tag:blogger.com,1999:blog-48798336713480419312024-03-13T21:40:38.202-06:00CPA at LawSterling Olanderhttp://www.blogger.com/profile/18124570212293318545noreply@blogger.comBlogger142125tag:blogger.com,1999:blog-4879833671348041931.post-10946757410532541292024-02-10T16:17:00.002-07:002024-02-10T16:17:19.166-07:00Filing a BOIR Report for New LLCThe Corporate Transparency Act ("CTA") is now active law, and most new entities formed in 2024 must file a Beneficial Ownership Information Report ("BOIR") identifying their beneficial owners with the Financial Crimes Enforcement Network ("FinCEN") within <a href="https://www.fincen.gov/boi-faqs" target="_blank">90 days</a> of formation. Entities existing prior to 2024 have until the end of this year to file. For an introduction to the Corporate Transparency Act, see my <a href="http://www.cpaatlaw.com/2023/11/introduction-to-corporate-transparency.html" target="_blank">prior post</a>. <br />
<br />FinCEN provides detailed step-by-step instructions for filing a BOIR <a href="https://boiefiling.fincen.gov/resources/BOIR_E-File_Online_Step-by-Step_Instructions.pdf" target="_blank">here</a>, and this post will supplement those instructions. To file a BOIR, visit <a href="https://www.fincen.gov/" target="_blank">www.FinCEN.gov</a> and click "File Your Report Now." This will take you to the <a href="https://boiefiling.fincen.gov/" target="_blank">E-Filing System</a> through which the BOIR is filed. Bank Secrecy Act reporting is also mentioned on this page, but BOIR filing is commenced by clicking "Get Started" where BOIR is referenced. The <a href="https://boiefiling.fincen.gov/fileboir" target="_blank">next page</a> provides two primary options, which are to file a PDF BOIR or an Online BOIR; this post will describe the online alternative. <br />
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After agreeing to only use the system for authorized purposes, select the "Type of filing," which for purposes of this post will be an "Initial report" for a newly-formed entity. No login or account is needed in order to file a BOIR. The process is straight-forward and involves simply selecting the correct options and entering the information, first about the reporting company itself and then the applicant(s) and beneficial owner(s).<br />
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The next screen asks and then confirms whether the entity is an existing reporting company, meaning one that was already in existence as of January 1, 2024. Entities existing prior to 2024 need not report any company applicant information, but entities formed in 2024 need to provide company applicant information. Applicant information (name, birthdate, address, etc.) can either be provided directly, or if the applicant has previously obtained a <a href="https://fincenid.fincen.gov/landing" target="_blank">FinCEN ID</a>, the ID number can be entered instead. Requiring a FinCEN ID of company applicants and beneficial owners significantly simplifies initial reporting and the requirement to update reports if information about an applicant or owner changes.<br />
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After inputting information for all applicants, or their FinCEN IDs, the next page is where beneficial owner information (name, birthdate, address, etc.) is inputted. Note that a clear image of appropriate picture identification must be uploaded for both applicant(s) and beneficial owner(s) if a FinCEN ID is not provided. After the beneficial owner information is inputted, the final page is where certification of the information is provided and the report submitted.<br />
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The following page allows the filer to download the transcript of the BOIR, which is critical so that the data submitted can be kept on file by the company for when, among other things, information about the entity changes. Filing and updating BOIRs is an important new requirement for most U.S. entities.Sterling Olanderhttp://www.blogger.com/profile/18124570212293318545noreply@blogger.com0tag:blogger.com,1999:blog-4879833671348041931.post-60351640511214419152023-11-21T23:06:00.001-07:002023-11-21T23:06:12.544-07:00Introduction to the Corporate Transparency ActOn January 1, 2024, the new federal Corporate Transparency Act will require the vast majority of small U.S. entities to start filing an online report with the Financial Crimes Enforcement Network (<a href="https://www.fincen.gov/boi" target="_blank">FinCEN</a>) and report beneficial ownership. Existing entities will have until January 1, 2025 to file this report, but entities formed in the new year will need to file within 30 days of formation. Reports with FinCEN are already required for, among other things, foreign accounts, which I discussed in a <a href="http://www.cpaatlaw.com/2014/07/foreign-account-reporting-requirements.html" target="_blank">previous post</a>. However, the CTA is a big deal and represents a complete upheaval of current entity formation and maintenance practice. A number of exceptions to the reporting requirements apply, but generally only include large entities or entities that are otherwise subject to an existing regulatory regime, such as financial institutions. In other words, it is small entities that are being targeted by the CTA, and ultimate individual beneficial ownership is the primary reporting objective.<br />
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The reporting requirement is imposed upon the "<a href="https://www.fincen.gov/sites/default/files/shared/BOI_FinCEN_Brochure_508C.pdf" target="_blank">reporting company</a>" itself, which is any entity formed by filing a document with a state agency. This means that most trusts will not themselves be reporting companies but will likely have complex requirements to provide information about various trust participants if the trust owns a reporting company interest. "<a href="https://www.fincen.gov/sites/default/files/shared/BOI_Small_Compliance_Guide_FINAL_Sept_508C.pdf" target="_blank">Senior officers</a>" of a reporting company are liable for penalties of up to $500 for each day that the violation continues, imprisonment for up to two years, and/or a fine of up to $10,000. Beneficial owners of a reporting company that provide false information or refuse to provide information to the reporting company can also face penalties. A beneficial owner is any individual who exercises "substantial control" over a reporting company or owns or controls at least 25 percent of the ownership interests of the reporting company. <br />
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The key pieces of information required of beneficial owners include full legal name, date of birth, physical home address (P.O. Boxes are not allowed), and a copy of the individual's driver's license or passport. If any of this information changes, the reporting company must file a change report. Much of the burden of reporting and keeping track of a beneficial owner's change of information appears to be relieved in large part if the beneficial owner obtains his or her own FinCEN identification number and the reporting company reports that number. Given the detailed personal information that is required to be disclosed and the substantial penalties for noncompliance, we will be hearing much more about the CTA at the start of the new year. Sterling Olanderhttp://www.blogger.com/profile/18124570212293318545noreply@blogger.com0Lehi, UT 84043, USA40.4136016 -111.892630312.103367763821154 -147.0488803 68.723835436178845 -76.7363803tag:blogger.com,1999:blog-4879833671348041931.post-77139240511486113242023-10-15T17:46:00.003-06:002023-10-15T17:46:42.307-06:00Supported Decision Making AgreementsAn emerging phrase in the estates and trusts world is that of "supported decision making." The concept of supported decision making is exactly as unremarkable as it sounds and is simply the idea of individuals looking to help from others in making a decision. Hiring a transactional attorney is to seek supported decision making, and many other professional advisors could also qualify as providing decision support. <br />
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However, when used in the context of helping individuals with disabilities, supported decision making represents a paradigm shift from <i>protecting</i> such individuals from poor decisions by inserting a surrogate decision maker to act for them to <i>empowering</i> such individuals to make their own decisions, with support from others. See Nina A. Kohn, <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3768684" target="_blank">Legislating Supported Decision-Making</a>, 58 Harvard Journal on Legislation 313 (2021). Accordingly, one specific objective of supported decision making arrangements is to avoid the need for a guardianship. <br />
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Utah has introduced legislation specifying the requirements for supported decision making agreements, <a href="https://le.utah.gov/~2023/bills/static/HB0510.html" target="_blank">H.B. 510</a>. Under the law, if passed, such an agreement must, among other things, be in writing, designate a "supporter," describe the principal's rights and how the principal uses supported decision-making to make decisions, define the responsibilities of each supporter, and be notarized. It must also "describe how any perceived or actual conflict of interest between a supporter and the principal will be mitigated." <br />
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Supported decision making agreements are nothing more than contracts that have been and will be executed whether or not H.B. 510 or comparable laws in other states are passed. However, the key benefit of H.B. 510 appears to be codifing what constitutes a supported decision making agreement and protecting third parties who rely in good faith on such agreements. It seems that there could be significant overlap in the utility and coverage of supported decision making agreements and limited powers of attorney, but supported decision making agreement legislation may fill coverage gaps and benefit individuals with disabilities. Sterling Olanderhttp://www.blogger.com/profile/18124570212293318545noreply@blogger.com0Lehi, UT 84043, USA40.4136016 -111.892630312.103367763821154 -147.0488803 68.723835436178845 -76.7363803tag:blogger.com,1999:blog-4879833671348041931.post-19091622641617405592023-08-10T18:39:00.001-06:002023-08-10T18:39:12.079-06:00Probate Code's One-Year Nonclaim Statute Protects EstatesIn Utah, a creditor of an estate must present their claim within one year from the decedent's death or be forever barred. A court-appointed personal representative has the option, but not the obligation, to publish notice and give known creditors affirmative notice of the decedent's death and a shorter, three-month window to present claims. However, if no probate proceeding is commenced, the option for the three-month creditor window is not taken, and the one-year mark from the decedent's death is approaching, a creditor in Utah <a href="http://www.cpaatlaw.com/2020/09/introduction-to-claims-against-estate.html" target="_blank">must file</a> its own probate petition together with its claim.<br />
