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Introduction
Everyone has an estate -
it is simply the property they own. Estate planning is the process of
designing and documenting a plan for the legal protection of your property and assets
during life and their management and distribution after your death. The plan
also protects you personally in case of incapacity or medical emergency.
A completed
estate plan generally includes a will or trust and related documents, such
as a financial and medical power of attorney. All of these documents are
prepared to reflect your personal objectives, decisions, and values.
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Do I Need an Estate Plan?
You need an estate plan if you
want to be the one who decides who receives your property at your death,
how it is distributed, and who acts in your behalf in case of incapacity,
medical emergency, or death. Without an estate plan, these decisions
are made by a court or are controlled by the laws of inheritance.
Just as having insurance is important
to be financially protected if the unexpected happens, so an estate plan provides
legal protection to you and your survivors if the unforeseen occurs. In
addition, the estate planning process is an opportunity for you
to consider what values related to money and finances are important to you,
and to share those values with your family and loved ones by the way in
which you design your plan. For example, if financial responsibility
is important to you, you can design your plan to promote this
value.
Finally, planning your estate
is one way of demonstrating your love and concern for family members by creating
a roadmap that will assist them with the unavoidable
task of dealing with your property and assets after you "blast off."
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Does Estate Planning Benefit Me During My Lifetime?
Yes. Setting up a trust with accompanying
financial and medical powers of attorney benefits you during life in the following ways:
- Protects you financially, by designating a trusted family member, friend,
or professional to act in your behalf as your financial agent if you are
ever disabled or incapacitated
- Protects your health, by designating a trusted person to act in your
behalf as your medical agent if you are hospitalized and unable,
because of a coma or other extreme physical condition, to make medical
decisions for yourself
- Saves you money, by avoiding the need for expensive court proceedings
to appoint a guardian or conservator to care for you or handle your finances
- Gives you peace of mind, knowing that those who will act on your behalf
are trusted persons you have chosen, instead of being chosen by a probate judge
In addition, with advanced planning
you can safeguard your assets, by owning them through legal entities that provide
protection from unexpected lawsuits and catastrophic financial setbacks.
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What Are the Benefits of Estate Planning to My Survivors?
A combination of a will, trust,
and related legal documents benefits your survivors in the following ways:
- Provides a roadmap for your survivors to follow when you "blast off"
- Makes sure that your property is distributed according to your wishes
- Names guardians for any minor children
- Provides financial management for family members or other
survivors who need help with their finances
- Saves money, by reducing or eliminating probate costs, and estate
and inheritance taxes
- Improves estate administration, because your estate will be administered
by persons who you have chosen for their management skills and good judgment
- Avoids disagreements between survivors
In addition, with advanced
planning you can protect your survivors'
inheritance from unexpected lawsuits and
catastrophic financial setbacks.
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How Do I Get Started?
Free initial
consultation. The author of this web page, Mark Morrise,
a Utah estate planning attorney, has prepared estate
plans for clients with the full range of estate planning
needs. You can schedule a free initial consultation with him
by telephoning (801) 530-7359 or emailing him at mjmorrise@cnmlaw.com.
New client profile. For
your convenience, a
New Client Profile, which can be filled in online, is available for you to
bring to your first consultation. Completing this profile
before your initial meeting will make the meeting more productive and will
speed up preparation of your plan.
Legal representative
choices. A second
form,
Legal Representative Choices, is also available for you to print
and review before your first consultation. Once you have started
the estate planning process, you will be asked to make the choices
for executor, trustee, etc. necessary to complete this form.
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Estate Check-Up
Sometimes what a person needs to get
started on their estate planning is to simply take the
first step. The Estate
Check-Up has 8 simple questions that will get you thinking about your heirs
and your estate and hopefully motivate you to move ahead in the estate planning
process.
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Free Estate Planning Forms
The following forms are provided
free of charge to help you with your estate plan.
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Sample Estate Plans
- Single person without children
- Single person with children
- Married couple with minor children
- Married couple with adult children
- Second marriage with children from prior marriage
- Married couple with a taxable estate
- More sample plan information
In sample Utah estate plans that follow,
it is assumed that the person or persons planning their estate have signed, in
addition to any documents mentioned in the sample plan, a Financial Power of Attorney,
a Medical Power of Attorney, and a Directive to Physicians and
Providers of Medical Services (also known as a "Living Will").
