child. Disabled persons who expect an inheritance or other large sum of money may establish a special needs trust themselves, provided that another person or entity is named as trustee.

Spendthrift Trust

A trust that is established for a beneficiary that does not allow the beneficiary to sell or pledge away interests in the trust is known as a spendthrift trust. It is protected from the beneficiaries’ creditors, until such time as the trust property is distributed out of the trust and given to the beneficiaries.

Tax By-Pass Trust

A tax by-pass trust is a type of trust that is created to allow one spouse to leave money to the other while limiting the amount of federal estate tax that would be payable on the death of the second spouse. While assets can pass to a spouse tax-free, when the surviving spouse dies, the remaining assets over and above the exempt limit would be taxable to the children of the couple, potentially at a rate of 55 percent. A tax by-pass trust avoids this situation and saves the children perhaps hundreds of thousands of dollars in federal taxes, depending upon the value of the estate.

Totten Trust

A Totten trust is one that is created during the lifetime of the grantor by depositing money into an account at a financial institution in his or her name as the trustee for another. This is a type of revocable trust in which the gift is not completed until the grantor’s death or an unequivocal act reflecting the gift during the grantor’s lifetime. An individual or an entity can be named as the beneficiary. Upon death, Totten trust assets avoid probate. A Totten trust is used primarily with accounts and securities in financial institutions such as savings accounts, bank accounts, and certificates of deposit. A Totten trust cannot be used with real property. It provides a safer method to pass assets on to family than using joint ownership. To create a Totten trust, the title on the account should include identifying language, such as “In Trust For,” “Payable on Death To,” “As Trustee For,” or the identifying initials for each, “IFF,” “POD,” “ATF.” If this language is not included, the beneficiary may not be identifiable. A Totten trust has been called a “poor man’s” trust because a written trust document is typically not involved and it often costs the trust maker nothing to establish.

Drawbacks of a Living Trust

A living trust does have unique problems and complications. Most people think the benefits outweigh the drawbacks, but before you make a living trust, you should be aware of them. Setting up a living trust isn’t difficult or expensive, but it requires some paperwork. The first step is to create and print out a trust document, which you should sign in front of a notary public. That’s no harder than making a will. There is, however, one more essential step to making a living trust effective: You must make sure that ownership of all the property you listed in the trust document is legally transferred to you as trustee of the trust. If an item of property doesn’t have a title (ownership) document, you can simply list it on a document called an Assignment of Property. Most books, furniture, electronics, jewelry, appliances, musical instruments and many other kinds of property can be handled this way. But if an item has a title document; real estate, stocks, mutual funds, bonds, money market accounts or vehicles, for example; you must change the title document to show that the property is held in trust. For example, if you want to put your house into your living trust, you must prepare and sign a new deed, transferring ownership to you as trustee of the trust.

Record Keeping

After a revocable living trust is created, little day-to-day record keeping is required. No separate income tax records or returns are necessary as long as you are both the grantor and the trustee. Income from property held in the living trust is reported on your personal income tax return. You must keep written records whenever you transfer property to or from the trust, which isn’t difficult unless you transfer a lot of property in and out of the trust.

Transfer Taxes

In most states, transfers of real estate to revocable living trusts are exempt from transfer taxes that are usually imposed on real estate transfers. But in a few states, transferring real estate to your living trust could trigger a tax.

Difficulty Refinancing Trust Property

Because legal title to trust real estate is held in the name of the trustee, a few banks and title companies may balk if you want to refinance it. They should be sufficiently reassured if you show them a copy of your trust document, which specifically gives you, as trustee, the power to borrow against trust property. In the unlikely event you can’t convince an uncooperative lender to deal with you in your capacity as trustee, you’ll have to find another lender (which shouldn’t be hard) or transfer the property out of the trust and back into your name. Later, after you refinance, you can transfer it back into the living trust. Most people don’t worry that after their death, creditors will try to collect large debts from property in the estate. In most situations, the surviving relatives simply pay the valid debts, such as outstanding bills, taxes and last illness and funeral expenses. But if you are concerned about the possibility of large claims, you may want to let your property go through probate instead of a living trust. If your property goes through probate, creditors have only a certain amount of time to file claims against your estate. A creditor who was properly notified of the probate court proceeding cannot file a claim after the period — about six months, in most states expires.

Benefits of a Revocable Living Trust

A living revocable trust serves as far more than just where assets are to go upon your death and it does that in an efficient way. Here are some of the reasons a revocable trust should be part of your estate plan.
1. Revocable trusts are changeable and flexible: Revocable living trusts allow you to make amendments at your own discretion. That can prove invaluable if your circumstances change or if you just aren’t sure who you want to name as your beneficiaries. That flexibility also makes these trusts a popular option if you are starting your estate planning young.
2. Revocable trusts cover your assets before your death: As outlined above, a living trust covers grantors during three phases of life. If you become incapacitated, your trustee can take over and manage your affairs. (Don’t worry: This person has a fiduciary duty to act in your best interest.) This happens automatically. You do not need to go through court proceedings or appointed conservators. Revocable living trusts also account for guardianship. You can stipulate living situations and spending habits for minor children in the terms of your trust.
3. Revocable trusts avoid probate: If you have a will when you die, your assets will go through probate. That is a court proceeding where your assets are distributed per your stipulations. Probate is a relatively slow process that that can take up to several months. If you own property in more than one state, your beneficiaries may have to go through multiple probates. The costs of going through probate can also cut down what your beneficiaries inherit. With revocable living trusts, probate is not necessary. Your successor trustee will be able to pass your assets on to your beneficiaries without the need to wait for a court order. That usually means a quicker and more affordable process for your beneficiaries.
4. Revocable trusts incur less cost and hassle down the line: Drafting a living trust usually requires more funds and effort up front because it’s a more complex legal document than a regular trust or will. So that means you will need to spend some time and money to properly set up and maintain your trust. However, that work can save you the headache and higher expenses associated with probate. Living trusts also tend to hold up better if someone contests a provision, potentially saving more money and time.
5. Revocable trusts provide privacy: After your death, wills and their requisite transactions enter into public record. Anyone can see what stipulations are in your will, who your beneficiaries are and what each beneficiary is inheriting. Estates in a living trust are distributed in private. No one can search the public records to see where your assets went. This protects the privacy of your assets as well as your beneficiaries.
6. Assets in revocable trusts receive FDIC protection: The FDIC (Federal Deposit Insurance Corporation) typically protects money in a bank account up to $250,000. However, that coverage amount goes up with revocable living trusts. According to the FDIC, the owner of a revocable trust account receives insurance of up to $250,000 per each beneficiary. The maximum insured amount you can have is $1,250,000, equal to $250,000 for the owner and each of four beneficiaries.

Free Initial Consultation with Lawyer

It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!

The cost of your estate plan varies with which documents you need and with the complexity of each document. These documents are the estate planner’s tools. A good estate planning attorney will recommend a combination of those tools and help you prepare a strategy to make the tools work together.

Example 1: A young couple of average wealth with small children will need an estate plan that focuses on guardianship and maximizing financial security in the event the parents pass away at a young age. This plan requires straightforward documents like a will, appointment of guardianship, and perhaps a basic living trust.

Example 2: In contrast, a wealthy individual with children from multiple relationships will need a plan that focuses on wealth management and legacy planning with careful consideration of family dynamics. This plan requires more skill in both strategic planning and document drafting, potentially involving multiple types of trusts, powers of appointment, and powers of attorney.

Keep in mind that fees for estate planning are not just a function of the time your attorney spends drafting documents. Good estate planning attorneys use their skills, knowledge, and expertise to construct a holistic plan that will help you accomplish your unique estate planning goals. You will pay more for the work of a more experienced estate planning attorney who can provide a complex plan. If you do not need a complex plan, consider finding an attorney who focuses on plans for simpler estates.

Types of Fees for Estate Planning

Lawyers use different types of fees for different services, and the way you pay your attorney has a big impact on how much you will end up paying for your estate plan. Lawyers typically use one of three common rate structures –flat fees, the billable hour, or contingency fees.

Flat Fees

Flat fees are used when your attorney can quickly assess your needs and know what type of estate plan you require. Your estate planning attorney can look at your financial status, family situation, and any special considerations and know what planning tools you will need. For these common cases, your attorney may offer a flat fee arrangement that is, a firm price to complete all of your estate planning work. You may be asked to pay this amount, or part of this amount, before work begins.

A typical flat fee estate plan includes the most common estate planning tools such as:
• a simple will
• a powers of attorney for finances and property
• a power of attorney for healthcare decisions
• a living will outlining end of life decisions, and
• an appointment of guardianship for parents.

While this typical estate planning bundle, not all flat fee arrangements are identical. When agreeing to a flat fee, be sure you understand what documents and services are included in your estate plan.

The Billable Hour

For plans that don’t fit into one of those common flat fee categories, your estate planning attorney will likely charge an hourly rate for the time they spend thinking about, working on, and meeting with you about your case. When charging an hourly fee, your attorney may ask you to provide a retainer before starting work on your case. A retainer is a prepayment of fees that the attorney will draw from as they work on your case. Retainer policies vary among attorneys and law firms. Your attorney may ask for a retainer of the entire expected cost of creating your estate plan. Or, your attorney may ask for just a portion of that amount (maybe one-half) and then bill you for the rest later. Estate planning attorneys often use a billable hour if they anticipate your estate plan will require extra sophistication in planning or time coordinating with other professionals (for example, your financial planner). If your attorney cannot confidently predict the cost of your estate plan, they will charge an hourly rate that reflects their knowledge and expertise in the estate planning field. Location also factors into your attorney’s hourly rate. Generally, attorneys in metropolitan areas charge higher hourly rates than attorneys in less populated areas. Hourly rates also vary from state to state.

Contingency Fees

Estate planning attorneys typically do not use contingency fees. Contingency fee arrangements work best in cases where your attorney is trying to win you money in a lawsuit or settlement. For example, you agree to pay the attorney a portion (typically one-third) of whatever the attorney can get for you. If you get $15,000 in a settlement negotiated by your attorney, you would pay $5,000. Because estate planning isn’t adversarial you’re not fighting another person contingency fees don’t make sense. However, probate attorneys might use a form of contingency fee for helping you settle an estate.

