Probate and Administraton

After a person dies, it is generally necessary to take steps to transfer the ownership of the deceased person's property to their family members. Russ assists clients with probate and trust administration, the legal processes by which property is transferred after death. Probate is the legal process by which a person's debts are paid and assets are distributed upon her or his death. Estate Administration includes the probate process as well as non-probate transfers of the deceased's assets. State law directs the probate court how to distribute the deceased's estate if a person has not signed a will or a trust. Russ can assist you with the probate process or administrative process to help ensure that the deceased's assets are distributed correctly for the benefit of all concerned. For more information on these topics, see the frequently asked questions below.

• What is Probate?
• Advantages and Disadvantages of Probate
• Costs of Probate and Time Required to Complete
• Alternatives to Probate
• Should I Probate the Estate now or can it wait?
• First Steps to Take after someone dies 
• Income Tax Returns for Decedents

WHAT IS PROBATE?

Probate is the legal process of transferring the ownership of a deceased person's property to his or her family members or other beneficiaries. When a deceased person is the sole owner of real estate or certain other kinds of titled property at the time of death, a probate will be required to transfer ownership. A "personal representative" of the deceased person's estate appointed by a probate court is the only person who can sign the transfer documents.

If a deceased person leaves a will, an additional purpose of probate is to prove its authenticity to the probate court. Once satisfied that the will is authentic, the court will, in most cases, enforce its terms.

If a deceased person dies without a will, the state of Utah has written one for them. State law specifies who will receive the decedent's property, and the results, particularly where there are children from more than one marriage, may not be what the decedent would have wished. The process through the court ensures that the proper persons designated by Utah law will receive the decedent's property.

Probate also provides for payment of the deceased person's creditors and protects beneficiaries from those creditors. Only creditors who file claims by the published deadline will have a right to be paid from its assets.

Certain kinds of property can always be transferred without probate. For example, property held in trust passes as outlined in the trust without going through the probate process. Assets that are owned in joint tenancy, or that pass by beneficiary designation, such as life insurance, also bypass probate. However, you should not use any of these probate avoidance methods without proper legal advice since doing so may create unintended consequences.

PROBATE: ADVANTAGES AND DISADVANTAGES

Many people who have heard terrible things about probate may be surprised to learn that there are some advantages to transferring an estate through probate. For example, probate provides for the orderly payment of claims against the deceased person's estate, and cuts off the claims of creditors who fail to file them by the published deadline for doing so. This means that beneficiaries will not have to worry about paying those claims from their inheritances. Simple estates with few assets and few or no creditor's claims can be probated through an informal process in as few as four months, which can be less expensive than other more complex estate planning techniques.

Of course, there are some significant disadvantages to probate. One disadvantage is that the estate plan will be a matter of public record after the will is filed with the probate court. When the inventory and appraisement is filed in the probate, the assets that comprise the estate and their values will be disclosed. The additional time and expense required to transfer an estate through probate is another reason some people avoid probate in their estate plans.
If you decide to transfer your estate by using a will, you are guaranteeing that your estate will be passed to your family through a probate proceeding. If probate does not appeal to you, consider using a trust or other planning tool for avoidance of probate after you obtain the advice of an experienced attorney.

COST OF PROBATE AND TIME REQUIRED TO COMPLETE?

Many simple probates can be completed in four to five months, and most can be completed in less than one year. The amount of time a probate takes depends, however, on the complexity of the estate and the composition of its assets. It also depends on whether the deceased person left a will with clear directions for the disposition of the estate, and whether there are disputes between family members and beneficiaries over who will receive the estate. Family disputes, particularly, can turn a probate from a simple and relatively quick proceeding to a long, expensive and complicated matter.

The expenses generally incurred in connection with a probate in Utah include the $155 filing fee charged by the court when the probate is filed, costs of publication, which can range from $65 to $150, and postage and copy costs. If an attorney is retained to assist with the probate, the fee charged by the attorney must be reasonable in view of the complexity of the case. Many attorneys will charge a flat fee for simple probates with few assets. Other estates are handled by attorneys on either an hourly fee basis or a flat percentage of the estate. The actual fee will depend on the attorney's experience and complexity of the case.

ALTERNATIVES TO PROBATE

Joint tenancy is one of the ways in which two or more people may hold legal title to real estate or personal property. Its unique feature is that if one of the joint tenants dies, the other joint tenant or tenants automatically become the owners of the deceased person's interest in the property. This eliminates the need to probate the property. Careful consideration, with professional advice, must be given before jointly titling assets with a non-spouse to avoid loss of control of the property during the owner's lifetime and possible loss of tax benefits that would otherwise be available after death.

