Should I get a Will or a Trust in Utah?

Deciding between a Last Will and Testament and a Living Trust in Utah can be daunting. Wills fill many roles in an estate plan, but a Trust is either: 1) a nice supplement to a Will; or 2) a critical piece of the estate plan. How can you tell which role a Trust will fill in your estate plan? Based on your age, stage of life, risk factors for disease, and business interests, you can decide what you need.

Age and Probate Avoidance

Probate is the court-supervised process of transferring assets of a deceased person. One of the key differences between a Will and a Utah Trust is the potential to avoid the probate process through a Trust. While a Will governs the distribution of assets, it does not exempt assets administered under its authority from the probate process. However, a Utah Living Trust will fully govern and administer any assets held under its name, exempting Trust assets from probate.
Due to this probate-avoidance quality of a Living Trust, many aging Utahns elect to have a Trust. For anyone with a terminal illness or expecting to pass away within a short period due to age, a Trust is a crucial element of any Utah estate plan. However, for younger Utahns, a Trust may only be an added upgrade to an estate plan as far as probate avoidance is concerned.

Providing for Minor Children

Most estate plans for parents and grandparents provide in some ways for minor beneficiaries. Sometimes, the funds left to minors come from investments and assets, and other times the funds come from life insurance proceeds. Whenever these proceeds are left directly to a minor child, that child's legal guardian - whoever that may be - is the steward of those funds and will manage them until the child is an adult.
Through a Will, any asset can be transferred to a minor child with ease, whether to that child directly, to a custodian, or through a Trust created at the time of the administration of the Will. However, any option placing conditions of receipt of those assets until a time greater than age 21 would be through a Trust. That Trust can be created as part of the administration process of the Will, or as part of a Living Trust. The administration of the Will is tied to the probate process, so planning for minor children through a Living Trust is far more efficient and is not contingent on court delays and filings.
If any funds left for minors will not be needed for several months following the death of a parent, then a Living Trust is merely a convenience in administration. However, if those proceeds will be needed for a child's support within weeks after the death of a parent, then a Living Trust is likely a far better option for providing for minors.

Planning for Incapacity

A Last Will and Testament is of no effect until the person signing it (Testator/Testatrix) is deceased. However, a Utah Living Trust is effective immediately upon signing and from that point governs any assets owned by the Trust.
In situations where someone loses capacity to manage their own financial affairs due to stroke, Alzheimer's, dementia, or any other ailment, a Will is not effective. Family members must then go to court to obtain a costly conservatorship to manage the finances of their loved one. While a power of attorney can sometimes mitigate the need for a conservatorship, many financial institutions and title companies will not accept a power of attorney after a certain period of time has passed, even though they are required by law to do so.
A Trust immediately manages the assets held by it, so anyone occupying the office of Trustee can manage those assets. During the lifetime of the grantor of the Trust, that is usually the grantor. However, if the grantor becomes disabled or resigns, the new Trustee can manage the Trust without the need for court supervision.
A Trust then is a key element of an estate plan for anyone with risk factors for losing capacity to manage their own finances.

Closely-Held Business Interests

Finally, one more component in the decision between a Will and a Utah Living Trust is whether or not the grantor has a closely-held business interest. Most likely, this takes the form of a business owned by the grantor and a few other people at most. These small businesses often rely on the relationships and skills of the owner, rather than a smooth-running independent operation.
If your business is such that it would not be viable without your involvement after 6 months, then probate is not an acceptable option if you were to pass away. Through internal documents and a Utah Living Trust plan, we are able to ensure your loved ones can sell or manage your business affairs immediately following death or accident, instead of picking up the pieces months later when there is little left to manage.
For most small business owners, a Utah Living Trust is a key component in their estate plan, as a Will alone would not do the job.

Conclusion

If you still have questions about whether or not your estate plan includes a Utah Living Trust, feel free to schedule a free phone consultation here online or give us a call at (801) 896-4377.
Republished with permission from the Middle Class Estate Plans Blog

How can a consumer decide what service to use for a Utah estate plan?