<br />Last year, the Utah Supreme Court clarified this statute in the case of <a href="https://casetext.com/case/huitron-v-kaye" target="_blank">Huitron v. Kaye, 517 P.3d 399 (2022)</a>, holding as follows: <blockquote>
[T]he Nonclaim Statute acts as a complete bar to claims against an estate that are not presented by the applicable deadline. This means that the presentment deadline is not waivable, and the one-year period cannot be tolled. And in an untimely suit against an estate for the sole purpose of collecting insurance proceeds, it means that the estate’s assets are not at risk as a matter of law. 517 P.3d at 404 (citations omitted).</blockquote>
This statute raises the possiblity that successors of a decedent may attempt to avoid payment of known claims by delaying administration until the one-year nonclaim period has run. However, the drafters of the Uniform Probate Code <a href="https://www.uniformlaws.org/HigherLogic/System/DownloadDocumentFile.ashx?DocumentFileKey=a411a8ae-b30f-ce3b-0438-bb0e6d103bd2&forceDialog=0" target="_blank">deemed this unlikely</a> because: <blockquote>
[U]npaid creditors of a decedent are interested persons... qualified to force the opening of an estate for purposes of presenting and enforcing claims. Further, successors who delay opening an administration will suffer from lack of proof of title to estate assets and attendant inability to enjoy their inheritances. Finally, the odds that holders of important claims against the decedent will need help in learning of the death and proper place of administration is rather small.</blockquote>
Similar reasoning was used by the Colorado Supreme Court, interpreting another state's Uniform Probate Code nonclaim statute, in <a href="https://casetext.com/case/in-the-matter-of-the-estate-of-ongaro" target="_blank">In the Matter of the Estate of Ongaro, 998 P.2d 1097 (2000)</a>. In that case, the court stated: <blockquote>
We are aware that the firm deadline for presenting claims... occasionally will work a hardship on claimants who do not receive actual notice of a decedent’s death. The General Assembly, however, has determined that the burden on those claimants is outweighed by the interest in the speedy and efficient settlement of estates.... A personal representative who decides not to provide known creditors with written notice of a decedent’s death and of the deadline for filing claims must forfeit the shorter nonclaim periods... in favor of the one-year period... 998 P.2d at 1104-1105. </blockquote>
In summary, the Uniform Probate Code balances the due process rights of creditors with the need for efficient administration of estates by including the one-year nonclaim statute. This limitations period cannot be tolled because "the personal representative is a trustee of the estate for the benefit of its creditors and heirs, and as such cannot by his conduct waive any provision of a statute affecting their substantial rights." Crowley v. Farmers Bank, 123 P.2d 407, 409 (1942). Anyone owed money or otherwise possessing a claim against an estate must make a formal claim against the estate in the manner prescribed by statute within one year of the decedent's death in order to protect their interests. Sterling Olanderhttp://www.blogger.com/profile/18124570212293318545noreply@blogger.com0Lehi, UT 84043, USA40.4136016 -111.892630312.103367763821154 -147.0488803 68.723835436178845 -76.7363803tag:blogger.com,1999:blog-4879833671348041931.post-78802233825345587422023-06-05T19:58:00.002-06:002023-06-05T19:58:58.392-06:00Transfers Not Subject to Gift TaxUnited States taxpayers pay an estate or gift tax on wealth transfers to the extent that the aggregate value of the transfers, whether upon death or during lifetime, exceeds <a href="https://www.irs.gov/businesses/small-businesses-self-employed/whats-new-estate-and-gift-tax" target="_blank">$12,920,000</a> in 2023. On January 1, 2026, this exclusion amount is scheduled to be reduced roughly in half. Because of this, many taxpayers are considering utilizing this high capacity to give without taxes by utilizing their exclusion before it is reduced. <br />
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In general, any gratuitous transfer is reportable, and will reduce a taxpayer's capacity to transfer wealth without tax, but there are important exceptions. One important exception is the annual exclusion, which I discussed in a <a href="http://www.cpaatlaw.com/2021/08/reducing-estate-taxes-with-annual.html" target="_blank">prior post</a>, which currently allows each taxpayer to gift up to <a href="https://www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-gift-taxes" target="_blank">$17,000</a> per year per donee. This is perhaps the most widely known mechanism for transferring wealth without any gift or estate tax impact, but there are others as well.<br />
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Any taxpayer may make unlimited tuition payments on behalf of any individual without needing to report the gift, pay gift tax, or use their lifetime exclusion. Any such payments must be made directly to the educational institution. Similarly, any amounts may be paid to educational institutions for their general charitable purposes, just as any amounts may be paid to other charitable organizations free of gift or estate tax. <br />
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Any taxpayer may generally make payments directly to medical providers for medical payments or medical insurance premiums for others. Not only are such payments free from gift or estate tax, an income tax deduction may be available for the taxpayer, just as a charitable deduction may be available for gifts to charities for the benefit of the public. Finally, gifts to <a href="https://www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-gift-taxes#collapseCollapsible1685550671805" target="_blank">political organizations</a> are generally exempt from gift tax. Using the tools described herein can be effective ways to mitigate gift and estate taxes.Sterling Olanderhttp://www.blogger.com/profile/18124570212293318545noreply@blogger.com0Lehi, UT 84043, USA40.4136016 -111.892630312.103367763821154 -147.0488803 68.723835436178845 -76.7363803tag:blogger.com,1999:blog-4879833671348041931.post-9583989927262859582023-04-27T21:43:00.000-06:002023-04-27T21:43:58.538-06:00Legal Pitfalls for Inexperienced FiduciariesAs a simple <a href="https://www.ksl.com/news/search?cx=partner-pub-3771868546990559%3Ar955z1-wmf4&cof=FORID%3A9&ie=ISO-8859-1&sa=Search&searchtype=kslcom&x=15&y=19&q=unlawful+dealing+of+property+by+a+fiduciary#gsc.tab=0&gsc.q=unlawful%20dealing%20of%20property%20by%20a%20fiduciary&gsc.page=1" target="_blank">local news search</a> will reveal, criminal charges are regularly brought against fiduciaries who have allegedly breached their fiduciary duties. Criminal charges in the area of estate and trust administration could include unlawful dealing of property by a fiduciary and financial exploitation of a vulnerable adult. <br />
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The former is committed when a <a href="https://le.utah.gov/xcode/Title22/Chapter1/22-1-S1.html?v=C22-1-S1_1800010118000101" target="_blank">fiduciary</a> "deals with property that has been entrusted to him as a fiduciary... in a manner which the person <a href="https://le.utah.gov/xcode/Title76/Chapter6/76-6-S513.html?v=C76-6-S513_2019051420190701" target="_blank">knows is a violation</a> of the person's duty and which involves substantial risk of loss or detriment to the owner or to a person for whose benefit the property was entrusted." The latter is committed when anyone, among other things, "unjustly or improperly uses or manages the resources of a <a href="https://le.utah.gov/xcode/Title76/Chapter5/76-5-S111.html?v=C76-5-S111_2022050420220504" target="_blank">vulnerable adult</a> for the profit or advantage of <a href="https://le.utah.gov/xcode/Title76/Chapter5/76-5-S111.4.html?v=C76-5-S111.4_2022050420220504" target="_blank">someone other than</a> the vulnerable adult..."<br />
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There are obvious examples of cases where a fiduciary admits to using trust funds for <a href="https://www.ksl.com/article/50401751/prison-ordered-for-salt-lake-attorney-who-stole-millions-from-disabled-clients" target="_blank">personal use</a> and criminal charges are warranted. However, it is not difficult to imagine a scenario where an inexperienced fiduciary has good intentions but doesn't keep a proper accounting or invests trust funds imprudently and a vindictive beneficiary seeks criminal charges.<br />
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An inexperienced trustee should clearly be held to account and restore, but there are <a href="https://le.utah.gov/xcode/Title75/Chapter7/75-7-S1001.html?v=C75-7-S1001_1800010118000101" target="_blank">civil remedies</a> and <a href="https://le.utah.gov/xcode/Title75/Chapter7/75-7-S1002.html" target="_blank">civil damages</a> available to beneficiaries that seem more appropriate as a first resort. Any fiduciary would be well-advised to seek legal counsel to avoid civil or criminal issues arising from their service.Sterling Olanderhttp://www.blogger.com/profile/18124570212293318545noreply@blogger.com0Lehi, UT 84043, USA40.4136016 -111.892630312.103367763821154 -147.0488803 68.723835436178845 -76.7363803tag:blogger.com,1999:blog-4879833671348041931.post-59662973433820889872023-03-12T16:30:00.000-06:002023-03-12T16:30:08.376-06:00Petition for Essential Treatment and InterventionAs I discussed in a prior post, completing a <a href="http://www.cpaatlaw.com/2022/09/utah-declaration-for-mental-health.html" target="_blank">Declaration for Mental Health Treatment</a> can be a useful way for someone with drug abuse or mental health challenges to provide for their own care if they reach a point where they can no longer care for themselves. If a Declaration is not completed, and the person becomes at risk of harming themselves or others, seeking an <a href="https://le.utah.gov/xcode/Title75/Chapter5/75-5-S310.html?v=C75-5-S310_2017050920170509" target="_blank">emergency guardianship</a> from a court may be considered. Such motions can be ex-parte, meaning that no notice or hearing is required, and if granted, an emergency guardianship lasts for 30 days. <br />
