Salt Lake City Estate Planning Lawyer

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It's never too early to begin planning for your future and ensuring that your loved ones are taken care of. Unfortunately, many people delay or neglect estate planning altogether. Don't settle for default laws dictating the distribution of your assets after you're gone. Take control of your legacy on your own terms with a comprehensive estate plan.

At Pearson Butler, our team of experienced Salt Lake City estate planning attorneys specializes in handling estate planning matters. Whether you have questions about this complex area of law or need assistance with specific aspects, we're here to help. Collaborating closely with you, your attorney will design a customized estate plan to achieve your goals and provide you with peace of mind.

Our Salt Lake City estate planning services include:

• Wills
• Asset protection and business planning
• Trusts
• Farm or family business planning
• Trust administration and probate
• Incapacity planning
• Legacy planning
• Retirement planning
• Special needs planning
• Powers of attorney
• Pet planning
• Income tax planning
• Estate and gift tax planning
• Medicare and Medicaid planning
• Veteran planning
• Business succession planning
• Charitable planning
• Asset Protection Trust assistance
• Foreign trusts

To learn more about our services and discuss your needs with a qualified Salt Lake City estate planning lawyer, call (800) 265-2314 or reach out to us online. Pearson Butler serves all of Utah.

Understanding Estate Planning

Estate planning is the process of making legal and financial arrangements for the distribution of your assets and property after your death. It also involves planning for potential incapacity, such as illness or injury.

By creating a comprehensive estate plan, you can ensure your wishes are followed, protect your loved ones, and minimize potential legal and tax complications.

A skilled Salt Lake City estate planning attorney can help you create a personalized plan, which typically includes:

• Last Will and Testament: A legal document outlining how you want your assets to be distributed.
• Trusts: Legal entities that can hold and manage your assets, protecting them from taxes and other liabilities.
• Advanced Directives: Legal documents specifying your healthcare wishes in case you become incapacitated.
• Power of Attorney: A legal document authorizing someone to make decisions on your behalf.

Factors to Consider in Your Estate Plan

Several factors should be taken into account when crafting your estate plan. These include determining who will inherit your assets, who will make healthcare decisions for you if you're unable to do so, how to provide for a minor or child with special needs, and how to avoid probate and guardianship proceedings.

Creating a comprehensive estate plan is essential to ensure your wishes are carried out and your loved ones are protected. Here are some key factors to consider when crafting your Salt Lake City estate plan:

1. Asset Inventory:

• Real Estate: Identify all properties you own, including homes, land, and rental properties.
• Financial Assets: List bank accounts, investment accounts, retirement accounts, and other financial holdings.
• Personal Property: Inventory valuable possessions like jewelry, art, collectibles, and vehicles.

2. Beneficiary Designation:

• Wills: Specify how you want your assets distributed after your death.
• Trusts: Consider creating trusts to manage assets for beneficiaries, especially minors or those with special needs.
• Life Insurance Policies: Designate beneficiaries for life insurance proceeds.
• Retirement Accounts: Name beneficiaries for retirement accounts like IRAs and 401(k)s.

3. Estate Taxes:

• Federal Estate Tax: While Utah doesn't have a state estate tax, federal estate tax may apply to large estates. Consult with a tax advisor to understand potential implications.
• Gift Tax: If you plan to make significant gifts during your lifetime, be aware of gift tax rules.

4. Healthcare Directives:

• Living Will: Outline your wishes for medical treatment in case of terminal illness or incapacity.
• Healthcare Power of Attorney: Appoint a trusted person to make healthcare decisions on your behalf.

5. Guardianship for Minor Children:

• Guardianship Designation: Name a guardian to care for your minor children if you're unable.
• Custodianship: Consider setting up a custodial account to manage assets for your children's future.

6. Probate Avoidance:

• Revocable Living Trust: Transfer assets to a trust to avoid the probate process, which can be time-consuming and costly.

7. Asset Protection:

• Irrevocable Trusts: Consider using irrevocable trusts to protect assets from creditors and lawsuits.

8. Business Succession Planning:

• Business Ownership: If you own a business, plan for its future ownership and management.

9. Digital Assets:

• Digital Estate Planning: Address how you want your digital assets (online accounts, social media, etc.) to be handled.

10. Review and Update:

• Regular Review: Regularly review your estate plan to ensure it aligns with your changing circumstances and goals.
• Update Beneficiaries: Keep beneficiary designations current to avoid unintended consequences.

What Are Beneficiary Designations?

Beneficiary designations are a powerful tool in estate planning. They are a simple way to direct that specific assets go where desired. However, they must be used with care and coordinated with the overall estate plan to meet the client’s objectives.