Get It In Writing

No matter which type of fee arrangement your attorney uses, make sure you get it in writing! Your attorney should offer you an engagement letter that details:
• fees and payment terms
• the scope of work your attorney will do (i.e., what estate planning documents are included in your plan)
• confidentiality requirements, and
• any agreements about conflict resolution.

This is the contract between you and your attorney. If your attorney does not provide an engagement letter like this, ask for one. You and your attorney should sign the agreement before work begins. A final factor that contributes to the cost of your estate plan is who actually performs the work. This can vary depending upon the type of lawyer or law firm you hire. If you hire a solo attorney or a small firm, your attorney typically handles much of the work on your case and will charge you their hourly rate for all the work. If you hire an attorney from a larger law firm, your attorney will typically delegate some tasks to junior attorneys, paralegals, or other staff. This is particularly true if common, formulaic documents fit your estate plan’s needs. This division of labor isn’t necessarily a bad thing for you. Junior attorneys, paralegals, and staff have hourly rates much lower than the experienced senior attorney who conducted your first meeting. Having staff complete tasks under the supervision of that senior attorney saves you money while also allowing you to take advantage of that senior attorney’s experience and knowledge. Knowing what goes into the cost of an estate plan, the question remains “So, how much?” As the above paragraphs reflect, the costs can vary widely. Some attorneys may prepare a simple will or power of attorney for as little as $150 or $200. On average, experienced attorneys may charge $250 or $350 per hour to prepare more sophisticated estate plans. You could spend several thousand dollars to work with such an attorney.

Local and statewide business practices can influence what an estate planning attorney will charge for handling a particular matter, but her level of experience factors in as well. So how do you gauge that experience, and how do you know if you’re being asked to pay too much? It can help to understand the general rules and fee-setting process.

Your Initial Meeting

Most estate planning attorneys don’t charge a fee for the initial meeting, but this is by no means a universal rule. Don’t be surprised if the attorney does charge a small fee for sitting down with you for the first time. It can go either way. An estate planning attorney is in business to earn a living, and time spent with you takes time away from billable hours that he could be spending on other clients’ matters. That said, this is also his opportunity to sell you on retaining his services and to get an idea of what your matter involves. This is when he determines how many hours he and his staff will have to invest into resolving your issue…and if he wants to take your case on. Many attorneys recognize the context of a first meeting and don’t charge for it. A set dollar amount typically covers the initial meeting—if you end up retaining the attorney’s services as well as preparation of basic documents, review of documents, and signing of documents. Some attorneys will also include assistance with funding your living trust as part of their estate planning flat fees if you decide you want one, while others charge a separate funding fee based on the value of the property they’ll be helping you move into the ownership of your trust. The only reasonable alternative would be for the attorney to charge you on an hourly basis. The downside to this approach is that it leaves a great deal of uncertainty for you as to what the final total cost will be. You can avoid this by asking your attorney to come up with a flat fee to cover all the services that she’ll be providing to you. Just be prepared to move on and interview other attorneys if she declines.

Standard Hourly Rates

A flat fee is a composite of the attorney’s standard hourly rate and how many hours he thinks he’ll have to invest in your case to resolve it. Ask what that hourly rate is, and find out how much you’ll be charged for the services of other attorneys and paralegals in the firm. This will give you an idea of how many hours the attorney expects the firm to spend on your estate plan. If he quotes you a $5,000 flat fee and he bills his time at $200 an hour, he expects that he and his firm will spend about 20 to 25 hours on your case. The general rule is that the higher an attorney’s hourly rate, the more experience he has. All those hours might seem like a lot to you, but the attorney should have a pretty good idea of the time it will take to meet with you, answer your questions, design and draft your estate plan, review your plan with you, help you sign your plan, then help you fund your trust if you’ve chosen to include one.

Meet by Telephone First

It’s common these days to handle a significant amount of business by telephone. Consider setting up telephone interviews with at least two estate planning attorneys before meeting in person. This will save your time and the attorney’s time…if she’s willing. Don’t expect a great deal of decisive information in an initial phone interview. That would be like the attorney giving her advice away for free. Your goal for this phone conversation should be determining whether you want to work with her or not. Each attorney should be able to get a feel for what your needs are during this conversation and quote you a flat fee for your basic estate plan. Remember, you’re not asking what you should do, but rather how much it’s likely to cost you to do what you have in mind. This gives you the opportunity to compare the flat fees quoted by each attorney and narrow down your choice as to who you want to meet with in person.

Ask for Details

Ask an attorney who’s going to charge you more than another exactly why his fee is so much higher. Some attorneys are in the business of selling estate plans in bulk, while others are truly interested in giving you a high-quality estate plan and becoming your advisor for life.

Trust Your Gut

Your goal shouldn’t necessarily be to find the cheapest attorney. Think about how comfortable you feel with each, because you’ll have to be open and honest when discussing the most intimate details of your personal life and finances with this individual. Sometimes you have to go with your instincts. Only you’ll know for sure who you’ll be able to trust with this important part of your life.

Estate plan costs vary because each estate plan has unique needs. The lower end of the spectrum can include a basic will written for as little as $150 to $200. But a more complex plan may cost you upwards of $300 per hour. If you want something that reflects your situation and the necessary measures it will take to protect your assets and heirs, it will cost more. The cost also depends on how many documents you need prepared beyond your will, like a power of attorney and the circumstances of your heirs. There is no “one-size-fits-all” plan for an estate. For example, a couple with underage children will be focused on a plan that emphasizes guardianship, long-term care and financial security. However, add extra factors such as previous marriages and multiple trust funds. That situation calls for more accommodations while spreading out the distributions. This shouldn’t stop you from shopping for the most affordable price, but don’t let it be the deciding factor. If you’re not careful, your heirs could lose money regardless because the estate wasn’t properly managed.

How to Minimize Your Estate Planning Costs

Estate planning can be unpredictable and costly. Depending on your situation, you may be paying an unexpectedly high fee. If you plan accordingly, though, you will find there are ways to help minimize the costs.

• Pick the right attorney: Research firms, read reviews and compare them. Try to schedule an in-person consult with each one.
• Know your needs: Go into your first meeting educated. Know what a basic estate plan includes and whether you’ll need more documents.
• Discuss money upfront: Whether it is on the phone or in-person, a firm might offer the first consultation free. Use that opportunity to discuss rates and how long the process might take.
• Put it in writing: Once you choose your attorney, make sure you draft a written agreement you both sign. It should include the work your lawyer will do as well as any costs.
• Do-it-yourself kits to create and file a legally enforceable will have gained in popularity due to the minimal cost involved. If you don’t have a lot of complicated issues about your final wishes, your finances are fairly straightforward, and you don’t have any children, this may be the most suitable option for you. Kits can be purchased for as little as $10, so they give you the option of drawing your will at your convenience without having to pay an outrageous cost. There is a lot less time involved, and you can generally make updates at your leisure without much difficulty or cost.
• Before you settle with one of these kits, first read the reviews of the platforms selling the kits and hear what their customers say about this product. This is a new business and many companies are racing to take a share in it while the quality varies from the legal providers.
• Second, make sure you understand everything the kit entails including the legal language. You don’t want to sign a document you don’t fully understand. Also consider whether the document is enforceable in your state, as some documents don’t coincide with guidelines in certain areas. For the state compliance matter, contact the platform and ask them the question and get their experience with other users from your state. You may be required to have witnesses or have your document notarized. Remember that the basic will documents within may not cover every life situation that should be addressed. That’s when you move to the next step.

Free Initial Consultation with Lawyer

It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!

Estate planning is the process of arranging one’s affairs so that the transfer of assets at the time of incapacity, illness or death is accomplished in a most efficient manner. In achieving this efficiency, one has to try to control both tax and non-tax factors. Non-tax factors consist of unnecessary expenses such as guardianship proceedings and probate proceedings. Tax factors consist of matters such as federal gift tax issues and federal estate tax issues. The easiest approach to estate planning is to sit down with a qualified professional for an initial interview and discuss matters pertaining to your objectives and your assets.

A typical estate plan for most clients will consist of the following:
• “Pour Over” type Will
• Revocable Living Trust
• Power of attorney Health Care
• Power of Attorney for Property.

Depending on the circumstances, there are many other types of documents that may be required, such as insurance trusts, gift trusts, etc.

Gift Tax

Gifts are subject, however, to our Gift and Estate Tax rules, which obligates the grantor (that is the person giving the gift) to pay tax on all gifts made. To begin with, you should also think that all gifts are taxable. There are a few exceptions, but if you don’t fit within one of the exceptions, then prepare to be generous to the IRS.

The Exceptions to Gift Tax

Every person has the right to gift up to $13,000, per person, per year. These annual exclusion gifts do not have to be reported to the IRS. The “per person, per year” requirement means that a single person can make multiple gifts to different people each year. So a grandfather could gift up to $13,000 to each of his children, and each of his grandchildren and not have to report the gifts, provided that no one person received more than $13,000 in a given year. Many people remember the annual exclusion gifts as being the annual $10,000 gifts. That is the prior gift tax exclusion amount before they were indexed for inflation. The annual gift amount is now $13,000.

Marital Deduction

Spouses can gift each other an unlimited amount of gifts and pay no gift tax whatsoever. The only requirement is that the couple must be legally married. Sounds simple, but it can be tricky at times.

Gift Tax Exclusion

Under our current Estate and Gift Tax laws, every individual is allowed an exclusion from gift and estate tax equal to $5,000,000. This means that you can give up to $5,000,000 away and not have to pay a gift tax on that transfer.

However, any amount of exclusion you use during your lifetime by making gifts reduces what you have left for your estate. So if you gift $2,000,000 during your lifetime, you pay no gift tax, but your Estate Tax exclusion is reduced from $5,000,000 to $3,000,000 to account for the $2,000,000 of exclusion you used while alive. Gifts in any single year to a single person that exceed $13,000 must be reported to the IRS using a Gift Tax Return (Form 709) even though no tax will be due on the return. This reporting requirement allows the IRS to track gifts made over your lifetime to determine when, and if, you exceed you tax-free limit.

Charitable Gifts

As you would expect, gifts made to charity, in any amount, are free of gift tax. Luckily the IRS is not so callous as to require a generous donor to pay tax on gifts to charity. But beware, the charity must be recognized as a valid charity by the IRS under Internal Revenue Code Section. Always ask to see proof of a charity’s determination letter before making any large gifts to charity, and then confirm the charity’s status with the IRS because sometimes charitable status can be revoked by the IRS.