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A third option, however, for cases of drug abuse, is known as a Petition for Essential Treatment and Intervention, which became available in 2017 pursuant to Utah Code 62A-15-1201. This law was passed to "address the serious <a href="https://le.utah.gov/xcode/Title62A/Chapter15/62A-15-S1201.html?v=C62A-15-S1201_2017050920170509" target="_blank">public health crisis</a> of substance use disorder related deaths". The proceeding commences in court when a "relative seeking essential treatment and intervention for a sufferer of a substance use disorder" files a <a href="https://le.utah.gov/xcode/Title62A/Chapter15/62A-15-S1203.html" target="_blank">petition</a> with the district court where the sufferer lives. <br />
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The petition must identify a treatment facility where the sufferer may receive treatment and a binding commitment on the part of the petitioner to pay for treatment costs. Upon receiving the petition, the court will "set an expedited date for a time-sensitive hearing to determine whether the court should <a href="https://le.utah.gov/xcode/Title62A/Chapter15/62A-15-S1205.html" target="_blank">order the respondent </a>to undergo essential treatment for a substance use disorder" and provide notice of the same to the interested parties. Unless the sufferer objects or the court orders otherwise, two essential treatment examiners will examine the sufferer before the hearing and make treatment recommendations to the court. If the court ultimately finds that treatment is required, it can order treatment and subject the sufferer to a <a href="https://le.utah.gov/xcode/Title62A/Chapter15/62A-15-S1205.5.html" target="_blank">warrant of commitment</a> if they do not comply. <br />
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A Petition for Essential Treatment and Intervention is confidential, and the Utah Courts website provides all of the <a href="https://www.utcourts.gov/en/self-help/case-categories/family/intervention.html" target="_blank">necessary forms</a> for individuals who want to proceed without an attorney. While such a petition is not a panacea, it should at least be considered as an alternative to a guardianship.Sterling Olanderhttp://www.blogger.com/profile/18124570212293318545noreply@blogger.com0Lehi, UT 84043, USA40.4136016 -111.892630312.103367763821154 -147.0488803 68.723835436178845 -76.7363803tag:blogger.com,1999:blog-4879833671348041931.post-89305285820880704312023-01-22T08:00:00.000-07:002023-01-22T08:00:09.255-07:00Posthumous Common Law Marriage in UtahIn Utah, like many states, marriage-like relationships that were never solemnized can be declared valid by court or administrative order. "A petition for an unsolemnized marriage shall be filed during the relationship... or within <a href="https://le.utah.gov/xcode/Title30/Chapter1/30-1-S4.5.html?v=C30-1-S4.5_2021050520210505" target="_blank">one year</a> following the termination of that relationship", which includes termination due to the death of one of the parties. Utah Code 30-1-4.5(2)(a). <br />
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A key step in any posthumous common law marriage petition is securing the appointment of a <a href="https://www.utcourts.gov/en/self-help/case-categories/family/marriage/common-law.html" target="_blank">personal reresentative</a> over the decedent's estate because the marriage petition must be served on the personal representative. Gardiner v. Taufer, 2014 UT 56, 342 P.3d 269. A court order of a common-law marriage after death would significantly impact the rights of the natural relatives of the decedent, making a <a href="http://www.cpaatlaw.com/2018/01/introduction-to-probate-proceedings.html" target="_blank">probate proceeding</a> indispensable.<br />
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Any petitioner must be prepared to show the court that the petitioner and the decedent (a) were of legal age and capable of giving consent to the marriage, (b) were legally capable of entering a solemnized marriage, (c) cohabited, (d) mutually assumed marital rights, duties, and obligations; and (e) held themselves out as and had acquired a uniform and general reputation as husband and wife. See Utah Code 30-1-4.5(1). Consent to the marriage can be shown by "maintenance of joint banking and credit accounts; purchase and joint ownership of property; the [sharing of a spouse’s] surname by the [other spouse] and/or the children of the union; the filing of joint tax returns; speaking of each other in the presence of third parties as being married; and declaring the relationship in documents executed by them while living together, such as deeds, wills, and other formal instruments." Volk v. Vecchi, 467 P.3d 872, quoting Whyte v. Blair, 885 P.2d 791, 794-795.
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There are many reasons to seek a posthumous common law marriage, such as "to claim insurance benefits, retirement benefits, survivor benefits, or public benefits, or to <a href="https://www.utcourts.gov/en/self-help/case-categories/family/marriage/common-law.html" target="_blank">inherit property</a>." The Utah Courts provide a <a href="https://legacy.utcourts.gov/howto/marriage/commonlaw/docs/1600FA_Petition_to_Recognize_a_Relationship_as_a_Marriage.pdf" target="_blank">marriage petition</a> form on their website as well as ancillary documents. However, due to the multiple proceedings that may be required and the evidentiary requirements, seeking legal counsel in a marriage petition is strongly advised. Sterling Olanderhttp://www.blogger.com/profile/18124570212293318545noreply@blogger.com0Lehi, UT 84043, USA40.4136016 -111.892630312.103367763821154 -147.0488803 68.723835436178845 -76.7363803tag:blogger.com,1999:blog-4879833671348041931.post-55110247335338915872022-11-25T16:28:00.003-07:002022-11-25T16:28:36.612-07:00Co-Fiduciaries in Probate and PlanningThe terms of <a href="http://www.cpaatlaw.com/2017/12/estate-planning-fundamentals.html" target="_blank">fundamental estate planning </a>documents always include designating a fiduciary in each such document. Specifically, a last will will designate a personal representative of the estate, a power of attorney and health care directive will designate an agent to make decisions during life, and a trust agreement will designate a successor trustee. If an individual does not have a power of attorney or health care directive, a guardianship and conservatorship will sometimes be required, wherein the court will appoint a guardian and/or conservator. <br />
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There are obvious benefits in designating multiple co-fiduciaries in any of these situations as opposed to a single fiduciary. Co-fiduciaries can provide a check and a balance on each other and share the burdens of serving in the role. The primary downside is more complexity in carrying out the co-fiduciaries' duties because often multiple fiduciaries will need to act together in signing documents or taking other action.<br />
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The terms of the relevant governance document must always specify whether co-fiduciaries can act independently or if they must act together. State law provides default answers in certain circumstances, but it is not always clear or predictable what the default rule is. <a href="https://le.utah.gov/xcode/Title75/Chapter3/75-3-S716.html?v=C75-3-S716_1800010118000101" target="_blank">Utah Code 75-3-716</a> states that co-personal representatives of an estate generally act by majority vote unless the will provides otherwise, and <a href="https://le.utah.gov/xcode/Title75/Chapter7/75-7-S703.html?v=C75-7-S703_2019051420190514" target="_blank">Utah Code 75-7-703</a> addresses co-trustees and by default would require the action of both. Utah Code <a href="https://le.utah.gov/xcode/Title75/Chapter2A/75-2a-S108.html?v=C75-2a-S108_1800010118000101" target="_blank">75-2a-108</a> also provides for majority vote in the health-care decision-making context. <br />
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However, <a href="https://le.utah.gov/xcode/Title75/Chapter9/75-9-S111.html?v=C75-9-S111_2016051020160510" target="_blank">Utah Code 75-9-111 </a>has the opposite default in the case of co-agents under a power of attorney, meaning that each can act independently unless the governing document provides otherwise. The comments to the <a href="https://www.uniformlaws.org/HigherLogic/System/DownloadDocumentFile.ashx?DocumentFileKey=c9e55522-8363-74ba-e087-175af9e4c93e&forceDialog=0" target="_blank">Uniform Probate Code</a> indicate that some questions as to whether co-fiduciaries must act together were deliberately left to state law, and in Utah anyway, it is unclear what the default rule is in the case of co-guardians and co-conservators. Best practices clearly require the governing document or court order to specify whether co-fiduciaries can act independently or whether they must act together. Sterling Olanderhttp://www.blogger.com/profile/18124570212293318545noreply@blogger.com0Lehi, UT 84043, USA40.4136016 -111.892630312.103367763821154 -147.0488803 68.723835436178845 -76.7363803tag:blogger.com,1999:blog-4879833671348041931.post-91341001009787538812022-10-17T07:14:00.000-06:002022-10-17T07:14:07.226-06:00Introduction to Premarital AgreementsA prenuptial or premarital agreement refers to "an agreement between prospective spouses made in <a href="https://le.utah.gov/xcode/Title30/Chapter8/30-8-S2.html?v=C30-8-S2_1800010118000101" target="_blank">contemplation of marriage</a> and to be effective upon marriage." Such agreements are strongly recommended anytime an individual with separate assets intends to marry.<br />
