An estate plan puts you in control of your future, making sure your voice is heard even when you can’t speak for yourself. These plans are not just for those with lots of wealth—it’s a step everyone can take to simplify decisions and provide peace of mind for those they care about.
In this guide, we’ll outline the essentials of estate planning and touch on unique considerations for Utah residents. You’ll learn about core documents like wills, living trusts, and powers of attorney, and gain an understanding of how to make informed choices for yourself and your loved ones.
By the end, you’ll be better equipped to navigate the process, allowing you to create a plan that reflects your values and protects what matters most.
What Is Estate Planning and Why Is It Important?
Estate planning involves making decisions now that will direct how your assets and healthcare choices will be handled in the future. It generally requires creating legal documents like wills and powers of attorney to express your wishes and appoint individuals who can make decisions if you’re unable to.
An estate plan can simplify the probate process, reduce the chances of family disputes, and help lower potential tax liabilities. It’s an opportunity to name someone to manage your assets, care for your children, or even make healthcare choices on your behalf.
A well-structured plan can also help your family avoid probate entirely, which is often a lengthy and public process. Tools like living trusts can be used to streamline the transfer of assets privately, allowing you to have more control over how and when your property is distributed.
Ultimately, estate planning benefits people of all ages and financial situations, not just the wealthy or elderly. It clarifies your intentions and offers guidance, helping streamline the legal process for your loved ones when it’s time to distribute your assets.
Understanding the Basics of Utah Estate Planning
When building an estate plan in Utah, a few core documents come into play. Each of these serves a distinct purpose, helping you specify how your assets are managed, who makes decisions on your behalf, and what your preferences are for future care. Here’s a closer look at each of these elements:
Wills and Trusts: A will lets you determine who gets what and can name a guardian for your kids. However, a living trust might be a better fit for more complex situations. With a revocable trust, you can move assets into the trust during your lifetime, avoid the probate process, and keep estate matters private. The decision to use a will or trust depends on your circumstances and what you want to achieve.
Powers of Attorney: A financial power of attorney grants someone the authority to handle your financial matters if you’re unable to do so yourself. This includes paying off bills, overseeing investments, and making financial decisions. A healthcare power of attorney gives a designated person the authority to make medical calls on your behalf if you’re incapacitated. With both documents in place, your preferences for medical care and financial matters are honored without confusion.
Advance Healthcare Directives and Living Wills: An advance directive lets you spell out your wishes regarding medical care in case you become unable to voice your decisions. It can include instructions about life-support measures and other treatment options. A living will, a type of advance directive, specifically focuses on care you would want—or would prefer not to have—at the end of life or in specific medical situations.
Beneficiary Designations: Life insurance policies and retirement funds often pass directly to the named beneficiaries, skipping the whole probate process entirely. Because these designations override any instructions in your will or trust, it’s important to keep them current, especially after significant life changes such as marriage or divorce.
Please Note: If you’re currently going through a divorce, revisiting and updating your beneficiary designations is a key step in your estate planning process. Without making these changes, there’s a risk that your assets could go to someone you no longer want to benefit. By keeping these designations aligned with your current circumstances, you can prevent confusion and unintended outcomes. For more information on maintaining financial stability during a divorce, check out our article on financial planning during a divorce.
Utah Estate Planning Laws and Key Considerations
It’s important to understand the laws surrounding estate planning in Utah to determine how your assets will be handled after your passing. Below, we’ll cover a few critical topics, including intestate succession, probate procedures, and how taxes can impact your estate.
Utah’s Intestate Succession Rules
If a Utah resident dies without a will, state law determines how their estate is divided. Who inherits depends on which relatives are still living. Here’s how the division works:1
- Children, No Spouse: Children split assets equally.
- Spouse, No Children: Everything goes to the spouse.
- Spouse and Children (Same Marriage): The spouse inherits all; the children don’t receive anything.
- Spouse and Children (Different Relationships): Spouse gets $75,000 first, then half of what remains. The rest is divided equally among the children.
- Parents, No Spouse or Kids: Parents share the estate equally.
- Siblings Only: Siblings get equal shares of everything.
Please Note: These guidelines apply only to assets that go through probate, such as real estate or personal property that isn’t included in a trust. Nonprobate assets, like life insurance policies and retirement accounts, can pass directly to the listed beneficiaries and do not follow intestate rules.
