Joint Wills

As a probate lawyer, I often get asked questions about wills and trusts. Usually, you and your spouse will want to make a will together to leave the entire estate to each other and eventually to your children. While it is not the only way, a joint will allows one spouse to inherit the entire estate upon the death of the other spouse. However, you will need to carefully balance many factors to determine if creating a joint will is the best option for you. Read on to learn about joint wills, their legal effects, and potential problems and issues.

Joint Wills

What Are Joint Wills?

A joint will is a type of will that is jointly executed by two or more persons, usually a married couple, which combines the parties’ last will and testament. Under a joint will, the surviving party inherits the entire estate when the other party passes away. Between a married couple, the entire estate will usually go to the spouses’ children upon the death of the second spouse. Keep in mind that joint wills are different than joint and mutual wills, which contain reciprocal provisions that make the property distributions dependent on the other.

Legal Effects of Joint Wills

A joint will is a legal contract that cannot be changed or revoked by one party alone. The parties may revoke the will during their lifetime through mutual consent. However, once one of the parties passes away, the joint will cannot be revoked. Even if the surviving spouse remarries after the death of the other spouse, the terms of the joint will remain unchanged and the surviving spouse must comply with them. At Ascent Law, we really believe that having a will or joint wills if you are married is a vital part of estate planning and it should not be ignored or put off for another day.

Problems of Joint Wills

Joint wills are rarely used today because of potential problems and lack of advantages. Back in the day, joint wills were preferred over other types of wills because they saved time and additional labor. However, now that wills can be easily created on a computer, there’s no clear advantage to joint wills in most cases.

One of the biggest potential problems is that the surviving spouse is unable to change the terms of the will, regardless of the changed circumstances after the death of his or her spouse. For example, when the surviving spouse remarries another person and wants to leave some of the assets to his or her stepchild, the joint will prevents the surviving spouse to leave any part of the estate to that stepchild.

Another problem may arise if the surviving spouse wants to disinherit the child. Even if the spouses’ child abandons the family and stays disconnected with the surviving spouse, the surviving spouse still cannot disinherit the child without an approval of the deceased spouse.

Moreover, the surviving spouse may be tied up with the terms of the joint will for a long time. Say that the spouses got married when they were young and one of the spouses dies soon after their marriage. Now, the surviving spouse can be tied up with the terms of their joint will for decades.

Good Alternative to a Joint Will

A joint will isn’t the only way to transfer the estate to another person. If a married couple wants to make sure their children inherit everything after their deaths, the couple can set up a trust that contains the provisions of their wishes and restrictions. By setting up a trust, you are able to control who will manage the property for the benefit of your children, modify any terms of the trust, or entirely revoke the trust during your lifetime.

Free Consultation with a Utah Estate Lawyer

If you are here, you probably have an estate issue you need help with, call Ascent Law for your free estate law consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Ascent Law LLC

4.9 stars – based on 67 reviews


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10 Ways to Reduce Estate Taxes

The Federal estate tax can be reduced through various legitimate estate planning techniques. Following is a list of ten methods you should think about as ways to reduce your estate taxes.