Utah estate planning takes many different forms, depending on the consumer's needs and knowledge base, as well as the expertise and know-how of the attorney involved. For many families, estate planning is a simple correction in life insurance beneficiary designations. In others, it can be as complicated as multiple business and trust instruments to avoid a high estate tax rate. Regardless of the level of planning needed in any given situation, the problem remains the same: How can a consumer differentiate an overly-expensive plan from a plan that lacks the depth to contemplate their basic needs?

An estate plan can range in price from $50 up to tens of thousands of dollars, depending on what is needed. Many online do-it-yourself living trust services cost a few hundred dollars or less, while a law firm may charge $10,000 or more for any clients in need of estate tax planning. The question remains, which service should the consumer choose? The three main factors to help in this decision pertain to the consumer's need for expertise, the gaps in efficiency between different providers, and the level of customization required.

The Need for Expertise - Law Firms Win

Estate planning is not rocket science or brain surgery, but there are several moving parts and contingencies. In addition to distribution of assets, a properly-structured estate plan accounts for changing family dynamics, changing asset structures, access to public benefits, dispute mitigation, and other factors. Further, there are many options available to consumers that they may not even know exist.

At most law firms providing estate planning services, the expertise to skillfully handle an estate matter is not in question. Some attorneys can become complacent in their research over time, but this can be easily-vetted through viewing their publication history.

Do-it-yourself options, on the other hand, often fall short in this regard. Demographic surveys that generate an estate plan rarely if ever have the capacity to account for family dynamics, blended family scenarios, and the unique difficulties facing business owners in estate planning.

Efficiency Gaps - Law Firms Lose

Historically, estate planning could be very expensive due to an attorney's drafting fees. With the technological advancements of the computer and internet age, estate planning has become much more accessible through software automation. For example, most 'complex' trusts drafted in the 1980s could be drafted by a basic estate planning computer program within 15 minutes of data entry. This has allowed a much greater level of customization and multi-dimensional planning at an affordable rate.

However, many law firms have not updated their systems or software in years. Some firms use basic templates that have been in the archives for decades, while other firms draft every document from scratch. Ultimately, the consumer bears the costs of inefficiency.

Most online do-it-yourself programs can generate a basic estate plan within minutes for a customer completing a demographic and preference survey. However, while these plans seem to be cost-effective in the drafting phase, a poorly-structured plan can fall apart and cost a family tens of thousands of dollars in legal fees to clean-up the damage caused by ineffective planning. Customization is key to any effective estate plan.

Level of Customization - Varies Greatly

The degree to which any estate plan will be effective hinges on that plan's ability to account for the family, the assets, and the situation at any given time. Do-it-yourself systems consistently fail in this regard. While they may work if one were to take a snapshot of the estate planning situation at the time of the drafting. they rarely account for any substantial changes in the life of the consumer.

Sadly, a consumer's ability to discern whether an attorney-drafted plan will adapt to new circumstances is nearly impossible. Some attorneys may simply change some names on a generic template found online, while others will draft every word from scratch. Still more may rely solely on a software package to draft an estate plan, while others will use the software as a starting point in an hours-long customization process.

As with assessing an attorney's expertise, an attorney's tendency to truly customize an estate plan may be easily assessed by determining whether that attorney takes pride in his or her work through publications. Most estate planning attorneys that truly focus on that practice area tend to publish articles fairly regularly.

At Middle Class Estate Plans, we pride ourselves on the level of expertise and customization we deliver to our clients. Through our innovative client participation system, we are also able to deliver one of the most cost-effective ways for middle class families to plan for their loved ones. You can find out more about our client participation system at the link here.


This material has been published with consent from middleclassestateplans.com.


What are the Fees for Our Services?