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The reason why a premarital agreement is important is because, by virtue of a marriage, spouses assume certain legal duties and obtain certain rights with respect to their spouse and their spouse's assets, especially in the event of divorce or death. For example, in the event of divorce in Utah after a long-term marriage, a judge would likely award alimony to one spouse to the extent needed to maintain the lifestyle they enjoyed during the marriage for a period up to the length of the marriage. Alimony can and often is a negotiated term of a premarital agreement.<br />
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Another example of a right that a surviving spouse has in Utah is the right to an "<a href="https://le.utah.gov/xcode/Title75/Chapter2/75-2-S202.html?v=C75-2-S202_1800010118000101" target="_blank">elective share</a>" of the assets of the first spouse to pass away, calculated as one-third of the "augmented estate." This right of election effectively makes it nearly impossible to disinherit a spouse, even in very short-term marriages, and even where a trust or other non-probate transfers are involved.<br />
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The right to an elective share can be waived, and often is waived in a premarital agreement. However, the waiver can be set aside by a court pursuant to <a href="https://le.utah.gov/xcode/Title75/Chapter2/75-2-S213.html?v=C75-2-S213_1800010118000101" target="_blank">Utah Code 75-2-213(2)</a>, which contains essentially the same standard for setting aside a premarital agreement itself under <a href="https://le.utah.gov/xcode/Title30/Chapter8/30-8-S6.html?v=C30-8-S6_1800010118000101" target="_blank">Utah Code 30-8-6(1)</a>. Specifically, such agreements must be voluntary and not fraudulent (or not "unconscionable" in the case of an elective share waiver) and must have been accompanied by adequate disclosure or knowledge of the property or financial obligations of the other spouse.<br />
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There are of course many additional legal implications of a marriage and a premarital agreement. These should be discussed with an experienced attorney well in advance of the wedding date. Sterling Olanderhttp://www.blogger.com/profile/18124570212293318545noreply@blogger.com0Lehi, UT 84043, USA40.4136016 -111.892630312.103367763821154 -147.0488803 68.723835436178845 -76.7363803tag:blogger.com,1999:blog-4879833671348041931.post-2220180573260447572022-09-13T22:10:00.002-06:002022-09-13T22:10:57.169-06:00Utah Declaration for Mental Health TreatmentThe Utah Advance Health Care Directive Act, among other things, allows an individual to sign an <a href="https://ucoa.utah.edu/_resources/documents/directives/fillin-2009electronic.pdf" target="_blank">Advance Health Care Directive</a> and appoint an agent to make health care decisions on their behalf. However, "[a]n adult's current health care decisions, however expressed or indicated, <a href="https://le.utah.gov/xcode/Title75/Chapter2A/75-2a-S109.html?v=C75-2a-S109_1800010118000101" target="_blank">always supersede</a> an adult's prior decisions or health care directives." This raises the question as to how an agent or medical professional can help someone who is refusing necessary care or otherwise acting contrary to their best interests.<br />
<br />A common course of action in this scenario is to seek <a href="http://www.cpaatlaw.com/2021/05/utah-adult-guardianship-appointment.html" target="_blank">guardianship</a>, possibly on an emergency basis, over the person who is acting contrary to their own best interests. However, this can be an expensive, invasive, and time-consuming process that may lead to a court dismissal of the guardianship or a guardianship that unduly restricts the protected person's rights.<br />
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One alternative that is worth considering in Utah for anyone with mental health struggles is a <a href="https://le.utah.gov/xcode/Title62A/Chapter15/62A-15-S1004.html?v=C62A-15-S1004_1800010118000101" target="_blank">Declaration for Mental Health Treatment</a>. The key difference between this declaration and an Advance Health Care Directive is that a Declaration for Mental Health Treatment may not be revoked if the principal is considered incapable of making mental health treatment decisions by two physicians. In such a scenario, a declaration allows the declarant's agent to make decisions about mental health treatment as expressed in the declaration even if the declarant expresses contrary preferences or attempts to revoke the declaration.<br />
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For an excellent article on psychiatric advance directives like Utah's Declaration for Mental Health Treatment, see <a href="https://hollislaidlaw.com/wp-content/uploads/2021/10/mental-health-directives.pdf" target="_blank">Mental Health Directives in Estate-Planning Engagements</a> in Trusts & Estates by Moira S. Laidlaw. Such directives are an important tool that strikes a balance between the potential inefficacy of an Advance Health Care Directive and the overbearing nature of a guardianship for individuals experiencing an acute psychiatric episode.Sterling Olanderhttp://www.blogger.com/profile/18124570212293318545noreply@blogger.com0Lehi, UT 84043, USA40.4136016 -111.892630312.103367763821154 -147.0488803 68.723835436178845 -76.7363803tag:blogger.com,1999:blog-4879833671348041931.post-61312324360020553882022-08-17T08:14:00.001-06:002022-08-17T08:14:38.503-06:00Utah's Guardianship Bill of RightsAccording to the <a href="https://www.americanbar.org/groups/senior_lawyers/publications/voice_of_experience/2020/august-2020/rights-of-persons-under-guardianship/" target="_blank">American Bar Association</a>, "Since 2015, at least 18 states have passed legislation to focus on the rights of individuals under guardianship, while others with existing laws have modified and strengthened those laws." Utah was added to this list earlier this year when <a href="https://le.utah.gov/~2022/bills/static/HB0320.html" target="_blank">H.B. 320</a>, the Guardianship Bill of Rights, was passed and signed into law.<br />
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The Guardianship Bill of Rights "addresses the rights of a person alleged to be incapacitated with respect to a guardianship" and also "addresses the rights of an incapacitated person with respect to a guardianship." While it was always clear that an adult person alleged to be incapacitated had a <a href="https://le.utah.gov/xcode/Title75/Chapter5/75-5-S303.html?v=C75-5-S303_2018050820180508" target="_blank">right to be represented</a> by an attorney prior to having a guardian appointed, that right was less clear after having been declared incapacitated and having a guardian appointed. After all, is a person under full guardianship legally capable of retaining an attorney?<br />
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The Guardianship Bill of Rights specifies that "an incapacitated person for whom a guardian is appointed has [the] right to... have counsel represent the incapacitated person at any time after the guardian is appointed." This is an important clarification that will help prevent guardianship abuse.<br />
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Another important right that persons under guardianship have is to "receive telephone calls and personal mail and associate with relatives and acquaintances." This section works with <a href="https://le.utah.gov/xcode/Title75/Chapter5/75-5-S312.5.html?v=C75-5-S312.5_2022050420220504" target="_blank">Utah Code 75-5-312.5</a> to help address the "anecdotal evidence... that guardians, either well-meaning or for personal gain, <a href="https://www.americanbar.org/groups/senior_lawyers/publications/voice_of_experience/2020/august-2020/rights-of-persons-under-guardianship/" target="_blank">have restricted</a> the protected person’s access to their family..." The Guardianship Bill of Rights is an important law that provides meaningful protection for vulnerable individuals. Sterling Olanderhttp://www.blogger.com/profile/18124570212293318545noreply@blogger.com0Lehi, UT 84043, USA40.4136016 -111.892630312.103367763821154 -147.0488803 68.723835436178845 -76.7363803tag:blogger.com,1999:blog-4879833671348041931.post-18273408892109215542022-06-18T13:50:00.000-06:002022-06-18T13:50:46.902-06:00The Uniform Transfer on Death Security Registration ActIn a <a href="http://www.cpaatlaw.com/2019/09/instruments-entitled-to-probate.html" target="_blank">prior post</a>, I discussed the trend in probate law whereby nontestamentary arrangements are increasingly favored as ways to transfer property upon death without the need for probate. One such arrangement that I have written about previously is the <a href="http://www.cpaatlaw.com/2020/01/real-property-transfer-on-death.html" target="_blank">Uniform Real Property Transfer on Death Act</a>. Another such arrangement is the Uniform Transfer on Death Security Registration Act. <br />
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The purpose of the UTODSRA is "to allow the owner of securities to register the title in <a href="https://www.uniformlaws.org/HigherLogic/System/DownloadDocumentFile.ashx?DocumentFileKey=08e900c4-eca1-a665-5806-96d2cbaa03d4&forceDialog=0" target="_blank">transfer-on-death</a> (TOD) form," thus providing for a non-probate mechanism for transferring a security upon the death of the owner. Under the act, one or more individuals who own a security can take ownership in "beneficiary form," which simply means that ownership reflects the name of the registered owner(s), followed by the words “transfer on death”, “TOD”, “pay on death”, or “POD,” followed by the name of the beneficiary.<br />
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The UTODSRA extends to interests in private companies, including <a href="https://scholarship.law.marquette.edu/cgi/viewcontent.cgi?article=5288&context=mulr" target="_blank">limited liability companies</a>. This can be very beneficial because it is often families of small business owners that have the greatest need for a simple, low-cost alternative to probate.<br />