10 Ways to Reduce Estate Taxes

  1. MARITAL TRANSFERS. Except where a spouse is a noncitizen, neither lifetime gifts nor bequests at death to one’s spouse are subject to estate taxes. However, the estate of the spouse will have to pay estate taxes on the spouse’s entire taxable estate, including the amount transferred to the spouse pursuant to the lifetime transfer, at the spouse’s death. Utah probate law allows these transfers and they are completely legal. Accordingly, this tool merely defers estate taxes; it does not entirely eliminate them.
  2. LIFETIME GIFTS TO CHILDREN AND GRANDCHILDREN. Each person can make annual gifts of $12,000 to any number of persons, typically children or grandchildren, without incurring a gift tax. If a husband and wife both engage in gifting, they can collectively give away $24,000 per year per recipient without incurring a gift tax. Over a period of several years the amount of money that can be transferred to a couple’s intended beneficiaries under this method is substantial, thereby reducing the size of the taxable estate.
  3. UNIFORM TRANSFER TO MINORS. This is a form of gifting used where the children are still minors. The gift is given to a custodian for the benefit of the child, and is distributed to the child when he/she reaches the age of majority. As with other gifts, the annual exclusion for lifetime gifts is used under this approach.
  4. AB TRUSTS AND QTIP TRUSTS. For 2006 through 2008, each person is currently scheduled to have the first $2 million of his/her estate pass to his/her heirs without estate taxes. This is referred to as the “unified credit” or “personal exemption.” An AB Trust is a trust designed to make sure the unified credit of each spouse is used to the full extent possible, while allowing the surviving spouse to have the use of the assets of the deceased spouse during the remainder of the surviving spouse’s lifetime. A QTIP Trust permits a spouse to transfer assets to his/her trust while still maintaining control over the ultimate disposition of those assets at the spouse’s death. QTIP Trusts are particularly popular in situations where a person is married for a second time but has children from a first marriage for whom he/she would like to reserve assets.
  5. IRREVOCABLE LIFE INSURANCE TRUSTS. By transferring small amounts of the estate (equal to the amount of a life insurance premium) to an irrevocable life insurance trust, a person can reduce the size of his or her taxable estate while creating a much larger asset (the life insurance proceeds) outside of the estate. The life insurance proceeds are generally not taxable.
  6. FAMILY LIMITED PARTNERSHIP. The family limited partnership provides a valuable estate planning tool to assist families in transferring ownership of family-owned closely held businesses to the next generation, and in protecting family assets from creditors. It also permits taxation of partnership income at the children’s lower tax rates. Additional attractive features of the family limited partnership are flexibility and revocability.
  7. PRIVATE ANNUITY. A private annuity is a sale of an asset to a younger generation in exchange for an unsecured promise to pay annual amounts to the seller for the seller’s lifetime. The sold asset is thus removed from the seller’s estate, although the amounts of the payments to the seller (unless spent) will be part of the seller’s estate.
  8. QUALIFIED FAMILY-OWNED BUSINESS INTEREST (QFOBI). The Internal Revenue Code permits a “qualified family-owned business interest” to be deducted from a gross estate. To qualify for the deduction, the following requirements must be met:
    • The decedent or family members must have owned and participated in the business for at least five of the last eight years
    • The business interest must make up at least 50 percent of the decedent’s adjusted gross estate
    • The decedent and his/her family must have owned 50 percent of the business
    • The decedent must have been a U.S. citizen or resident
    • The business must be located in the U.S.
  9. SPECIAL USE REAL ESTATE VALUATION. For federal estate tax purposes, real estate is usually valued at its “highest and best use” value. This can sometimes produce unfair results, such as where a family farm is located adjacent to more valuable commercial real estate. To address this unfairness, the Internal Revenue Code permits certain real estate to be valued at its “actual use” rather than its “highest and best use.”
  10. CHARITABLE TRANSFERS. Lifetime charitable transfers or gifts to charities upon death can reduce the size of the estate and thereby reduce estate taxes. Lifetime gifts provide the added benefit of an income tax deduction. Gifts can also be made in a manner that lets the donor retain the right to use the gifted asset or income therefrom until death.

Free Consultation with a Utah Estate Lawyer

If you are here, you probably have an estate issue you need help with, call Ascent Law for your free estate law consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Ascent Law LLC

4.9 stars – based on 67 reviews


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Mistakes When Making a Will

Making a last will and testament is a very wise decision. It tells your surviving loved ones exactly what your wishes are regarding your property and assets. When it comes to estate planning however, there are some things that you can’t or shouldn’t include in your will.

Mistakes When Making a Will

Types of property you can’t include when making a will

Some types of property carry rules that govern what happens after you die. These rules are independent of your will, mostly because the nature of these types of properties is to name a beneficiary or avoid probate.

