One of the main reasons people painstakingly plan out how their estate is to be distributed when they pass away is to avoid family disputes over property and other assets. Unfortunately, even the most ironclad estate plan sometimes become the object of a will contest or other litigious proceeding. This has given rise to people putting “no contest” clauses in their estate planning documents. Although these sound like a great idea, there are a few important things you need to know about this clause before you think that it will solve all of your family problems.

No Contest Clause
A will or trust contest is brought by somebody claiming an estate plan document is not valid or that it does not do something properly; and sometimes doesn’t do something the contestant says you promised. The argument that a will or trust is not valid is usually based on allegations that the person who created the document did not have the requisite mental capacity to do so, or was unduly influenced.

A “no contest” clause is designed to discourage relatives from contesting your will or trust. It is basically a paragraph in your will or trust document that states that anyone who mounts a legal challenge against your will or trust, and loses in court, cannot inherit anything.

No-Contest Clauses in Utah
In Utah, no contest clauses are only enforceable against people who bring contests without a reasonable basis for the claim. This means that the will or trust contest has to be completely frivolous. The courts discourage these clauses in order to protect family members who should otherwise be allowed to inherit, or may have been forgotten; and the courts generally do not like the idea of “forfeiting” your legal rights. But even with that, it’s a good clause to have in your will or trust.

If you are worried about terms in your estate planning documents being contested, consult with an experienced estate planning attorney. A no-contest clause may be part of the solution, but the attorney can also give you other solutions to avoid unintended results in your plan.

The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.

A Trustee of a Trust has very specific responsibilities. In addition to making sure the trust is administered for the benefit of the trust beneficiaries, there are specific laws regarding how the trustee should manage trust property. Because the role is so important and often involves large sums of money, the consequences of breaching trustee responsibilities are quite grave.

Trustee Responsibilities
Trustee responsibilities include the:
• Duty of Confidentiality
• Duty of Loyalty
• Duty to Notify Beneficiaries
• Duty to Protect Trust Property
• Duty to File Tax Returns
• Duty to Prudently Invest Trust Funds

Consequences of Breach
If a trustee fails to faithfully perform his or her duties, he or she may be subject to a variety of sanctions. The beneficiaries can bring a lawsuit against the Trustee that could result in removal as trustee, monetary damages, denial of Trustee compensation, and even the reversal transactions that the Trustee may have entered into improperly. In extreme cases, if the Trustee’s breach of his fiduciary duties resulted in a loss or substantial risk of loss to the beneficiaries, a Trustee may be subject to criminal liability.

Sometimes a Trustee may be dutifully fulfilling his or her responsibilities, but makes a mistake or is faced with difficult beneficiaries. In this event, to protect him or herself from monetary fines, a trustee can obtain errors and omissions insurance or even a bond to guarantee his fidelity to the Trust.

Consultation with Attorney
It is wise for a Trustee to consult with an attorney about his or her duties. We recently worked with a Trustee who had not done so and had made major errors in distributions and transactions. That Trustee had to pay back several thousand dollars to the Trust and luckily could. If you are a beneficiary and aren’t getting reports or you suspect the Trustee is not acting properly, you should immediately consult an attorney to reduce the risk of losses to the Trust.

The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.

Picking who will serve as a successor Trustee for your Trust (after you are gone or during incapacity) is an extremely important decision. Before choosing who is going to be in charge of holding legal title to the Trust property, consider all the responsibilities associated with that role. It is equally important for whoever you choose to serve as Trustee to understand the powers and responsibilities associated with the job. The following summary outline can be helpful to show a Trustee what his or her job will entail.

1. Read the Trust
The Trust instrument will specifically outline the Trustee’s administrative responsibilities, powers, and restrictions on powers as well as the beneficiaries’ rights to distributions. It is therefore important for the Trustee to read the entire Trust.

2. Duty of Confidentiality
The Trustee owes a duty of confidentiality to the beneficiaries with respect to all of the Trust terms.

3. Managing the Trust for the Benefit of the Beneficiaries
Every action the Trustee takes in connection with the Trust must be for the benefit of the beneficiaries.

4. Duty to Protect Trust Property
The Trustee must administer the Trust in a prudent manner to protect Trust property. This includes enforcing Trust claims, keeping appropriate records, making safe and wise investments, and incurring only reasonable costs.