Tax Law Changes

When you give assets to someone whether cash, stocks or a car the government may want to know about it and may even want to collect some taxes. Fortunately, a large portion of your gifts or estate is excluded from taxation, and there are numerous ways to give assets tax free, including these:
• Using the annual gift tax exclusion
• Using the lifetime gift and estate tax exemption
• Making direct payments to medical and educational providers on behalf of a loved one

In general, it’s better to give assets to your loved ones while you’re still alive rather than after you pass away. Giving today allows your loved ones to benefit from your gifts right away and gives you the enjoyment of seeing your gifts improve their lives. In addition, those gifts can grow in value in their hands, rather than yours, which helps reduce your taxable estate. Currently, you can give any number of people up to $15,000 each in a single year without incurring a taxable gift ($30,000 for spouses “splitting” gifts). The recipient typically owes no taxes and doesn’t have to report the gift unless it comes from a foreign source. However, if your gift exceeds $15,000 to any person during the year, you have to report it on a gift tax return (IRS Form 709). Spouses splitting gifts must always file Form 709, even when no taxable gift is incurred. Once you give more than the annual gift tax exclusion, you begin to eat into your lifetime gift and estate tax exemption.

With the passage of the Tax Cuts and Jobs Act (TCJA), the gift and estate tax exemption has increased significantly. The IRS refers to this as a unified credit. Each donor (the person making the gift) has a separate lifetime exemption that can be used before any out-of-pocket gift tax is due. In addition, a couple can combine their exemptions to get a total exemption of $23.4 million. There’s one big caveat to be aware of the $11.7 million exception is temporary and only applies to tax years up to 2025. Unless Congress makes these changes permanent, after 2025 the exemption will revert back to the $5.49 million exemption (adjusted for inflation). So here is the big question if this new exemption disappears after 2025, how do you take advantage of it before then?

How To Lock In The New Exemption

For the majority of people, the gift and estate tax exemption will allow for the tax-free transfer of wealth from one generation to the next. For those who have acquired enough wealth to surpass the gift and estate tax exemption, there are several strategies that could lock in the $11.7 million exemption. The simplest way is to gift your assets to your loved ones now, rather than waiting until you pass away. If you have the means, giving the assets now has two advantages. First, you get to see your loved ones benefit from your gifts. Second, the gifted assets could increase in value for your loved ones and could decrease your taxable estate.

For example, if you were able to give the entire $11.7 million to your children today, that money could grow over time. At a growth rate of 5% per year for 10 years, that $11.7 million gift could end up being worth over $19.05 million, and your loved ones will have received the entire amount free from gift or estate taxes.

On the other hand, if you held onto those assets and you passed away in 10 years, a large portion of the $19.05 million would be taxed at 40%. Additionally, in 10 years the gift and estate tax exemption will have likely reverted back to the lower $5.49 million amount (for dates after 2025). That could result in your estate having to pay over $4.74 million in federal taxes, leaving your heirs with about $14.33 million in assets rather than $19.05 million if you made the gift sooner.

One concern many people have when it comes to giving assets away early is that sometimes the person receiving the gift may not be ready to handle the responsibility of managing such a large amount of money. A good example of this is a large amount of money gifted to a young child or teenager. One way to give those assets, but ensure they are protected from misuse, would be to give them to an irrevocable trust and make the child or teenager the beneficiary. This method allows you to set the rules of the trust and determine how the assets will be invested and distributed. For instance, you could create a trust that stipulates the beneficiary can only have access to the income generated by the assets or you could set specific rules, such as the beneficiary must graduate from college before having access to the funds in the trust. There are numerous options when it comes to structuring a trust, and each state has its own rules. If you’re interested in learning more about the various options available, take the time to meet with an attorney or tax professional in your area.

You can also make unlimited payments directly to medical providers or educational institutions on behalf of others for qualified expenses without incurring a taxable gift or affecting your $15,000 gift exclusion. This method is a great way to help out a loved one with large medical bills from an illness or to help pay for a family member’s education.

For example, say you wanted to pay your granddaughter’s $50,000 tuition for her medical degree. You could pay the university directly for her tuition and still give her an additional $15,000 tax-free. This strategy reduces your taxable estate and helps preserve your lifetime exemption.

One thing to remember about the assets you gift is that your cost basis will transfer over to the recipient. So, if that asset has appreciated in value significantly prior to the gift, the recipient could incur the substantial taxable gain when selling that asset. Highly appreciated assets that are received as part of an estate, on the other hand, generally get a “step up” in basis, which means a taxable gain could be avoided if the asset is sold soon after being received. In a nutshell, you need to carefully select what assets you gift to minimize the impact of taxes. In general, cash and assets with little appreciation are better for gifts while highly appreciated assets are better to transfer as part of your estate.

Take the time to meet with a tax and estate planning professional to ensure your gift and estate plans are well thought out and properly implemented. As with any tax planning strategy, there is always the possibility that Congress could change the laws related to the gift and estate tax exemption. You’ll want to review your gift and estate strategy each year to be sure that your plans are still relevant based on your financial situation or changes in tax laws.

The federal government imposes a substantial tax on gifts of money or property that exceed certain levels. Without such a tax, someone with a sizable estate could give away a large portion of his or her property before death and escape death taxes altogether. For this reason, the gift tax acts more or less as a backstop to the estate tax. And yet, few people actually pay a gift tax during their lifetime. A gift program can substantially reduce overall transfer taxes; however, it requires good planning and a commitment to proceed with the gifts.

Advantages of Gift Giving

You may have many reasons for making gifts for some gift giving has personal motives, for others, tax planning is what motivated them. Most often, you will want your gift-giving program to accomplish both personal and tax motives. A few reasons for considering a gift-giving plan include:
• Assisting someone in immediate financial need
• Providing financial security for the recipient
• Giving the recipient experience in handling money
• Seeing the recipient enjoy the property
• Taking advantage of annual exclusion allowance
• Paying gift tax now to reduce overall taxes later
• Giving tax advantaged gifts to minors

A qualified terminable interest property trust, or “QTIP” trust, is a specific type of marital trust designed for one spouse to provide for the care of the surviving spouse after their death. Importantly, QTIP trusts help the executor of your estate avoid state and federal taxation upon your death. QTIP trusts are generally set up to provide income to a surviving spouse upon the death of the first spouse. Because the first spouse’s assets were transferred to the QTIP trust prior to their death, the executor of the estate of the deceased spouse may elect to claim the marital deduction for the amount of money transferred to the estate or may choose not to claim the deduction. This means that QTIP trusts provide a flexible way for the executor of an individual’s estate to minimize the possibility of that individual owing an estate tax upon their death. As such, QTIP trusts, and marital trusts in general, are important estate planning tools. As can be seen, estate law is often complicated due to the changing nature of both federal and state tax laws. Additionally, proper estate planning is essential in order to make sure your estate is disposed of according to your wishes, as well as ensuring that your estate does not owe estate taxes upon your death. There are numerous estate planning tools that can ensure that your estate is not subject to federal or state taxation. Therefore, it is important to consult with a well qualified and knowledgeable estate attorney in order to protect your assets upon your death. An experienced estate planning attorney can advise you on how to avoid estate taxes by establishing a trust or making gifts throughout your lifetime. Additionally, they can draft the necessary documents on your behalf.

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It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!

You may deduct legal fees paid to attorneys and fees paid to other professionals for ordinary and necessary expenses of your business, including expenses for helping you start your business. When you are starting a business, keep track of all your costs while you are investigating business possibilities, creating the business, and setting up your organization. You will then need to separate costs for startup vs. organization.
Organizational costs include fees for services performed by an attorney to help you organize your business, before the end of your first tax year. These fees are considered capital expenses, not operating costs, and they must be amortized (spread out) over a specific number of years. An example would be an attorney’s fee for helping you filing business registration documents with state and preparing corporation bylaws. Operating costs for startup are those you would be able to deduct if you were operating the business. Startup legal fees could be for helping you review contracts, hire executives, or travel to negotiate purchase of a business
Where you include these fees depends on whether they are deducted or capitalized.

In most cases, you will be deducting these fees as part of your normal business activities. Here’s where you would include these deductions on your business tax return:
• For sole proprietors and single-member LLCs, show these expenses in the “Expenses” section of Schedule C
• For partnerships and multiple-member LLCs, show these expenses in the “Deductions” section of Form 1065
• For corporations, show these expenses in the “Deductions” section of Form 1120.
• If you have to amortize startup and organizational costs, you would include them in Other Expenses on your business tax return.

Reporting payments to attorneys is complicated. Starting with the 2021 tax year, payments to attorneys may be reported on one of two forms, depending on the type of payment: Fees paid to an attorney or other legal service provider of $600 or more are reported on Form 1099-NEC (Box 1). These are the payments for legal services, whether they are paid as a retainer or fee. Gross proceeds to an attorney are reported on Form 1099-MISC (Box 10). These are payments made to an attorney that are not for legal services, but, for example, as in a settlement agreement. Report payments to accountants and other professionals if you paid that person or firm $600 or more in deductible fees in a year. Use Form 1099-NEC to report these payments. This form is given to people you pay but who are not employees. You must give the form to the recipient and file the form with the IRS by January 31, after the end of the tax year. Before you complete a 1099-MISC or 1099-NEC form for an attorney or other professional, you must have this person complete a W-9 form. This form lists the recipient’s tax ID number and information about the name and address. Fees paid to attorneys or other professionals for personal advice, personal taxes, personal investments or retirement planning or personal legal services are not deductible business expenses If you have tax preparation fees for both your business and personal taxes, you’ll need to separate the cost between the two portions of your return.

For example, Schedule C for business income is part of your personal tax return if you own a small business. You can deduct the cost for a tax professional to prepare your Schedule C, but not the cost of preparing the rest of your personal tax return. Use your business checking account or business credit card to pay for the business portion and your personal account for the personal portion. If the business and personal work are not so easily separated, you should estimate what percentage of the work is business-related, and pay only that percentage from your business account. The more tax deductions your business can legitimately take, the lower its taxable profit will be. In addition to putting more money into your pocket at the end of the year, the tax code provisions that govern deductions can also yield a personal benefit: a nice car to drive at a smaller cost, or a combination business trip and vacation. It all depends on paying careful attention to IRS rules on just what is and isn’t deductible.