Life insurance and retirement accounts, such as IRAs, have beneficiary designations that determine to whom the assets go at death. Bank, brokerage, and other financial accounts may also have such beneficiary designations. Additionally, in many states, real estate may also have a transfer on death designation which works like a beneficiary designation to transfer the asset at the death of the current owner.

In other words, these accounts go automatically to the designated individuals, regardless of what the Will or Trust provides. In other words, it’s a very blunt instrument. This is often confusing to clients.

Let’s look at an example that illustrates one common problem with beneficiary designations. Mary has a Will prepared by an excellent attorney. Mary’s Will provides for everything to go to her two children, John and Sally. Mary has $2 million in assets. She believes $1 million will go to each of her children, as her Will provides. Her children just turned 18.

Mary’s assets include a brokerage account which she opened 25 years ago before she had children. That account designates her sister, Peg, as the beneficiary. Mary also has a home that has a transfer on death designation to her mother.

Mary dies in an accident. Her brokerage account goes to her sister, Peg, due to the beneficiary designation. Mary’s home goes to her mother due to the transfer on death designation. In other words, Mary’s children are left with no mother, no home, and no money. Maybe Mary’s mother and sister would give the assets to Mary’s children, or maybe they wouldn’t. They’d be under no legal obligation to do so.

Another common problem with beneficiary designations (and other specific designations) is that the assets could change in value. Let’s say, in the example above, John had been the beneficiary of the brokerage account and Sally had been the transfer on death beneficiary of the home. Mary’s intent would have been realized had the assets been comparable in value at her death. However, assets fluctuate in value. Let’s say Mary had invested in the next Amazon or Apple and the brokerage account increased from $1 million to $10 million. Meanwhile, her home increased in value only a little to $1.2 million. Thus, at Mary’s death in this scenario, John would receive the $10 million brokerage account and Sally would receive the $1.2 million house. Mary certainly never intended John to receive more than nine times the inheritance Sally would receive. This unintendedly lopsided bequest would sow the seeds of bitterness in the relationship between John and Sally.

The beneficiary designations avoided probate, but they introduced other problems. A better way would have been to have Mary’s assets owned by her revocable trust without beneficiary designations. This would have avoided probate and provided incapacity planning, which the beneficiary designations did not. Further, the trust could have left the assets proportionately to the two children, rather than subject their future inheritances to the roulette wheel of chance. Finally, the trust could have added layers of protection for John and Sally to provide divorce protection, asset protection, or estate tax protection.

Beneficiary designations can be a simple solution in the right situation. However, often a revocable trust can provide a solution that is better at achieving the client’s goals.

The Advance Directive: Your Medical Decisions

A freak accident can result in an incapacitating injury at any time. As we age, we’re also at increased risk of medical conditions like stroke or dementia that can erode the ability to care for ourselves. With an advance directive, you can provide instructions for your loved ones on what types of treatment you would (or would not) like to receive. You can also appoint a healthcare agent to make medical decisions for you if you are unable to.

Question: What Are My Values Surrounding Illness and Treatment?

Most people’s medical decisions are driven by an underlying set of beliefs or values. Your advance directive ensures you receive the type of treatment you’re comfortable with even if you can’t communicate your wants at the time. You can use it to specify whether you’d like to receive:

• CPR
• Ventilator use
• Artificial nutrition and/or hydration
• Comfort (palliative) care

For many people, these aren’t simple yes/no answers: They depend on the circumstances. For instance, we now know that a ventilator can be essential in saving COVID-19 patients. This treatment may not work and, even when it does, can leave patients with lung damage after they are removed from a ventilator. On the other hand, some health issues that interfere with your breathing could mean you would need a mechanical ventilator for the rest of your life. Is one of these situations okay with you, but the other not?

Due to the complexity of medical issues, this topic might take some heavy thought. It’s okay if you can’t answer every question right away. Figuring out which principles you’d like to guide your care is the larger part of the work.

Question: Am I Susceptible to Certain Health Conditions?

Maybe you’ve always had high blood pressure, or there’s a history of breast cancer on your dad’s side. Knowing your and your family’s healthcare history can help you predict the questions your loved ones might face if you end up in emergency care. Then, you can create specific directions and plans for the care you’d like to receive.

Your primary care provider may be able to help you identify issues that might arise and discuss your options.

Question: Do I Want to Give Someone Else the Power to Make Healthcare Decisions for Me?

It’s usually not possible to cover every single topic or concern in an advance directive, which is why many people choose to designate an agent who can make decisions if you are incapacitated. You’ll want to choose someone you trust and who fully understands what matters to you.

When you ask someone to be your agent, we advise having an in-depth conversation about your wishes for medical care. It may be uncomfortable, but it’s the best way to ensure you’re treated the way you want to be even if you are unconscious or otherwise unable to communicate.

Question: Should My Agent Have Some Authority Even When I’m Okay?