5. The Duty of Loyalty
A trustee owes the Trust beneficiaries a duty of loyalty. This means the Trustee may not engage in any transaction with the Trust or with any Trust beneficiary. In other words, the Trustee cannot borrow or lend money from or to the Trust or a Trust beneficiary, buy or sell property from the Trust or a Trust beneficiary, or take away a Trust’s potential business opportunities.

6. Inform Beneficiaries
Another duty the Trustee has it to keep the beneficiaries fully informed about Trust operations. This entails:
• providing each beneficiary with a copy of the Trust instrument,
• sending a periodic accounting to each beneficiary,
• notifying the beneficiaries before the Trustee takes any significant action with regard to the Trust,
• notifying the beneficiaries when a new Trustee takes office
• notifying the beneficiaries when a revocable Trust becomes irrevocable as a result of the settlor’s death, and
• notifying the beneficiaries when the Trustee’s compensation changes.

7. File Tax Returns
The Trustee is responsible for filing annual federal and state tax returns, reporting the income earned on Trust assets.

8. Prudently Invest Trust Funds
When it comes to investing Trust funds, the Trustee is held to the standard of a “prudent investor.” This means he or she must think about the Trust purpose, terms, and distribution requirements whenever making investment decisions. The Trustee also needs to hold a diversified portfolio of assets for the Trust to minimize loss and have an investment strategy with risk and return objectives that are reasonably suited to the Trust. Sometimes this means working with a professional investment advisor to make sure Trust assets are adequately protected.

The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.

You have probably heard that a Trust can be a valuable estate planning tool. Before making any decisions about whether to have one, what kind to create, and whether or not to have any other estate planning tools, make sure you understand all the benefits of a Trust and all the things one can do.

A Trust is a written document that allows you to legally transfer your real property and your personal property to your loved ones upon your death. Think of a Trust like a bucket; it holds all your property and it just needs a guiding hand to pour it out in the right way.

Avoid Probate
Although probate in Utah is not as awful as it can be in some states, it can still be expensive and burdensome. A Trust can distribute your assets more efficiently than the probate process can, and without the hundreds or thousands of dollars in court and attorney fees associated with probate.

Also, by avoiding probate, the terms of your Trust remain private. If you have a Trust and become incapacitated, you avoid the need for the court to appoint a conservator, which is another public proceeding. With a will, an announcement needs to be placed upon your death so that creditors can file claims they may have against you and relatives can contest your will. This is avoided with a Trust, and your beneficiaries will remain confidential.

Probate can take months or even years. If you have a Trust, your estate can be settled in just a short time after your death because there won’t be court delays or judicial interferences.

Maintain Control
Your Trust document contains instructions for managing your assets in the event of your death or incapacity. While you are able, you still have full control to buy, use, spend, or even give away your Trust property. You can sell property, change your beneficiaries, change your Trustee, or even revoke the Trust as a whole. Then when the time comes when you are unable to handle your own affairs, your previous work in establishing the Trust will make sure your affairs are handled according to your wishes.

Eliminate or Reduce Estate Taxes
With a Trust agreement, you may reduce or even eliminate estate taxes which could otherwise be charged against your estate upon your death.

Effective Pre-Nuptial Planning
A Trust can be an effective pre-nuptial planning tool. Any property that you place in your Trust before you marry is the property of that Trust. That means it stays separate from any property accumulated during your marriage, making it your separate property and not marital property for divorce purposes.

The Astill Law Office has provided high quality legal services for over 30 years. We specialize in Wills, Trusts, Estate planning, and Asset Protection. If you have any questions about creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.

We are constantly stressing the importance of having a well-rounded estate plan, elements of which include both a will and a power of attorney. Before having either document drafted, it is imperative to understand the nuances of both. For example, did you know that there are two types of powers of attorney? There is a durable power of attorney and a non-durable power of attorney. Knowing the difference between the two is necessary to make sure you create a document that suits your needs.

Non-Durable Power of Attorney
A Non-Durable Power of Attorney automatically terminates if you become incapacitated, and at death. This means the agent you appointed in the document will lose authority after any one of those circumstances occurs. When that happens, a court will have to appoint a conservator for you to handle your personal and business affairs.

Durable Power of Attorney
A Durable Power of Attorney, which usually includes a “financial” or “general” power of attorney, will become or will continue to be effective even if you become incapacitated. A Durable Power of Attorney can be created by including certain specific statements in the document. These statements need to be very well drafted, and they make the difference between a durable and non-durable power of attorney. As with the Non-Durable Power of Attorney, a Durable Power of Attorney becomes ineffective immediately upon the death of the creator of the power.

