Utah offers some probate shortcuts for “small estates.” These procedures make it easier for survivors to transfer property left by a person who has died. You may be able to transfer a large amount of property using simplified probate procedures or without any probate court proceedings at all — by using an affidavit. And that saves time, money, and hassle.
Utah has a procedure that allows inheritors to skip probate altogether when the value of all the assets left behind is less than a certain amount. All an inheritor has to do is prepare a short document, stating that he or she is entitled to a certain asset. This document, signed under oath, is called an affidavit. When the person or institution holding the property — for example, a bank where the deceased person had an account — gets the affidavit and a copy of the death certificate, it releases the asset. The out-of-court affidavit procedure is available in Utah if the value of the entire estate subject to probate, less liens and encumbrances, is $100,000 or less. An affidavit may also be used to transfer up to four boats, motor vehicles, trailers or semi-trailers if value of estate subject to probate, excluding the value of the vehicles, is $100,000 or less. There is a 30-day waiting period.
Simplified Probate Procedures
Utah has a simplified probate process for small estates. To use it, an executor files a written request with the local probate court asking to use the simplified procedure. The court may authorize the executor to distribute the assets without having to jump through the hoops of regular probate. You can use the simplified small estate process in Utah if the value of the entire estate, less liens and encumbrances, does not exceed the homestead allowance, exempt property, family allowance, costs of administration, reasonable funeral expenses, and reasonable medical expenses of the last illness. The executor files a sworn statement that says the estate assets are less than the value described above, describes the estate assets, declares the executor has distributed assets to the inheritors, and sent the inheritors and known creditors a closing statement and provided them with a closing statement.
Can I avoid probate?
If you don’t own any land, and your estate is less than $100,000, no probate is required. It is possible to arrange your affairs so there is no estate to probate upon your death. For example, you can give all your property away the day before you die. You might also arrange that you own everything jointly with someone who you expect will survive you. “Joint tenancy with rights of survivorship” means simply that every person named on the title as your joint tenant who survives you will own the property without it becoming part of your estate. If you and your spouse own your home as “joint tenants”, upon your death (if you die first) your spouse will own the home without probate to transfer ownership. The same rule applies to ownership of all things you own, although the law does not usually include the power of joint ownership for such items of property as furniture or clothing or jewelry. Joint tenancy has disadvantages. If your child owns your bank account with you jointly, the child could take the money and spend it for herself. If a creditor gets a judgment against your child, the creditor could claim the account. If your child dies before you or gets divorced, the child’s spouse might become a part owner. If your child is a joint owner of your home, she could block you from selling it. There are also tax problems: if you give property away, you may be required to file a gift tax return; and if your child (to whom you deeded a joint tenancy) sells your home after your death, the child may have to pay capital gains tax. Probate of your estate including your home avoids the capital gains tax. Using a trust also avoids this tax. A safer method than joint ownership of monetary accounts is to designate the accounts to be “Paid on Death” (POD) to named beneficiaries. For example, you can make your spouse a co-owner of your accounts, and designate your children as POD beneficiaries on the account record. After your and your spouse’s deaths, any balance in the account will be paid to your children (who need only prove your death and their identities). Your children are not “owners” of the account while you are alive, so none of the children can make withdrawals, nor can their creditors. Another option is to give all your property to a trust that manages the property for your benefit while you are alive and distributes the property as you direct when you die. Such a trust is often called a “living trust” because you establish it while you are alive. It is also called “revocable” because you ordinarily retain the right to revoke the trust.
If you give your property to a trust, here are some things to think about:
• If the person who manages your trust is also one of your beneficiaries, that person may have conflicting interests. For example, your trust may have to pay for your medical care, which the trustee might not want to do because her inheritance would therefore be smaller.
• A trust does not receive the benefit of the statute of limitations created by publishing a notice to creditors in the same way a probated estate does. Such notices inform all your creditors to file claims within three months or be forever barred.
• If any of your property is not properly given to the trust, there may be an estate that must be probated anyway. Arranging a trust requires careful drafting of all necessary documents. It is helpful to have an attorney prepare the papers. This cost would come out of your pocket, while the cost of a probate is paid by your estate after your death.
