Probate

Legalese 101: Probate Court

 
Legalese 101 is our running series aimed at helping you understand key terms found in common legal documents. At J. Cutler Law we don’t just want to collect a paycheck, we want to make sure our clients’ legal needs are fully met. A fundamental part of that is ensuring that they completely understand the legal work we do for them.

Legalese 101 is our running series aimed at helping you understand key terms found in common legal documents. At J. Cutler Law we don’t just want to collect a paycheck, we want to make sure our clients’ legal needs are fully met. A fundamental part of that is ensuring that they completely understand the legal work we do for them.

 

You may have heard people suggest that it’s a good idea to avoid probate court. And it is. But many people don’t understand exactly why.

Probate court is the name of the specific court that oversees the way a deceased person’s property is distributed to others. It also covers crucial matters like who will care for any of the deceased’s minor children.

So, in the most basic sense, probate court makes sure that your things go to the right people once you die and that your minor children will be properly cared for.

That might make you wonder why there’s talk of avoiding it. It doesn’t sound like such a bad thing, right?

Although probate court serves an important purpose in many cases, the process of going through probate can be expensive and time consuming for the friends and family you leave behind. Probate court handles cases responsibly, as you’d expect, but there’s no guarantee that they’ll decide to distribute your possessions, or provide for the care of your minor children, in the way that you would have.

The good news is that probate court is avoidable. If you’ve arranged a proper estate estate plan then you can avoid probate and ensure that your children and are cared for by the person you trust and your possessions are given to the correct people.

Call J. Cutler Law Today

J. Cutler Law is one of Utah’s most trusted estate planning firms and we’d be happy to answer more of your questions and help you arrange the estate planning you need. We can help you outline all of your estate planning options based on your needs and advise on the best course of action. Call us today for a free consultation at (801) 618-4469 or click the appropriate button to schedule a free consultation or begin the estate planning process.

What Everyone Needs to Know About Estate Planning

Curious about estate planning but don't know where to start?

Then check out the slideshow below to learn the basics about estate planning. (Click the bottom right corner for full-screen).

Call J. Cutler Law Today

To determine what estate planning documents are best for you, or to answer any of your Estate Planning questions, call J. Cutler Law for a free consultation at (801) 618-4469 or contact us online.

How Do I Know If My Estate Is A Small Estate?

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Not all estates need to go through the probate process, and not all estates need to be written as trusts.

For many individuals who do not own a significant amount of property, the small estate procedure will assist heirs in resolving outstanding estate issues.

The Purpose of Small Estates

Small Estate procedures were created to assist heirs in obtaining the deceased’s property and assets without the lengthy process of probate. Small estates can also be done relatively quickly while keeping both time and costs low, both of which appeal to those involved.

Small estates can be completed through affidavits executed by either the spouse or heirs of the deceased. They give the affidavit to the holders of the deceased property to get the property.

In certain states, you must present the affidavit to the Court first before going after the property. In Utah, if the value of the entire probate estate does not exceed $100,000, the estate is considered a “small estate,” and it can be closed within thirty days after the death.

Determining the Value of the Estate

Small estate procedures can happen with or without the will. All that matters is the total value of the property involved in the estate.

To determine the value of the estate, it is recommended you make a list of all of the deceased’s assets. Come with an accurate value as best you can with respect to the various assets, and if you are unclear on certain line items, attempt to get an appraised value.

Certain assets are not included in this list, including property in joint tenancy, retirement plans, payable-on-death (POD) accounts, real estate transferred through a transfer-on-death deed, or a transfer-on-death brokerage account. Life insurance proceeds are similarly excluded from the list of assets.

The Small Estate Affidavit

The spouse or heirs need to file out a simple affidavit and wait for a 30-day period before distributing the assets.

The small affidavit can be used to collect property, except real property, if the deceased living in Utah at the time of death or his property was located in Utah; the person signing the affidavit is a surviving spouse, child or heir of the deceased, or if this individual is named as a beneficiary in the will; the person who signs the affidavit is entitled to receive the deceased’s property, 30 days have passed since the death of the decedent; no one else is appointed or is seeking to be appointed as personal representative in any state; and the deceased’s estate value is not more than $100,000.

Summary Probate Small estates can be subject to a summary administrative procedure. If, after look at all property and appraising the value of the estate, minus lines and encumbrances, it does not exceed the homestead allowance, exempt property, family allowance, costs and expenses of administration, reasonable funeral expenses and any medical and hospital costs of the deceased’s last illness, the personal representative can distribute the assets without giving notice to creditors.

The personal representative then files a sworn closing statement with the court stating the nature and value of the estate assets, the value of the estate, any debts that were outstanding as part of the estate, and a statement that the personal representative has fully administered the estate, paying off needed debts and disbursing the assets. A closing statement needs to be given to all beneficiaries and creditors showing that their claim has been satisfied in full.