Also, because these plans are just examples,
they are for the purpose of illustration only, they may not fit a person's particular
circumstances, and they are not intended to substitute for legal, tax,
or other professional advice. In preparing your own estate plan,
you should not rely solely on these sample plans but should instead seek
the services of a competent Utah estate planning professional.
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Sample estate plan for a single person without
children
(click for
detailed diagram)
Steven Single has no children. He
creates and funds a Revocable Trust with an accompanying Pourover Will. His trust gives
him the following lifetime benefits:
- As the initial trustee, he maintains complete control of the trust property
- His trust is private
- If he were to become incapacitated, his
sister Sylvia (as successor trustee) would manage the trust property for him
If Steven were to die,
his Pourover Will would send
any previously unfunded property to his trust. Under Steven's trust,
one-half of his trust property would be distributed directly to his sister
Sylvia, and the other half
would be held in trust for his brother Bob, who needs help managing his finances.
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Sample estate plan for a single person
with children
(click for
detailed diagram)
Sarah Single has two children,
Sam and Samantha. She creates and funds a Revocable
Trust with an accompanying Pourover Will. Her trust gives her the following lifetime benefits:
- As the initial trustee, she maintains complete control of the trust property
- Her trust is private
- If she were to become incapacitated, her
brother Brad (as successor trustee) would manage the trust property for her
If Sarah were to die,
her Pourover Will would send
any previously unfunded property to her trust. Her trust could be set up
so that the trust property would
either be distributed directly to her children, or would be held
in trust for their benefit.
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Sample estate plan for a married couple with
minor children
(click for
detailed diagram)
This plan assumes that the
couple's estate is not subject to estate tax. Husband and wife
create and fund a Joint Revocable Trust with accompanying Pourover Wills. Their trust
gives them the following lifetime benefits:
- As the initial trustees, they maintain complete control of the trust property
- Their trust is private
- If either spouse were to become incapacitated,
the other spouse or the successor trustee would manage their finances for them
At the death of the first spouse to die,
the trust continues for the benefit of the surviving spouse. At the death
of the second spouse, that spouse's Pourover Will nominates guardians for the
minor children and sends any previously unfunded property
to the trust. The trust property is held in trust for the children's
support until they reach a given age. Then, depending on how the trust
was set up, the trust property is either distributed directly
to the children, or is held
in trust for their benefit.
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Sample estate plan for a married couple with
adult children
(click for
detailed diagram)
This plan assumes that the
couple's estate is not subject to estate tax. Husband and wife
create and fund a Joint Revocable Trust with an accompanying Pourover Will. Their trust
gives them the following lifetime benefits:
- As the initial trustees, they maintain complete control of the trust property
- Their trust is private
- If either spouse were to become incapacitated,
the other spouse or the successor trustee would manage their finances for them
At the death of the first spouse to die,
the trust continues for the benefit of the surviving spouse. At the death
of the second spouse, that spouse's Pourover Will sends any previously unfunded property
to the trust. Depending on how the trust is set up,
the trust property
either is distributed directly to the adult children, or is held
in trust for their benefit.
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Sample estate plan for a second marriage
with children from prior marriages
This plan assumes that the
couple's estate is not subject to estate tax. Also, for ease of
explanation, in the example the husband dies
before the wife.
Husband and wife
create and fund Revocable Trusts for each of them. The trusts
give them the following lifetime benefits:
- They each maintain complete control of the property in their separate trust
- Their trust is private
- If either spouse were to become incapacitated,
the successor trustee of their trust would manage their finances for them
At the husband's death, his trust property
is held in trust
for the wife's support for the rest of her life. At her
death, the husband's remaining trust property is distributed to his
children from a prior marriage, and the wife's trust property is distributed to her
children from a prior marriage. For each trust, depending on how the
trust was set up, the trust property
either is distributed directly to the children of that deceased spouse, or is held
in trust for their benefit.
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Sample estate plan for a married couple
with a taxable estate
In this example,
for ease of explanation, it is assumed that the husband dies
before the wife.
Husband and wife
create Pourover Wills and Separate Revocable Trusts. The trusts give
each of them the following lifetime benefits:
- They each maintain complete control of the property in their separate trust
- Their trusts are private
- If either husband or wife is incapacitated, the successor trustee of their trust
will manage the trust property in that trust for the benefit of the incapacitated spouse
At the husband's death, his trust
divides into two trusts, called the "Marital" and "Family" trusts. The Marital trust
is either controlled by the wife, or provides support for the remainder
of her life. At the
wife's death, the remaining property in the Marital and Family Trusts is combined
with the wife's trust and is distributed to separate lifetime trusts created
for the benefit of each child.