Usually, I try to keep these blog posts focused on substantive estate planning or business law education. Today, however, focuses more on a question that seems like a mystery in the legal world today: "what are the fees?"
That's a good question, and it's sometimes hard to say for a good reason: every case is different. That being said, I'll walk you through a few types of fee systems in today's post.
1. Business Services
Simple Business Organizations: Most small businesses are simple to set up. We offer a low flat-rate fixed fee to obtain an Employer Identification Number, register the business with the state of Utah, and, if necessary, file with the IRS to obtain "S-Corp" status. As of the time of this publication, our flat fee for that service in Utah is $300, which includes the state's $70 registration fee but excludes any other local or regulatory fees.
Operating agreements, officer elections, minutes for annual meeting, and resolution establishing banking authority: These simple and often required forms are very simple for most small businesses where husband and wife are owners. They become increasingly complicated as different individuals, relationships, and business planning objectives come into play. For most small businesses, these services range between $200-1,000 depending on the level of complexity involved. Larger operations or businesses with unique needs sometimes exceed this amount, but a rate quote is always provided before work begins.
Hourly business services: Anything not listed above usually falls under an hourly system rather than a flat fee system. This happens when the service scope is more difficult to estimate up front. We always do our best to provide an accurate estimate, and often absorb the cost of time exceeding the estimate.
2. Estate Planning Services
Every estate is different and there are dozens of variables at play. That being said, the fee structure usually follows the complexity of the case, and covers four main components: 1) gathering needed information; 2) drafting the documents; 3) execution of documents; and 4) implementation and follow-up.
My practice is heavily-focused on estate planning, so research time is never a component of the fee as in most firms. The initial consultation is likewise not a component for billing purposes. Instead, most of the fee is based on the time needed to draft, execute, and implement the plan. A flat rate is usually quoted at the initial consultation.
The drafting of an estate plan, historically, was perhaps the largest part of the bill. However, modern technology has made it possible to enter client information and have a template within minutes. The drafting time, then, is limited to the time it takes to customize the plan to the family dynamic, goals, and asset profile instead of wasting time on standard language. This software allows me to take 40% less time than a traditional copy/paste template method, so those savings are passed on to the client.
Simple Will-based plans tend to start around $400 for individuals and $600 for couples. As we add business interests or children from prior marriages, the complexity and fee increases, but rarely do Will-based plans exceed $1,000.
Living Trust-based plans tend to start around $1,000 for the Trust, pour-over Will, advance health care directive, power of attorney, and deed and title work. As we add business interests, complex family structures, and high-value assets, the complexity and fee increases. Most middle-class families tend to spend around $1,200-1,400, but Living Trust-based plans can sometimes exceed $3,000.
Asset Protection Trust-based plans are much more complex and customized than Living Trust plans, so they tend to range between $2,000-6,000 for the complete service. Factors determining cost include family structure; value of assets; degree of control of assets; and required maintenance and monitoring.
3. Estate Administration Services
Probate: Any estate administration involving probate relies on the court system. The court's fees for most probates tend to average $400 from beginning to end of the process. Some probate proceedings also require a published notice in the paper that can run anywhere between $250-500. There are other accounting and professional fees that make up a significant component of the costs of probate. Attorney fees for the simplest of probate cases tend to run at least $1,000 but most simple uncontested probate cases tend to require around $1,500 in attorney fees. Obviously, contested probate proceedings and more complex estates cab easily exceed those fees.
Trust Administration: most simple Trusts require little, if any, administration input from an attorney. Some trusts, however, need more attorney involvement. Most Trust Administration projects are billed at an hourly rate.
Conclusion: I hope you have found this helpful in understanding how our fee structure works. If you would like to learn more, feel free to reach out to us with any questions you have by calling us at 435-572-0807.

Love is in the Air: Get a Pre-nup

​Love is in the air: Get a Pre-Nup
As Valentine's Day approaches, so does spring and the wedding season. One too-often-forgotten step in marriage is a prenuptial agreement. While most people entering a first marriage have no use for a prenuptial agreement, there is a good reason why everyone entering a marriage who already has children needs one.
Spousal Rights in Inheritance
In Utah, if a married person with children from a prior relationship dies without a Will, the surviving spouse is entitled to the first $75,000 of the estate (adjusted for 2009 dollar value) plus half of the remainder. The children from the prior marriage only receive the other half of that remainder.
Even if this person's Will or Trust states that everything goes to their children, the spouse is still entitled to a spousal elective share, which amounts to roughly 1/3 of the estate, depending on which assets are exempted.
This amount is a floor and not a ceiling, so you can leave as much as you want to your spouse without a problem. However, if the goal is to leave everything to your children, your hands are tied.
Where a Prenuptial Agreement comes in
​A prenuptial agreement is a simple document wherein each side entering into a marriage discloses their assets and debts, as well as agrees to certain rules regarding those assets. This is the simplest way to waive that spousal share upon death.
Many couples choose to leave something to their spouse after death, but a valid prenuptial agreement is the simplest way to ensure that their hands are not tied in leaving assets to the children that they bring to the marriage.
If you or a friend are looking at remarrying this year, take a look into a prenuptial agreement to protect the children's rights in inheritance and to simplify the estate plan going forward.

