If you’re working on your estate plans, you may come across living trusts as a way to protect your assets so you can safely leave them for family and friends. The primary benefit of using a living trust instead of a will is that they can allow you to bypass the probate process. As probate rules differ considerably from state to state, though, the importance of avoiding probate will depend on where you live. This guide will walk Utah residents through the decision-making process, break down the basics of creating a trust and point out related factors like taxes and other costs.
A financial advisor can help you put together a financial plan and work with your attorney to incorporate an estate plan for your family.
How to Create a Living Trust in Utah
In Utah, you’ll need to complete these six steps to get your living trust in order:
- Pick a single or joint trust: If you’re married, a joint trust lets you to split your property between what’s individually and jointed owned. In most other situations, a single trust is the optimal choice.
- Review and inventory your property: To know what needs protecting, a complete list of your physical property and cash and investment assets should be assembled. 401(k)s and other similar accounts likely don’t need to be included, as they often have their own beneficiaries. Try to get an idea of who you want to inherit your property.
- Decide on a trustee: This is perhaps the most important decision, as this individual will be handed control of your estate. You can pick either yourself or someone you trust, but if you’re the trustee, you must detail who succeeds you when you pass away. (This successor trustee is the trust equivalent of the executor of a will.) At this point you should have a firm grasp of who will inherit which assets.
- Write out your trust documents: Once you’ve decided on trustees and beneficiaries, start building your living trust using either an estate planning lawyer or an online program.
- Get your document notarized: Sign your living trust in front of a notary public.
- Fund your trust: Transferring your property to your living trust is a complex venture, so consider an estate planning lawyer if you haven’t already.
What Is a Living Trust?
A living trust, which is sometimes referred to as an “inter vivos” trust, is a legal document that allows you to cache all of your property and assets in a single entity. A trustee, which can be you or someone else, manages it during your life. If you nominate yourself as trustee, make sure you have a secondary trustee that will take over when you pass away.
Living trusts normally include:
You also need to decide whether you want a revocable or an irrevocable living trust. A revocable trust lets you shift what property is and isn’t included in your trust whenever you want. Conversely, an irrevocable trust requires the consent of all involved for changes to be made.
How Much Does It Cost to Create a Living Trust in Utah?
Unfortunately, there’s no simple way to determine how much it will cost you to get a living trust. This is because there are many variables that go into such a calculation, including what method you choose to create one and the complexity of your estate planning needs.
For example, if you go the DIY route through an online service, you can expect to pay anywhere from $200 to $500 based on what extras you’re looking for. However, DIY estate planning is very difficult and fraught with risk, so be ready to do some serious research.
Lawyers often use hourly fee schedules, and the price associated with creating a living trust is generally at least $1,000. Again, more complex estates may pay even more than that. In particular, make sure you’re using an estate planning lawyer that has a specialty in trusts.
Why Get a Living Trust in Utah?
Living trusts are popular because to their ability to help families skip the probate process following a loved one’s death. Probate is essentially the means by which a court confirms a will and settles potential disputes within its contents. As a result, normally private matters may enter public record. Probate can also be a lengthy and expensive process, especially if there are disputes between would-be heirs.
The Uniform Probate Code is a set of laws that were built to significantly simplify probate. Luckily for Utah residents, the state has adopted these laws in their entirety. As such, living trusts may not be as necessary for smaller estates in Utah.
That doesn’t mean that a trust will never be necessary. Unlike a will, a trust allows you to hold assets on behalf of a minor heir until such a time as they come of age. You can also detail when the trustee must hand over the property or assets to the official heir. There are also many types of specialty trusts intended to deal with complicated situations, such as special needs trusts intended to take care of disabled family members.
Who Should Get a Living Trust in Utah?
As Utah has adopted the Uniform Probate Code, avoiding probate is less of a priority for those with relatively simple estates. Furthermore, Utah law offers a simplified probate process for estates worth $100,000 or less. Those with larger estates, or with complicated estate plans or special circumstances, should still consider a living trust.
Still, keep in mind that the complexity of living trusts makes them intrinsically more expensive to put together than a will. They also come with a longer window for potential legal challenges than wills do.
Should You Have Both a Trust and a Will?
Wills and living trusts serve similar purposes, but your estate plan should include both. This is because a will dictates the distribution of any property or assets not included in your living trust. Other benefits to a will over a living trust include:
- Name an executor
- Provide instructions on how to pay taxes and debts
- Establish guardianship for children who are minors
- Select managers for children’s property
Take a look at the detailed breakdown below to ensure you know how a living trust and a will differ:
Living Trusts vs. Wills
|Names a property beneficiary||Yes||Yes|
|Allows revisions to be made||Depends on type||Yes|
|Avoids probate court||Yes||No|
|Requires a notary||Yes||No|
|Names guardians for children||No||Yes|
|Names an executor||No||Yes|
Living Trusts and Taxes in Utah
Living trusts have many advantages, but tax benefits are not one of them. For the most part, a living trust won’t have any bearing on your overall tax situation. This is especially true in Utah, as the state currently does not levy an estate or inheritance tax.
Note that, depending on the value of your estate, it may be in line to pay the federal estate tax. In 2022, the federal government raised the limit to $12.06 million. In other words, estates worth less than that are off the hook.
The presence of the Uniform Probate Code in Utah’s inheritance laws makes living trusts less necessary. Regardless, wealthy residents should still consider them, particularly with the help of an estate planning lawyer that specializes in trusts. Although the DIY approach is possible, larger estates often have a number of complex factors that could cause you some trouble.
Tips for Planning Your Estate
- Estate planning can be extremely complicated, but a financial advisor can help you get your plans in order. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- The legal situation surrounding an estate plan is different in every state. To learn more about the rules in Utah, check out our overview of the estate tax here.
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