What Assets Do Not Pass Through A Will?
Discover which assets bypass your will, avoiding probate in Utah. Learn about joint properties, beneficiary designations, and trusts. Ensure your estate plan aligns with your wishes.
What Assets Do Not Pass Through A Will?
Understanding which assets do not pass through a will is crucial for estate planning. Following the specific laws and regulations in Utah can help ensure that your estate is managed according to your wishes. This guide will delve into various types of assets that bypass the probate process and never become part of your will.
The Importance of Knowing Estate Planning Laws
Estate planning is complicated, filled with legal jargon, and can easily become overwhelming. Understanding the details can help make informed decisions that benefit you and your loved ones. Knowing what assets bypass a will can shield them from the lengthy and expensive probate process, providing quicker access for your heirs.
Assets That Do Not Pass Through a Will
Certain assets are designed to bypass the probate process, regardless of what your will states. Here are the most common types:
Jointly Owned Property With Right of Survivorship
In Utah, any property you own jointly with someone else where you both have rights of survivorship will automatically pass to the surviving owner. This includes various forms of jointly held property, such as real estate, banking accounts, and vehicles. The key statute here is the Utah Code Section 75–6–204, which outlines joint tenancy with the right of survivorship.
Example:
Imagine you co-own a house in Salt Lake City with your spouse, and the deed mentions “rights of survivorship.” Upon your passing, your spouse automatically inherits your share of the house without it passing through probate.
Beneficiary Designations
Many financial assets allow you to name beneficiaries directly. These designations override any instructions left in your will. Common assets that fall into this category include life insurance policies, retirement accounts (like IRAs and 401(k)s), and certain types of bank accounts. Refer to Utah Code Section 75–6–201 for more details on beneficiary designations.
Payable on Death (POD) and Transfer on Death (TOD) Accounts
Utah also recognizes Payable on Death (POD) and Transfer on Death (TOD) accounts. These designations mean that the named beneficiary will receive the asset automatically, without the asset going through probate. This can include bank accounts and even certain types of securities. For legal specifics, see Utah Code Section 70A-6a-101.
Example:
Imagine you have a savings account at a bank in Logan, UT, with a POD designation naming your daughter as the beneficiary. Upon your death, the bank will transfer the entire balance to your daughter, entirely avoiding the probate process.
Trust Assets
Assets held in a trust do not pass through probate because the trust itself dictates how they are distributed. Trusts can be an effective way to manage and distribute your assets precisely as you wish, sidestepping the probate process entirely. For more information, refer to Utah Code Title 75, Chapter 7.
Example:
You’re living in Provo and have set up a living trust, including your home and investment portfolio. Upon your passing, these assets are managed and distributed by the trustee according to your instructions in the trust document, and they never enter probate.
Why It Matters
Understanding which assets bypass your will can significantly affect your estate planning strategy. This knowledge can help minimize delays, reduce costs, and ensure your loved ones have quicker access to your assets. Properly preparing and understanding these legal elements can prevent family disputes and provide peace of mind.
Common Misconceptions
Misconception 1: A Will Controls All My Assets
Many people believe that a will is the ultimate document dictating the distribution of all their assets. However, as we’ve discussed, many assets bypass a will, rendering your instructions in it moot regarding those particular assets.
Misconception 2: Joint Accounts Always Avoid Probate
While joint tenancy often avoids probate, not all jointly held assets are exempt. If not specifically stated in a “right of survivorship,” your share may still pass through probate.
Misconception 3: Beneficiaries Named in a Will Override Other Designations
Beneficiary designations on accounts or policies always trump those mentioned in your will. Ensure your beneficiary designations are up to date and correctly reflect your wishes.
Real-Life Scenarios
Scenario 1: The Smith Family
The Smith family, living in Park City, set up a comprehensive estate plan. They included a mix of a living trust, joint tenancy properties, and proper beneficiary designations. Due to this meticulous planning, when both parents unexpectedly passed away, their children quickly accessed the inheritance without lengthy probate delays. This scenario exemplifies the effectiveness and importance of understanding and managing non-probate assets.
Scenario 2: The Johnson Estate
The Johnsons did not update their estate plan for years, even though their financial situation changed significantly. They overlooked naming new beneficiaries on retirement accounts and didn’t set up a trust for their newly acquired rental properties in Sandy. Upon their passing, the family faced delays and disputes, as considerable assets went through probate due to outdated or missing designations.
The Legal Perspective
Understanding Utah’s legal framework can seem daunting, but it safeguards your rights, resolves disputes, and regulates activities effectively. The laws ensure your assets are distributed according to your desires, minimizing family conflicts.
Laws That Protect Rights
Right to Survivorship
The right of survivorship ensures that co-owned property automatically transfers to the surviving owner, protecting their right to continue using and benefiting from the property without disruption.
Beneficiary Designations
Laws allowing for beneficiary designations ensure your financial accounts and insurance policies are transferred directly to your chosen beneficiaries, avoiding probate entirely.
Regulations That Resolve Disputes
Balanced Estate Distribution
Utah’s estate laws aim to fairly and equitably distribute assets, respecting the decedent’s wishes and the rights of heirs.
Preventing Family Feuds
Having clear laws on asset dispensation helps prevent potential family feuds and legal battles that can be both emotionally and financially draining.
Frequently Asked Questions
- Do all joint properties avoid probate in Utah? Not necessarily. Only those specifically designated with the right of survivorship avoid probate. Verify your property deeds to ensure they reflect this status.
- What happens if my beneficiary predeceases me? If a primary beneficiary predeceases you, the asset may pass through probate unless contingent beneficiaries are named. Update your designations to avoid this.
- Are retirement accounts always exempt from probate? Yes, if they have valid beneficiary designations. Ensure your beneficiary information is current.
- Can a trust include any asset? Generally, yes. Trusts can encompass real estate, financial accounts, personal property, and more.
- What’s the advantage of a living trust over a will? A living trust can manage and distribute assets without going through probate, providing faster access to beneficiaries and potentially saving on court costs and legal fees.
Conclusion
Understanding which assets do not pass through a will can make a substantial difference in your estate planning. This knowledge allows you to protect your loved ones from the cumbersome and often expensive probate process, ensuring a smooth transfer of your assets. To speak with a probate lawyer, call attorney Jeremy Eveland at (801) 613–1472. Make sure you regularly review and update your estate plan to align with your wishes and life changes.
We hope this article has been informative and empowering. Please clap if you found the information useful, leave a comment with your thoughts or questions, and subscribe to our Medium newsletter for updates on essential legal topics. Jeremy Eveland 8833 S Redwood Rd West Jordan Utah 84088 (801) 613–1472
The information contained in this article is for information purposes only and is not legal advice. For legal advice, hire a competent lawyer in your jurisdiction.