Trusts are more useful in some circumstances than others. For instance, if you own real estate in more than one state, probate may be required in each state, so a trust might save money. If your estate is large enough to be taxable, a trust might be used to avoid some or all of the tax. The law of “intestate succession” determines who gets the property of someone who has no testament. Here is what the legislature has provided:
• If only your spouse survives you, your spouse gets the entire estate.
• If only your children (issue) survive you, they get entire estate, split equally among them.
• If both spouse and children survive you:
• if all your children are children of your surviving spouse, your surviving spouse gets your entire estate. OR
• if any of your children are children of a person other than your surviving spouse, your surviving spouse gets the first $75,000 of your estate plus half of the remainder; all your children split the other half.
• If only your parent(s) survive you, your parent(s) get your entire estate.
• If neither spouse, nor issue, nor parents survive you, your estate goes (in the order listed) to: your brother(s) & sister(s) or their issue; your grandparents or their issue.
A basic estate plan in Utah will usually consist of several documents:
• a revocable trust
• a pour-over will
• a general assignment of assets to the revocable trust
• a financial power of attorney
• a health care directive
For simple estate plans, some attorneys prefer to use a traditional will rather than a revocable trust, a pour-over will and a general assignment. Using a traditional will requires that the estate go through probate. When a person dies without an estate plan, the first question to ask is whether any of her property was held in joint tenancy or had a valid beneficiary designation attached to it. At death, property held in joint tenancy automatically passes to the surviving joint tenant. Property that is subject to a valid beneficiary designation (such as a retirement plan, the proceeds under a life insurance policy or, in some cases, a bank or brokerage account) passes to the beneficiary designated. When a person dies without an estate plan, she is said to have died “intestate,” and any property that is not disposed of under a joint tenancy arrangement or under a beneficiary designation is distributed under the rules of intestate succession. In Utah, the rules of intestate succession provide as follows: If the deceased person was married when she died, and if she has no descendants (children, grandchildren, etc.), or if all of her descendants are also her surviving spouse’s descendants, then all of her property passes to her surviving spouse.
If the person was married, and if she has descendants who are not the surviving spouse’s descendants, the surviving spouse receives $75,000 off the top, plus one-half of the balance of the deceased person’s property. The balance of the deceased person’s property passes to her descendants. If the deceased person was not married when she died, the property passes to her descendants. If the deceased person has no descendants, it passes to her parents, and if her parents are not living, it passes to her brothers and sisters or to the children of deceased brothers and sisters. Some people with very simple estates are content to rely upon joint tenancy arrangements, beneficiary designations and the rules governing intestate succession. However, one should consult with one’s attorney before deciding to go that route. At the very least, a person with minor children should have a simple will that nominates guardians for the children in the event the person dies while the children are still minors.
It is generally advisable to have a revocable trust rather than a traditional will. Where a revocable trust is used, the dispositive terms of the estate plan (i.e. the “who gets what” provisions) are contained in the revocable trust. A revocable trust accomplishes two important things. First, it avoids the need for probate of one’s estate after one dies, and probate is generally something to be avoided. Second, a revocable trust avoids the need for a court-supervised conservatorship in the event one becomes incapacitated. In Utah, the probate process is not as inconvenient as it is in many other states, which means the need to avoid probate is not as pressing in Utah as it is in some other states. However, a court-supervised conservatorship is always a burdensome process, and avoidance of that alone may be a sufficient reason to have a revocable trust. Note that a revocable trust avoids probate and a conservatorship only to the extent that a person’s assets are transferred into the trust. If the assets are not transferred into the trust, the revocable trust serves no purpose. As noted above, some Utah attorneys prefer to use a traditional will rather than a revocable trust for small, simple estates. Their reasoning is that probate in Utah is relatively easy; clients often do not transfer their assets to the revocable trust, in which case the assets must pass through probate anyway; and the preparation of a revocable trust, a pour-over will, a general assignment and the deeds to transfer real estate to the trust will cost more than the preparation of a traditional will.
The primary arguments in favor of using a revocable trust are that even with stream-lined probate procedures, it is still better to avoid probate; a probated will is a matter of public record, while a revocable trust is private; a revocable trust is helpful to avoid a court-supervised conservatorship; if the client owns real property in another state, a revocable trust will avoid the need for (and cost of) an ancillary probate in the other state; a revocable trust will avoid the need for probate if the client moves to a state that has very cumbersome probate procedures and most clients can and will get their assets transferred to their revocable trusts if they are given the appropriate guidance. Ultimately, a Utah client should discuss with his or her attorney whether a traditional will or a revocable trust best suits the client’s individual needs, and what the respective cost will be of each option.