When you’re totaling up your business’s expenses at the end of the year, don’t overlook these important business tax deductions.

Auto Expenses

If you use your car for business, or your business owns its own vehicle, you can deduct some of the costs of keeping it on the road. Mastering the rules of car expense deductions can be tricky, but well worth your while.
There are two methods of claiming expenses:
• Actual expense method. You keep track of and deduct all of your actual business-related expenses and deduct an amount for depreciation each year.
• Standard mileage rate method. You deduct a certain amount (the standard mileage rate) for each mile driven, plus all business-related tolls and parking fees. Check the IRS website for the current standard mileage rate.

As a rule, if you use a newer car primarily for business, the actual expense method provides a larger deduction at tax time. If you use the actual expense method, you can also deduct depreciation on the vehicle. To qualify for the standard mileage rate, you must use it the first year you use a car for your business activity. Moreover, you can’t use the standard mileage rate if you have claimed accelerated depreciation deductions in prior years, or have taken bonus depreciation or a Section 179 deduction for the vehicle. If your auto is used for both business and pleasure, only the business portion produces a tax deduction. That means you must keep track of how often you use the vehicle for business and add it all up at the end of the year. Certainly, if you own just one car or truck, no IRS auditor will let you get away with claiming that 100% of its use is related to your business.

Expenses of Going Into Business

Once you’re running a business, expenses such as advertising, utilities, office supplies, and repairs can be deducted as current business expenses but not before you open your doors for business. The costs of getting a business started are capital expenses, and you may deduct $5,000 the first year you’re in business; any remainder must be deducted in equal amounts over the next 15 years (180 months). If you expect your business to make a profit immediately, you may be able to work around this rule by delaying paying some bills until after you’re in business, or by doing a small amount of business just to officially start. However, if, like many businesses, you will suffer losses during the first few years of operation, you might be better off taking the deduction over five years, so you’ll have some profits to offset.

Books and Legal and Professional Fees

Business books, including those that help you do without legal and tax professionals, are fully deductible as a cost of doing business. Fees that you pay to lawyers, tax professionals, or consultants generally can be deducted in the year incurred. However, if the work clearly relates to future years, they must be deducted over the life of the benefit you get from the lawyer or other professional.

Insurance

You can deduct the premiums you pay for any insurance you buy for your business as a business operating expense. This includes:
• medical insurance for your employees
• fire, theft, and flood insurance for business property
• credit insurance that covers losses from business debt
• liability insurance
• professional malpractice insurance—for example, medical or legal malpractice insurance
• workers’ compensation insurance you are required by state law to provide it to your employees
• business interruption insurance
• life insurance covering a corporation’s officers and directors if you are not a direct beneficiary under the policy, and
• unemployment insurance contributions (either as insurance costs or business taxes, depending on how they are characterized by your state’s laws).

Interest

If you use credit to finance business purchases, the interest and carrying charges are fully tax deductible. The same is true if you take out a personal loan and use the proceeds for your business. However, if your business profit is more than $25 million, you’ll only be able to deduct 30% of your interest expenses. Be sure to keep good records demonstrating that the money was used for your business.

Equipment

Due to changes created by the Tax Cuts and Jobs Act (TCJA), most small businesses are able to deduct 100% of the cost of equipment in a single year. This may be done by using 100% bonus depreciation, expanded Section 179 expensing, and the $2,500 de minimis deduction. These deductions may be used for tangible personal property and computer software, but not real property, which must be depreciated over many years. In addition, under Section 179 of the Internal Revenue Code, you can currently deduct up to an annual threshold amount of the cost of equipment and certain business assets you purchase and place in service that year and use over 50% of the time for your business (not personal use). In addition to the annual limit, there is a phase-out on how much property can be deducted under Section 179 that starts when a business purchases more than $2.5 million in business property in a year. Once this annual investment limit is reached, the amount you can deduct under Section 179 is reduced dollar for dollar by the amount your purchases exceed the $2.5 million limit. Finally, using a provision of the tax law called the de minimis safe harbor, a business may deduct in a single year any tangible personal property that costs $2,500 or less, as stated on the invoice. You must file an election with your tax return to use this deduction.

Charitable Contributions

If your business is a partnership, a limited liability company, or an S corporation (a corporation that has chosen to be taxed like a partnership), your business can make a charitable contribution and pass the deduction through to you, to claim on your individual tax return. If you own a regular (C) corporation, the corporation can deduct the charitable contributions. If you’ve got some old computers or office furniture, giving it to a school or nonprofit organization can yield goodwill plus a tax benefit. However, if the equipment has been fully depreciated (written off), you can’t claim a deduction.

Taxes

Taxes incurred in operating your business are generally deductible. How and when they are deducted depends on the type of tax:
• Sales tax on items you buy for your business’s day-to-day operations is deductible as part of the cost of the items; it’s not deducted separately. However, tax on a big business asset, such as a car, must be added to the car’s cost basis.
• Excise and fuel taxes are separately deductible expenses.
• If your business pays employment taxes, the employer’s share is deductible as a business expense. Self-employment tax is paid by individuals, not their businesses, and so isn’t a business expense.
• Federal income tax paid on business income is never deductible. State income tax can be deducted on your federal return as an itemized deduction, not as a business expense. However, the annual personal itemized deduction for state and local taxes is limited to $10,000.
• Real estate tax on property used for business is deductible, along with any special local assessments for repairs or maintenance. If the assessment is for an improvement—for example, to build a sidewalk—it isn’t immediately deductible; instead, it is deducted over a period of years.

Education Expenses

You can deduct education expenses if they are related to your current business, trade, or occupation. The expense must be to maintain or improve skills required in your present business. (The cost of education that qualifies you for a new business or trade isn’t deductible.)

Pass-Through Tax Deduction

The Tax Cuts and Jobs Act created a new tax deduction for individuals who earn income through pass-through business. This includes any business that is a:
• sole proprietorship (a one-owner business in which the owner personally owns all the business assets)
• partnership
• S corporation
• limited liability company (LLC), or
• limited liability partnership (LLP).

Such individuals may deduct an amount up to 20% of their net income from each pass-through business they own. This is in addition to all their other business deductions. The pass-through deduction is a personal deduction pass-through owners can take on their returns whether or not they itemize. However, this deduction is limited for people whose business is providing personal services. This includes people providing services in the fields of health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage services, investing and investment management, trading and dealing in securities or commodities, or any business where the principal asset is the reputation or skill of one or more of its owners (but there is an exception for architects and engineers). A business owner who provides such services is entitled to the 20% pass-through deduction only if his or her taxable income from all sources after deductions is less than $315,000 if married filing jointly, or $157,500 if single. The deduction is phased out if income exceeds the $315,000/$157,500 limits. It disappears entirely for married filing jointly whose income exceeds $415,000 and for singles whose income exceeds $207,500. If you’re not involved in providing services, you can still qualify for a pass-through deduction if your business income exceeds $415,00/$207,500, but it is subject to a special limit: Your deduction can’t exceed (1) 50% of your applicable share of the W-2 employee wages paid by the business, or (2) 25% of the your share of W-2 wages, PLUS 2.5% of the original purchase price of the long-term property used in the production of income—for example, the real property or equipment used in the business.

Easily Overlooked Business Expenses

Here are some additional routine deductions that many business owners miss. Keep your eye out for them.
• bank service charges
• business association dues
• business gifts
• business-related magazines and books
• casual labor and tips
• casualty and theft losses
• coffee and beverage service
• commissions
• consultant fees
• credit bureau fees

Free Initial Consultation with Lawyer

It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!

In general, you can deduct legal fees as an ordinary and necessary business expense. The types of legal fees that are deductible include creation and review of contracts, filing a lawsuit or defending a lawsuit for breach of contract, legal assistance to collect on an account, defending an intellectual property right, defending against lawsuits brought by employees and receiving tax advice. The amount of the bill that can be deducted in the case of tax advice for an estate plan varies. The more that tax play a role in estate planning process, the greater the percentage of the fee that can be deducted as a qualified expense. However, it is wise to always check with your tax professional before filing this deduction on your tax return. There are times in which legal fees are a necessary evil. When you are able to deduct your legal fees, they become less of an evil. It’s important to understand, though, which legal fees are deductible and which are not. Personal legal fees (i.e.: fees used to pay a divorce attorney or fees used to hire an attorney to dispute a lawsuit that was brought against you) are non-deductible. These are considered personal expenses by the IRS, so that means you will not be able to claim them on your list of itemized deductions. If you own a corporation, an LLC, a partnership, or even if you are a sole proprietor, legal fees associated with helping the reputation of your business will be considered a business investment and will therefore be fully deductible. The term fully deductible means that there are no limitations or AMT (Alternative Minimum Tax) associated with your deduction.

In order to claim your investment legal fees, you must legitimately be conducting business. If you are not regularly filing as a proprietor, the legal fees associated with your business may be viewed by the IRS as miscellaneous itemized deductions. If this is the case, it will result in limitations being placed on your deductions. Legal fees which are equal to up to two per cent of your AGI (Adjusted Gross Income) are non-deductible. At higher income, deductions are completely phased out. Once you compute the AMT (which is a separate tax with a rate of 28 per cent), there is no deduction whatsoever. To avoid these limitations, you should file your US income tax as a proprietor and file Schedule C (assuming you are actually in business).

There is a different set of rules for attorneys with a contingency fee. If, for example, you are awarded $1M from a lawsuit that was handled for you by a contingency attorney who receives 30% of your lawsuit earnings, you may be under the assumption that you will only be required to pay taxes on the $700K you received. This is a false notion; you will be responsible for taxes on the entire $1M balance. If the settlement was for a personal injury case, you don’t have to worry, because compensation for personal injury cases are always tax-free as long as the entire balance is for personal physical injury or physical sickness recovery. If there were punitive damages or interest, those items will be taxable. If you have hired a contingency attorney to help with an employment suit, you will only be taxed on the amount you receive after attorney fees have already been taken out. The majority of employment lawsuits result in recoveries which are viewed by the IRS as income. Therefore, they do not qualify for the same exclusion as physical injury or sickness. A settlement will either be in the form of wages which are subject to withholding at the time they are paid out or non-wage income which will be reported on Form 1099. In most cases, legal fees for personal matters are not tax deductible. Prior to 2018, there was an Internal Revenue Service (IRS) exception that allowed the deduction of legal fees associated with estate planning. However, those fees are no longer deductible. IRS Publication clearly states that “legal fees related to producing or collecting taxable income or getting tax advice are not deductible.” Since legal fees for preparing a will are not tax deductible, it is more important than ever to get as good of a rate as possible without compromising quality.