The Power of Attorney is a very important document in your estate plan, but it can also be the most dangerous document you will sign. It can be dangerous because they often grant broad, mostly unchecked, power to someone else to handle your finances. That said, it should still be included as part of your estate and financial planning. It can be used in many ways to save you money and time in the long run, and it does not cost a lot of take much effort to draft and execute one. Creating a Power of Attorney can save the hassle of going to probate court to have a conservator appointed if you have an illness or accident that prevents you from handling your personal and business matters. They are an essential tool to help fund your living trust if you become incapacitated.

If granting broad powers to someone to conduct business on your behalf is a concern, limitations can be placed in the document, limiting its effectiveness unless you are incapacitated. All of this should be discussed with your attorney and understood by you.

It’s also important to remember to “refresh” your power of attorney. If it is more than 3-5 years old, many financial institutions are reluctant to accept the power of attorney, even if it is legally valid.

The Astill Law Office has provided high quality legal services for over 30 years. We represent individuals and business owners and specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Power of Attorney or estate planning in general, contact The Astill Law Office at 801-438-8698.

A Personal Representative, formerly known as an Executor, is the individual you appoint to administer your estate when you die. He or she will be responsible for administering your estate, paying your outstanding debts, and distributing your property according to your wishes. The person you select should be someone you trust and someone you are confident will carry out your final requests. There are a number of things you should consider when appointing your Personal Representative.

Usually, people pick their spouse or an adult child or sibling as their Personal Representative. If this is the route you are considering, remember to consider whether the appointment of one child or sibling will put a strain on any other family relationships.

It is also important to pick a Personal Representative who is capable of handling financial matters and maintaining detailed records; and they have to have a thick skin. Even the most harmonious of families experience some friction in administration of an estate. If a person is incredibly busy, they might not be the best choice as administering an estate generally takes a substantial amount of time.

You should always consider alternate Personal Representatives in case the initial person is unable or refuses to accept the position. Finally, let the individual know you have chosen them so they have a chance to let you know whether they are up for the task. You should also review your decision periodically to make sure your choice remains a wise one. We had a client some years ago who named a favorite brother. By the time the person died, the brother had become a drug addict and ruined his life. At that point it was a very bad choice.

There is not a perfect description of Personal Representative qualities, because your personal circumstances will determine the suitability and choice of an individual. Generally, though, your Personal Representative should be someone who is capable of managing your estate and has a good understanding of your affairs. You should discuss your choices with a qualified estate planning attorney so that you pick the right person for your circumstances.

The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.

We continuously stress the legal pitfalls surrounding wills or trusts drafted without an attorney. This is because as experienced estate planning attorneys, we have seen far too many sad cases where an individual’s intent is not honored because of a poorly drafted document. Only a qualified estate planning attorney can help you understand and apply the many laws that apply to your personal estate situation.

Creating Your Estate Plan without an Attorney
A do-it-yourself (DIY) will or trust program or form is not a substitute for an attorney. It cannot provide you with the wide range of legal advice that an experienced attorney can give you. It also cannot assure you that your will is validly formed, or that assets passing outside of your will or trust are properly handled. Only an experienced estate planning attorney can consider state law nuances that may apply to your situation, and address relevant tax, legal and personal issues. Recently we had two different clients who come to us with DIY wills and trusts. They did not accomplish the intended result. Luckily it was not too late. In another case, because of the poor drafting done, we had to go to Court to get permission to change a trust. The clients spent 5-10 times what a trust would have cost originally if done by a qualified estate planning attorney at the outset.

Creating Your Estate Plan with an Attorney
An estate planning lawyer will help you organize your estate and explain the implications of various estate planning tools and techniques. An attorney will explain the pros and cons to different tools based on your personal situation. There are several estate planning options, but not every single one is right for every family or individual. An estate planning attorney will also guide you through the complexities of estate planning laws that apply to you, and help you understand what can happen if certain actions are taken. The attorney can anticipate difficulties that may arise in the event of your disability or death and can advise you how best to plan for those contingencies. An estate planning attorney can also ensure that your estate planning documents are validly drafted and leave no room for interpretation. This minimizes the chances that your will or trust will be challenged.