Probate Process in Utah
Probate is a legal process where the court steps in to distribute a person’s assets and pay off debts after they pass away. In Utah, it can be relatively straightforward or more involved depending on the size and complexity of the estate. Here are the types of probate available in Utah:2
Small Estate Affidavit: For estates under $100,000 with no real property, a simplified affidavit process is available. It allows for a simplified transfer of assets without formal court proceedings.
Informal Probate: When there’s no friction among family members or beneficiaries, informal probate can be a straightforward way to handle an estate. It skips the need for court hearings, relying on a simplified process to appoint a personal representative who can then take charge of distributing assets as agreed upon by everyone involved.
Formal Probate: Formal probate comes into play when disputes arise—perhaps siblings can’t decide who should be in charge, or there are conflicting interpretations of the will’s terms. The court oversees hearings and makes rulings to make sure everything is resolved lawfully and fairly.
Please Note: To begin the probate process in Utah, the applicant typically needs to submit an application for probate, an official death certificate, and a Waiver of Notice signed by interested parties (if applicable). The applicant must also agree to serve as the estate’s personal representative by filing an Acceptance of Appointment.
Role of an Executor or Personal Representative
The Executor (named in the will) or Personal Representative (appointed by the court) oversees the estate’s management, paying debts, and distributing remaining assets. Their tasks include:3
- Creating an inventory of the estate’s assets and determining their value.
- Paying off debts and settling valid claims made by creditors.
- Distributing assets according to the will or state laws if no will is present.
Does Utah Have an Estate Tax or Inheritance Tax?
Utah does not have a state-specific estate or inheritance tax. However, the federal estate tax still applies to Utah residents with large estates. In 2024, the federal estate tax exemption is set at $13.61 million.4 Estates exceeding this threshold may owe federal estate taxes.
Even if your estate is below the exemption limit, it’s still useful to work with an estate planning attorney to see if strategies can reduce any potential tax liabilities, especially if your financial situation changes in the future.
Please Note: The Tax Cuts and Jobs Act (TCJA) is set to expire at the end of 2025. As a result, starting in 2026, the federal estate tax exemption will revert to pre-TCJA levels, adjusted for inflation. This is expected to be roughly $7 million for individuals and $14 million for married couples.5
Capital Gains Tax Implications for Inherited Property in Utah
When a property is inherited, its value is adjusted to the fair market value at the time of the original owner’s death, which is referred to as a “stepped-up basis.” For instance, if a house was originally purchased for $150,000 but is valued at $500,000 at the time of inheritance, the new tax basis is $500,000. This adjustment helps minimize capital gains taxes if the property is sold.
For example, let’s say your parents bought a house decades ago for $150,000, and it’s now worth $500,000. If you inherit the house after their passing, the property’s value is “stepped up” to the current market value of $500,000. If you decide to sell it for $525,000 shortly after inheriting it, you’d only pay capital gains tax on the $25,000 increase in value. Without the stepped-up basis, you’d owe taxes on the $375,000 gain between the original purchase price and the sale price, which could significantly increase your tax bill.
Without this step-up, beneficiaries might face high capital gains taxes based on the original purchase price and current market value. If you are considering leaving property to heirs, it’s important to understand these tax implications. Options like using trusts or holding the property for a certain period can help reduce the overall tax burden.
Strategies for Effective Estate Planning in Utah
A well-rounded estate plan involves more than just a will. Several strategies, such as gifting, charitable donations, trust creation, and business succession planning, can be used to protect your assets, manage tax liabilities, and provide for your family.
Gifting Strategies
Gifting is a straightforward way to pass on assets during your lifetime and reduce the taxable value of your estate. Below are some effective ways to use gifting as part of your estate plan:
Annual Gift Tax Exclusion: Each year, you can give a specific amount to multiple individuals without hitting federal gift tax limits. This approach allows you to distribute wealth gradually and potentially reduce the size of your taxable estate. In 2024, the annual exclusion caps out at $18,000 for individuals and $36,000 for married couples.6
Lifetime Gift and Estate Tax Exemption: In 2024, the lifetime exemption is set at $13.61 million. This exemption allows for larger gifts over your lifetime without triggering federal estate taxes, though gifts exceeding the annual limit will count toward this exemption.
Educational and Medical Gifts: You’re able to cover someone’s tuition or medical expenses by paying the institution or provider directly—without it being considered a taxable gift. This strategy allows you to help loved ones without using your annual or lifetime exclusions.
Charitable Giving Options
Charitable contributions can be an effective way to reduce estate size and support causes you care about. Here are some charitable giving strategies to consider:
Charitable Remainder Trust: A charitable remainder trust enables you to donate assets and receive income from them during your lifetime. Once you pass away, the remaining assets go to your chosen charity, which can lower your taxable estate and reduce capital gains taxes.