The following are a few tips to help you strike this balance when looking for estate planning services.

Consider Multiple Attorneys

The number one way to find a good attorney at a good rate is to ask the right questions. Start by asking your friends, family, and trusted coworkers if they know any estate planning attorneys that they would recommend. Ask about their experience with that attorney. Check the attorneys’ websites and make a list of a few that you would like to get more information from and reach out to them. During your initial consultation with the attorneys you are considering, ask questions about the attorney’s knowledge, training, experience and prices. Some questions you may want to ask are:
• How many years have you been practicing law?
• Where did you graduate law school?
• About what percentage of your clients are estate planning clients?
• How does the estate planning process work?
• How will you keep me updated during the process?
• How quickly do you generally return calls or emails?
• What are your rates?
• Do you offer flat rate estate planning packages?

If you like a particular attorney but their price is out of your budget, explain your situation and ask for a discount. You may or may not receive one, but it is worth a try.

Consider Using a Legal Service Provider

Historically, there were only two options for preparing a will and other estate planning documents: by using an attorney or doing it yourself. In the past few decades, a new middle ground option has emerged: legal service providers. Legal service providers prepare form documents based on your responses to questions. They are less expensive than using an attorney but produce better documents than doing it yourself. Legal service providers are not attorneys but most use attorneys to create and update their forms. Many also offer an add-on option where you can pay a little more to be able to talk to an attorney about your estate planning documents. This is typically still much less expensive than using an estate planning attorney. Legal service providers are typically best suited for routine estate planning for low or middle income families. If you have a nontraditional family, tax situation, or very high income, an estate planning attorney that can tackle the complex issues is usually a better choice. The bottom line is that while you cannot deduct legal fees from your tax returns, you can take steps to keep your estate planning legal costs low. Estate planning fees were tax-deductible, but are no longer. First, estate planning is the general term that covers arranging one’s assets and property for distribution at death to beneficiaries. It includes the creation of legal documents such as trusts and wills, as well as that of directives such as durable power of attorney and living wills. Estate planning isn’t only for the rich. Without a plan in place, settling affairs after one’s death could have a long-lasting and costly impact on loved ones. Unfortunately, recent tax changes have made it harder, if not impossible, to continue to deduct many estate-planning fees.

IRS Rules Changed

Some estate planning fees were eligible as an itemized deduction under IRS rules for miscellaneous deductions on Schedule A, but the Tax Cuts and Jobs Act changed that at least for now. Until recently, the IRS allowed that legal fees for estate tax planning services could have been tax-deductible if they were incurred for the production or collection of income; the maintenance, conservation, or management of income-producing property, or tax advice or planning. Many provisions of the Tax Cuts and Jobs Act will sunset at the end of 2025. A political change in Washington before then could also revive some deductions. Those who planned to deduct fees for advice on the construction of such income-generating instruments as an income trust or guidance on the use of property transfer methods, for instance, will generally now be unable to deduct the cost of the fees on their tax return.

Other examples of per-fee services that are no longer deductible include investment advice for trusts held by the estate and trust tax preparation.1 Some fees were not deductible before the tax changes: estate planning relating to the simple transfer of property or guardianship as is common with most wills, for instance, or the use of estate planning instruments such as powers of attorney, living wills, or the writing of trusts to prevent estate assets from having to go to probate. Fees associated with tax planning advice (i.e., minimizing estate or income taxes), tax return preparations, and resolution of tax return audits could be a deduction under IRC Section 212. Thus, estate planning legal expenses or fees could be a tax deduction, but it would be only deductible to the extent it is allocable to tax planning. Furthermore, since many taxpayers do not itemize and since miscellaneous itemized deductions often do not exceed 2% of AGI, many taxpayers will receive no benefit from these deductions. Furthermore, IRC Section 68 phases out itemized deductions for taxpayers with higher incomes (joint returns with AGI above $309,900 and single filers with AGI over $258,250). Total itemized deductions are reduced by 3% by which the AGI exceeds these thresholds.

Common Fees

There are several fees that could be associated with your estate plan, but are those estate planning fees deductible? Most common are the charges paid to attorneys to draft, review and update estate related documents such as wills, trusts, powers of attorney, healthcare proxies, and other documents. These can be paid as the documents are drafted and other services provided or on a retainer basis for those who seek ongoing services.

Effects of Tax Reform

The tax legislation taking effect in 2018 has affected several aspects of estate planning, including if estate planning is tax deductible. Previously most taxpayers deducted their estate planning fees as an itemized deduction as a “miscellaneous expense.” These deductions (which also included tax preparation fees and unreimbursed employee expenses) have been eliminated in the tax reform for tax years 2018 to 2025. For the tax implication on estates and trusts, consult your own tax and estate planning professionals.

Although this may disappoint some who were hoping to deduct these expenses on their personal income tax return, there are a few reasons why this may not have as great an effect on cost as it may seem. Even when estate planning fees were deductible, it was only for expenses related to the production of income, not for all estate planning fees in general. All miscellaneous expenses were also subject to a floor of 2% of Adjusted Gross Income or “AGI.” This means that to use the deduction, the total amount of miscellaneous expenses would have needed to be more than 2% of your total income after certain adjustments (retirement account contributions, for example) leading to AGI. You would have also needed to have total itemized deductions that exceed the standard deduction, which is why the loss of this deduction may affect even fewer taxpayers than would have otherwise been the case. Although certain deductions have been reduced or eliminated by recent tax legislation, the standard deduction has also been increased. Since a taxpayer can only use the standard deduction or itemize, there are likely fewer people that would have been affected by the loss of this deduction. Although tax reform often has the goal of reducing taxes, simplification of the process is also a common goal. You may not have as many deductions, although your overall rates may lead to lower taxes paid in general. This is similar to what happened in the 1987 tax reform during the Reagan administration. Rates were lowered but certain deductions were eliminated. You could previously deduct not only your mortgage interest but income on consumer loans including credit card debt. That said, the benefits of estate planning could be enormous independent of tax-deductible fees.

Implications to Consider

Many types of estate planning strategies have tax implications. While the estate tax will also affect fewer people under tax reform, there are still monetary advantages to estate planning such as advanced charitable gifting strategies, many of which are tax-advantaged. Avoiding probate is also a significant cost benefit for many.

Speak with Professionals

This may be an appropriate time to state the importance of making sure that you are working with quality professionals and that they are coordinated with one another on related issues. If your insurance agent offers a policy that is tax-advantaged, make sure your tax professional is aware of the implications. Your estate planning attorney, for example, may need to know when new investment accounts are opened or existing accounts transferred to weigh in on how beneficiaries should be listed or if certain accounts should be held in a trust rather than by an individual. Many aspects of your financial life relate to one another. You may have specialists for tax issues, estate planning, insurance, retirement planning, investments and other areas. You may wish to consider working with a financial planner whose objective is, in part, to make sure these areas are coordinated well with one another, taking a big picture approach to your financial situation. Whenever tax season kicks off into gear, many of us look for ways to reduce our tax liability. Some, but not all, attorney fees are eligible for deduction. It depends on the type of legal service you sought. For instance, hiring an attorney for a child custody dispute or a personal injury case are both ineligible expenses. Legal expenses related to a business, such as collecting unpaid debt, are qualifiable.

Examples of Tax Deductible Legal Fees
• Business-related expenses such as seeking advice for a startup business
• Rental property expenses such as fees paid to evict a tenant
• Employment discrimination cases
Examples of Non-Deductible Legal Fees
• Personal injury cases including workers compensation
• Criminal cases
• Estate planning disputes

Free Initial Consultation with Lawyer

It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!

When a person dies, all of his or her possessions real estate, money, stocks, personal belongings, and a lot become a part of his or her estate. Estate administration refers to the process of collecting and managing the estate, paying any debts and taxes, and distributing the remaining property to the heirs of the estate. The heirs of an estate are determined by will, and if there isn’t a will, by the intestacy (which means dying without a will) laws of each state. It is also the collecting, managing, and distributing a deceased person’s estate. Each state has its own probate laws, which govern the requirements and process for administering an estate. In some cases, an estate may need to be administered in more than one state. Generally, the state in which the person lived in at the time of death is where the estate goes through probate. However, real estate is governed by state law, so real estate in another state might have to be probated in that state. Several states have adopted a version of the Uniform Probate Code, which is designed to simplify the estate administration process and provide similarity among probate laws from state to state.

Duties of an Executor

The executor is responsible for locating and collecting all of the deceased’s property, making sure any debts and taxes are paid off, and distributing the remaining property and money to the entitled parties. Although anyone can be an executor, the executor must perform with diligence and in good faith. Usually the executor is designated in a will. If the deceased didn’t leave a will, an administrator is appointed by the probate court. If the probate process is complicated, the executor is entitled to hire an attorney at the expense of the estate; to help him or her with the process. While the executor is not entitled to any proceeds from the sale of property of the estate, generally he or she is entitled to a fee as compensation for administering the estate. Generally speaking, once a person dies, his or her debts are paid off from his or her estate, and if there isn’t enough money to repay the debt, the debt dies with the person. Relatives or beneficiaries of the will are usually not responsible to pay the deceased person’s debts. However, if the relative or beneficiary owned part of the debt or received substantial benefits from the debt, he or she would be responsible for repaying the debt. For example, credit card debt belongs to the account holder.

If, however, a relative co-signed on a loan or the credit card was from a joint account, the co-signor or other account holder would have to pay the debt. It’s important to note that in community property states where property acquired during marriage is considered jointly owned, the surviving spouse may be liable for the debt. If you’re in charge of administering an estate and have questions about it, you may want consult with an estate planning attorney. It would also be a good idea to contact an estate planning attorney if you have questions or concerns regarding the debt left by a person who has passed away.

