Probate Avoidance

Beginner's Guide To Completing Your Estate Plan

If you dread the idea of estate planning then, trust us, you are not alone. Many people avoid making proper legal arrangements for their end-of- life desires and assets for as long as possible.

While it is certainly understandable – both because there is some work required and the fact that thinking about death is unpleasant for some – this is the type of thing that should not, and need not, be procrastinated.

The first step is to have a clear understanding of exactly what estate planning entails. Estate planning is simply the legal specification of your desires for the management of all of your property after your death. Estate planning also often includes provisions for your healthcare if incapacitated before death and the desired arrangements for your body after death.

These are decisions you will want to make after giving them proper thought and consideration but just deciding on a course of action is not enough. Unfortunately there are a couple legal hoops that need to be jumped through to make your end-of- life wishes legally binding and enforceable after your death. You will want to consult with a trustworthy attorney in order to arrange your estate planning but below are a few things that everyone should know about the process.

While the term “estate” might leave you inclined to think of estate planning as only necessary for the wealthy it is, in fact, not a matter of wealth at all. You don’t need to live in Wayne Manor to have what is legally considered an estate.

By legal definition, your estate is just the umbrella term for all the property and assets that you own. This extends beyond just homes, cars, and jewelry to other intangible property such as bank accounts and insurance policies. With this understanding in mind, you can see that you don’t need to be of retirement age for estate planning to make sense.

If you own property and would like to have a say in what happens to it when you die then you will want to tackle your own estate planning sooner rather than later. Without legally binding estate planning, your end-of- life circumstances (both in terms of property and your own healthcare/burial matters) will be left to the whims of local laws, relatives, and doctors.

No two estates are the same so no two estate planning processes are the same either. In some cases the transferal of property is simple and clear and requires just a few pages of legal documentation. In most cases, however, arranging who gets what and when they will get it requires a number of different legal documents.

In addition to a declaration of what property goes to what person, you also want to consider aspects such as legal guardianship of dependent children, who will act as your agent in making decisions after your death, and how to handle any outstanding debts and taxes.

The most basic and essential document is a will but most people also find it necessary to set up a trust in order to legally arrange for a person (or people) to have the right to manage all or some of your assets upon your death without going through probate court (which is costly and time-consuming).

Trusts can be set up as revocable or irrevocable, with the former meaning that it can be amended down the road if you so desire and the latter meaning that once finalized it cannot be changed.

Wills and trusts are just two of the most crucial documents needed to properly arrange for your wishes to be carried out after your death. Depending on your circumstance, there may be other estate planning documents that you need and you will certainly want to consult with an attorney in that process.

Call J. Cutler Law Today

At J. Cutler Law, we offer free estate planning consultations for you and your family. We handle all the steps of estate planning, can help simplify the process for you, and are available to consult on any stage of the process. Call us today for a free consultation at (801) 618-4469 or contact us online.

5 Reasons Why You Should Do Your Estate Plan This Year

If you're like most people, you understand that estate planning is a good idea. You know that an estate plan ensures that your property goes to the right people and ensures your children are properly taken care of. Although you probably understand the importance of estate planning, you know it's all too easy to put off actually sitting down and making your plan.

If you can relate, then what better time then the New Year to resolve to actually finish your estate plan? While you may already have several New Year's resolutions swirling around in your head (or better yet already written down), a resolution to prepare your estate plan is a realistic goal that can be achieved by anyone.

New-Year-Goal-Estate-Planning

So to further encourage you to make finishing your estate plan a goal for the New Year, let us offer five reasons why your estate plan should be done this year:

1. Your Property Will Go To The People You Want

Without an estate plan you do NOT get to decide where your property goes when you die. Instead, state law determines who gets what. This may be the number one reason to do your estate plan. Even if you are not wealthy, you can still prepare a simple will or living trust to ensure your property is transferred to the people you want.

2. Your Children Will Be Taken Care Of According To Your Wishes

If you have young children and die without an estate plan then state law also determines who is the personal guardian of your minor children and who is the financial manager of their inheritance. This is why you'll want to ensure that your children are taken care of according to your wishes. In your will, you can name guardians to raise your children and managers to look after their inheritance. 

3. Your Medical And Financial Decisions Will Be Made By People You Trust

If you ever become incapacitated you will want to ensure the people you trust make important decisions for you instead of a court order or court appointed receiver. Part of estate planning is preparing for what would happen if you ever become unable to make medical and financial decisions for yourself. This can be done through a health care directive and a durable power of attorney. These documents can save your family much heartache.

4. You Will Save Time And Money By Avoiding Probate

Probate is the court process for wrapping up an estate. It's often time-consuming and expensive and rarely provides any benefit to the beneficiaries. With a little estate planning you can keep most or all of your estate out of probate, saving your loved ones time and money.

5. You May Reduce Your Estate Taxes

For the year 2017, if you pass away and your estate is worth more than $5,490,000 then your estate will be subject to federal estate taxes. If you already own this amount, or plan to eventually, then you will want to use your estate plan to reduce the tax that your estate could owe after your death. 

 

Hopefully these five reasons encourage you to make estate planning part of your goals for the New Year. Estate planning may seem overwhelming and time-consuming but it does not have to be. Keep in mind that many people need only a simple estate plan. You may even be able to prepare all your documents yourself. Or you might discover that having a lawyer do all the work for you is easier. Either way, planning your estate is a worthwhile goal that you can achieve this year. To start, get a free consultation to discuss what is best for you.

 

 

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 property cannot be left in a will?

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In most cases any property that is included in your will is transferred according to the instructions in your will. However, there are certain instruments that nullify property transferred by will. These instruments are probate avoidance devices and are commonly used. So it is helpful to know what they are. 

As an example, if you place place property in the one of the following forms of ownership, then leaving that property in your will has no effect:

  • Joint tenancy property. At your death your share in the property goes automatically to the surviving joint tenants, regardless if you left your share in your will.
  • Transfer-on-death deeds or registrations. Here, at your death the real estate or vehicle goes directly to the beneficiary you named on the deed or registration and does not go to any beneficiary listed in your will.
  • Property in a living trust. All property in a trust goes to the beneficiaries named in the trust, not the will.
  • Pay-on-death bank accounts. The beneficiary named on the bank account receives the funds and not any person named in a will.
  • Life insurance proceeds. These proceeds can only go to the beneficiaries named in the life insurance policy.
  • Retirement plans, including pensions, 401(k)s, IRAs, and profit sharing plans. These funds are payable to the named beneficiaries no matter what your will says.

If you need to review your estate plan to make sure your property is going to exactly the people you want, contact a Utah estate planning attorney at J.Cutler Law.