Protecting Your Assets with a living trust in Salt Lake City, Utah

What is a living trust in Utah?

Unlike a will, which only takes effect after the grantor’s death, a living trust (or inter vivos trust) becomes effective immediately upon creation and allows the grantor to manage their assets during their lifetime.

A revocable trust and a living trust are essentially the same thing. Both refer to a trust where the terms of the trust can be changed or revoked by the person who created it, as long as they are still alive and capable.

A living trust is one of the best estate planning tools for transferring assets directly to your beneficiaries without going through probate. However, only a funded living trust avoids probate. This means that assets must be properly transferred to the trust while the grantor is alive—otherwise, those assets may still have to go through probate.

However, life insurance and retirement accounts like 401(k)s or IRAs do not qualify for living trusts because they have designated beneficiaries.

Benefits of Creating a Living Trust in Utah

There are three main benefits to having a living trust as part of your estate plan.

Avoid Probate

The primary benefit of a living trust is that it helps you bypass the probate process. A living trust transfers assets directly to your beneficiaries, saving both time and money. 

Protect Privacy

Unlike a will, which becomes a public record in probate court, a living trust remains private. If privacy is important to you, a living trust is the best way to keep your assets, their value, and the identities of your beneficiaries out of the public eye.

Greater control

A revocable living trust can provide more control over how and when your assets are distributed among your beneficiaries. Unlike irrevocable living trusts, they allow you to change or cancel it anytime while you’re alive.

Can a Living Trust Reduce Estate Tax in Utah?

A living trust doesn’t protect assets from estate tax. While Utah doesn’t have an estate tax, the federal tax applies if the estate is worth over $13.9 million. This number is adjusted each year for inflation and can be otherwise adjusted by Congress either up or down. An estate planning attorney will know the number and a projected trajectory of the estate tax threshold. To avoid part or even all of the estate tax, you can use a marital trust (also known as an AB trust or QTIP trust). This type of trust allows assets to pass from a deceased spouse to the surviving spouse without triggering the estate tax.

If you place assets in a living trust, those assets will still be counted when applying for Medicaid. This means living trusts cannot protect your assets from Medicaid’s spend-down requirements.

A living trust doesn’t offer the same protection as a special asset protection trust; living trusts cannot protect your assets from creditors. This means if you owe money or are sued, creditors can still claim the assets in the trust to settle your debts.

How to Create a Living Trust in Utah

To create a living trust in Utah, first decide if you need a single or joint trust. A joint trust is ideal if you’re married, as it allows you to split your property between what’s individually and jointly owned. For most other situations, a single trust is a better option.

Next, take inventory of your assets—list your physical property, cash, and investments. Keep in mind that things like 401(k)s often have their own beneficiaries and don’t need to be included. Then, choose a trustee to manage the trust. This could be you or someone you trust. If you’re the trustee, you’ll also need to name a successor trustee.

After appointing a trustee, you’ll need to prepare a written trust document and sign it in front of a notary. Keep in mind that the trust becomes effective only after you transfer assets into it. 

Do I Need a Living Trust in Utah?

In Utah, you may not need a living trust if your estate is small and qualifies for simpler probate processes. Under Utah law Code 75-3-1201, where an estate is worth less than $100,000 (excluding boats or cars), the heirs can claim property with a simple affidavit (known as a   small estate affidavit ), skipping the probate process entirely. 

If the value of your estate (after debts are paid) doesn’t exceed the total of the homestead allowance, exempt property, family allowance, probate costs, and reasonable funeral and medical expenses, you won’t need to notify creditors or wait for claims to be filed and the probate process is much quicker. This is known as summary administration.

Utah’s probate process is fairly straightforward. However, you can make a living trust for more flexibility and to avoid probate entirely.

Learn More About Utah Living Trusts Today

If you’re looking to set up a living trust, talk to me,   the experienced Salt Lake City Watts Law trust attorney . I’m ready to assist you in building a lasting legacy for your family, customized to fit your unique needs.