Charitable Lead Trust: This type of trust pays a charity a set income for a specific number of years. Once the term ends, the remaining assets are transferred to your heirs. This is a good option for those who want to support a charity while still providing for their loved ones.
Donor-Advised Funds: With a donor-advised fund, you can donate cash or assets, get an immediate tax deduction, and then recommend grants to charitable organizations over time.
Using Trusts to Protect Assets
Trusts are valuable tools in estate planning. They can provide control over how your assets are managed and distributed, shield assets from creditors, and even avoid probate. That said, there are different types of trusts to consider based on your needs.
A revocable trust allows you to manage your assets while alive and make adjustments as circumstances change. Property held in this type of trust bypasses probate, providing privacy and quicker access for heirs. In contrast, an irrevocable trust offers stronger protections because it cannot be altered once established. This type of trust is ideal for reducing estate taxes or protecting assets from creditors.
For those interested in charitable giving, a charitable remainder trust enables you to support causes you care about while still benefiting from the assets during your lifetime. This type of trust is useful for individuals who want to reduce estate taxes while also supporting a charity.
Estate Planning for Business Owners in Utah
Business owners have unique challenges when creating an estate plan. It’s important to have a strategy that outlines how your business will continue to operate or be transferred if something happens to you. A detailed business succession plan can help avoid operational disruptions and legal conflicts.
Crafting a business succession plan establishes who will take over your business—whether it’s a family member, partner, or an outside buyer. Having a plan in place can prevent uncertainty and provide a roadmap for the business’s future.
Setting up a buy-sell agreement is another effective tool. Buy-sell agreements should detail how ownership will be managed in the event of a retirement, death, or other changes. It also helps establish a clear valuation method, making it easier for heirs or partners to handle the transition.
Establishing a Family Limited Partnership (FLP) lets you pass business ownership to family while maintaining control over management decisions. It can also help reduce estate taxes and preserve the business within the family for future generations.
Adding these strategies to your estate planning toolkit helps protect your business, provide for loved ones, and dodge future legal headaches.
Common Estate Planning Mistakes to Avoid
Even a small oversight can cause significant issues when it comes to estate planning. People in Utah sometimes make errors that complicate the process for their families. Here are some of the most common mistakes and advice on how to avoid them:
Forgetting to Update Your Estate Plan After Major Life Changes: Big events like marriage, divorce, or having kids can shake up your estate plan. Failing to make updates could mean your current wishes aren’t carried out. Make it a habit to review and update your estate plan periodically or whenever a major life event occurs to keep everything in line with your intentions.
Overlooking Utah’s Estate Laws: Each state has its own rules governing asset distribution and management, especially if someone dies without a will. Utah’s specific laws may affect your estate in ways you might not anticipate. Consulting with a local attorney familiar with these rules can help you craft a plan that works within the state’s guidelines and achieves your personal goals.
Neglecting to Properly Fund a Trust: Establishing a trust is just one part of estate planning; transferring ownership of your assets to the trust, known as funding it, is equally important. If the trust is not funded, assets intended to bypass probate may end up going through it anyway. Be sure to transfer titles, bank accounts, and other assets into the trust’s name to avoid complications later on.
Choosing an Inappropriate Executor or Trustee: Picking the right person to serve as your executor or trustee is crucial. This person should be dependable and capable of managing financial matters. Selecting someone who lacks the necessary skills or experience can lead to disputes, delays, and potential mismanagement. Think carefully about the responsibilities and the person’s abilities before making your selection.
Utah Estate Planning FAQs
Estate planning can be confusing, and it’s common to have many questions. To help you better understand the process in Utah, here are answers to some frequently asked questions:
What Does a Basic Estate Plan Look Like in Utah?
A basic estate plan in Utah typically includes a will, a living trust, financial and healthcare powers of attorney, and an advance healthcare directive. A will names who inherits what and assigns an executor to handle your estate’s logistics.
A living trust skips probate and keeps your financial matters out of public record. Healthcare and financial powers of attorney let trusted individuals act on your behalf, while an advance directive lays out your medical care preferences if you can’t communicate them yourself.
What Happens If I Die Without an Estate Plan in Utah?
If there’s no will or trust, Utah’s intestate succession laws take over. Assets are given to your nearest family members. With a spouse and children from the same marriage, the spouse typically inherits the entire estate.