The benefits of the children's
lifetime trusts include the following:
- The child can be their own trustee
- The child's inheritance is protected from creditors
- The child's inheritance is not subject to estate tax
- Full use is made of the Generation Skipping Transfer Tax (GSTT)exemption,
greatly reducing tax on generations below each child
In addition to the foregoing
planning, any life insurance on the life of husband or wife is owned
by an irrevocable insurance trust, so that the death benefits are
outside of the estates of the husband and wife.
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Definitions of
Utah Estate Planning Terms
To find an estate planning
term, click on the first letter of that term in the list below.
A
· B
· C
· D
· E
· F
· G
· H
· I
· J
· K
· L
· M
· N
· O
· P
· Q
· R
· S
· T
· U
· V
· W
· X
· Y
· Z
- E
-
- Estate - Property owned by a person at death.
- Estate Tax - A federal tax paid
by a decedent's estate on the amount by which the estate's value exceeds
the applicable estate tax exemption. Generally speaking, the estate
tax rate is about 50%. Estate tax can also be imposed on a state
level.
- Estate Tax Exemption An
amount which an estate's value must exceed before an estate tax is due. For
example, in 2005 the federal estate tax exemption is $1,500,000.
- F
-
- Financial Power of Attorney - names
an agent to manage a person's finances; usually grants the agent power to
do anything the person could do with respect to the
person's finances. It may take effect immediately or when the person
is unable to manage their own finances because of disability or incapacity. It
is also called a "Durable Power of Attorney" because it remains effective if the
person granting the power is disabled or incapacitated.
- G
-
- Generation Skipping Transfer (GST) Tax - a
federal tax which, subject to certain exceptions, is assessed when a person
gives property, either in life or at death, to a descendant other than the
person's children, or to anyone more than one generation younger than the
person making the gift. The tax equals 50% of the value of the property
given and is paid by the gift recipient.
- Generation Skipping Transfer (GST)
Tax Exemption - an amount which, if allocated to a
generation skipping transfer, exempts the gift recipient from
paying GST Tax. The GST Tax exemption amount may be allocated to
a single gift or cumulated through successive gifts.
- Gift Tax - a tax paid by the recipient of
a lifetime gift. Federal gift tax does not apply to gifts less than
the annual exclusion amount, which in 2005 is $11,000.
- I
-
- Irrevocable Trust - a trust that cannot
be amended or revoked by the trustmaker.
- L
-
- Living (Inter Vivos) Trust - A trust
that takes effect during the trustmaker's lifetime.
- Living Will - Also known as an "advance
directive" or "medical directive," this document directs physicians
and other providers of medical
services to withhold life sustaining procedures if the person giving the
directive is terminally ill or in a persistent vegatiative state. To
request a free Utah Living Will form with instructions,
email us by clicking here.
- M
-
- Medical Power of Attorney - names
an agent to make medical decisions for a person if the person is unable to
do so.
- P
-
- Pourover Will - A will that sends
the willmaker's property to the willmaker's trust.
- Probate - The legal process by which a decedent's
property is collected and preserved; the decedent's debts and taxes are paid;
and the remaining property is distributed according to the decedent's will or,
if the decedent had no will, the laws of inheritance.
- Probate Estate - Property owned by a willmaker
that is governed by the will; excludes property that passes outside the will, such as
jointly owned property, life insurance, and retirement accounts.
- R
-
- Revocable Trust - A living trust
that can be amended or revoked by the trustmaker.
-
- T
-
- Taxable Estate - an estate sufficiently large
to be subject to estate tax.
- Testamentary Trust - A trust that takes
effect on the trustmaker's death.
- Trust -
An enforceable agreement in which
a trustee holds and manages property for the benefit of
the trust beneficiaries; governs final distribution of the trust property;
names an initial and successor trustees.
- W
-
- Will - Takes effect at death; governs distribution
of property in the willmaker's probate estate; names a person
(the executor) to be in charge of the estate; can name guardians for minor
children.
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Links to Related
Sites
Utah Probate Solutions
Estate Planning Section of the Utah State Bar
Related services
imageclaim - asset recovery planning
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