Tips for Estate Planning in Utah
Guide to a basic estate plan where no sophisticated tax planning is contemplated
Advance Health Care DirectivesAn Advance Health Care Directive, or a Health Care Power of Attorney, is an integral part of a basic estate plan. The State of Utah has provided guidance for a form to use for the Advance Health Care Directive. This is set out in Utah Code Section 75-2a. This is known as the Utah Advance Health Care Directive Act. The optional form is contained at Utah Code Section 75-2a-117.
The first part of the form allows you to name another person to make health care decisions for you when you cannot make decisions or speak for yourself. This person is known as your agent. This is your "Health Care Power of Attorney." You may also name an "alternate agent" in the even your agent is unwilling or unable to serve. This first section also allows you to specify the limits of your agent's authority. It also allows you to nominate your agent, or alternate agent, as your guardian in the event you become incapacitated. A health care power of attorney is intended to help you avoid a guardianship, but a guardianship may become necessary. Finally, the first part of the form allows you to elect to authorize your agent to consent to your participation in medical research and/or organ donation.
The second part of the form allows you to specify your health care wishes. This portion of the Advance Health Care Directive is also known as a "Living Will." You may choose one of four options. Option Number One simply authorizes your agent to make decisions for you. Choosing this option presupposes that you have discussed your wishes carefully in advance with your agent and that you trust them to make the same health care decisions you would make. Option Number Two specifies that you choose to prolong life, regardless of your condition or prognosis, within the limits of generally acceptable health care standards. Option Three specifies that you choose not to receive care for the purpose of prolonging life, within certain parameters. Of course, you will always want to receive comfort care and routine medical care that will keep you as comfortable and functional as possible, even if that care will prolong your life. Within Option Three are two sub-options. The first, Option "a", places no limits on your agent's or health care providers ability to withhold or withdraw life-sustaining care. The second, Option "b", specifies that your health care provider should withhold or withdraw care if at least one of the following initial conditions is met: 1) you have a progressive illness that will cause death; 2) your are close to death and unlikely to recover; 3) you cannot communicate and it is unlikely that your condition will improve; 4) you do not recognize your friends or family and it is unlikely your condition will improve; and/or 5) you are in a persistent vegetative state. You can choose any or all of these sub-options if you elect option "b". Option 4 simply states that you do not wish to express health care preferences in this directive.
Part Three of the Directive allows you to include any additional instructions you may wish.
Part Four of the Directive is the signing and witnessing, which gives the Directive legal effect.
An Health Care Directive is revocable.
Powers of AttorneyA Durable Power of Attorney goes into effect when you become incapacitated or unable to make financial decisions on your own. It sets out the grant and limits of authority of your agent. The Power of Attorney is automatically terminated upon your death.
It is extremely important to name someone as your agent whom you trust implicitly. A Power of Attorney will often give your agent virtually unlimited authority with respect to dealing with banks, insurance companies, brokerage companies and other third parties with respect to your finances. Thus, the element of trust is extremely critical. Oftentimes, people will name their spouse as their primary agent, with one or more successors in the event your spouse is unable to serve.
WillsA last will and testament sets out exactly how you wish your estate (all of your real and personal property) to pass upon your death. It is very important to have a will. If you do not have a will, the state essentially writes a will for you in the form of "intestate succession", which sets forth your heirs and their order of priority in inheriting your estate.
A will must adhere to certain formalities, such as have two witnesses.
Oftentimes, people will have a "pour-over" will and a trust (which will be discussed in the next section). A pour-over will works in conjunction with a living trust in order to achieve the goal of streamlining administration of your estate and avoiding probate. Without a living trust, your will may need to go through the probate process. Probate basically meaning "proving", meaning proving a will. This is one reason for the requirement of two witnesses. If your goal is to avoid probate, your will certainly wish to consider a pour-over will and a revocable living trust.
Living TrustsA living trust is a document that sets forth the manner in which you want your property administered and transferred after your death. It is revocable.
The primary purpose of a revocable living trust is to avoid probate. In this sense, it may be thought of as a will substitute. It serves the same purpose as a will in terms of an orderly disposition of your estate, but has the added advantage of avoiding the need for probate. Oftentimes, people wish to avoid the fees and hassle of probate. There are filing fees and often attorney fees associated with probate, which make it desirable to avoid.
It is very important to transfer your property into the trust. If titles to property are not transferred into the trust, your estate may still need to go through probate, and the trust will not work effectively. It is beyond the scope of this guide to discuss the advisability of transferring ownership of a retirement plan, such as a 401(k) or an IRA, into a revocable living trust. Suffice it to say that such a transfer may trigger severe tax consequences. But title to real estate and other personal property should be transferred into the trust.
A revocable living trust will become irrevocable upon the death of the surviving spouse. Sometimes, the trust might specify that it will become irrevocable upon the death of the first spouse. This is a decision that should be discussed in detail with an experienced estate planning attorney.
As always, it is advisable to work closely with an attorney and financial advisor in devising an estate plan that is appropriate for your particular needs and situation.