Statutory Power of Attorney Form for Finances

The Statutory Power of Attorney Form for Finances is used to designate an agent to act on your behalf if you are unable to do so. These forms are often abused so be careful in choosing your agent, when the form becomes effective, and what authority your agent has. We have included a video explaining the form. You can download a PDF version of the form here.

poa-doc

 


Small Estate Personal Property Affidavit

This Small Estate Personal Property Affidavit allows heirs to receive the property of a deceased person without the costs of probate. It does not apply to real estate and has several value restrictions on it. Feel free to watch our video about completing the form and download the form here or on the Utah Courts website.

affidavit_personal_property

 


Power of Attorney over a Protected Person or Minor Child

The Power of Attorney over a Protected Person or Minor Child is a standard form provided by the Utah court system to allow parents and guardians a simple way to delegate their authority over the child to another responsible adult. This is usually done for school registration purposes or to allow a trusted adult caring for a child during the parents' vacation a way to admit the child to a medical facility. Feel free to download the form here or through the Utah Courts website. We have provided the video below as a way to show you how simple this form is and how to fill it out.

01_power_of_attorney_over_protected_person_or_minor_child


Utah Advance Health Care Directive Form

The Utah Advance Health Care Directive form allows you to designate an agent over your medical decisions if you are unable to make those decisions for yourself. Watch our video about completing the form and download it here or at the University of Utah's Center on Aging.

 


Small Estate Motor Vehicle Affidavit

The Small Estate Motor Vehicle Affidavit allows heirs to transfer ownership in up to four motor vehicles belonging to a deceased person without the costs of probate. Be careful to examine the form to ensure that the estate falls under the form's scope. Feel free to watch our video about completing the form and download the form here or on the Utah Courts website.

Download the form here: affidavit_vehicle

 


Series: Everyday Estate Planning - Planning for your Bank Accounts

Unlike readollar-1362244_960_720l estate and some other kinds of assets, estate planning for bank accounts is very simple and can be done without an attorney's assistance in most cases.

For most bank accounts under $75,000 in value, the account is exempt from the probate process, so your heirs merely need to bring a small esta
te affidavit to the bank along with a death certificate to receive the funds. However, for non-exempt accounts, probate is required unless you follow one of the following procedures:

1) The simplest way to leave a bank account to someone upon death is a Pay-on-Death designation to the intended recipients of the funds in the account. You can list one or several persons to receive the funds in different percentage values upon presentation of identification and a death certificate. The chief advantage of this approach is its simplicity, but that is also its main downside. If the beneficiaries are subject to a judgment, divorce, bad business debts, or disability, the funds may not have their intended effect. Further, POD (Pay-on-Death) to minors comes with its own complications too numerous to address in this post.

2) Another way to leave a bank account to beneficiaries is through a Pay-on-Death designation to a Trust. The main advantage here is that the money will still pass to the intended beneficiaries, but with the contingency plans and flexibility offered through the Trust document. This tends to be the most common approach we use with our clients when coupled with a power-of-attorney to allow fund management during your lifetime if you become disabled while bypassing any court-ordered conservatorship requirements.

3) Finally, you may title the account in the name of your Trust during your lifetime. This eliminates the need for your Trustee to present proof of death to the bank and the associated waiting period to receive the death certificate. However, many people do not like the appearance of writing check out of their bank account. Further, some banking institutions do not allow this approach without exhaustive compliance and monitoring, negating the convenience factor.

Depending on your family situation, asset structure, and banking institution, any of these 3 options can be effective, appropriate, and convenient solutions to a common problem requiring probate for middle class families.

If you have any questions or concerns about estate planning for your bank accounts, feel free to contact us anytime at 435-572-0807.


This article is adapted from Tyler Melling’s upcoming book: Estate Planning for Utah’s Middle Class.
Tyler Melling is an estate planning attorney licensed in Utah, an adjunct professor of estate planning and probate law at Southern Utah University, and the author of The Utah Uniform Probate Code: A Quick-Reference Guide for Practitioners and Students