Call J. Cutler Law Today

To determine if assets are classified as a small estate, or to answer any of your Estate Planning questions, call J. Cutler Law for a free consultation at (801) 618-4469 or contact us online.

Probate Vs. Non-Probate Assets in Estate Planning

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You may hear a lot about probate assets and non-probate assets and not understand what the terms mean and why the difference matters.

Whether an asset is probate or non-probate affects how quickly you get the asset as well as the oversight needed to distribute the asset to the rightful beneficiaries.

What Is the Difference?

Assets that do not have to go through probate can be transferred to beneficiaries much more quickly. Probate can take months, if not longer, depending on the complexity of the estate.

Often beneficiaries will need assets and funds quicker than that time will allow, and these non-probate assets help make this possible.

Common Assets That Go Through Probate

The probate process is required for any property that was solely titled in the name of the deceased person.

For instance, if the deceased owned real estate or a car titled only in his or her name, that property would be handled via the probate system. In addition, if property was owned as “tenants in common” with a deceased person and another individual, that portion of the property owned by the deceased would be handled via probate.

All this property goes into the “probate estate,” and this will be handled by the personal representative or executor, as well as the Judge in the probate court.

Many choose to hire an attorney to assist with this process, as well as an accountant for purposes of estate taxes, should those apply.

Assets That Don’t Need to Go Through Probate

Not everything goes through probate. Many assets can be handled without filing a single document in court, if done properly prior to the deceased’s death.

For instance, if the deceased is married and owned most of his or her property jointly with his or her spouse, that property would quickly pass onto the spouse upon the passing of the deceased.

Living trusts are the most common method people use to avoid having their assets go into probate. Trusts are created giving the Settlor (i.e., you) the power to modify or change as many times as you wish during your lifetime, and then, upon your death, the trust is under the control of the Trustee, someone you name specifically within the document to handle your assets and debts, as well as any outstanding affairs that need to be handled before the trust can be closed.

These assets are not taxed under estate taxes and can be distributed quickly outside of the court system. The caveat to trusts, however, is once the document is created, you will need to change legal ownership of your property to “The Trust of ‘X’.” Otherwise, you are walking around with a document that holds absolutely no power over anything you own, and all your assets will go to probate in the end.

Life insurance proceeds are out-of-probate assets that go directly to the beneficiaries listed on the accounts. Some people choose to list the estate as the beneficiary of a life insurance policy, though this somewhat defeats the purpose of having a non-probate asset like this.

Retirement accounts, IRAs, 401(k) accounts, and pension plans all have beneficiary designations, and these assets also go outside of probate.

Any property that is held in joint tenancy with right of survivorship or property that is owned in Securities registered in transfer-on-death form, funds that are available in a pay-on-death bank account, U.S. saving bonds that are also registered in a pay-on-death form, or real estate that is valid on a transfer-on-death deed are also handled outside of probate.

If you have registered your car or boat in a transfer-on-death form, this asset would be dealt with outside of probate. However, this option is limited only to a handful of states.

Call J. Cutler Law Today

At J. Cutler Law, we offer free probate consultations for you and your family. We can help you decide what trust best fits your family’s needs. Call us today for a free consultation at (801) 618-4469 or contact us online.

Do I need a living trust?

For those wishing to avoid probate, a living trust is often the most common avoidance tool. This is especially true for people that have major assets like a home, investment property, stocks, bonds, and other big ticket items.

Given the advantages of avoiding probate, it may seem like a living trust is something that everyone needs no matter their situation. However, while some lawyers make such a claim, a living trust may actually not be necessary for everyone. 

There are two reasons for that; first, there are other probate-avoidance tools that may be more appropriate, especially for certain types of property; and second, some people don't really need to avoid probate.

For example, you may not need a living trust if:

You can more easily transfer your assets by another probate-avoidance device

Other easy ways to avoid probate include pay-on-death bank accounts, joint tenancy, life insurance, gifts, and in Utah, transfer-on-death deeds for real estate. There are also other devices that you can learn about or ask an estate planning attorney about. Each of these devices can be just as effective at avoiding probate as a living trust.

You are young and healthy

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It is not very common when a healthy, younger person dies without warning. Because of this, a Will may be all that you need. While a Will does go through probate, probate only occurs after you die. Thus, as long as your living, probate-avoidance is of no benefit.

Likewise, when you are young it is likely that your primary estate planning goals are simply to ensure your property goes to the people you want and that you name someone to take care of your children (if you have any). If this is true, a will often achieves these goals more easily than a living trust.

Some attorneys may recommend a living trust to young people in case they become incapacitated and can no longer manage their estate. However, most young people don't own substantial assets or estates that need to be managed. More importantly, an easier way for young people to manage their assets should they become incapacitated is to sign a power of attorney.

