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Trust Division In Utah

Advantages Of Using A Trust Over A Will
Advantages Of Using A Trust Over A Will

Estate planning is essential for preparing your assets and property to be managed, preserved, and distributed to the right beneficiaries and in the manner you choose following your death. While most people assume a will is sufficient for ensuring that their estate is properly handled, an estate plan must include several additional legal documents to be considered truly complete and offer the highest level of protection for your estate. When someone leaves behind only a will rather than a comprehensive estate plan, their family members will likely be required to undergo an expensive, lengthy, probate process in which the court must prove the will’s validity before any of the assets become accessible to the beneficiaries named in the trust.

A trust serves as one of the most valuable tools you can include in your estate plan because it gives you the ultimate authority over how your assets are managed after your death without forcing your grieving family to face the probate process. This allows your beneficiaries quicker, easier access to their inheritance without requiring intervention from the court or making the details of your financial circumstances part of public record and exposing you and your beneficiaries to unnecessary risk. A trust is a piece of property that is managed by a trustee for a beneficiary. The piece of property funding the trust can be anything from cash to real estate. There are a variety of reasons someone might want to create a trust. In some cases, they may just want to avoid paying taxes on the property, or they may want to pass it along as an inheritance while avoiding going through probate court.
Trusts received as a gift or part of an inheritance is generally considered separate (non-marital) property, rather than marital property, under Utah law. Trusts acquired before marriage are generally not considered marital property unless the funds have been distributed and commingled with marital property. For example, if any funds from a trust had been deposited into a joint bank account shared by both partners, then it would be considered to have commingled with marital property, in which case a judge may consider the trust marital property when dividing assets. Any property or assets acquired during divorce is generally considered marital property, regardless of whose name is on the title or listed as the beneficiary. This can be true of trusts as well, but there are some exceptions, namely the revocable trust.
Trusts can be revocable, which is when the grantor (creator of the trust) reserves the right to cancel the trust at any time. Beneficiaries of revocable trusts cannot access funds from the trust, which is one way for the grantors of trusts to help provide for a loved one while keeping the funds safe from that loved ones ,spouse or ex-spouse. Sometimes a spouse will create a trust and name the other spouse as the beneficiary as a way to leave something to the beneficiary if something were to happen to the grantor first. Such a trust can be created out of either marital or non-marital property, but either way, once divorce proceedings have begun, the trust is usually revoked and the property reverts to its previous status as either marital or non-marital property.

But most revocable trusts are not automatically revoked in the event of a divorce under Utah law. If the property used to fund the trust was marital property, then the trust can be revoked in order to finish dividing the marital assets, but any trust assets that were not already set to go to an ex-spouse will automatically be revoked. If the grantor is the one getting divorced, then all provisions of that trust pertaining to the grantor’s spouse, and which are revocable by the grantor do get revoked. This includes any gifts or interests in property. Although the beneficiary of a divorce may succeed in keeping all their rights to that trust secure, if there are children involved, the value of that trust will be included when calculating child support and/or spousal maintenance (alimony).
A trust refers to a fiduciary relationship created to appoint one party to manage another party’s assets and property on behalf of a third party. This relationship is established between the creator of the trust (the grantor) and the trustee, who holds and administers the assets and property within the trust on behalf of the beneficiaries or the individuals or entities designated to receive the property. The trustee is appointed to fulfill the obligations of administering the trust while acting in the best interests of the grantor, the trust, and its beneficiaries.
After creating a trust, the grantor is able to transfer assets into the trust or order that the trust is funded following their death. They can make one trust that contains all their assets to be distributed or set up different trusts for specific family members. To ensure these family members do not squander their inheritance, the grantor can stipulate restrictions for distributing the assets or outline conditions that must be met for the beneficiaries to receive their inheritance, such as getting married or reaching a certain age.

Requirements for Creating a Trust

For a trust to be valid and legally enforceable, it must feature the following components:
• Sound mind: The grantor must be of sound mind and mentally capable of creating the trust, understanding the rights and obligations involved in a trust, and entering into a fiduciary relationship with the trustee.
• Purpose: The trust must be created with a clear and valid purpose.
• Certainty of objects: The trustee must be able to clearly identify or easily ascertain the beneficiaries of the trust.
• Certainty of intention: The grantor must demonstrate that they intended to create the trust and transfer ownership of the assets within the trust to a trustee to hold and manage on behalf of beneficiaries. The trust document must use imperative words to show intent rather than expressing a wish or desire, as this imposes a moral obligation rather than the intention to create a legally binding commitment. In some cases, proving certainty of intention does not require a trust document but can be distinguished by the words or conduct of the grantor.
• Certainty of subject matter: The grantor must define which assets are included in the trust and what portion of these assets should be transferred to which beneficiaries. This is necessary so the trustee can ascertain what they are responsible for holding on behalf of the beneficiaries and how to appropriately distribute them following the grantor’s death. Without meeting these requirements, a trust is not considered valid, and the assets continue to remain the grantor’s property.

