If you’re working on your estate plans, you may come across living trusts as a way to protect your assets so you can safely leave them for family and friends. The primary benefit of using a living trust instead of a will is that they can allow you to bypass the probate process. As probate rules differ considerably from state to state, though, the importance of avoiding probate will depend on where you live. This guide will walk Utah residents through the decision-making process; show the basics of creating a trust; and discuss related factors like taxes and other costs.
Should you decide to move forward with a living trust, it would be wise to get an estate planning lawyer. It’s also a good idea to work with a financial advisor who can put together a financial plan and work with your attorney to incorporate your estate plan.
How to Create a Living Trust in Utah
In Utah, you’ll need to complete a series of six steps to get your living trust in order:
A living trust, which is sometimes referred to as an “inter vivos” trust, is a legal document that allows you to cache all of your property and assets in a single entity. A trustee, which can be you or someone else, manages it during your life. If you nominate yourself as trustee, make sure you have a secondary trustee that will take over when you pass away.
Living trusts normally include:
You also need to decide whether you want a revocable or an irrevocable living trust. A revocable trust lets you shift what property is and isn’t included in your trust whenever you want. Conversely, an irrevocable trust requires the consent of all involved for changes to be made.How Much Does It Cost to Create a Living Trust in Utah?
Unfortunately, there’s no simple way to determine how much it will cost you to get a living trust. This is because there are many variables that go into such a calculation, including what method you choose to create one and the complexity of your estate planning needs.
For example, if you go the DIY route through an online service, you can expect to pay anywhere from $200 to $500 based on what extras you’re looking for. However, DIY estate planning is very difficult and fraught with risk, so be ready to do some serious research.
Lawyers often use hourly fee schedules, and the price associated with creating a living trust is generally at least $1,000. Again, more complex estates may pay even more than that. In particular, make sure you’re using an estate planning lawyer that has a specialty in trusts.Why Get a Living Trust in Utah?
Living trusts are popular because to their ability to help families skip the probate process following a loved one’s death. Probate is essentially the means by which a court confirms a will and settles potential disputes within its contents. As a result, normally private matters may enter public record. Probate can also be a lengthy and expensive process, especially if there are disputes between would-be heirs.
The Uniform Probate Code is a set of laws that were built to significantly simplify probate. Luckily for Utah residents, the state has adopted these laws in their entirety. As such, living trusts may not be as necessary for smaller estates in Utah.
That doesn’t mean that a trust will never be necessary. Unlike a will, a trust allows you to hold assets on behalf of a minor heir until such a time as they come of age. You can also detail when the trustee must hand over the property or assets to the official heir. There are also many types of specialty trusts intended to deal with complicated situations, such as special needs trusts intended to take care of disabled family members.Who Should Get a Living Trust in Utah?
As Utah has adopted the Uniform Probate Code, avoiding probate is less of a priority for those with relatively simple estates. Furthermore, Utah law offers a simplified probate process for estates worth $100,000 or less. Those with larger estates, or with complicated estate plans or special circumstances, should still consider a living trust.
Still, keep in mind that the complexity of living trusts makes them intrinsically more expensive to put together than a will. They also come with a longer window for potential legal challenges than wills do.Should You Have Both a Trust and a Will?
Wills and living trusts serve similar purposes, but your estate plan should include both. This is because a will dictates the distribution of any property or assets not included in your living trust. Other benefits to a will over a living trust include:
Take a look at the detailed breakdown below to ensure you know how a living trust and a will differ:Living Trusts vs. Wills Situation Living Trusts Wills Names a property beneficiary Yes Yes Allows revisions to be made Depends on type Yes Avoids probate court Yes No Requires a notary Yes No Names guardians for children No Yes Names an executor No Yes Requires witnesses No Yes Living Trusts and Taxes in Utah
Living trusts have many advantages, but tax benefits are not one of them. For the most part, a living trust won’t have any bearing on your overall tax situation. This is especially true in Utah, as the state currently does not levy an estate or inheritance tax.
Note that, depending on the value of your estate, it may be in line to pay the federal estate tax. In 2019, the federal government raised the limit to $11.4 million. In other words, estates worth less than that are off the hook.Bottom Line
The presence of the Uniform Probate Code in Utah’s inheritance laws makes living trusts less necessary. Regardless, wealthy residents should still consider them, particularly with the help of an estate planning lawyer that specializes in trusts. Although the DIY approach is possible, larger estates often have a number of complex factors that could cause you some trouble.Tips for Planning Your Estate
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