In Utah, you can allow your agent to access medical records and admit you to a long-term care facility, even when you are capable of speaking for yourself. Does this sound like a good plan to you, or is it too invasive? Are there other rights you would like to grant your agent or things you would like to bar them from doing, even if you are incapacitated? These issues can all be addressed in your advance directive.

Question: Do I Have Specific End-of-Life Wishes?

Some people choose to become organ donors upon their death, while for others, the idea goes against their beliefs. Scientists are continually looking for volunteers for clinical studies—would you want to be enrolled in one, even if it might not help you? These answers are part of a complete advance directive.

Finally, you will need to decide whether you’d like your medical team to prolong your life as long as possible or withdraw life-sustaining care in certain conditions. You can leave this decision to your agent or spell out your wishes directly.

Durable (Statutory) Power of Attorney: Maintaining Your Finances

If you are incapacitated, you may also need someone to step in to manage your finances. This issue may be less complex than an advance directive, but it still requires knowledge of your affairs and serious decisions.

With a durable power of attorney, you can designate one agent and up to two successor agents should the first person be unavailable. While your agent does not have to be someone related to you, it should be someone who is good with finances and whom you trust entirely.

Question: Which Assets Should My Agent Control?

A power of attorney doesn’t release all your possessions into someone else’s control. You can pick and choose which elements you want your agent to have access to. Depending on your financial situation, you may not need to give your agent authority over everything. For example, if your property is paid off and your stock portfolio consists of index funds you don’t want to change, what would your agent need with these assets?

On the other hand, your agent may need to take action to cover costs by applying for government benefits, filing insurance claims, or withdrawing money from your retirement savings. You should go through each of your accounts, properties, and other holdings and ask whether it’s reasonable to expect them to stay undisturbed if you’re incapacitated.

Question: How Many Changes Can Your Agent Make?

Depending on the powers you give your agent, they could completely take over your financial affairs. In Utah, you can pick and choose the rights you want to pass to your agent. What you don’t want to do is select every option without careful consideration.

The Utah Statutory Power of Attorney form is available free online, so you can see the options you have. Anything you do not understand should be discussed with a financial planner or attorney before you sign any documents. If something were to happen tomorrow, we want to be sure your estate will be managed to your wishes.

Question: Do I Have a Will or Trust that Covers These Actions?

If you’re here, you probably don’t have a will or trust set up yet, but keep in mind these documents might overlap with a durable power of attorney. If you’re satisfied with the arrangements made elsewhere, you probably do not want to grant your agent the right to change them.

On the other hand, you may want to give someone else full control if you are incapacitated, trusting them to make changes if illness, death, divorce, or any other circumstances affecting others might interfere with your plans. It depends on what you are comfortable with and how actively you want your estate to be managed.

Revocable Living Trust or Last Will and Testament: Where Your Assets Will Go

Dividing your assets after death can be done in two ways: with a last will and testament, or with a trust. If you’re not sure what a trust is, you’re not alone; most Americans are more familiar with wills, perhaps because they are more often cited in the media.

The method that’s best for you may vary based on the assets you have and your plans for your heirs. Or, you may choose to have both a will and a trust—but keep in mind that in case of conflicts, your trust will likely prevail.

Question: What Are All My Assets?

Before you determine who you want to inherit your assets, you need to identify everything. This means gathering deeds, documents, account numbers, and in some cases contact information for everything from bank accounts to vehicles to debts.

Not all significant belongings come with deeds, however. If you have family heirlooms, expensive jewelry, or other belongings with sentimental value, write these down as well so you don’t forget to specify your plan for each.

Question: Who Do I Want to Provide For?

Determining a fair division of assets is difficult, especially considering that some may depreciate (lose value) while others appreciate (gain value) over time. The first step is to make a list of people you’d like to bequeath your assets to. This may include children, adopted children, siblings, a spouse, relatives with special needs, or even charities or causes you support.

Question: Is My Estate Significant?

Because a trust costs more to set up and maintain, some individuals with smaller estates decide a will is the better option for them. This means your loved ones will have to go through the probate process after your death, which is often costly itself. If your estate does not have real property and is under $100,000, probate is not required—a small estate affidavit can be used instead.

Estates over that amount may be better served by the creation of a trust. Along with allowing your wishes to be carried out without the hassle of probate, a trust is private, while wills enter the public record. For those with considerable assets, a trust may also provide significant tax savings.

A financial planner or attorney can look at your assets and help you lay out the pros and cons of each method.

Question: How Much Control Do I Want Over Asset Distribution?

A will is sufficient for laying out the basics of asset distribution, but a trust allows you to be more specific about how or when a beneficiary (heir) will receive certain assets. In a will, you appoint an executor who will oversee the division of your assets but may use their own judgment for you to best meet your wishes.