What Does a Trustee Do?

When a trustee is appointed to administer a trust, they accept specific legal responsibilities for managing, preserving, and distributing the assets and property according to the instructions in the trust document. Trust administration involves the following responsibilities:
• Adhering to all the terms in the trust regarding asset management.
• Creating an inventory of assets and property and having them appraised.
• Notifying creditors who may have valid claims against the estate.
• Contacting beneficiaries to inform them of their interest in the estate.
• Paying debts and taxes.
• Managing existing investments or making new ones.
• Distributing the assets and property to the named beneficiaries according to the conditions of the trust.
• Recording all transactions involving the trust, including income, expenses, and distributions.
Benefits of a Trust
Creating a trust allows you to enjoy several benefits, such as:
• Designating beneficiaries of your estate.
• Choosing the specific assets and property you want your beneficiaries to receive.
• Establishing conditions for the distribution of your assets.
• Allowing your loved ones to receive their inheritance without forcing them to undergo the probate process.
• Reducing tax liabilities..
• Preparing for potential disability or illness you may experience in the future that would impact your ability to manage your estate or make decisions about your finances.
• Supporting the care of loved ones with special needs.
• Protecting your beneficiaries from losing their inheritance due to poor judgment, poor financial decisions, or being taken advantage of by others.
• Preventing creditors from making debt collection efforts against your estate.
• Making tax-efficient contributions to charity.
• Ensuring your wealth will be transferred through several generations of family members.
The following assets are most appropriate for transferring into a trust:
• Cash accounts, such as checking and savings accounts.
• Stocks and bonds.
• Non-retirement investment and brokerage accounts.
• Non-qualified annuities.
• Business interests in corporations, general and limited partnership interests, and membership interests in limited liability companies.
• Tangible personal property, including personal effects, household goods, vehicles, pets, domestic livestock, and tools.
• Oil, gas, and mineral rights.
• Real estate, along with mortgages and other loans against the property.
Which Assets Should Not Be Included in a Trust?
The following assets cannot be distributed to beneficiaries through a trust:
• Life insurance: The proceeds are transferred to the beneficiary designated in the insurance policy documents.
• Payable-on-death accounts: These funds go to the beneficiary named on the account.
• Retirement accounts: They are transferred to the beneficiary on the account.
• Jointly owned assets: With the right of survivorship, these assets become automatically owned by the surviving party.
• Real estate with a transfer-on-death deed: This is inherited by the new property owned named in the deed.
• Health savings accounts and medical savings accounts: These accounts cannot be retiled in the name of a trust.
The owner of the assets within a trust depends on the type of trust you create. Trusts can be revocable or irrevocable. When you create a revocable trust, also referred to as living trust, you name yourself as a trustee and have the legal authority to change, revoke, or cancel the trust at any point during your lifetime. Even though you may have retiled assets to the trust, you still retain ownership of these assets, and they are considered part of your property. This means you are responsible for reporting any income or gains you made on the trust property in your income tax return and that creditors can pursue collection efforts in the future against these assets. After your death, a successor trustee will take over the duties of trust administration.
In contrast, an irrevocable trust cannot be changed, revoked, or canceled after creating it, except in rare extenuating circumstances. When you transfer your assets into an irrevocable trust, you are handing over ownership of the assets within the trust to a trustee you appoint to administer this trust and distribute the assets it contains. Because you no longer have access to these assets, they are not considered part of your property, and you cannot reclaim possession of them in the future. Creditors cannot pursue any claims against your assets or the beneficiaries you designate to receive them after your death. The trustee controls the assets and property held in a trust on behalf of the grantor and the trust beneficiaries. In a revocable trust, the grantor acts as a trustee and retains control of the assets during their lifetime, meaning they can make any changes at their discretion. This includes which assets will be inherited, who the beneficiaries of these assets will be, how the assets should be distributed, and when the beneficiaries will gain access to them. In an irrevocable trust, the grantor relinquishes control of the assets to the trustee, who holds them in the trust until the grantor’s death. At this time, the trustee administers the trust and distributes the assets and property according to the terms specified in the trust document.

When Should I Consider Creating a Trust?

You should consider creating a trust if any of the following circumstances apply to you:
• You want to select beneficiaries to receive your assets and property after your death and determine how they will be distributed.
• You have assets or property you would like another party to manage on your behalf.
• You suspect that your will may be contested.
• You do not want to force your loved ones to undergo the probate process to have access to the assets and property you leave behind for them.
• You want to protect these assets from being improperly handled due to your own incapacity or the incompetence of your beneficiaries.
• You are concerned that potential creditors may attempt to make claims against your estate or your beneficiaries
• You own a business and want it to continue operating if you become incapacitated or die.

Legal Assistance
Individuals who are considering drafting a trust or a will may wish to consult with an estate planning lawyer. He or she can explain the advantages of using a trust as well as a will. He or she can make recommendations based on the specific considerations of the client. He or she may even recommend using both documents, such as by using a pour-over will that places any property owned at the time of the testator’s death into the trust.

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