How does a revocable trust avoid probate?
Property must pass through probate if it is held in the decedent’s name at the time of death, unless it was held in joint tenancy with another person or has a valid beneficiary designation. Property that is held in a revocable trust is not titled in the name of the decedent. It is titled in the name of the trustee of the trust. It is therefore not subject to probate. Property held in a revocable trust avoids probate even if the decedent was the trustee of her own revocable trust. Indeed, in most cases, a person will serve as trustee of her own revocable trust. What matters is that title to the property was held by her in her fiduciary capacity, as trustee of the revocable trust, and not in her own name as an individual. Merely having a revocable trust does not avoid probate. The decedent’s property must be held in the revocable trust. Only property that is held in the revocable trust will escape probate. Property that is not held in the revocable trust will have to pass through probate, unless it is held in joint tenancy or has a beneficiary designation. Once a person signs a revocable trust, she should immediately transfer her property to the trust. For real estate, this is accomplished by signing a deed transferring the property from her name, as an individual, to her name as trustee of the trust. If a person acquires real estate or opens new bank or brokerage accounts after the revocable trust is created, title to that newly-acquired property should also be taken by her in her capacity as the trustee of the trust, not in her individual capacity. Some property, such as property that is held in joint tenancy and property that has a beneficiary designation need not, and should not, be held in a revocable trust. Property that is held in joint tenancy escapes probate. On the death of one joint tenant, it passes outside probate to the surviving joint tenant. One would not, therefore, hold joint tenancy property in a revocable trust. Similarly, property that has a valid beneficiary designation escapes probate. On death, it passes, outside probate, to the beneficiary designated. One would not, therefore hold a life insurance policy, a retirement plan or a bank or brokerage account in a revocable trust if the policy, plan or account has a beneficiary designated. Indeed, one cannot transfer ownership of a retirement plan to a revocable trust because only the employee may be the owner of the plan during her lifetime.
How does a revocable trust operate?
While the creator of a revocable trust is alive and mentally competent, she has complete control over the revocable trust and the property held in the trust. She can amend or revoke the trust at any time; she can withdraw property from the trust at any time; and she has complete control over how the trust assets are invested. If the creator of the revocable trust becomes incapacitated, the successor trustee identified in the trust will immediately step in and begin to manage the trust property. No court involvement will be needed. Similarly, when the creator of the trust dies, the successor trustee assumes control of the trust property and begins the process of paying creditors, paying taxes and distributing the property to the persons who are entitled to it under the terms of the trust, without the need for court involvement. Frequently, a husband and wife will create a revocable trust together. Most often, they will serve as co-trustees of the trust. They will have the power, acting together, to amend the trust at any time, and either spouse, acting alone, will be able to revoke the trust at any time. If one spouse becomes incapacitated, the other spouse will serve as sole trustee. Upon the death of one spouse, the trust may divide into several new trusts, as described under “Basic Estate Tax Planning” on this website.
What is the Probate Process in Utah?
To distribute the assets of the estate, the probate process in Utah must be completed. It can be quick and easy with informal probate or a lengthier process with formal probate. In either case, certain steps must be taken.
• An executor or administrator must be selected by the court if not named in the will. The job of this person is to contact all parties interested in the estate and managing the estate until probate is completed.
• The executor will open probate either with a formal petition to the court or an application to the court for informal probate. They must present the will to the court which will review it to determine if it is valid.
• An inventory must be conducted by the executor which includes the dollar value of all assets.
• The executor will notify creditors in writing and by publishing a notice in the newspaper.
• All debts, including taxes, must be paid out of the estate.
• The court will make a decision on any disputes over the will. It is the job of the executor to provide financial statements regarding all actions to the court for approval.
• Assets will be distributed or sold and the funds disbursed between the heirs. Once this process is finished, the case will be closed.
It is important to note that while the executor does carry power in this position to make decisions regarding the estate, they do not own the estate. They are limited to only the powers granted to them by the courts.
Probate Lawyer and Estate Attorney
When you need to speak to a probate lawyer in Utah, please call Ascent Law LLC for your free consultation (801) 676-5506. We want to help you.
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506
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