How to Administer an Estate

Whenever a person dies, his or her estate needs to be collected, managed, and distributed. Estate administration involves gathering the assets of the estate, paying the decedent’s debts, and distributing the assets that remain in the estate. In recent years, state legislatures have attempted to reduce the complexity of estate administration. Currently, about 20 states have adopted some version of the Uniform Probate Code (UPC), which was designed to simplify the estate administration process and provide similarity among probate laws from state to state. In some cases, an estate may need to be administered in more than one state. Generally, the state in which the decedent resided at the time of death will be the state where the decedent’s estate is probated. However, state law governs the transfer of real estate, so if the decedent owned real estate in another state, it may be necessary to do an ancillary proceeding to probate that one piece of property in the state where it is located. An ancillary proceeding is a scaled-down probate proceeding, which governs only the assets located in that state. In some instances, it may be necessary to consult two attorneys, one in the state where the decedent lived and another attorney in the state where the decedent owned real estate.

Probate: Formal or Informal

In many states, a probate proceeding can be either formal or informal. An informal probate proceeding usually involves filing some basic paperwork, having the court appoint someone to manage the estate; paying the debts, distributing the assets, and having the court approve the distribution. The court’s role may never require a hearing, but only a review of the papers filed. In other instances, such as when a will is disputed, a formal probate proceeding may be required. A formal proceeding involves more court oversight and usually requires one or more court hearings. In some states, a probate proceeding can be formal in parts and informal in others. For example, the matter may start out formally, with a court hearing to appoint the personal representative, but end informally, with a paper filed with the court detailing how the assets are to be distributed.

Managing the Estate: Personal Representatives

The first task in a probate proceeding is appointing a responsible party to manage the estate. This person is usually called the personal representative. In some states this position is known as the “executor.” The personal representative may be an individual or a company, such as a bank. The personal representative may have been nominated by the decedent in the will. If there was no will, the court will usually appoint the surviving spouse or another family member. There may be more than one personal representative named.

Inventorying the Estate

After being appointed, the personal representative is expected to document all of the decedent’s assets. This documentation is often referred to as the inventory. The personal representative must also inform the decedent’s creditors that the decedent has died. If the decedent’s probate assets are sufficient to pay the creditors, the personal representative will pay them from the estate. If the probate assets are insufficient, the personal representative may need to obtain court approval to determine which creditors should be paid.

Distributing the Estate

If there are any assets left after the creditors have been paid, those assets are distributed according to the will. If there is no will, the decedent is said to have died intestate. State laws vary as to how to distribute the assets of an intestate decedent. The personal representative will also file any necessary tax returns. If the estate is owed any money, the personal representative may need to bring a lawsuit in order to collect it. If the will is contested or if there is any other dispute over how to distribute the estate assets, the personal representative may have to “defend” the will in a probate proceeding. If the decedent owned few assets, it may be possible to avoid the probate process. In many states, a “small estate administration” is available. Usually, in order to qualify for a small estate administration, the decedent’s assets must not include real estate and must be worth less than a threshold amount determined by the state. If a small estate administration is applicable, the parties who are entitled to receive the decedent’s assets may collect those assets by way of an affidavit, a sworn statement that is filed with the court. Even in a small estate proceeding, though, the decedent’s creditors may need to be paid from the assets before any estate assets are distributed.

Wills are the most common way for people to state their preferences about how their property should be handled after their death. A will is similar to an instruction booklet for the probate court, the court that oversees estate administration and disputes over the will itself. The will provides the court with guidance as to how to distribute the deceased person’s assets in accordance with his or her wishes. Wills have been referred to as tickets to probate court. In large estates, the only way to legally transfer assets in accordance with the will is through the probate process. However, wills only control probate assets, that is, those assets that can be transferred by the probate court. Some assets do not have to be probated and generally are not controlled by a will. These assets include:
• Life insurance proceeds, which are paid to the beneficiaries designated in the policy.
• Property held in joint tenancy, which provides that, upon the death of one joint tenant, the deceased person’s interest automatically passes to the surviving joint tenant(s).
• Property held in living trusts.
Because these assets are transferred by means other than the probate process, a will generally does not control how they are distributed.

Example: A person names her spouse in a beneficiary designation to receive her life insurance proceeds on her death. In her will, she names her sister to receive those same proceeds. Because the proceeds are paid directly to the spouse, they never become part of the deceased person’s estate. Therefore, her will, which only controls her estate, cannot override the beneficiary designation.

Will Validity

A will must meet certain formal requirements in order to be valid; otherwise it may be challenged during the probate process. These requirements vary from state to state. Generally, the person making the will (the “testator”) must be an adult of sound mind, meaning that the testator must be able to understand the full meaning of the document. Wills must be written in most circumstances. Some states allow a will to be in the testator’s own handwriting, but a better and more enforceable option is to have a typed or pre-printed document. A testator must sign his or her own will, unless he or she is unable to do so, in which case the testator must direct another person to sign the will in the presence of witnesses, and the signature must be witnessed and/or notarized. A valid will remains in force until revoked or superseded by a subsequent valid will. Some changes may be made by amendment (a “codicil”) without requiring a complete re-write.

Will Limitations

Some legal restrictions prevent a testator from giving full effect to his or her wishes. Some laws prohibit disinheritance of spouses or dependent children. A married person cannot completely disinherit a spouse without the spouse’s consent, usually in a prenuptial agreement. In most jurisdictions, a surviving spouse has a right of election, which allows the spouse to take a legally determined percentage (up to one-half) of the estate when he or she is dissatisfied with the will. Nondependent children may be disinherited, but this preference should be clearly stated in the will in order to avoid confusion and possible legal challenges.

Will Executors

A will usually appoints an executor or personal representative to perform the specific wishes of the testator after he or she dies. The personal representative consolidates and manages the testator’s assets, collects any debts owed to the testator at death, sells property necessary to pay estate taxes or expenses, and files all necessary court and tax documents for the estate. While wills may be tickets to go through the probate process, not having a will forces the probate court to distribute the property without guidance from the testator. Dying without a will leaves an estate intestate, and a probate court must step in to divide up the estate using legal defaults in order to give property to surviving relatives. A personal representative must still be appointed, but the court must choose someone rather than following the deceased person’s wishes. The court pays any unpaid debts and death expenses first, and then follows the legal guidelines. The rules vary depending on whether the deceased was married and had children, and whether the spouse and children are alive. If the intestate individual has no surviving spouse, children or grandchildren the estate is divided between various other relatives. Therefore, intestacy means that people who would never have been chosen to receive property may do so. Additionally, state intestacy laws only recognize relatives, so close friends or charities that the deceased favored do not receive anything. If no relatives are found, the estate goes to the government in its entirety. Intestacy also poses a heavy tax burden on estate assets. When made aware of the consequences of intestacy, most people prefer to leave instructions rather than subject their survivors and property to mandated division. Where some small estates are concerned, a will may not have to be probated. If the value of the assets in the estate is below a threshold established by state law, a short estate proceeding may avoid the probate process entirely. The administration of estates is complex and varies quite a bit from individual to individual while dying without a will complicates matters even more. If you have any particular estate administration needs, an estate planning attorney will be able to explain the process and handle the details in order to serve your family’s best interests. Over the course of administering an estate, many different types of expenses can arise. The good news for the beneficiaries of the estate is that these expenses may be deductible. It is important to consult with an experienced tax advisor and attorney who understand which types of expenses qualify to be used for this tax benefit.

Types of Expenses That May Be Deducted By an Estate

When deducting expenses, the personal representative of the estate can elect to either take this deduction against the gross estate for determining the federal estate tax or from the estate’s gross income when calculating the estate’s income tax. The expenses cannot, however, be deducted for both estate and income tax purposes at the same time. The following is an overview of the types of expenses that can generally be deducted by an estate:
1. Fees paid to the personal representative for administering the estate.
2. Fees paid to attorneys, accountants, and tax preparers with regard to estate administration.
3. Expenses associated with the management, conservation, or maintenance of estate property.
4. Expenses incurred in connection with the determination, collection, or refund of the estate’s tax liability.

Free Initial Consultation with Lawyer

It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!

Estate planning is the preparation of tasks that serve to manage an individual’s asset base in the event of their incapacitation or death. The planning includes the bequest of assets to heirs and the settlement of estate taxes. Most estate plans are set up with the help of an attorney experienced in estate law. Estate planning involves determining how an individual’s assets will be preserved, managed, and distributed after death. It also takes into account the management of an individual’s properties and financial obligations in the event that they become incapacitated. Assets that could make up an individual’s estate include houses, cars, stocks, artwork, life insurance, pensions, and debt. Individuals have various reasons for planning an estate, such as preserving family wealth, providing for a surviving spouse and children, funding children’s or grandchildren’s education, or leaving their legacy behind to a charitable cause.

The most basic step in estate planning involves writing a will. Other major estate planning tasks include the following:
• Limiting estate taxes by setting up trust accounts in the names of beneficiaries
• Establishing a guardian for living dependents
• Naming an executor of the estate to oversee the terms of the will
• Creating or updating beneficiaries on plans such as life insurance, IRAs, and 401(k)s
• Setting up funeral arrangements
• Establishing annual gifting to qualified charitable and non-profit organizations to reduce the taxable estate
• Setting up a durable power of attorney (POA) to direct other assets and investments
Wills

Most people don’t know it, but they have an estate. An estate is simply the sum of your possessions at a given point in time during your lifetime or when you die. It can consist of your house, car, jewelry, stocks, bank accounts, life insurance and other professional or personal interests. Some estates are worth a lot more than others, of course, but large or small, most Utahans have one. The most basic, and likely the most well-known, estate planning instrument is the last will and testament. This document details your wishes regarding the distribution of your assets. In short, it specifies who gets what when you die. If you die intestate, without a will, the state steps in and decides how your estate will be handled. For your own peace of mind and the welfare of your heirs, it’s best to leave a will behind. This way, you’re more assured that others will handle your estate according to your wishes and not the state’s laws. While a valid will takes precedence over state laws, it will not keep your estate out of probate. Before a judge enforces a will, the court must first determine that it is, in fact, the decedent’s final instructions. The executor has to file the will in court and inform all known beneficiaries that the probate process has begun. Then the executor or his/her attorney must place a notice (or several notices) in a local paper. This will give creditors and unknown heirs a chance to step forward and stake a claim on your estate. A probate can be time-consuming and costly. Worse, it is only at the end of this process that your heirs can access the assets you left behind.

