Estate Planning Frequently asked questions

What is the difference between a Will and a Trust?


  • A will is simply a statement of your wishes of what you want to have happen to your assets when you die.
  • A trust does that as well, but it is different because it can also hold and own property.

  • Because a trust can own property, any property that you place into the trust does not need to go through probate. Therefore, if you place all of your assets and property into a trust, your heirs can completely avoid the probate process because there are no assets to transfer out of your name after your death.





What is Probate?


Probate usually refers to a court process of administering your estate after you dies. During the probate process, the court declares a will valid and supervises and approves the distribution of assets of the person who has died, whether or not the person died with a will. The court also names the Personal Representative (formerly called Executor) of the estate. After being named by the court, the Personal Representative has the power to settle the affairs of the estate (such as paying final bills and gathering all of the assets for distribution to the heirs). The probate process takes a minimum of four months but often takes longer. Probate can take years, particularly when one or more heirs contests the will or distributions.

  • Probate is the court process that is used to transfer property out of a deceased person’s name.
  • During the probate process, papers are filed with the court to begin the process and the court appoints a Personal Representative (executor) of the estate.
  • The Personal Representative is chosen by whoever is nominated in the decedent’s will (if there is a will) or according to whoever has priority as determined by Utah statutes (in cases where there is no will).
  • After the Personal Representative is appointed by the court, that person has the authority to sign documents, transfer property and assets, and act on behalf of the deceased person.




How do assets pass to my heirs at death?


There are four general ways that most assets pass at death:

  1. Joint Ownership with Right of Survivorship. Property owned jointly with a right of survivorship (such as home held in joint tenancy) passes to joint owner upon your death, by operation of law.
  2. By Contract (beneficiary designation). Life insurance proceeds pass to the named beneficiary. Retirement, bank or investment accounts may have a named beneficiary.
  3. By Revocable Living Trust. Assets that have been transferred to the trust pass according to the terms of the trust.
  4. Through Probate (under the terms of your Will or, if there is no Will, under the terms of the intestate statutes). Any assets owned in your own name (and not passing in one of the above ways) pass through the probate process.




Why do I need an estate plan?


There are four main purposes for estate planning:

  1. To pass assets to heirs with as minimal complications as possible
  2. To avoid probate court
  3. To avoid family disputes over splitting up assets
  4. To minimize or eliminate estate tax liability




What is a Trust?


Like a will, a trust is often used to distribute assets after death, and a trust is usually created with a legal document. But, unlike a will, a trust can be used to own and hold property. A revocable trust is one that is revocable and amendable by the person(s) making it as long as they are living. A revocable living trust is a revocable trust created by a living person. If all of your assets are owned in a valid revocable living trust, all of your assets can pass to your heirs without any requirement to go through the court process called the probate process. Generally, in estate planning, when people refer to a "trust" they are usually referring to a "revocable living trust." A "revocable" trust is one that can be amended or revoked by the "Grantor" (the person who owns the trust). A "living" trust simply means a trust that was set up during the life of the grantor.

  • A Trust is basically a separate legal entity.
  • The GRANTOR transfers assets to the TRUSTEE, who manages the trust assets in accordance with the trust agreement for the benefit of the BENEFICIARIES.
  • You transfer all (or most) of your assets to the trust.
  • You are the trustee until your death or incapacity, so that you remain in control of your assets that have been transferred to the trust.
  • You are the beneficiary until your death.
  • You can revoke or change the trust agreement at any time before your death or incapacity.
  • There is no current effect on income taxes. The trust will not file a separate income tax return until after your death.
  • Upon your incapacity (if incapacity occurs), the trust agreement controls the management of the trust assets for your benefit until your death.
  • Upon your death, the trust agreement controls the distribution of your assets to your chosen beneficiaries. The probate court is not involved with this distribution.
  • A “pour-over” will is also written, to ensure that any assets not transferred to the trust will be transferred to the trust after your death and distributed under the terms of the trust agreement.




What about Estate Taxes?


There are a few things to understand about estate taxes in order to reduce or even completely eliminate any estate tax liability.

