Why Estate Planning?
Benjamin Franklin wisely said, if you fail to plan you are planning to fail. Failing to plan your estate, however, is also a failure for those who depend on you.
Effective estate planning in Utah establishes an estate plan supported by Utah law. A carefully thought out and documented estate plan will be a blessing to your family after you are gone. Estate planning, especially with a qualified estate planning attorney, helps you accomplish a smooth transfer of your assets to your beneficiaries. An effective estate plan avoids strife and quarrels over what you wanted to happen. Estate planning makes it clear who gets what. An effective estate plan can lawfully transfer real estate and other assets without expensive legal proceedings.
Estate planning in Utah preserves assets from predators who can read about your gifts in public records in probate court. It avoids costly litigation in probate courts. It also benefits you while you are alive. It allows others to act on your behalf when you are not able. Estate planning avoids unnecessary burdens on your loved ones and reduces stress and concern during your declining years.
An effective estate plan anticipates your likely needs during retirement and last illnesses and provides for your long term care without consuming the assets you wish to pass on to your loved ones – your legacy. Responsible estate planning is a strong statement that your life mattered and made a difference to your family.
What is in an estate plan?
An effective basic estate plan consists of four parts. First, a revocable living trust, second, a will, third, a durable power of attorney and fourth, a healthcare power of attorney and directive. Beyond the basics, estate planning may involve a variety of trusts, limited liability companies and other entities for more complex situations.
The revocable living trust is the centerpiece of an estate plan. It is the legally structured agreement that delivers assets to the beneficiaries. It is “the truck that delivers your goodies to your bennies.” The driver is the trustee. The trust document says who, what, when and how the assets are to be delivered.
The grantor (sometimes called “trustor” or “trust maker”) is the one who sets up the trust with the delivery instructions, i.e. the trust agreement. Then the grantor puts their property into the trust to be delivered pursuant to the instructions.
Estate planning trusts are usually revocable (changeable) during the grantor’s lifetime, becoming irrevocable (unchangeable) upon the death of the grantor. Why? Because it is hard for someone who is dead to dictate any changes to the trust. Since after death, the grantor can’t change the terms of the trust agreement, it is then irrevocable.
A living trust is one that is set up during the grantor’s lifetime. The Latin term for this is “inter vivos.” In contrast, a testamentary trust is set up through a will or other legal instrument. A testamentary trust and is funded after the death of the grantor.
The body of property loaded into the trust is called the res (Latin for thing). The property can be loaded into the trust any time after it is established. Persons other than the grantor can put property into the trust. But usually, only the grantor wants to put in the property. That is because the property will go to people the grantor chooses according to what the grantor stated in the trust agreement.
With a revocable trust, grantors may freely move property in and out of the trust. They can change the terms or instructions in the trust. If a property is not put in the trust it may not be delivered the way you want it delivered. Therefore, careful attention to transfer documents (deeds, titling, beneficiary designations, assignments of interests) is essential to an effective estate plan.
What is important to think about in setting up an estate plan?
Who do you do you want to receive your assets?
Children are the most common beneficiaries. The question is, what would be good for them – and when? Minor children likely need a guardian to manage these resources. Even young adults may need some management so they don’t spend their inheritance frivolously.
To even things out among children of different ages, it is often good to wait until the youngest has been provided for through a certain age before dividing the remainder of the estate.
Parents or siblings or other extended family members may also be considered as beneficiaries, especially for people without children. Charities are great beneficiaries and gifts to them can provide considerable tax savings. Special friends also appreciate gifts.
Making your desires clear, tends to reduce conflict
What provisions should be made for specific kinds of property?
The family home is generally the gift of highest economic value. Often it needs to be sold to equalize the shares of the estate. If it is desired to be kept within the family, a clear method of a buyout by one child can be specified.
Retirement funds such as IRAs, 401ks 403(b)s, SEPs, etc. need careful estate planning because of income tax issues involving minimum distributions.
Life insurance proceeds are a great, usually tax-free, benefit for the family. Carefully made beneficiary designations make the proceeds flow quickly to the intended beneficiaries, generally free from claims of creditors.
What else do you have of value? Specific gifts of memorable or sentimental items can be made to specific persons, whether friends or family. Such gifts often become treasured heirlooms, not so much because of their inherent worth, but their sentimental value. Estate planning that makes a note of why such gifts are given, strengthens the bonds of love and may comfort the bereaved.
Stories and statements of values and faith are a meaningful and inexpensive gift. Preservation of your life experiences, faith, counsel and affections in a variety of formats, written, audio, video, may even be the most meaningful gifts.
Who should drive the delivery truck?
The driver is called a fiduciary. Fiduciaries have a legally enforceable duty to deliver the property according to your instructions.
With regard to property held in trust, such as real estate, the fiduciaries are called trustees. With regard to property passing by will they are called executors or personal representatives of the estate. With regard to financial powers of attorney, they are called agents or attorney-in-fact or power of attorney. With regard to health care they are called healthcare representatives, agents or power of attorney.
With regard to each role, the fiduciaries need to have clear instructions to know what you want them to do.
Fiduciaries should be people you trust and can count on to do what you request. They should be available to do what you ask. Knowledge and skill are important, but fiduciaries can be authorized to employ professionals with specialized knowledge and skill to help them do their duties in administering the estate.
Home health, assisted living, geriatric care managers, physicians, financial planners, brokers, hospice, morticians, accountants and attorneys all can be very helpful in providing valuable services as needed. Choosing good fiduciaries is probably the most effective decision in having your wishes carried out.
How and when should a property be given?
Consideration should be given to spreading out monetary gifts over time, especially retirement funds that are taxed upon distribution. Statistics show that beneficiaries most often spend their gifts within a few months of receipt, often improvidently.
Spendthrift clauses can protect the gift from the creditors of the beneficiary.
Special needs trusts can prevent a gift from disqualifying a disabled person from receiving public benefits.
Charitable trusts can reduce taxes as well as accomplishing charitable purposes.
The timing and method of giving make a big difference in the effectiveness of your gift in blessings the lives of your beneficiaries.
How do you set up an estate plan?
Some people choose to set up their own plan without the assistance of an estate planning lawyer or Utah estate tax specialist. For such people to avoid costly mistakes in doing it themselves, they need to undertake significant education and spend significant time creating their documents and funding their plan. There are a number of self-help programs of varying degrees of efficacy available online that they can choose from to help them do a plan. The best choice for most people is to choose a good estate planning attorney in Utah.
If you would appreciate professional help, you should seek out a good estate planning attorney. Choose someone who has sufficient training, skills, and experience in doing the kind of planning you want to do. Choose someone who is willing to take time to understand your goals and desires and will help you accomplish them. Many estate planning attorneys in Utah will provide a free initial consultation. The free initial consultation will help you see if they have the skills and experience you want. It will also provide a second opinion on some planning issues. The quality of such opinions can help you choose the best lawyer for you.
It helps if you choose a law firm that will still be there to help you make adjustments as your circumstances change and as your plan needs to be carried out. It is also good if the estate planning attorneys are pleasant to deal with and accommodating to your needs and assure that your wishes are carried out.
You don’t need to travel to the big cities. Salt Lake City and Provo are not the only places that have great estate planning attorneys. With offices in Orem and Lindon Utah and many years of experience, we can provide you with the quality of services you expect and need.