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Many buy-sell agreements restrict ownership of a business to a small group of individuals and provide for the buy-out of an owner upon death. However, depending on the terms of the buy-sell agreement and the owner's individual estate plan, the successor of a deceased business owner may need to go through probate in order to give the manager of the business assurance that the proceeds of the interest buy-out are paid to the right person. The UTODSRA provides one option for streamlining the effectuation of a buy-sell agreement upon the death of a business owner. Sterling Olanderhttp://www.blogger.com/profile/18124570212293318545noreply@blogger.com0Lehi, UT 84043, USA40.4136016 -111.892630312.103367763821154 -147.0488803 68.723835436178845 -76.7363803tag:blogger.com,1999:blog-4879833671348041931.post-91346712425064705612022-04-30T14:49:00.001-06:002022-04-30T14:49:21.456-06:00Allocating a Decedent's Joint Debts Secured by Jointly-Owned PropertyOne of the tasks that needs to be completed in the <a href="http://www.cpaatlaw.com/2020/07/what-to-do-after-loved-one-passes-away.html" target="_blank">process of administering</a> a decedent's estate is to determine what debts the decedent owed and arrange for payment of those debts. Sometimes, decedents may be joint obligors on a debt with another person, in which case the estate may be liable for a portion of the debt. <br />
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Under common law, even if the decedent was jointly obligated on a debt that was secured by property owned in joint tenancy, the estate still had an obligation to pay a share of the debt even though the underlying property passed in its entirety to the surviving joint tenant. The majority rule permits contribution by the estate to the surviving joint tenant, while the minority rule does not; however, the trend does seem to be towards the minority rule. In 1998, the Supreme Court of Rhode Island in <a href="https://casetext.com/case/mellor-v-oconnor" target="_blank">Mellor v. O'Connor</a>, 712 A.2d 375 (R.I., 1998), settled the issue in that state by rejecting the majority rule, holding that the surviving joint tenant was not entitled to contribution from the estate of the decedent for payment of a jointly executed promissory note secured by a mortgage on the property. For a critique of this decision, see <a href="http://dirt.umkc.edu/dd99/dd011999.htm" target="_blank">this analysis</a> by Patrick A. Randolph, Jr., then a professor at UMKC School of Law.<br />
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Section 2-607 of the <a href="https://www.uniformlaws.org/HigherLogic/System/DownloadDocumentFile.ashx?DocumentFileKey=c9e55522-8363-74ba-e087-175af9e4c93e&forceDialog=0" target="_blank">Uniform Probate Code</a> provides that a "specific devise [under a will] passes subject to any mortgage interest existing at the date of death, without right of exoneration, regardless of a general directive in the will to pay debts." In other words, if a decedent's will leaves a property to a beneficiary, and the property is subject to a debt, the beneficiary is not entitled to contribution from the estate for payment of the debt.<br />
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In 2012, the Supreme Court of Montana in <a href="https://www.leagle.com/decision/inmtco20121218283" target="_blank">In re Estate of Afrank</a>, 291 P.3d 576 (Mont. 2012), held that a debt encumbering property held in joint tenancy is not exonerated upon the death of one of the joint tenants, meaning that the surviving joint tenant is not entitled to contribution from the estate for a share of the encumbrance. While the property did not pass via will, the Court looked to Montana's Uniform Probate Code and applied the policy of nonexoneration to the case at hand. <br />
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This issue has not been decided in Utah, where presumably the majority rule under common law would prevail: <blockquote>
In a majority of jurisdictions the courts have taken the view, at least in the absence of evidence of other intention or special circumstances, that a surviving spouse is entitled to equitable contribution out of the estate of a deceased spouse, in reimbursement of the payment by the survivor of more than his equitable share of their joint obligation, even though the debt is secured by real property which was held by them as tenants by the entirety, and which, therefore, is wholly acquired by the surviving spouse as surviving tenant, leaving the estate of the deceased spouse with no interest therein. 76 A.L.R.2d 1004 </blockquote>Sterling Olanderhttp://www.blogger.com/profile/18124570212293318545noreply@blogger.com1Lehi, UT 84043, USA40.4136016 -111.892630312.103367763821154 -147.0488803 68.723835436178845 -76.7363803tag:blogger.com,1999:blog-4879833671348041931.post-78057073217141524192022-02-08T08:42:00.001-07:002022-04-10T19:23:20.828-06:00Presumption of Beneficiary Designation Revocation by DivorceWhen a couple gets divorced, the division of each and every asset they own must be specified in the divorce decree. Equally as important, the former spouses must update their estate plans after their divorce is finalized, including all beneficiary designations, consistent with the divorce decree. Frequently, however, this does not happen, and the family of a divorced individual who has passed away often finds a former spouse designated as beneficiary on a retirement account or life insurance policy.<br />
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In Utah, "[e]xcept as provided by the express terms of a governing instrument, a court order, or a contract [such as a prenuptial agreement], the divorce... <a href="https://le.utah.gov/xcode/Title75/Chapter2/75-2-S804.html?v=C75-2-S804_2021050520210505" target="_blank">revokes any revocable</a>... disposition or appointment of property made by a divorced individual to the individual's former spouse in a governing instrument..." A "governing instrument" in this context includes a beneficiary designation, meaning that if an individual names their spouse as a beneficiary of a retirement account or life insurance policy, then gets divorced without updating the designation, and then passes away, the beneficiary designation is deemed to have been revoked by the divorce, barring a contrary provision in a contract or court order.<br />
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The Utah Supreme Court has interpreted this section as creating "a rebuttable presumption that a beneficiary designation... is revoked upon divorce. The presumption can be rebutted by express terms in the life insurance policy; a court order, including a decree of divorce; or a 'contract relating to the division of the marital estate made between the divorced individuals.'" <a href="https://caselaw.findlaw.com/ut-supreme-court/1766360.html" target="_blank">Hertzske v. Snyder</a>, 390 P.3d 307, 311 (2017).<br />
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A third-party payor, such as a life insurance company, "<a href="https://le.utah.gov/xcode/Title75/Chapter2/75-2-S804.html?v=C75-2-S804_2021050520210505" target="_blank">is liable</a> for a payment made or other action taken after the payor... received written notice of a claimed forfeiture or revocation..." Such notice must be "mailed to the payor's or other third party's main office or home by registered or certified mail, return receipt requested, or served upon the payor." While these provisions may be overruled by federal law or a benefits plan, they are designed to ensure that a divorced spouse's probable intent in removing their ex-spouse from a beneficiary designation after a divorce is enforced even if the beneficiary designation was not actually changed. Sterling Olanderhttp://www.blogger.com/profile/18124570212293318545noreply@blogger.com1Lehi, UT 84043, USA40.4136016 -111.892630313.983852988150996 -147.0488803 66.843350211849 -76.7363803tag:blogger.com,1999:blog-4879833671348041931.post-66716541495988206292022-01-06T08:34:00.000-07:002022-01-06T08:34:39.509-07:00Establishing an Unregistered Birth or DeathIn Utah, an individual, an immediate family member, or a legal representative "may petition for a court order establishing the fact, time, and place of a birth or death that is not registered or for which a certified copy of the registered birth or death certificate is not obtainable." <a href="https://le.utah.gov/xcode/Title26/Chapter2/26-2-S15.html?v=C26-2-S15_2020051220200512" target="_blank">Utah Code 26-2-15(1)</a>. Such a proceeding must be brought where the birth or death occurred, where the individual currently resides, or where the individual resided upon death.<br />
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The petition must provide information regarding the date, time, and place of the birth or death and state that the vital record is unregistered or unobtainable. If all of the requirements of the statute are satisfied, the court will issue an order establishing the facts of a birth or death after a hearing. <br />
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Often, this statute is used by parents who adopt a child from a foreign country "<a href="https://le.utah.gov/xcode/Title26/Chapter2/26-2-S15.html?v=C26-2-S15_2020051220200512" target="_blank">not recognized</a> by department rule as having an established vital records registration system." Obtaining a court order establishing the facts as to the child's birth is a prerequisite to the Department of Health issuing a <a href="https://le.utah.gov/xcode/Title26/Chapter2/26-2-S28.html?v=C26-2-S28_2021050520210505" target="_blank">birth certificate</a> for the adopted child.<br />