  • Marital deduction: You can give an unlimited amount of assets to your spouse at your death without your spouse having to pay any Federal Estate Taxes. However, your estate gets added to your spouses so that when the second spouse does, their heirs will have to pay Estate Taxes on the entire amount.
  • Estate Tax Exemption: If the value of your “Gross Estate” falls below the federal exemption, your heirs will not have to pay any Federal Estate Taxes. In 2018, the amount of the exemption is $11.2 million for individuals, and $22.4 million for married couples. If the total value of your gross estate is less than that, you will not have any federal estate tax liability. However, the amount of the exclusion is in a state of flux. As recently as 2001, the federal exclusion amount was only $675,000. If you have any potential federal estate tax liability, there are other estate planning tools that can be used to minimize or eliminate estate tax liability.




What is a Will?


A last will and testament is a legal document that sets forth your wishes for the distribution of the assets you have acquired during your lifetime. In your will, you also can name one or more persons to be the guardian of your minor children, if you should die with minor children. Additionally, in your will, you nominate who you want to be the Personal Representative (formerly called Executor) of your estate.




When is Probate required?


Probate is usually required to transfer assets held in your name after you die. If you own real estate or a bank account held in your name when you die, a probate proceeding is nearly always required to transfer those assets after you die. It may be possible to transfer clothing and other similar personal effects without a probate proceeding, but each situation is different. If your estate is worth less than $100,000 and does not include real estate, a simplied court process can often be used. We can provide advice regarding whether probate is required to family members of a deceased individual in each situation.




Do I really need a Will?


We recommend a will for everyone, but a will is not required by any law. If you die without a will, the government is not going to take your assets. (Of course, if you owe valid debts to the government at your death, the government may have rights to your assets after you die.) If you die without a will, your estate will be distributed according to the manner the Utah State Legislature has determined through statues. However, if YOU want to determine how your assets are distributed after your death, then a will is vital. Additionally, in your will, you can nominate one or more guardians for your minor children, if you should die with minor children.




What are some of the benefits of a Trust


In many cases, one purpose of a revocable living trust is to avoid the court process called probate. If all of your assets are owned in a valid revocable living trust, your estate can be divided after your death by your chosen trustee and completely settled in shorter time frame than the typical probate court proceeding. Another common purpose of a revocable living trust is to allow your family to more easily manage your assets while you are living, if you become incapacitated or incapable of caring for yourself. Also, in cases when estate tax may be owed after your death, a revocable living trust can save your estate (and your heirs) thousands of dollars in estate taxes after you have passed. For example, with a properly prepared and funded Revocable Living A-B Trust, married couples can effectively double the amount of their assets that pass to their heirs free of estate tax. Further, a revocable living trust can be used to avoid probate in multiple states, when you own real estate in multiple state. Trusts can be used for many other purposes.




Will the government take my assets after I die if I die without a will?


As discussed above, should you die without a will, your estate will be distributed according to the manner the Utah State Legislature had determined through statues. However, if you want to be the one to determine how your assets are distributed after your death, then a will is vital. Additionally, in your will, you can nominate who you want to be the guardian of your minor children, if you should die with minor children.




What will happen to my children after I die if I die without a will?


If you have minor children when you die and you do not have a will that nominates a guardian, there be a court hearing in which a judge will determine who will best be the guardian of your children. In a will, however, you can nominate who you want to be the guardian of your minor children after your passing, and if the will is valid, the court must respect your nomination in your will unless someone challenges your nomination.




Can I just type out my own will?


We do not recommend preparing your own will. However, if you follow the proper statutory procedures for preparing and executing a will, a will that you have prepared on your own would be a valid will. In order to give yourself and your heirs the best opportunity to have a legally valid will that complies with Utah law, we recommend that an attorney prepare your will and that an attorney supervise its execution.




What is a living trust?


A living trust is a trust that is created during your lifetime, as opposed to a testamentary trust which is created after you die as directed in a will.




My estate is small, so I do not need a living trust, right?


Many of the benefits of revocable living trusts apply regardless of the expected size of your estate. It is true that, for larger estates where estate tax may be owed, certain revocable living trusts can be used to save your heirs thousands of dollars in estate taxes. However, that is not the only benefit of a Living Trust. Even small estates can benefit from Living Trusts. If the trust document is properly drafted and administered and if all of your assets are owned in the trust, your heirs may be able to completely avoid the time and cost of a court probate process after your death. Another common benefit of a revocable living trust is to allow your family to more easily manage your assets while you are living, if you become incapacitated or incapable of caring for yourself.




If I am married, does my spouse need a will too or is my will enough?


Because it is impossible to know who will die first, you and your spouse should both have a will. Fortunately, because both the husband and wife often have the same desires for the disposition of their assets, personal respresentatives, guardians and other provisions, a will for your spouse can be created for no additional cost.





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