  • Joint tenancy property. This type of property grants the right of survivorship to your joint tenant, automatically by law. Therefore, when you die, your share of the property passes directly to the surviving joint tenant, regardless of what your will says.
  • Property in a living trust. One of the ways to avoid probate is to set up a living trust. The property included in a living trust avoids probate; whereas property in your will does not. Additionally, willing property to someone in your will when that property is already delegated to someone by a living trust is inconsistent. The property in the living trust automatically goes to the beneficiaries and is managed by the trustee. If you want to change this arrangement, you must do it through the trust forms and documents and not through your will.
  • Life insurance proceeds that have a beneficiary. In this case, like with the trust, the proceeds automatically go to the beneficiary.
  • Retirement plan proceeds, including money from a pension, IRA, or 401(k). The forms for these plans contain a section for you to include your desired beneficiary.
  • Stocks and bonds held in beneficiary. This is yet another type of property that automatically goes to your named beneficiary. Talk to the brokerage company if you wish to change the named beneficiary.
  • Proceeds from a payable-on-death bank account. The form for this account asks you to name your beneficiary. To change the beneficiary, you just fill out another form with your bank.

Avoid leaving funeral instructions when making a will

Usually, the settling of the estate and the probate proceedings do not happen until after the funeral. The funeral arrangements are among the first matters of business after someone dies. Therefore, people may not even notice your funeral wishes stated in your will until after the funeral. Instead of leaving your funeral wishes in your will, talk with your loved ones about what you want. You can even make a separate document that spells out your wishes for the funeral, and give this document to the executor or executrix of your estate.

Avoid using a will to escape estate taxes

A will is still subject to estate taxes. Instead of trying to use a will to avoid the often heavy estate taxes, explore different types of trusts that may work for your situation. Trusts escape a lot of tax subjection, because the property is not passing directly to the beneficiary, rather to the trust account, over which the beneficiary does not have complete control.

Wills do not escape probate

A common misconception is that wills do not have to go through probate proceedings. This is not true. Wills are still subject to probate proceedings. Probate proceedings can take months. However, having a will does help to speed up the probate process, because your loved ones, lawyers, and the probate court are not left having to divide all of your property for you. You have already explained how it should be divided, and the court will follow your wishes. There are other ways you can avoid probate. One common way is leaving the property to a trust fund, with the desired recipient a beneficiary, instead of granting the property directly to that person.

Be careful with what conditions you put on gifts

Not all of those conditions are legal. Conditions that include marriage, divorce, or the change of the recipient’s religion cannot be provisions in a legal will. Therefore, a court will not enforce them. You can put certain other types of conditions on gifts. Usually, these types of conditions are to encourage someone to do or not do something. For example, when making a will, you could say, “to Allison, if and when she graduates from college.” You could also say something like, “to Paul, so long as he uses the property as an art studio.” Just keep in mind that putting conditions on gifts can complicate things. Think about who will actually enforce these conditions, for how long, and does the enforcer get anything like an executor’s fee?

Avoid leaving gifts or money for illegal purposes

Although this is uncommon, some people will try and sneak in some sort of illegal condition or purpose for the gift. This would not make your will a legal will. For example, you wouldn’t be able to include, “to Mary, so long as she uses the property to grow marijuana,” or “To Jane, so long as she has her first beer before she is 21 years old.”

Do not arrange care for a special needs person when making a will

Although it is very possible to arrange such special needs for a disabled person, a will is not the place in which to do it. You need to to a trust. There are certain types of trusts, such as a special needs trust, that specifically address the management of the specific special needs of a disabled person.

Avoid leaving gifts to pets in a will

Animals do not have the legal capacity to own property. What many people do instead is they leave the pet with someone who they know will provide it with good care. You can also leave that person any property or money to help out with the care of the pet. Certain states do allow for trusts with an animal as the beneficiary. If this makes you more comfortable, check to see what your state’s laws are. However, as long as you believe in the person you are leaving your pet with, you probably do not need a pet trust fund.

Free Consultation with a Utah Will Lawyer

You need need your will drawn up, call Ascent Law for your free estate law consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Ascent Law LLC

4.9 stars – based on 67 reviews


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