Which Type Of Ownership Would Best Avoid Probate?
Discover the best ownership types in Utah to avoid probate. Learn how joint tenancy, TOD, POD, and revocable living trusts can save time, costs, and maintain privacy.
Which Type Of Ownership Would Best Avoid Probate?
Navigating the intricacies of estate planning can be daunting, especially when it comes to understanding the laws related to probate. If you’re a resident of Utah and looking to avoid the time-consuming and often expensive probate process, you’re in the right place. This article will provide a comprehensive analysis of ownership types best suited to avoid probate under Utah law.
Understanding Probate: An Overview
Probate is the legal process through which a deceased person’s estate is administered and distributed. In Utah, probate proceedings are governed by the Utah Uniform Probate Code, found in Title 75 of the Utah Code. Probate can be time-consuming and costly, which is why many people seek to arrange their affairs to avoid it.
Why Avoid Probate?
Cost
Probate can be expensive due to court fees, attorney fees, and executor fees. These costs can significantly diminish the value of the estate.
Time
Probate proceedings can take several months to years to complete, delaying the distribution of assets to beneficiaries.
Privacy
Probate is a public process, meaning details about the estate become a matter of public record. Those who value privacy may wish to avoid this.
Ownership Types: Analyze and Compare
Selecting the right type of ownership can help you avoid probate. Below, we will examine various ownership structures recognized under Utah law that can facilitate this.
Joint Tenancy with Rights of Survivorship (JTWROS)
Under JTWROS, two or more people hold title to an asset together, and when one of them dies, ownership automatically passes to the surviving owner(s). This form of ownership avoids probate because the asset doesn’t become part of the deceased’s estate.
Example: If you and your spouse hold your home in Salt Lake City as joint tenants with rights of survivorship, the house will automatically pass to your spouse when you die, bypassing probate.
Legal Authority: Utah Code § 75–2–702.
Tenancy by the Entirety
Similar to JTWROS but only available to married couples, tenancy by the entirety involves property owned jointly by a married couple. Upon the death of one spouse, the survivor automatically acquires full ownership without going through probate.
Legal Authority: Utah Code § 57–1–5.1.
Transfer on Death (TOD) Designations
TOD designations allow you to name beneficiaries who will inherit your assets upon your death, thus bypassing probate. This can apply to bank accounts, investment accounts, and even real estate under specific circumstances.
Example: You can designate your daughter as the TOD beneficiary for your investment account in Provo, and, upon your death, she would automatically inherit the account without the need for probate.
Legal Authority: Utah Code § 75–6–101 et seq.
Payable on Death (POD) Accounts
Similar to TOD accounts, POD accounts allow account holders to name a beneficiary who will receive the funds upon the holder’s death. This avoids probate.
Example: If you open a POD account at a bank in West Valley City and name your son as the beneficiary, he will receive the funds directly and bypass probate.
Legal Authority: Utah Code § 75–6–101 et seq.
Community Property with Right of Survivorship
In Utah, married couples can elect to hold their property as community property with right of survivorship. This allows property to transfer directly to the surviving spouse upon one’s death, bypassing probate entirely.
Example: If you and your spouse own a vacation home in Park City as community property with right of survivorship, it will automatically pass to the surviving spouse on death.
Legal Authority: Utah Code § 75–2–1203.
Revocable Living Trusts
One of the most effective ways to avoid probate is by creating a revocable living trust. You can transfer ownership of your assets into the trust, and as the trustee, you maintain control over them during your lifetime. Upon your death, the successor trustee distributes the assets according to the terms of the trust, thus bypassing probate entirely.
Example: By creating a revocable living trust, you can transfer your home in Davis County and other assets into the trust, ensuring they are distributed to your beneficiaries without going through probate.
Legal Authority: Utah Code § 75–7–101 et seq.
Common Misconceptions About Avoiding Probate
Wills and Probate
A common misconception is that having a will avoids probate. In reality, a will only provides instructions for the probate process. If avoiding probate is your goal, consider other methods discussed above.
Small Estate Exemption
Utah law provides a simplified probate process for small estates (valued at $100,000 or less). However, even this simplified process is still probate, so it’s better to look at alternatives if you wish to entirely avoid probate.
Legal Authority: Utah Code § 75–3–1201.
Practical Applications: Real-World Scenarios
Here are some scenarios to illustrate the practical application of the ownership types that avoid probate:
Scenario 1: John and Mary, a married couple, want to make sure their home in St. George passes to the surviving spouse without undergoing probate. They choose to title their home as joint tenants with rights of survivorship. Upon John’s death, Mary automatically becomes the sole owner, bypassing probate.
Scenario 2: Sara has a significant amount of savings in a bank account in Lehi. She names her niece as the POD beneficiary for the account. When Sara passes away, her niece can claim the funds directly without going through probate.
Scenario 3: David, who resides in Weber County, creates a revocable living trust and transfers his real estate and other assets into the trust. Upon his death, his successor trustee distributes the assets according to the terms of the trust, avoiding the probate process entirely.
Addressing Common Questions
1. Can joint tenancy help me avoid probate in Utah?
Yes, assets held in joint tenancy with rights of survivorship automatically pass to the surviving owner(s), thus avoiding probate.
2. What happens if I don’t make any arrangements to avoid probate?
If no arrangements are made, your assets will go through the probate process, which can be lengthy, costly, and public.
3. Does having a will alone avoid probate?
No, a will does not avoid probate; it simply provides a guide for how your assets should be distributed during the probate process.
4. Can I change the beneficiaries of my TOD or POD accounts?
Yes, you can change the beneficiaries of your TOD or POD accounts at any time while you are still alive.
5. Is it expensive to set up a revocable living trust?
While there might be initial setup costs, the expense is generally outweighed by the savings from avoiding the probate process.
Why Understanding These Laws Matters
Understanding the types of ownership that can avoid probate is crucial for effective estate planning in Utah. Knowing your options can help you make informed decisions that align with your financial goals and personal circumstances. By avoiding probate, you can save time, reduce costs, and maintain your family’s privacy.
Practical Implications
Privacy: Avoiding the public scrutiny of probate ensures that details of your estate remain private.
Avoid Delays: Ensuring your assets are transferred without probate can eliminate delays in your beneficiaries receiving their inheritance.
Cost-Effective: Avoiding the fees associated with probate can preserve more of your estate for your beneficiaries.
Conclusion
Navigating the probate laws in Utah can be complex, but understanding the different types of ownership that can help you avoid probate is a significant step in the right direction. Whether you opt for joint tenancy, a revocable living trust, or any other method discussed, it’s always wise to seek professional advice tailored to your specific circumstances.
To speak with a probate lawyer, call attorney Jeremy Eveland at (801) 613–1472. He can provide you with tailored advice to ensure your estate planning goals are met effectively.
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Probate Lawyer 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.