Overall, if you are young and healthy, a living trust may be more appropriate later in life when the prospect of death is more imminent and you have accumulated more property.

You don't own much property

If you don't own a lot of property than there isn't any real benefit to avoiding probate since probate likely won't cost that much anyway. In fact, in Utah, if your total estate is less than $100,000 than you all of your assets can be transferred by way of a beneficiary affidavit rather than probate.

However, if you don't have much property but you do have a life insurance policy, and your young children are named as beneficiaries, than it may helpful to have a trust set up so that any life insurance proceeds are managed by the trustee instead of a court appointed conservator. This is especially recommended if you do not want your children receiving the insurance proceeds as soon as they turn 18.

You have complex debt problems

If you have a lot of creditors, then going through probate may actually be helpful. The reason for this is that probate provides an absolute cutoff time for creditors to file claims.

For instance, in Utah, creditors have one year to make a claim against your estate as soon as you file in probate court. That time period shortens to three months if you provide public notice of your probate proceeding. In contrast, a trust may be subject to creditors' claims much longer than a year.

So, a living trust?

To sum it all up, a living trust is a great tool to avoid probate and will likely be just what you need at some point in your life, if not already. However, a living trust is not always the answer to your estate planning issues and there other steps you can take to protect your assets and provide for those you care about. A good estate planning attorney can help you decide what is best for you.

 

What is probate and should I try to avoid it?

What is probate?

When someone dies, probate is the legal process that includes:

  • Filing the deceased person's will with a local court
  • Having the will examined and proved valid to the court
  • Identifying and inventorying the deceased person's property
  • Having that property appraised
  • Paying off debts, and 
  • Distributing what's left of the property as the will directs.

If the deceased person didn't leave a will (or leave in the property in any other way such as through a living trust or joint tenancy) then the property is distributed through intestate succession. Intestate succession is essentially a state's pre-determined ranking system of who is entitled to a portion of the decedent's property.

For example, in Utah the surviving spouse is in first position, followed by the children and grandchildren (if any), then the parents (if no surviving children or grandchildren), then the siblings (if no surviving parents), then the grandparents (if no surviving siblings), then the cousins (if no surviving grandparents), and so on.

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Should I try to avoid probate?

Except in a few unique situations, avoiding probate will almost always save time and money. Probate can be costly as it requires filing fees and attorney fees (In Utah a probate lawyer is not required although doing it yourself can cause more problems than solutions). Probate can also take anywhere from a few months to a few years depending on the size of the estate and whether there are any disputes over the estate property.

For these reasons, many people plan to avoid probate. Probate can be avoided by using any of the following methods:

  • Revocable living trusts
  • Joint tenancy ownership
  • "Pay on death" designations
  • Life insurance
  • Retirement accounts that go to a beneficiary
  • Having an estate of less than $100,000 (Utah Code Ann. § 75-3-1201)

While there are many benefits to avoiding probate, probate proceedings may actually be a good idea in a few situations. For example, if the estate owes a lot of debt then a probate proceeding is simpler than defending several lawsuits. Likewise, if the deceased person owned a failing business, or was involved in complicated financial transactions or complex litigation, probate provides a ready-made court procedure for resolving creditors' claims faster than by normal lawsuits.

In sum, probate is generally a process that is beneficial to avoid. In order to do so, it is helpful to talk to an estate planning attorney to discuss the methods that would be the most appropriate for you. J.Cutler Law offers free consultations and can help answer any of your estate planning questions.

What is a living trust?

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Essentially a living trust performs the same function as a will without having to go through the money, delay, and hassle of probate. In other words, a living trust is a legal entity that owns your property during your lifetime, while still allowing you to manage and control it, and then transfers your property to those you wish upon your death. 

An example may help to illustrate this. Let's say John (known as the grantor) creates a living trust and thereby transfers the ownership of his home, cars, and investments into his living trust. John also names himself as trustee of the living trust and the bank as the successor trustee. John then names his wife and children as the beneficiaries (or recipients) of all of the trust property.

While still living, John does not personally own the home, cars, and investments (they are owned by the trust) but he can still manage and control this property. Upon his death, the bank becomes the trustee and transfers ownership of trust property to John's wife and children (the beneficiaries). However, unlike a will, the transfer of all of this property does not have to go through probate, which saves a lot of time and money.

For this reason, some attorneys recommend that everyone create a living trust. While there are certainly major benefits to a living trust there are also some circumstances in which a living trust may not be the best choice. There are other options to avoid probate and sometimes there may actually be some benefits to going through probate. This is why it is beneficial to talk with a local estate planning attorney to determine what is the best fit for you. To set up a free consultation with J.Cutler Law, click on the link below.