As you did while thinking about your power of attorney, you’ll need to consider whether you trust your executor to make those decisions or whether you’d prefer to lay out the terms yourself. Additionally, because a trust may require continued management, it’s important to ask whether you want this responsibility. Either choice is valid—it all depends on your preferences.

Question: Do I Or My Beneficiaries Need to Worry About Financial Penalties?

As we mentioned above, a trust brings tax advantages for those with large estates. It can also protect assets from creditors or litigation. At the same time, it’s a lot more expensive to set up, which can be a concern for those who are under financial strain right now.

You may also want to consider how beneficiaries’ financial options may be affected by their inheritance. For instance, individuals with disabilities might lose government benefits after receiving a large sum of cash. A trust could disburse the inheritance in a way that does not interfere with disability payments.

A lawyer or financial planner can look at your wishes and help you find the best way to care for your beneficiaries without incurring significant penalties.

When Should You Create an Estate Plan?

It's essential to establish an estate plan as soon as you acquire assets, have dependents, or reach adulthood with personal opinions about your medical care. Many people mistakenly believe that estate planning can be put off, but this is a misconception.

Consider creating an estate plan if any of the following apply to you:

• You have a spouse and/or children whom you want to provide for in the event of your absence.
• You have children and want to designate a guardian for them if you pass away.
• You wish to plan for your medical care in case of incapacitation.
• You hold strong views regarding end-of-life care.
• You want to ensure your wishes are meticulously followed regarding your assets and property.
• You want to safeguard your assets from estate taxes, lawsuits, and creditors.
• You want to qualify for Medicaid in the future without depleting your assets.

How Often Should You Review Your Estate Plan?

While there's no strict timeline, it's generally recommended to review your estate plan every 1-3 years. However, there are specific life events that should prompt a more immediate review:

Major Life Events:

• Marriage or Divorce: These significantly impact your beneficiaries and asset distribution.
• Birth of a Child or Grandchild: Consider guardianship and inheritance provisions.
• Death of a Loved One: Reassess beneficiary designations and estate distribution.
• Significant Financial Changes: Major purchases, inheritances, or changes in investments may require adjustments.
• Moving to a New State: State laws vary, so ensure your plan complies with your new state's regulations.
• Changes in Health: If you develop a serious health condition, review your healthcare directives.

Other Considerations:

• Changes in Tax Laws: Tax laws can change, impacting your estate plan.
• Changes in Your Wishes: Your preferences and goals may evolve over time.
• Changes in Your Executor or Trustee's Situation: If your executor or trustee is no longer able to serve, you'll need to appoint a replacement.

Life is unpredictable, and you don't want your assets to lose value due to mismanagement or your family to endure disputes over your property in unforeseen circumstances. Your estate plan can address issues such as minimizing or avoiding estate taxes, dealing with irresponsible heirs, and appointing a trusted guardian for your children. Whatever your goals may be, estate planning is instrumental in achieving them.

Common Mistakes in Estate Planning

Here is a look at some of the most common mistakes that people make in estate planning.

Underestimating the need for estate planning

As we discussed in this blog post, estate planning is not only for the rich or for those with complex finances. It is for any individual who wants to ensure that their wishes concerning their assets are carried out upon their death. In addition, proper estate planning can help ease the probate process for your family, create a plan for minor children, and designate someone who will act on your behalf should you become incapacitated in your lifetime.

Putting off estate planning for too long

Another common mistake that individuals and families make is putting off their estate planning for far too long. The important thing to remember about estate planning, however, is that you can always start with a basic plan in place and then nurture than plan as you and your finances mature. Rather than taking on the “better late than never” mindset with your estate planning, make it a goal to get your estate planning started early on so that you and your family can enjoy the peace of mind that estate planning offers.

Not putting enough thought into choosing a trustee

Naming a trustee who will be in charge of your affairs after your death is no easy decision, and therefore it is important for you to take the time and thought necessary to name the right trustee for your needs. When choosing a trustee, you must select the person who will be the fittest for the task. Resist the urge to simply choose your oldest child or an old friend because it seems logical at the start. Your attorney can help advise you as to who might be most fit to serve as your trustee.

Neglecting digital assets

The world is growing more and more digital by the minute, and therefore it makes sense that estate planning would grow to encompass more and more digital assets. Who is going to manage your social media accounts after you are gone? What about digital purchases and digital copies of important documents stored on your computer? Be sure to assign a specific authority to manage those assets after you are gone.

Neglecting pets

Pet trusts exist for a reason. They ensure that your pet will be taken care of and that your wishes regarding their care will be carried out after you are gone. Without taking the measures necessary to include your pet in your estate planning, your pet could easily end up in a shelter.

Contact Pearson Butler's Salt Lake City estate planning lawyers today at (800) 265-2314.