Which Of The Following Is One Of The Best Ways To Avoid Probate?
Discover one of the best ways to avoid probate: revocable living trusts. Save time, money, and stress by planning ahead with our detailed guide. Ideal for Utah residents.
Which Of The Following Is One Of The Best Ways To Avoid Probate?
Navigating the labyrinthine world of probate law can be challenging, but understanding how to avoid probate could save you time, money, and stress in the long run. If you’re a resident of Utah, particularly in cities like Salt Lake City or counties such as Davis or Utah County, you’ll find this information especially relevant. Let’s delve into one of the best ways to avoid probate and equip you with the knowledge to make informed decisions.
What is Probate?
Probate is the legal process by which a deceased person’s estate is administered. This process includes validating the will, inventorying the estate, resolving any debts and taxes, and distributing the remaining assets to the rightful heirs. While it’s meant to ensure that the deceased’s wishes are honored, probate can often be time-consuming and costly. This is where planning ahead comes into play.
Why Avoid Probate?
Avoiding probate can save significant amounts of time and money. Probate proceedings can take months, even years, to complete and often involve legal fees that reduce the value of the estate. Additionally, probate records are public, which eliminates privacy for the deceased’s financial matters.
Revocable Living Trusts
One of the best ways to avoid probate is through a revocable living trust. Unlike a will, a living trust doesn’t go through probate, making it a preferred method for many Utah residents.
How a Revocable Living Trust Works
A revocable living trust allows you to place your assets into a trust during your lifetime. You still maintain control over these assets, and you can make changes or revoke the trust at any time. When you pass away, the assets in the trust are distributed according to your instructions without going through probate.
Example
Imagine you live in Salt Lake City and own a home, a car, and some investment accounts. By transferring these assets into a revocable living trust, you ensure that they pass directly to your beneficiaries upon your death, bypassing the probate process altogether.
Legal Foundation
The Utah Code governs how trusts are created and managed, particularly under Title 75, Chapter 7 — Utah Uniform Trust Code. According to Utah Code Ann. § 75–7–601, a revocable trust allows the settlor (the person who creates the trust) to maintain control over the assets and modify the trust as needed.
Joint Ownership
Another effective way to avoid probate is through joint ownership of assets. This setup is common with real estate properties and bank accounts.
How Joint Ownership Works
Joint ownership means that two or more people co-own an asset. Upon the death of one owner, the surviving owner(s) automatically gain full ownership of the asset, bypassing probate.
Legal Foundation
Joint tenancy with rights of survivorship is recognized under Utah law (Utah Code Ann. § 57–1–5.1). This provision ensures that properties held in joint tenancy transfer seamlessly to the surviving co-owners, avoiding probate.
Example
If you and your spouse own a home in Davis County as joint tenants, when one of you dies, the other automatically becomes the sole owner. This transfer is immediate and does not require probate.
Beneficiary Designations
Certain assets can be transferred directly to beneficiaries without the need for probate through designation forms. These assets often include:
- Life insurance policies
- Retirement accounts like IRAs and 401(k)s
- Payable-on-Death (POD) bank accounts
How Beneficiary Designations Work
Naming a beneficiary on these accounts means the asset is transferred directly to that person upon your death, avoiding probate.
Legal Foundation
Utah law supports the use of beneficiary designations. For example, the Utah Uniform Probate Code (Utah Code Ann. § 75–2–804) allows for life insurance and retirement accounts to be directly paid to named beneficiaries without going through probate.
Example
Consider a resident of Utah County who has an IRA. By designating their child as the beneficiary, the account bypasses probate and transfers directly to the child upon the parent’s death.
Transfer on Death Deeds
For real estate, Utah law allows for Transfer on Death (TOD) deeds, which enable property to transfer to a named beneficiary without going through probate.
How Transfer on Death (TOD) Deeds Work
A TOD deed allows property owners to name a beneficiary who will receive the property directly upon their death. Until that time, the owner retains full control over the property and can revoke the deed at any time.
Legal Foundation
The Utah Code Ann. § 75–6–401 et seq. outlines the specifics of Transfer on Death deeds within the state. This provision facilitates the seamless transfer of real estate, avoiding probate entirely.
Example
If you own a home in Davis County and prepare a TOD deed naming your daughter as the beneficiary, upon your death, your daughter automatically becomes the owner of the home without going through probate.
Small Estate Affidavit
For smaller estates, Utah offers a simplified process called the small estate affidavit, which allows heirs to claim assets without undergoing full probate proceedings.
How Small Estate Affidavit Works
If the total value of the deceased’s estate is below a certain threshold (currently $100,000 for personal property), heirs can use a small estate affidavit to collect the assets.
Legal Foundation
Utah Code Ann. § 75–3–1201 permits the use of small estate affidavits for estates that qualify. This process can be quicker and less costly than traditional probate.
Example
A resident of Salt Lake City who passes away with an estate valued at $90,000 can have their heirs use a small estate affidavit to claim and distribute assets, avoiding the probate process.
Why It Matters
Understanding how to avoid probate is crucial for ensuring that your wishes are honored and your loved ones are spared lengthy legal battles. By using tools like revocable living trusts, joint ownership, beneficiary designations, TOD deeds, and small estate affidavits, you can streamline the transfer of your assets and maintain control over your estate.
Addressing Common Misconceptions
1. My Will Alone Will Avoid Probate
Many people assume that having a will avoids probate. However, a will still needs to be validated through probate. A revocable living trust is a better way to bypass this process.
2. Probate is Quick and Easy
Probate can often be a lengthy and expensive process, especially if there are disputes or complex assets involved. Planning to avoid probate can save both time and money.
3. Joint Ownership Solves Everything
While joint ownership is a tool to avoid probate, it can also have downsides, such as the risk of creditors trying to claim the property from either owner. It’s wise to use this tool judiciously.
Practical Applications and FAQs
1. How Do I Create a Revocable Living Trust?
To create a revocable living trust in Utah, you’ll need to draft a trust document and transfer ownership of your assets to the trust. Consulting a probate lawyer can ensure that all legal requirements are met.
2. Are There Any Downsides to Avoiding Probate?
While avoiding probate has many benefits, some methods, like joint ownership or TOD deeds, may have limitations or implications for estate planning. Carefully consider each option in the context of your overall estate plan.
3. Can I Change My Mind About My Trust or Beneficiary Designations?
Yes, a revocable living trust can be modified or revoked at any time. Similarly, you can update or change beneficiary designations on your accounts.
4. What Happens If I Don’t Have Any Probate-Avoidance Strategies in Place?
If you don’t take steps to avoid probate, your estate will go through the probate process, which could be lengthy and costly for your heirs.
5. How Do I Ensure My Estate Plan Complies With Utah Law?
Consulting with a probate lawyer will help you create an estate plan that complies with Utah regulations and meets your specific needs.
Conclusion
Avoiding probate is not just about simplifying the process for your loved ones; it’s about ensuring your wishes are honored, maintaining privacy, and maximizing the value of your estate. Whether you choose to create a revocable living trust, opt for joint ownership, utilize beneficiary designations, implement TOD deeds, or leverage a small estate affidavit, these tools can help you achieve peace of mind.
To speak with a probate lawyer, call attorney Jeremy Eveland at (801) 613–1472.
If you found this article helpful, please clap, leave a comment, and subscribe to our Medium newsletter for updates. Your engagement helps us continue providing valuable content! 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.