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However, another situation where this statute can be very useful is for individuals trying to obtain dual citizenship in another country <a href="https://www.forbes.com/sites/joesills/2020/09/30/these-countries-will-grant-you-citizenship-based-on-your-ancestry/?sh=6f961bf01266" target="_blank">based on their ancestry</a>. Proving ancestry based on official government documentation typically requires producing birth and/or death certificates. However, in Utah, a birth certificate can only be issued to a <a href="https://le.utah.gov/xcode/Title26/Chapter2/26-2-S9.html" target="_blank">living person</a>, and in the 1800s, it was not uncommon for births or deaths to occur without an accompanying vital record. In these cases, a court order pursuant to <a href="https://le.utah.gov/xcode/Title26/Chapter2/26-2-S15.html?v=C26-2-S15_2020051220200512" target="_blank">Utah Code 26-2-15(1)</a> can satify the evidenciary requirement for ancestry even without an actual birth or death certificate. Sterling Olanderhttp://www.blogger.com/profile/18124570212293318545noreply@blogger.com0Lehi, UT 84043, USA40.4136016 -111.892630312.103367763821154 -147.0488803 68.723835436178845 -76.7363803tag:blogger.com,1999:blog-4879833671348041931.post-38842943553120166732021-11-10T19:26:00.001-07:002021-11-10T19:26:26.725-07:00Utah Recognizes the Tort of Intentional Interference with InheritanceOn July 1, 2021, the Utah Supreme Court held that the tort of intentional interference with inheritance is a valid cause of action in Utah. See generally, <a href="https://casetext.com/case/trust-v-rudd-in-re-estate-of-osguthorpe" target="_blank">Matter of Est. of Osguthorpe, 2021 UT 23, 491 P.3d 894</a>. The case involved a dispute between the children of Dr. D.A. Osguthorpe and David R. Rudd and the law firm of Ballard Spahr, LLP, with the children arguing that Rudd had "improperly influenced Dr. Osguthorpe to amend his will and trust in a manner that shifted a portion of the Children's expected inheritance" to Dr. Osguthorpe's second wife and his alma mater. The Supreme Court agreed with the children that the district court erred by declining to recognize intentional interference with inheritance as a tort and by dismissing their claim "on the alternative ground that, even if the tort were a valid cause of action in Utah, the probate proceeding would resolve all of their complaints." <br />
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While the Uniform Probate Code is intended to address and provide remedies for many kinds of trust and estate disputes, the Court concluded that "there are claims that seek to remedy other types of harms and thus are not displaced" by the Probate Code. For example, the Probate Code may not have an adequate remedy for a claim that "'the decedent intended to create a different will' which would have added a gift to the plaintiff, yet the decedent 'was prevented from doing so by the defendant.'" Similarly, in a claim that a "'defendant's tortious conduct had caused the testator to make an inter vivos conveyance... of assets that would otherwise have been part of the estate, setting aside the will" under the Uniform Probate Code would not provide an adquate remedy. <br />
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The elements for a claim of intentional interference with an inheritance in Utah come from the Third Restatement of Torts and are as follows:<br />
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(a) the plaintiff had a reasonable expectation of receiving an inheritance or gift;<br />
(b) the defendant committed an intentional and independent legal wrong;<br />
(c) the defendant's purpose was to interfere with the plaintiff's expectancy;<br />
(d) the defendant's conduct caused the expectancy to fail; and<br />
(e) the plaintiff suffered economic loss as a result.<br />
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However, the claim of intentional interference with inheritance cannot be brought under any circumstance. Specifically, it "'is not available to a plaintiff who had the right to seek a remedy for the same claim' under Utah's Probate Code." For example, traditional claims of fraud, duress, or undue influence would need to be brought within the framework of the Probate Code. Nevertheless, Utah's recognition of the tort of intentional interference with inheritance will help fill in some gaps where a wrongdoing may otherwise elude a straight-forward remedy. Sterling Olanderhttp://www.blogger.com/profile/18124570212293318545noreply@blogger.com0Lehi, UT 84043, USA40.4136016 -111.892630312.103367763821154 -147.0488803 68.723835436178845 -76.7363803tag:blogger.com,1999:blog-4879833671348041931.post-53807144045232518422021-10-31T21:28:00.000-06:002021-10-31T21:28:00.156-06:00What is an Advancement? In the estate planning and administration context, an advancement is a gift made to an heir prior to death that is treated as an advance on the heir's ultimate share of the estate. For example, if dad made a $50 advancement to son during his lifetime, died intestate with $100 to his name, and had three children and no spouse, the two children that had not received lifetime gifts would split the $100 equally. The $50 is treated as an advance on the son's ultimate inheritance; otherwise, the remaining $100 would be split three ways, with the son receiving in total a disproportionate share. <br />
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Under the Uniform Probate Code, a gift made prior to death is only treated as an advancement if accompanied by contemporaneous written documentation that the gift is to be treated as such. While the concept of an advancement can only technically apply where a decedent dies intestate and left documentation of intent to treat a gift as an advancement, my will and trust form language includes a provision confirming that any prior gifts are not advancements. It is important for clients to consider the impact that providing additional support and resources to one heir during life can have on all heirs upon death. <br />
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The comments to the Uniform Probate Code provide a <a href="https://www.uniformlaws.org/HigherLogic/System/DownloadDocumentFile.ashx?DocumentFileKey=64b642f6-296a-035a-65de-1126796214d4&forceDialog=0" target="_blank">good example</a> of how advancements work, which I simplify here: G died intestate, survived by his three children, A, B, and C. G’s probate estate is valued at $60, but during his lifetime, G had advanced A $50 and B $10 and memorialized in writing that such gifts be advancements. Upon G's death, the first step in calculating the children's respective shares in G's estate is to add back the advancements, resulting in a theoretical "hotchpot" estate of $120 (60 + 50 + 10), of which the three children would be entitled to equal shares. <br />
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Because A has received an advancement greater than the share to which he is entitled, A can retain the $50 advancement but is not entitled to any additional amount. This leaves $70 (60 + 10) remaining in the hotchpot estate, of which B and C are each entitled to half. B receives $25 (having already received $10) and C receives the remaining $35. Had A and B's gifts not been treated as advancements, A would have received $70, B would have received $30, and C would have received $20 from G's estate (aggregating pre-death gifts with an equal share of the remaining estate). This example illustrates why it is important to consult with an estate planning attorney prior to making substantial, disproportionate gifts to heirs. Sterling Olanderhttp://www.blogger.com/profile/18124570212293318545noreply@blogger.com0Lehi, UT 84043, USA40.4136016 -111.892630312.103367763821154 -147.0488803 68.723835436178845 -76.7363803tag:blogger.com,1999:blog-4879833671348041931.post-28338293050453146392021-09-11T10:33:00.001-06:002021-09-11T10:33:32.423-06:00Review of Estate Planning Documents<iframe width="480" height="270" src="https://youtube.com/embed/Ne9oKmkCwqQ" frameborder="0"></iframe>Sterling Olanderhttp://www.blogger.com/profile/18124570212293318545noreply@blogger.com0Lehi, UT 84043, USA40.4136016 -111.892630312.103367763821154 -147.0488803 68.723835436178845 -76.7363803tag:blogger.com,1999:blog-4879833671348041931.post-24995519709941295462021-08-06T19:22:00.000-06:002021-08-06T19:22:08.008-06:00Reducing Estate Taxes with Annual Exclusion GiftingSubject to new legislation passed under the Biden administration, United States taxpayers pay an estate tax on death to the extent that the value of their estate exceeds <a href="https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax" target="_blank">$11,700,000</a> in 2021; the estate tax is a tax on the right to transfer property upon death. It cannot be avoided by making lifetime gifts to heirs because most such gifts reduce this estate tax lifetime exclusion amount. If the lifetime exclusion amount is exhausted, a gift tax applies in lieu of the estate tax.<br />
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In general, any gift is taxable, meaning that the gift will either reduce the lifetime exclusion or require the payment of a gift tax by the donor if the donor's lifetime exclusion has been exhausted. However, there are a number of <a href="https://www.irs.gov/newsroom/tax-tips-to-help-you-determine-what-makes-a-gift-taxable" target="_blank">important exceptions</a> to the rule that any gift is taxable. One such exception is the annual exclusion.<br />
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"If a taxpayer makes a gift to another person, the gift tax usually does not apply until the value of the gift exceeds the <a href="If a taxpayer makes a gift to another person, the gift tax usually does not apply until the value of the gift exceeds the annual exclusion amount for the year" target="_blank">annual exclusion</a> amount for the year." The annual exclusion is indexed for inflation and is <a href="https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2021" target="_blank">$15,000</a> in 2021. Under current law, every taxpayer can gift up to $15,000 per year to an unlimited number of donees. Married couples can each make an annual exclusion gift from their own property, essentially doubling the annual exclusion amount. To qualify for the annual exclusion, the gift must be of a "present interest" in property, meaning a gift that the donee can access and <a href="https://www.pnc.com/insights/wealth-management/transferring-family-wealth/annual-exclusion-gifting-explained.html" target="_blank">use immediately</a>.<br />
