Freezing a Financial Account

Financial institutions are permitted to freeze a customer's account if they believe that the account is at risk of being misappropriated or they suspect unauthorized activity. The institution's policies and customer agreements will discuss this option; for example, Bank of America's Deposit Agreement and Disclosures states, "If at any time we believe that your account may be subject to irregular, unauthorized, fraudulent or illegal activity, we may, in our discretion, freeze some or all of the funds in the account and in other accounts you maintain with us, and/or delay transactions, without any liability to you, until such time as we are able to complete our investigation..." Financial institutions need to balance various federal and state consumer protection laws designed to protect account...

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New Form 990 Upload Requirement for Utah Nonprofits

As I discussed in a previous post, the Utah legislature recently removed the requirement that charitable organizations register with the Division of Consumer Protection in order to legally solicit contributions. At that time, new administrative rules were to be drafted requiring certain charities "to upload their most recent Form 990 as part of the corporation's filing process." Pursuant to new R152-22-7, charities must begin submitting a PDF of their IRS Form 990 on an annual basis "using the process established by the Division of Corporations and Commercial Code" at the time the charitable organization registers as either a domestic or foreign nonprofit corporation or submits its annual report to the Division of Corporations and Commercial Code. The new online process established by the...

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Changing a Sex Designation on a Registered Birth Certificate

In a prior post from 2022, I discussed Utah Code 26-2-15, which has since been recodified to Utah Code 26B-8-119, pursuant to which a person may petition for a court order establishing the fact, time, and place of a birth for which no registered birth certificate is obtainable. In this manner, a birth certificate could be issued where one previously did not exist. At this time, nearby section 26-2-11 of the Utah Code provided a means for amending an existing birth certificate. Specifically, this statute provided instruction to the registrar that if a name change or sex change had been approved by a court, pursuant to an application form approved by the registrar, the registrar was required to "note the fact of the amendment on the otherwise unaltered original certificate." Utah Code 26-2-11...

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Donations of Closely-Held Business Interests

As I discussed in a prior post, a donation of closely-held stock to a charitable organization can be highly tax efficient because (1) the donor receives a deduction for the fair market value of the donated asset, (2) the donor avoids paying tax on the asset's built-in gain, and (3) the charity, being tax-exempt, also avoids paying tax on any gain from the sale of the asset. However, the IRS has historically and in recent years especially challenged the avoidance of tax on the built-in gain under what is known as the "assignment of income" doctrine. Often, a donation of stock or interest in an LLC occurs shortly before the sale of the business. In these cases, the IRS argues that the donor's right to proceeds from the sale of the donated interests became "fixed" or “practically certain to...

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Introduction to the Utah Advance Health Care Directive Act

Author's Note: I help maintain certain Thomson Reuters Practical Law resources for trusts and estates in Utah, including their Advance Health Care Directive (UT) resource. I recently helped update this resource as a result of Utah's S.B. 79 - Estate Planning Recodification, which, among other things, changed many Utah statutory references. This post draws upon this Thomson Reuters resource. An important part of any person's estate plan is the designation of an agent to make health care decisions for the person if they cease to be able to make or communicate their own decisions. Similarly, it is important to provide instructions to govern medical treatment, including wishes for the withholding or withdrawal of life-sustaining care. Utah's Advance Health Care Directive Act provides a statutory...

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The Jointly-Owned "Convenience Account"

One common source of controversy in end-of-life planning and estate and trust administration is the existence of a financial account owned jointly by the decedent/contributor and another person who is not the sole heir of the decedent's estate. As I discussed in a previous post, the key features of most joint accounts is that any party to the account may unilaterally withdraw the funds in their entirety and the surviving joint account holder will automatically be entitled to retain the remaining amounts in the account upon the death of the other owner. The last will or trust agreement of the decedent would have no impact on this result. After the death of the owner of the contributor of the funds, the other heirs of the estate may attempt to recoup funds that automatically passed by operation...

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Old Expired Entities Can Now Be Reinstated in Utah

On March 13, 2024, Utah's governor signed S.B. 14 - Corporate Dissolution Amendments, which is effective beginning this month. Previously, a business entity that had been administratively dissolved for failing to file an annual report only had two years from dissolution in which to file for retroactive reinstatement. Under this new law, entities can apply for reinstatement "under the corporation's same corporate name at any time after the effective date of dissolution," if the corporate name is still available. This new law is a significant improvement to Utah's corporate regime. Previously, "[t]he termination of the status of an entity as a corporation (for state law purposes) could possibly cause a change in the treatment of the entity for federal income tax purposes, unless the state...

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