DO YOU HAVE AN ESTATE PLAN?The simple answer to the above question is yes. Even if you have never signed a will or trust, you have an estate plan. Some of you may be asking, "How?" The answer is that the state has a default estate plan for those without their own.
In Utah, if you die without an estate plan, the law provides that your entire estate will be distributed to your spouse if he or she is alive unless you have children from a prior marriage. If you do not have a surviving spouse, the estate will be distributed to your children and if a child predeceases you, then to that child's children. If you have no surviving children or grandchildren (commonly called your issue), then your estate will be distributed to other relatives. If you have a surviving spouse and children from a prior marriage, one-half of your estate will be distributed to your surviving spouse and one-half to your children.
Although the state default estate plan attempts to represent what most people would want to do with their estate if they had done their own estate planning, it may not be what you want. There are many concerns about relying on the state's default estate plan. First, if you have an estate over $675,000, relying on the state's default estate plan can result in unnecessary estate tax. With proper estate planning, estate taxes can be significantly reduced. Additionally, the process of getting your assets to your beneficiaries will require a more expensive probate procedure than if you had done your own estate planning.
If you rely on the state's default estate plan, your desires may not be met when you have children from a prior marriage. As previously stated, the state's default estate plan provides that one-half of your estate will go to children from a prior marriage and the other one-half to your surviving spouse. Often, it may be desirable to allow the surviving spouse to have a lifetime interest in all or a part of your estate until his or her death and at that time the estate could be distributed to your children. Additionally, if you marry later in life, you may desire that all your assets be distributed to your children from a prior marriage because your surviving spouse has sufficient assets of his or her own.
If minor children are the beneficiaries of your estate, there are many concerns. First, in Utah, a child under age 18 cannot receive an outright distribution of property. Therefore, if you have not done your estate planning, it is likely that a conservator will be appointed by the court for the benefit of your child. In addition to the cost of having a conservator appointed, a conservator will be required to make periodic accountings to the court. If you have not specified who you want to be the conservator of your child, there will be a question as to who should serve. Although the preceding can create problems, the worst aspect of failing to do estate planning when minor children are involved is that the minor child will receive those assets without any restrictions at age 18 unless a special conservatorship is granted by the court to extend the conservatorship until age 21. If you do estate planning, you can control how those assets will be used and distributed for that minor child without the court's involvement.
Hopefully, you can see that although we may all have an estate plan, it is very beneficial and sometimes crucial that you take the time and effort to develop your own estate plan and not rely on the default estate plan established by the state legislature.
Jeffery J. McKenna
Attorney licensed and servicing
clients in Utah, Nevada and Arizona
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