Q: What assets should be included when setting up an estate plan in Utah?
A: Most assets and property that should be considered when making an estate plan can be grouped into just a few general categories:
- Real Estate (home, land, rental property, etc.);
- Bank or Credit Union Accounts;
- Retirement Accounts (IRA, 401(k), etc.);
- Investment/Brokerage Accounts;
- Life Insurance;
- Vehicles (cars, boats, trailers, etc.);
- Business Interests (LLC, partnership, S-corp, etc.);
- Personal Property (furniture, jewelry, tools, etc.).
Here are a few tips and ideas to consider relating to each of these categories.
Real Estate
Holding title to real estate directly in your own name at the time of passing is a common trigger requiring filing for probate in the Utah court system. Transferring title to a revocable living trust is often the best way to avoid probate and also to ensure that the property is transferred according to your intentions after your death.
The property does not have to be fully paid off before it can be transferred to a revocable trust. Even if you still owe substantial amounts on a mortgage loan, transferring the property to your trust is a relatively easy step that can bring significant future benefits.
Bank and Credit Union Accounts
Checking accounts and savings accounts can be opened in the name of the trust. But often, a simpler way of ensuring the assets pass under the terms of your revocable trust is to change the pay-on-death designation. Rather than naming a specific individual or your “estate” more generally, the pay-on-death provision on most accounts can designate your trust as the entity to which account balances should be paid upon your passing.
Retirement Accounts
Most retirement accounts must remain in your name as an individual during your life. But these accounts typically will allow for the naming of beneficiaries who are to receive the account assets following your death. Named beneficiaries can be individuals, or your revocable living trust can be named as a beneficiary. There are potential tax implications with each choice, but naming your trust as beneficiary is often a better way of ensuring that assets are transferred and used according to your intentions.
Investment/Brokerage Accounts
Contact your investment firm or broker for information on their specific procedures for transferring ownership of your account or naming an account beneficiary. Different account types and individual firms may have different rules on account ownership, transfers, and beneficiaries.
Life Insurance
The policy holder generally does not need to be changed, but the beneficiary and/or contingent beneficiary may need modification. It is common to list your spouse as the primary beneficiary. Rather than naming your “estate” as a contingent beneficiary, it will often make more sense to name your revocable trust as the secondary beneficiary in the event that your spouse has predeceased you.
Cars, Trucks, Boats, and Trailers
In Utah, your estate (through your personal representative or executor) may be able to transfer up to four (4) vehicles following your death without needing to go to court for probate. There can be circumstances where transferring vehicle title to your trust during your lifetime can make sense. But more often, vehicles can be easily transferred to your trust following you death using a pourover provision in your will.
If you own several vehicles, or if you own collectible or antique vehicles, it can sometimes make sense to transfer the vehicles into your trust or to create a specific vehicle trust. But in most cases, using a simple small estates affidavit and a form from the DMV is the easiest way to transfer vehicles following your death.
Business Interests and Ownership
Many professionals and small business operators have an ownership or membership interest in an LLC, PLLC, partnership, or corporation (often an S corp). Before making any assignment of interest or transferring ownership, check operating agreements or shareholder agreements to make sure the transfer complies with any transfer rules or buy-sell agreements or restrictions. But often, transferring your ownership interest to your trust can help make a smooth transition for the business following your death.
Personal Property
Items of personal property, such as tools, household furnishings, jewelry, art, or other collectibles can be transferred to a revocable living trust by general assignment to the trust. But often, there is little or no benefit to holding personal property items under the trust during your life. A personal property memorandum (in conjunction with your last will and testament) can be used to designate individuals who are to receive specific items of property. Alternatively, a pourover provision in your will can effectively transfer other personal property into your trust following your death.
Consulting with a Good Attorney
There are many “general rules” that apply to the process of creating a good estate plan. But there are even more exceptions to those rules. Consultation with a good attorney is the best way to ensure that your estate planning documents meet your individual needs and goals.