Certain accounts with banks and others can be designated as "pay on death" or "transfer on death" accounts. This means that when the owner of the account dies, it is simply paid to the designated person. Retirement benefits and life insurance policies will pass to the person you designate as the beneficiary and will not require probate. Of course, gifts you make during your lifetime will avoid probate as well.

Property owned by a trust created during a person's lifetime will avoid probate and pass according to the terms of the trust. These are sometimes called "living trusts." During the lifetime of the person who creates the trust, that person serves as the trustee. When the trust's creator dies, the successor trustee appointed by the creator simply takes over the administration of the trust and follows the creator's instruction, all without the supervision or involvement of the probate court. While a trust is generally more expensive to create than a will, the convenience, privacy and ability to protect assets for the benefit of your family after you are gone are advantages to using a trust to create an estate plan.

SHOULD I PROBATE NOW OR WAIT?

Under Utah law, a will cannot be probated more than three years after the person who signed the will dies. Therefore, if there is a possibility that any property needs to pass through probate, the probate must be commenced within three years of death.

If it is clear that a probate will be necessary, it is always best to open the probate as soon as reasonably possible after the deceased person's death. This may be necessary to allow the personal representative of the estate, who must be appointed by the probate court, to take the steps necessary to protect the estate's assets by securing and insuring them. If time is allowed to pass before these steps are taken, assets may disappear and beneficiaries may begin blaming each other for lost property. Quick action can avoid many problems.

It is important to determine early whether a probate will be necessary. If real estate is involved, be sure to check the deed to the deceased person's real estate to see how he or she owned their interest in the property. If you can't find the deed, contact the county clerk for your county and obtain a copy of the deed through that office. Many people wait until the sale of family property is ready to close to check the title, and realize only then that a probate is necessary to transfer ownership. This can create a real problem with the closing and possibly jeopardize the sale.

Commencing and completing a probate soon after a person dies preserves property, maintains relationships, and resolves matters while memories are fresh and information is readily available.

FIRST STEPS TO TAKE AFTER A PERSON DIES

One of the first steps should be to secure the deceased person's property so that family members or others don't walk off with items that may become the source of disputes later. This can be accomplished by changing the locks to the house, notifying banks and other financial institutions of the death, and taking any other reasonable steps that seem necessary or appropriate to keep things as they were at the time of death until they can be sorted out in the probate or trust administration process. While this step is best done by the "personal representative," it may be done by anyone with an interest in the estate until the personal representative is appointed.

At the same time, a search should be undertaken to determine whether the deceased individual left a will. Generally, a person will nominate an individual who they want to serve as "personal representative" in their will. If a will is found, it should be delivered immediately to the personal representative so that he or she can commence a probate proceeding with the court if necessary.

Another step that should be taken immediately is to make sure that all property is insured against loss by fire or other casualty. Loss of uninsured property can result in liability to the personal representative of the estate and loss to the family.

The personal representative should seek the assistance of qualified professionals to assist with any accounting and legal matters as early in the administrative process as possible to ensure that assets are preserved and administered properly and that all tax returns are filed and taxes paid in a timely manner.

INCOME TAX RETURNS FOR DECEDENTS

After a person dies, the surviving spouse, personal representative of the person's estate, if one was appointed, or another family member should file the deceased person's final federal and state income tax returns. The return will cover only the portion of the year while the person was living. The returns are due on or before April 15 of the year following death. The return should be filed even if income was not sufficient to require the filing of a return.

Even though a spouse has died, you may file a joint return to take advantage of the lower tax rate for the year of your spouse's death. A surviving spouse may, under some limited circumstances, be eligible to claim joint status for two tax years following the tax year in which the deceased spouse died.

Generally, taxable income and exemptions are determined in the same manner as if the person were alive, and the exemption is not reduced because of the short tax year. Medical expenses paid before death, or under limited circumstances, after death, are deductible up to certain limits on an itemized return. If a refund is due, a form 1310 may be required prior to payment if the person claiming the refund is neither the personal representative nor the surviving spouse.

Contact Russell M. Blood

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Russell M. Blood
Nygaard, Coke & Vincent, L.C.
6465 South 3000 East, Suite 103
Salt Lake City, UT 84121
Phone: (801) 438-2512
Fax: (801) 438-2517

Russell M. Blood,and the firm of Nygaard, Coke & Vincent,L.C.,are located in Salt Lake City, Utah and serve clients from Salt Lake City and surrounding area communities, including Draper, Sandy, Midvale, Murray, Riverton, South Jordan, West Jordan, Bluffdale, Herriman, Lehi, Alpine, and throughout Salt Lake and Utah Counties. Whether you need a Utah estate planning attorney, business lawyer, or real estate attorney, you have come to the right law firm.