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An annual exclusion gifting plan can remove significant wealth from a taxpayer's estate over time, thus reducing future gift and estate taxes. For example, a couple with three children and nine grandchildren can potentially gift $360,000 ($15,000 x 2 spouses x 12 heirs) to their family every year without even the need to file a gift tax return. However, there is no requirement that the donee be a family member, meaning that the class of potential donees is only limited by the pool of beneficiaries who the donor wishes to benefit. Annual exclusion gifting should be coordinated with other gifting and tax-mitigation planning but is an important estate and gift tax mitigation tool.Sterling Olanderhttp://www.blogger.com/profile/18124570212293318545noreply@blogger.com0Lehi, UT 84043, USA40.4136016 -111.892630312.103367763821154 -147.0488803 68.723835436178845 -76.7363803tag:blogger.com,1999:blog-4879833671348041931.post-55204151777026335722021-05-30T22:21:00.000-06:002021-05-30T22:21:49.450-06:00Utah Adult Guardianship Appointment ProceduresIndividuals who have executed an <a href="https://ucoa.utah.edu/_resources/documents/directives/fillin-2009electronic.pdf" target="_blank">advance health care directive</a> and <a href="https://www.utcourts.gov/howto/family/power_of_attorney_general/docs/01_Power_of_Attorney.pdf" target="_blank">power of attorney</a> are far less likely to need a court-appointed guardian or conservator. However, those who did not execute such forms while they had capacity, and sometimes even those who have executed such forms, may need a guardianship and conservatorship. Below are the minimum requirements in securing a guardianship and conservatorship in a common scenario where a child of an elderly, incapacitated parent seeks guardianship and conservatorship over the parent. The following procedures assume that the parent is unmarried with no living parents, one of their children seeks appointment without objection from a sibling, and the incapacitated person attends the guardianship hearing and requires a full guardianship: <br />
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1. The first step is to gather the necessary information and documentation needed for the Petition for Guardianship and Conservatorship. The Utah Courts website provides a <a href="https://www.utcourts.gov/howto/family/gc/guardianship/docs/01_Petition.pdf" target="_blank">form</a> on its website, but the form is for a petition for guardianship only. The Utah <a href="https://www.utcourts.gov/ocap/" target="_blank">Online Court Assistance Program</a> (OCAP) has forms for a guardianship and conservatorship. <br />
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2. Individuals who will be subject to a guardianship need to be represented by an attorney, so the next step is to identify such an attorney. Many attorneys in Utah will charge a modest fee to represent an incapacitated person needing a guardianship; alternatively, the <a href="https://www.utcourts.gov/gramp/gsp/" target="_blank">Guardianship Signature Program</a> seeks to provide free attorneys for indigent incapacitated persons. To ask the court to appoint an attorney for the incapacitated person, prepare a <a href="https://www.utcourts.gov/howto/family/gc/guardianship/docs/14_Request_Appoint_Atty.pdf" target="_blank">Request to Appoint</a>, <a href="https://www.utcourts.gov/howto/family/gc/guardianship/docs/15_Order_Appoint_Atty.pdf" target="_blank">Order Appointing Attorney</a>, and <a href="https://www.utcourts.gov/howto/family/gc/docs/1000PR_Request_to_Submit_for_Decision_Probate.pdf" target="_blank">Request to Submit for Decision</a>. <br />
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3. All proposed guardians and conservators are required to review the <a href="https://www.utcourts.gov/howto/seniors/BasicGuidelines-2007.pdf" target="_blank">Guidelines for Guardians and Conservators</a> and take the accompanying <a href="https://www.utcourts.gov/howto/seniors/docs/Guardian_and_conservator.pdf" target="_blank">Pre-Appointment Test</a>. The proposed guardian will then need to sign a <a href="https://www.utcourts.gov/howto/seniors/Declaration_of_Completion_of_Testing.pdf" target="_blank">Declaration of Completion</a> for filing with the court. <br />
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4. Prepare the other necessary court documents, which include an <a href="https://www.utcourts.gov/howto/family/gc/guardianship/docs/10_Acceptance.pdf" target="_blank">Acceptance of Appointment</a>, whereby the guardian accepts the fiduciary role and subjects themselves to Utah law, a <a href="https://www.utcourts.gov/resources/forms/civil/Probate_Actions_Cover_Sheet.pdf" target="_blank">Cover Sheet</a>, a private <a href="https://www.utcourts.gov/howto/family/gc/docs/01.Summary_Contact.pdf" target="_blank">Information Sheet</a>, a proposed <a href="https://www.utcourts.gov/howto/family/gc/guardianship/docs/09_Order.pdf" target="_blank">Guardianship Order</a>, and <a href="https://www.utcourts.gov/howto/family/gc/guardianship/docs/11B_Letters_Full.pdf" target="_blank">Letters</a>. (Note that the linked Order and Letters do not include a conservatorship; see the OCAP program linked above for more comprehensive forms).<br />
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5. File the Cover Sheet, Petition, Acceptance, Declaration of Completion, and appointment forms for the incapacitated person's attorney. A doctor's letter or evaluation of the proposed ward's capacity must also be filed with the court. The court should sign the Order Appointing Attorney to represent the ward, schedule a hearing, and send notices of the hearing to all of the <a href="https://www.utcourts.gov/howto/family/gc/guardianship/docs/02_Schedule_A.pdf" target="_blank">interested persons</a> listed with the Petition. The attorney for the ward can agree to accept service of the Petition on behalf of the ward.<br />
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6. Five days prior to the hearing, file the proposed Guardianship Order and Letters with the court. Also prior to the hearing, ensure that the proposed ward has had the opportunity to meet with his or her court-appointed attorney. At the hearing, the judge will likely ask to hear from the proposed guardian and conservator, the incapacitated person, and the incapacitated person's attorney. Assuming that no one objects and all of the aforementioned documents have been properly completed and filed, the court is likely to appoint the proposed guardian and conservator. Sterling Olanderhttp://www.blogger.com/profile/18124570212293318545noreply@blogger.com0Lehi, UT 84043, USA40.4136016 -111.892630312.103367763821154 -147.0488803 68.723835436178845 -76.7363803tag:blogger.com,1999:blog-4879833671348041931.post-91080644051913802452021-04-29T07:13:00.000-06:002021-04-29T07:13:26.874-06:00Control of Disposition of RemainsAnyone completing an estate plan should consider leaving written instructions regarding their wishes for their funeral and the disposition of their body. Section 3-701 of the <a href="https://www.uniformlaws.org/HigherLogic/System/DownloadDocumentFile.ashx?DocumentFileKey=33b0cff0-d094-d97b-bb9d-95fb1125701e&forceDialog=0" target="_blank">Uniform Probate Code</a> states that "a person named executor in a will may carry out written instructions of the decedent relating to the decedent’s body, funeral, and burial arrangements" prior to being actually appointed by a court. Most family disagreements over funeral-related matters that arise when a loved one passes away are resolved by negotiations amongst the family, sometimes with the assistance of experienced funeral directors and clergy. However, some disagreements, such as control over the disposition of the decedent's body, can be more serious and cannot be resolved without court intervention. <br />
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There is little uniformity among the states in this area. See generally Shawn Irwin Walker, Over My Dead Body: Preventing and Resolving Disputes Regarding the Disposition of the Dead, 43 ACTEC L.J. 385, 388 (2018). Utah is one of the states that has a "priority of decision" law, which is found in Part 6, Control of Disposition, of the Funeral Services Licensing Act. Section <a href="https://le.utah.gov/xcode/Title58/Chapter9/58-9-S601.html?v=C58-9-S601_2018050820180508" target="_blank">58-9-601</a> of the Utah Code confirms the probate code concept that a decedent's written instructions concerning their funeral and manner of burial are enforceable but adds the requirement that such instructions be "acknowledged before a notary public or executed with the same formalities required of a will..."<br />
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Another interesting aspect of this law is the fact that the nominated personal representative under the decedent's will, depending on the circumstances, may not have first, or even second, priority to control the disposition of the decedent's body. The person with first priority is whoever is designated "in a written instrument, excluding a power of attorney..., if the written instrument is acknowledged before a Notary Public or executed with the same formalities required of a will..."<br />
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The person identified as "personal representative" in the decedent's will may appear to fit this description; however this section is clearly describing a distinct role because section <a href="https://le.utah.gov/xcode/Title58/Chapter9/58-9-S602.html?v=C58-9-S602_2016051020160510" target="_blank">58-9-602(3)</a> of the Utah Code identifies "the person nominated to serve as the personal representative of the decedent's estate in a will" as the one with third priority. Second in line is "the surviving, legally recognized spouse of the decedent, unless a personal representative was nominated by the decedent subsequent to the marriage, in which case the personal representative shall take priority over the spouse."<br />
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A few different measures could be taken in order to prevent disputes over the disposition of a body. First, individuals could specify in their will that they are designating their personal representative as the person with the right and duty to control the disposition of the body under Utah Code 58-9-602. Such designee should be aware of the scenarios under which they could <a href="https://le.utah.gov/xcode/Title58/Chapter9/58-9-S603.html" target="_blank">lose their right</a> of disposition and also the process for <a href="https://le.utah.gov/xcode/Title58/Chapter9/58-9-S605.html" target="_blank">resolving disputes</a>. Finally, individuals should leave notarized instructions to their next of kin specifying their funeral and burial wishes. Sterling Olanderhttp://www.blogger.com/profile/18124570212293318545noreply@blogger.com1Lehi, UT 84043, USA40.4136016 -111.892630312.103367763821154 -147.0488803 68.723835436178845 -76.7363803tag:blogger.com,1999:blog-4879833671348041931.post-57277513687703453342021-02-05T21:16:00.003-07:002021-02-05T21:16:35.808-07:00Submitting Form 2848 to the IRS OnlineThe IRS now allows taxpayer representatives to submit Forms 2848 and 8821 <a href="https://www.irs.gov/tax-professionals/submit-forms-2848-and-8821-online" target="_blank">online</a>. Any taxpayer representative with an <a href="https://www.irs.gov/e-services" target="_blank">IRS e-Services</a> account can use their e-Services credentials to log on to the new online submission portal. If you don't have an e-Services account, you can sign up for the submission portal at <a href="https://www.irs.gov/individuals/secure-access-how-to-register-for-certain-online-self-help-tools" target="_blank">this link</a>. <br />