If you have children from another relationship, your spouse receives the first $75,000 and half of the remaining property, with the rest going to your children. When there’s no estate plan, the distribution may not align with your wishes, creating unintended complications for your family.
How Do I Avoid Probate in Utah?
Setting up a living trust and transferring your assets into it can help keep your estate out of probate. Naming beneficiaries on accounts like life insurance policies or retirement accounts can also prevent those assets from going through probate. Additionally, jointly owned property with rights of survivorship transfers directly to the other owner, further simplifying the process and saving your heirs time and legal expenses.7
Can I Change My Estate Plan After Setting It Up?
Yes, estate plans can be updated or even redone entirely if necessary. Wills and revocable trusts can be changed whenever your situation or intentions evolve. It’s wise to review your estate plan whenever a major life event happens, like a marriage, separation, or the having of a baby, to ensure everything still reflects your current situation. Regularly consulting with an estate planning attorney and financial advisor can help ensure your plan stays in line with your goals.
How To Get Started with Estate Planning in Utah
Getting started with an estate plan can seem overwhelming, but breaking it into smaller steps makes it more manageable. Here’s how to begin the process in Utah:
Create a Comprehensive Inventory of What You Own and What You Owe: Start with your assets, including real estate, investments, and valuable items. Then, list your liabilities like loans and mortgages.
Detail Your Desired Distribution and Name Guardians for Dependents: Think about who should receive what and in what proportions. Consider who you’d trust most to look after your minor children or other dependents.
Update Your Estate Plan Regularly: Make it a habit to review your estate plan, especially when major life changes happen. This way, it always represents your latest wishes and circumstances.
Put Together the Right Estate Planning Team: Bringing together a group of trusted professionals is often the best way to create a well-rounded estate plan. Each expert provides specialized insight to cover various aspects of your estate, helping to ensure that your plan is both legally solid and financially advantageous.
Essential Utah Estate Planning Professionals
A solid estate plan usually requires input from multiple professionals, each contributing specialized knowledge. Here are the key professionals you will likely want to be part of your team:
Estate Planning Attorneys: These attorneys can draft essential legal documents, such as wills, trusts, and powers of attorney. They also help you navigate complex legal matters, such as probate and trust management, while ensuring your estate plan complies with Utah laws.
Tax Professionals: Tax experts are invaluable for minimizing estate and gift taxes. They provide guidance on how state and federal tax laws apply to your estate and suggest strategies, like gifting or charitable donations, to reduce your tax liabilities. Their expertise can help maximize the benefits of your estate plan.
Financial Advisors: A financial advisor helps you manage and grow your wealth, plan for retirement, and align your investments with your estate planning goals. They work closely with your attorney and tax professional to create a plan that best suits your overall financial strategy.
We Can Be Part of Your Utah Estate Planning Team
At Snowpine Wealth, we understand that creating a thorough estate plan involves more than just drafting legal documents—it’s about developing a holistic strategy that protects your assets and provides long-term security for your family. With over 12 years of experience in the financial industry, our team is here to guide you through each step, offering tailored solutions that meet your unique needs.
We’re committed to working closely with your estate planning attorney and tax professional to ensure that your plan is comprehensive and legally sound. If you don’t currently have an established team, we’re happy to introduce you to trusted experts from our vetted professional network. This collaborative approach allows us to address every facet of your estate plan, from setting up a living trust and structuring life insurance policies to developing tax-efficient strategies and minimizing probate-related costs.
Our priority is to provide you with personalized guidance and access to the right resources, so you can feel confident about your estate planning decisions. Whether you’re looking to create a new plan or update an existing one, we’re here to support you in creating a strategy that aligns with your long-term financial goals.
We invite you to schedule a free consultation with one of our team. During your session, we’ll take the time to understand your financial situation, review any existing estate plans, and offer tailored recommendations to help you achieve your goals.
Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Advisor. Fixed insurance products and services not offered through Commonwealth Financial Network®.
This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Investors should consult with a tax or legal professional regarding their individual situations.
Sources:
https://www.bankrate.com/retirement/how-to-prevent-investments-going-into-probate/
https://www.nolo.com/legal-encyclopedia/intestate-succession-utah.html
https://www.utcourts.gov/en/self-help/categories/probate/informal-probate.html#will
https://www.investopedia.com/terms/e/executor.asp
https://www.kiplinger.com/taxes/estate-tax-exemption-amount-increases
https://www.schwab.com/learn/story/countdown-gift-and-estate-tax-exemptions
https://www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-gift-taxes