Revocable Trust

Trusts keep your estate out of probate and your private affairs beyond the public scrutiny of prying eyes. There are different types of estate planning trusts you can use. The revocable living trust is the most commonly used trust for estate planning purposes. The assets you place in this type of trust go directly to the named beneficiaries without passing probate. You can be both grantor and trustee of such a revocable trust. It is also referred to as an inter vivos trust. You retain control over the assets even if, technically, you no longer own them – the trust does. Because you still control the assets in a revocable trust, they may be considered in the valuation of your estate. They will skip probate but will likely include living trust assets in figuring out the estate tax your heirs have to pay. Majority of Utahans estates will likely not end up having to pay estate taxes. The current exemption is at $5.45 million per individual, twice this for married couples. As a rule, if you pass on with an estate that’s worth less than this amount, no estate taxes are due.

Irrevocable Trust

If your estate exceeds the exemption, a wise strategy is to use an irrevocable trust to hold your estate assets. The terms of an irrevocable trust cannot be changed once it has been set up. Therefore, as grantor, you no longer control the assets in an irrevocable trust. That is now a task that falls on the trustee. Assets in an irrevocable trust are exempt from probate and are not part of the valuation of a decedent’s estate. This could mean substantial savings in terms of estate taxes for your heirs. A Medicaid Trust is a power irrevocable trust into which you can convey assets. Once you do, you can become eligible to have the government cover 100% of nursing home costs.

Living Will

Sound estate planning should also make provisions for your care in the event you’re unable to do so yourself. Towards this end, you need to have a health care declaration, also known as a living will. This gives someone you name (and trust) the power to make healthcare decisions on your behalf if you become incapacitated. You may already have made your wishes known to your spouse or adult children. But if you don’t have it down in writing, the state could intervene and a legal mess can ensue. This at a time when your family cans least affords to deal with one. Along the same vein, it’s prudent to give someone power of attorney over your financial affairs. This could already be the trustee or your financial advisor, but again, this has to be in writing. When you inform them of the task you’re asking them to perform for you, make your wishes clear. Understandably, this could be a difficult and emotional conversation. But, if you want your wishes to be honored, it is a conversation you must initiate. When you can no longer make decisions for yourself, the people you want on your side are those you can trust to carry out your wishes.

Insurance

Life insurance is often included in carefully thought-out estate planning checklist. Life insurance benefits can provide continued income for your loved ones at your death. An estate planner typically advises creating an irrevocable life insurance trust (ILIT) to hold a life insurance policy. This can be especially prudent if you know you’re leaving behind an asset-rich but cash-poor estate. Your estate may consist of priceless heirlooms and antiques that place it well outside the current exemption. In this case, it makes sense to create an ILIT to hold your life insurance policy. Since trust assets are outside probate, your heirs will have access to the life insurance benefits sooner. They can then use some of this money to pay for any estate taxes that become due. Life insurance is not the only type of insurance you should include when planning your estate. Consider taking out disability income insurance. This can replace your income if you’re suddenly injured and can no longer work. There is also long-term care insurance to help pay for your care in the event of a prolonged illness. The more safety nets you have, the greater your chances of not hitting the ground with a crashing thud.

Bank Accounts and Beneficiaries

Make sure you have a beneficiary for your bank and retirement accounts and that this is kept current. Naming a beneficiary automatically makes these types of account ‘payable on death’ to the beneficiary. If the beneficiary is an ex-spouse or deceased, your present heirs will have a tough time accessing the funds. Worse, this can result in your estate having to go through probate, which would cause additional delay. Stocks and brokerage accounts can be registered as well so they transfer to your named beneficiary upon your demise. Keeping your list of beneficiaries current can be easily overlooked. However, something as simple as this can cause major problems for your heirs down the road. As your life circumstances change, your plans for your estate could evolve as well. Keep in mind that laws that impact estate planning can change too. An experienced estate planning lawyer or professional can prove to be invaluable in terms of keeping up with these changes. This is all the more true if your estate plan includes offshore trust vehicles.

Importance of Estate Planning

Estate planning helps an individual to decide how his/her assets will be managed and owned after their death or incapacitation. It is a tax-proficient, easy way of transferring the assets to the family. Below lists reasons that estate planning is important:
• Plan how the assets are to be segregated: In the absence of an estate trust, governments may decide on the allocation of assets. It could mean that a friend or a non-family member could get the assets ahead of the immediate family members. Hence, it is important to plan the allocation of assets so that the right people who the grantor of the estate planning deems to be the beneficiaries are allocated the assets.
• Proficient and faster transfer of assets: Without a plan, many estates take a long time to settle, as disputes may arise among the family members on the allocation of the assets. Hence, it is important to have a plan in advance so that the estate can be transferred proficiently to the beneficiaries.
• Plan how assets are managed during their lifetime: Estate planning can also help an individual in deciding who will manage and own the assets when the grantor is alive but is not in a position to manage the assets due to an accident or illness.
• Reduce fees and taxes: As mentioned above, without an estate plan, there can be a lot of fees and taxes involved in the transfer and segregation of assets. Hence, with an estate plan, the grantor can reduce fees and taxes, which will help avoid more money being taken out of the estate to pay the said fees and taxes.
The tangible assets in an estate may include:
• Homes, land or other real estate
• Vehicles including cars, motorcycles or boats
• Collectibles such as coins, art, antiques or trading cards
• Other personal possessions
The intangible assets in an estate may include:
• Checking and savings accounts and certificates of deposit
• Stocks, bonds and mutual funds
• Life insurance policies
• Retirement plans such as workplace 401(k) plans and individual retirement accounts
• Health savings accounts
• Ownership in a business
Once you inventory your tangible and intangible assets, you need to estimate their value. For some assets, outside valuations like these can help:
• Recent appraisals of your home
• Statements from your financial accounts

When you don’t have an outside valuation, value the items based on how you expect your heirs will value them. This can help ensure your possessions are distributed equitably among the people you love.

How to Choose an Executor

In addition to drawing up your will and trusts, you’ll also have to choose an executor. Your executor will be responsible for administering your assets after your death and ensuring your final wishes are met. An executor’s duties may include:
• Filing court papers to begin the probate process
• Taking inventory of the entirety of the estate
• Distributing assets to named beneficiaries
• Filing final personal income tax returns
• Paying remaining bills, including taxes and funeral costs

Often, people choose a family member, such as a child or spouse, to fill this role. You can also select a friend. What’s important is to make sure you pick someone who is dependable, trustworthy and organized. Also consider a person’s age and health, as you want your executor to be around after you’re gone. If your chosen executor lives in a different state, be sure to check your state’s laws as there may be requirements regarding an out-of-state executor.

Free Initial Consultation with Lawyer

It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!

 

About Ogden Utah

Ogden, Utah

From Wikipedia, the free encyclopedia

 

 

Ogden, Utah
City

From top left to bottom right: Ogden High School, Weber State University Bell Tower, Peery’s Egyptian Theater, Downtown, Gantry Sign, aerial view

Flag

Nickname: 

Junction City

Motto: 

Still Untamed

Location in Weber County and the state of Utah

Coordinates: 41°13′40″N 111°57′40″WCoordinates: 41°13′40″N 111°57′40″WCountryUnited StatesStateUtahCountyWeberSettled1844IncorporatedFebruary 6, 1851 (As Brownsville)Named forPeter Skene Ogden^[1]Government

 

 • TypeCouncil-Mayor • MayorMike CaldwellArea

^[2]

 • Total27.55 sq mi (71.35 km²) • Land27.55 sq mi (71.35 km²) • Water0.00 sq mi (0.01 km²)Elevation

 

4,300 ft (1,310 m)Population

 (2020)

 • Total87,321 • Density3,169.55/sq mi (1,223.84/km²)DemonymOgdenite ^[3]Time zoneUTC−7 (MST) • Summer (DST)UTC−6 (MDT)ZIP Codes

84201, 84244, 844xx

Area codes385, 801FIPS code49-55980^[4]GNIS feature ID1444049^[5]Websitehttp://ogdencity.com/

Ogden /ˈɒɡdən/ is a city in and the county seat of Weber County,^[6] Utah, United States, approximately 10 miles (16 km) east of the Great Salt Lake and 40 miles (64 km) north of Salt Lake City. The population was 87,321 in 2020, according to the US Census Bureau, making it Utah’s eighth largest city.^[7] The city served as a major railway hub through much of its history,^[8] and still handles a great deal of freight rail traffic which makes it a convenient location for manufacturing and commerce. Ogden is also known for its many historic buildings, proximity to the Wasatch Mountains, and as the location of Weber State University.

Ogden is a principal city of the Ogden–Clearfield, Utah Metropolitan Statistical Area (MSA), which includes all of Weber, Morgan, Davis, and Box Elder counties. The 2010 Census placed the Metro population at 597,159.^[9] In 2010, Forbes rated the Ogden-Clearfield MSA as the 6th best place to raise a family.^[10] Ogden has had a sister city relationship to Hof in Germany since 1954. The current mayor is Mike Caldwell.

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If you’ve got people in your life who you love and want to take care of, it’s wise to build an estate plan. This plan, which you can put together with the help of an estate planning specialist, will make sure loved ones are taken care of in the event of your death. An estate plan is more than just drawing up a will. It also involves formalizing how you want to be looked after (medically and financially) if something happens to you, or if you’re unable to make your own decisions later in life. Your estate plan will also clarify how you want your assets to be protected during your lifetime and distributed after your death. State planning entails the preparation of will or codicil, setting up trusts, bequeathing gifts to persons or entities and/or granting authority to do certain acts by way of power of attorney. This discuss will explain the various forms of estate planning and highlight its benefits.

Reasons to Create Your Plan

Very few people wake up in the morning and wish they could spend the day working with their attorney to create an ‘estate plan.’ However, creating (or updating) a plan is among the most important things you can do. When you do, you can:
• Ensure the property you have accumulated over your lifetime goes exactly where you want it to go and when. If you don’t have a will or living trust, the state has a distribution plan for you, which may or may not be in accordance with your wishes.