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The IRS requires that all 2848 forms mailed or faxed have a wet-ink signature, but now the IRS will accept electronically-signed 2848s, as long as proper procedures are followed and the forms are submitted electronically through the new submission portal. Below is an acceptable process that a taxpayer representative can follow to remotely obtain and submit a <a href="https://www.irs.gov/pub/irs-pdf/f2848.pdf" target="_blank">Form 2848</a> online for an individual taxpayer:
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1. Request that the taxpayer electronically provide a copy of their photo ID and the first page of their tax return.<br />
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2. Complete IRS Form 2848 with the name, address, and social security number you have received and verified and electronically send the Form 2848 to the taxpayer for signature.<br />
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3. Schedule a video conference to verify the taxpayer's identity and their receipt of the Form 2848 and coordinate the taxpayer's signing and and electronic return of the Form 2848.<br />
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4. Log into the new IRS online submission portal, answer the questions the portal presents, and upload the appropriate form.</blockquote><br/>
The submission portal provides the option of submitting a Form 2848, <a href="https://www.irs.gov/pub/irs-pdf/f8821.pdf" target="_blank">Form 8821</a>, or a revocation of an existing authorization. On the next screen, you will be asked if the taxpayer electronically signed the form in a remote transaction (meaning anything not in person). You will then be asked to declare that you "have authenticated the identity of the taxpayer on line 1 of the form or have personal knowledge of the taxpayer’s identity." If you click "no" to this question, you will be logged out, so be sure to authenticate the taxpayer's identity before logging in. <br />
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After stating whether the taxpayer is domestic or international, you will input the social security number of the taxpayer and upload the signed Form 2848. Once the file is attached, click "submit." You will receive an email confirming that the form will be processed in the order it was received and recommending that you not submit a duplicate form via mail or fax. The IRS's new online form submission portal is an appropriate and helpful development for a social-distanced world. Sterling Olanderhttp://www.blogger.com/profile/18124570212293318545noreply@blogger.com1Lehi, UT 84043, USA40.4136016 -111.892630312.103367763821154 -147.0488803 68.723835436178845 -76.7363803tag:blogger.com,1999:blog-4879833671348041931.post-66637015803561716702020-12-17T21:27:00.000-07:002020-12-17T21:27:59.192-07:00What Happens When the Estate Tax Exclusion Goes Down?The Internal Revenue Code imposes a tax on the value of wealthier estates that is payable after the owner passes away. In 2017, an individual could bequeath <a href="https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax" target="_blank">$5,490,000</a> to his or her heirs, free of estate tax, while wealth passed in excess of this exclusion amount was subject to an estate tax of 40%. The Tax Cuts and Jobs Act increased the estate tax exclusion to $11,180,000 in 2018, which exclusion amount increases for inflation each year.<br />
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The estate tax cannot be avoided by making lifetime gifts to heirs; such gifts must be reported on <a href="https://www.irs.gov/pub/irs-pdf/f709.pdf" target="_blank">IRS Form 709</a> and reduce the giftmaker's estate tax exclusion amount. If the exclusion amount is exhausted, a gift tax applies in lieu of the estate tax. Upon death, the personal representative of the decedent's estate will file <a href="https://www.irs.gov/pub/irs-pdf/f709.pdf" target="_blank">IRS Form 706</a> and add all prior gifts back to the value of the estate owned by the decedent on death as part of the completion of the estate tax return and calculation of the estate tax.<br />
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Under the Tax Cuts and Jobs Act, the estate tax exclusion reverts to approximately $5,500,000 in 2026. This reversion could have "<a href="https://www.journalofaccountancy.com/news/2019/nov/irs-estate-gift-tax-clawback-rules-201922516.html" target="_blank">retroactively [denied]</a> taxpayers who die after 2025 the full benefit of the higher exclusion amount applied to previous gifts." This possibility arose because the estate tax exclusion amount has never gone down before, and the credit against the estate tax for gifts made when the exclusion amount was high could have been calculated based upon the lower exclusion amount upon death.<br />
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Treasury Regulation <a href="https://www.ecfr.gov/cgi-bin/text-idx?SID=e038ccdd381684c3b031f12244518196&mc=true&node=se26.16.20_12010_61&rgn=div8" target="_blank">Section 20.2010-1(c)</a> resolved this uncertainty. In summary, individuals maintain the benefit of having made gifts utilizing the estate tax exclusion in a year when the exclusion was higher than it is at death. One of the examples in the regulations assumes that a never-married individual made lifetime taxable gifts of $9 million and paid no gift tax at the time because the gifts were made when the exclusion was $11.4 million. Upon death, the exclusion amount was $6.8 million. The example concludes, "Because the total of the amounts allowable as a credit in computing the gift tax payable on [the] gifts (based on the $9 million of basic exclusion amount used to determine those credits) exceeds the credit based on the $6.8 million basic exclusion amount allowable [on death, the credit] is based on a basic exclusion amount of $9 million..."<br />
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In other words, taxes are saved by making gifts during a time when the exclusion amount is high, as it is now, if death ultimately occurs when the exclusion is low. The exclusion amount will go down at the end of 2025 but could go down more than it is scheduled to, and sooner, under the Biden administration. Accordingly, for many wealthier taxpayers, the time to make gifts is before the end of this year. Sterling Olanderhttp://www.blogger.com/profile/18124570212293318545noreply@blogger.com1Lehi, UT 84043, USA40.4136016 -111.892630312.103367763821154 -147.0488803 68.723835436178845 -76.7363803tag:blogger.com,1999:blog-4879833671348041931.post-4670084524682011272020-10-18T21:41:00.000-06:002020-10-18T21:41:08.268-06:00Utah Adopts Uniform Electronic Wills ActBeginning August 31, 2020, pursuant to the Uniform Electronic Wills Act, Utahns have the option of executing a last will and testament without the traditional paper and ink and physical presence of witnesses. Before the adoption of the Electronic Wills Act, wills in Utah were generally required to (i) be in writing, (b) signed by the testator, and (c) signed by at least two individuals, each of whom signed within a reasonable time after witnessing the signing of the will. The Electronic Wills Act keeps each of these requirements but <a href="https://le.utah.gov/xcode/Title75/Chapter2/75-2-S1405.html?v=C75-2-S1405_2020083120200831" target="_blank">adapts</a> them for a modern world. <br />
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An electronic will must still be "in writing," or more particularly, in "a record that is readable as text at the time of signing." A "record" includes electronically-stored information "retrievable in <a href="https://le.utah.gov/xcode/Title75/Chapter2/75-2-S1402.html?v=C75-2-S1402_2020083120200831" target="_blank">perceivable form</a>." Importantly, a video or audio recording of the testator's last wishes does not constitute a will because the electronic files would not be "<a href="https://le.utah.gov/xcode/Title75/Chapter2/75-2-S1405.html?v=C75-2-S1405_2020083120200831" target="_blank">readable as text</a>." <br />
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An electronic will must still be signed by the testator, but under the Electronic Wills Act, "signing" includes executing or adopting a tangible symbol or logically associating with the record a symbol or process with the intent of authenticating or adopting the record as the last will. The Electronic Wills Act is designed to be flexible enough so that no particular software or application is needed to adopt a will. <br />
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Finally, an electronic will must still be signed by two individual witnesses who observed the testator sign the electronic will, but such individuals need not be in the physical presence of the testator; electronic presence is sufficient. Under the Electronic Wills Act, "electronic presence" requires that the witnesses be "communicating in real time to the same extent as if the individuals were physically present." An electronic will may be simultaneously executed, attested, and made self-proving with the help of a notary public as described in <a href="https://le.utah.gov/xcode/Title75/Chapter2/75-2-S1408.html?v=C75-2-S1408_2020083120200831" target="_blank">Utah Code 75-2-1408</a>. This section expressly supersedes the Notaries Public Act, meaning that remote notarization appears to be permitted in the context of an electronic will. <br />
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Estate planning practitioners have resisted laws permitting electronic wills for many years, fearing that electronic wills would be more likely to result in contests and other estate controversy. While these concerns will likely persist, the current pandemic has clearly illustrated the need for an electronic wills option. Currently, Utah is one of only a handful of states have adopted an electronic will statute, but more states are sure to follow. Sterling Olanderhttp://www.blogger.com/profile/18124570212293318545noreply@blogger.com1Lehi, UT 84043, USA40.4136016 -111.892630312.103367763821154 -147.0488803 68.723835436178845 -76.7363803