• Give directions to be followed in case you become incapacitated and can’t make decisions for yourself.
• Organize your affairs and designate who will handle them when you are gone.
• Appoint a guardian for any minor-aged children.
• Provide for any special needs your loved ones may have.
• Minimize possible estate taxes and costs.
• Specify the type of funeral arrangements you would like.
• Remember and provide for friends, pets, and organizations you care about but are never a part of the default state distribution scheme.

By planning, you also make things easier for your family. If something happens to you, it will already be a very difficult time for your family and other loved ones. How wonderful it will be if they know exactly what you want to have happen and have the means at hand to follow your wishes. Consider the planning you do now to be your final future gift to your loved ones. While estate planning can entail some difficult choices and means confronting uncomfortable issues, it does provide a sense of relief and peace of mind when it is done. You’ll know that you have done your best to plan and provide for yourself and for loved ones, as well as for the causes you’ve cared about during your lifetime. There is great satisfaction in knowing what your legacy on earth will be.

Will

A valid will is generally type written, dated, and signed by you as well as two legally competent witnesses. States differ as to the exact requirements for a valid will and whether a handwritten will, with or without witnesses, are valid. The probate court oversees administration of a valid will at death to carry out your instructions. The court charges probate fees to administer an estate and the documents and proceedings are public record.

Revocable Living Trust

This replaces the will as the main document disposing of your property. You might hear it referred to as a “living trust” or “RLT.” The trust is created while you are living, and the power to change and even revoke it can be retained. Most often people serve as the trustee for their own revocable living trust. A living trust requires that you actually transfer your property into it for it to be effective. A living trust allows assets to pass to heirs outside of the probate process, potentially saving probate fees, and keeps your affairs private. Typically, if a living trust is recommended your estate planning lawyer will also suggest a will as a backup document, to transfer any assets that weren’t included in your trust at the time of your death.

Beneficiary Designations

Your will or living trust does not control distribution of assets such as your IRA, commercial annuities, and some other assets at death. Your IRA or annuity administrator will distribute these types of assets according to a beneficiary designation form on file with their office. These are the forms you fill out when you establish IRAs or other types of retirement plans, or purchase a commercial annuity or life insurance policy. This form directs the administrator as to who will receive whatever remains upon your passing. You can also request a beneficiary designation for a bank or investment account. Since your will and living trust do not apply to these important assets, these beneficiary designations can have a profound impact on how your overall estate is distributed and should be part of any coordinated plan.

Power of Attorney (POA) for Financial Matters

This document grants to someone you trust the ability to act on your behalf for a variety of potential transactions and responsibilities. You decide when the POA will become effective and the extent of the authority granted. A POA is only effective during your lifetime and automatically terminates at your death.

Health Care Power of Attorney (HCPOA) for health care decisions

This document appoints someone to make decisions for you regarding medical treatment if you are not able to make these decisions for yourself. It allows you to specify who is in charge of making critical treatment decisions and, perhaps more importantly, who does not have that authority.

Physician’s Order for Life Sustaining Treatment (POLST).

This document describes what health care treatment you want in case of an emergency. You work with your doctor to document your wishes regarding resuscitation and other life sustaining procedures.

Managing and Distributing Your Wealth

You might conceive of the estate planning process as constructing a pyramid from the ground up. Primarily, you want to do what you can to ensure your own well-being. In so doing, keep in mind that it’s not selfish to look out for yourself! Only by meeting your own needs now and in the future are you able to build the next level of the pyramid. If you’re fortunate enough to accomplish some important basics, you’re then in a position to provide for family members and other loved ones. Thereafter, if you have the desire and the means, it becomes appropriate to think about a legacy you can leave for causes dear to you in addition to family and friends.

The Benefits of Estate Planning

For the management of an individual’s property in the event of incapacity
In circumstances where a person is unable to manage their properties or finances due to severe illness or unavailability, an estate plan sets helps a person properly determine how their assets should be managed. A power of attorney, personal directives through letters of instruction and trusts can be effective tools for proper estate management.

For proper distribution of assets

Estate plan is very beneficial for accurate distribution of an individual’s assets. Wills, codicils, deeds of gifts and trusts enables an individual determine how their assets will be distributed to their beneficiaries after their death to prevent disputations in future. Without an estate plan, the court will determine how the assets of a deceased will be distributed.

For the protection of beneficiaries

An estate plan invariably protects the interest of beneficiaries by ensuring that their shares are properly specified and preserved. If an individual has a child who is a minor, the individual can designate guardians and trustees who will oversee the financial and other needs of the minor. On the other hand, if the individual’s children are adults, but are unable to manage finances or assets, the individual can create a trust to protect the children from making bad decisions.

For a speedy and efficient transfer of an individual’s assets

The deed of gift and trusts are very speedy and cost effective ways to transfer one’s assets to a beneficiary. Without proper estate plan, the process of transfer of assets may be extremely cumbersome. Estate planning helps an individual to identify cost effective and peaceful way to transfer their asset to their beneficiaries either during their lifetime or after their death.

To minimize cost and avoid disputes

An estate plan will specify how an individual’s assets will be managed and distributed to beneficiaries thereby leaving no room for speculations and confusion. Hence this will prevent disputations and invariably save time and money.

To minimize estate taxes

The significant loss of a part of one’s estate to the payment of taxes is a factor that should motivate people to establish an estate plan. Through strategic planning, people can substantially reduce or eliminate taxes by setting up trusts as part of their will, living trusts or bequeathing gifts to their beneficiaries during their lifetime. In conclusion, it is important to note that not every form of estate plan is suitable for everyone.

Each form of estate planning has its distinct and unique features and people’s. If an individual desires a speedy and cost effective process of property transfer, it’s important to consider the various forms of estate plan that will help the individual achieve their desired purpose. For example, executing a deed of gift or setting up trusts depending on the individual’s preference can be preferred to making a will because of the lengthy process of obtaining probate. Choosing the appropriate estate plan can ensure simple, tax efficient and organized transfer of assets to beneficiaries, it removes uncertainties and prevents disputes.

Factors To Consider In Estate And Financial Planning

Many individuals delay estate planning in Tracy because it involves end-of-life issues. However, regardless of your age or health, it’s always in your family’s best interests to consult an estate planning lawyer sooner, rather than later. Unexpected tragedies occur all too often; by dealing with these matters promptly, you can ensure that your family’s financial future is protected in the event of your passing. When you meet with an attorney to address matters such as your last will and testament, you’ll need to consider the following factors.

Evaluate Your Financial Situation

After scheduling a meeting with an estate planning lawyer, it’s time to gather together important financial documents. Review all of your financial information to determine the total value of your assets, and your current and anticipated cash flow. Compare your cash flow and assets to your total liabilities to determine your net worth. Consider other factors that may affect your finances in the future, such as the rising cost of living, your retirement or your spouse’s retirement, and unexpected, yet significant expenses, such as those related to a major illness. By understanding your particular financial situation, your estate planning lawyer can help you develop a sound financial plan for the future and for your heirs.

Consider Your Beneficiaries’ Needs

When you create a will with the help of your estate planning attorney, you’ll designate beneficiaries for your assets. You’ll also designate beneficiaries for your life insurance policy, retirement accounts, and similar accounts. It’s entirely your decision as to how to divide your estate among your family members, friends, or charitable organizations. However, when designating beneficiaries, you should consider their future needs and their spending habits. Many individuals earmark funds in a trust to cover specific expenditures, such as college tuition or special needs expenses.

Reduce Your Taxable Estate

Estate and income taxes can take a significant portion of the assets you allot to your beneficiaries. Your estate planning lawyer can help you develop efficient strategies to minimize tax obligations. You might also consider purchasing a life insurance policy that will cover the estate tax your heirs will owe.

Create An Inventory Of What You Own And What You Owe

Compile a comprehensive list of your assets and debts, including account numbers and contact information, as well as names and contact information for your important advisers. Keep the summary in a secure, central location – along with original copies of important documents and provide a copy of the summary for the executor of your will. This list could be a piece of paper or also a digital file kept in a secure location.

Develop A Contingency Plan

An estate plan allows you to control what would happen to your property and assets if you or your spouse passed away today. It also puts a documented plan in place so that if you became incapacitated, your family could carry on your affairs without having to go through court. This includes a strategy for providing income if you were to become disabled and covering potential expenses for care giving that may be needed at some point.

Provide For Children And Dependents

A primary goal for many estate plans is to protect and provide for loved ones and their future needs. Your estate plan should include provisions for any children, including naming a guardian for children under age 18 and providing for those from a previous marriage if you remarry, your assets may not automatically pass to them.

It also would specifically address the care and income of children or relatives with special needs that must be planned carefully to avoid jeopardizing eligibility for government benefits.

Protect Your Assets

A key component of estate planning involves protecting your assets for heirs and your charitable legacy by minimizing expenses, and covering estate taxes while still meeting your goals. If necessary, your estate plan would include specific strategies for transferring or disposing of unique assets like a family-owned business, real estate or investment property, or stock in a closely held business. Many people use permanent life insurance and trusts to protect assets while ensuring future goals can be met.

Document Your Wishes

If you want your assets distributed in a certain way to meet financial or personal goals, you need to have legal documentation to ensure those wishes are followed if you die or become incapacitated. This includes designating beneficiaries for your life insurance policies, retirement accounts and other assets that are in line with your goals. It also means ensuring that titles of material assets, such as automobiles and property, are named properly. Work with an attorney to be sure you have an updated will disposing of your assets, a living will reflecting your end-of-life wishes, as well as powers of attorney for health-care and financial matters.

Appoint Fiduciaries

To execute your estate plan, you must designate someone to act on your behalf if you are unable to do so as executor of your will, trustee for your assets, legal guardian for your dependents and/or personal representative or power of attorney if you became incapacitated. You need to be sure your fiduciaries are aware of and agree to their appointments, and that they know where to find your original estate planning documents.

Fiduciaries can be family members, personal friends or hired professionals such as bankers, attorneys or corporate trustees. Whether you are just starting out or have accumulated wealth over a lifetime, an up-to-date estate plan helps you minimize the impact of unexpected events on you and your family by preserving, protecting and managing your assets. A financial advisor can help you create a financial security plan to meet your goals, and provide tools and resources to build an estate plan that makes an impact well into the future.

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It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!