Ultimately, your affairs will be carried out how you want them to be. An estate planning attorney’s role is to make sure that your wishes are carried out according to your plan.

The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.

Surprisingly, one of the most challenging assets to deal with in planning for your estate at death is your IRA. “Why is this so difficult?” you ask. Here we present a few challenges and solutions.

First, IRA benefits pass by contract, according to your beneficiary designation. People sign wills and create trusts thinking they take care of everything, but unless you mindfully integrate your IRA with your estate plan, it is not part of your estate plan.

Second, there are complicated tax regulations dealing with IRAs. There are also rules about inheritors’ distributions of the IRA. These rules and regulations are complicated, and most people have not spent enough time to understand them.

Third, the IRS has caused some of the confusion. We’ll tell you why below.

One typical estate planning solution is to name the surviving spouse as the primary beneficiary of your IRA (if you’re married of course), and name the contingent beneficiary as your Trust. Clients and financial advisors routinely question this recommendation. Why? Because the IRS’ own Publication 590 says that “A trust cannot be a ‘designated beneficiary’ (an important term under the Code) even it is a ‘named beneficiary’.” Wow! Can anyone interpret that for me? We have interpreted it and it’s just plain wrong as you will see.

Taxpayers and financial advisors read that sentence and conclude that they can’t designate their Family Trust as an IRA beneficiary, but they are wrong! The incredible thing is the very next sentence in Publication 590 explains how a trust can be named as “your beneficiary”, with some stipulations. The proper type of trust can be named as an IRA beneficiary and at your death, and if you follow the stipulations, the IRS ‘looks through’ to the individual beneficiaries and they are deemed to be the inheritors for tax purposes, not the Family Trust. So the short answer is a properly drafted Family Trust can be named as the beneficiary of your IRA!

The obvious next question from our clients is ‘Why do I want to name my trust? Isn’t it simpler to just name my spouse and children so it goes directly to them?’ Good question! Here’s just some of the answers I give:
• Are any of your children minors? Or if not a minor, just how good are they with money? Are you ready to hand them several thousand dollars (if not hundreds of thousands)? Do you expect them to use it properly? If so, then why did we just create a trust to hold their assets until they reach age 25 or 30 or even 40 under the terms of your Will or Trust?
• What happens if one of the named beneficiaries dies? The truth is we don’t know and neither do you unless you read your IRA custodial agreement…and each one is different! So if you have several IRA accounts or even 401(k) accounts, without reading each one, you can’t know what the result is if a beneficiary dies before you do.
• Have you looked at your beneficiary designation for that IRA you created years ago? Many clients are surprised to find that when they signed their first beneficiary designation, they had one or two children and now have 3 or 4 children and guess what?…they haven’t updated it. All of their children aren’t named. People tend to ignore this stuff.
• Do you have a Special Needs child? They will lose governmental benefits until they use up all of their inherited IRA money.
• Are you concerned about possibilities of drug or alcohol abuse with your child? Only a trust can handle this issue.
• Do you have a grandchild or other person you want to benefit? How do you handle this?

The simplest answer is to create a good estate plan with a Will and Trust, handling all the issues you care about in your family, then designate the Trust as the beneficiary of your IRA and 401(k)! This integrates the IRA with your estate plan and you do not have to worry about where the IRA benefits will go with each family change.

The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about trusts or estate planning in general, contact The Astill Law Office at 801-438-8698.

When engaging in asset protection strategies, clients and their attorneys must be very careful not to act in a manner that defrauds creditors. Fraudulent attempts to protect assets not only derailed protection strategies entirely, but attorneys can lose their license to practice law for being involved. The key to proper and effective asset protection is that a client must fully disclose his personal and financial situations to his lawyer so that the lawyer can provide proper guidance.

Recently, the Iowa Supreme Court considered sanctions against a lawyer for allegedly committing an unethical act in helping the client protect assets by placing them in a Domestic Asset Protection Trust. Fortunately for the attorney, the Court ruled that he did not commit an ethical violation in assisting a client with asset transfers that the court determined to be fraudulent and which were done to defraud creditors.

This was an ugly case about an unwitting attorney and a horrible horrific incident in which his client was involved. A simple statement of the facts follows:
In January, 2003, RH shot and killed his neighbor, TL. RH was ultimately convicted of manslaughter. TL’s widow and TL’s estate sued RH and obtained a large judgment against him for wrongful death (similar to the O.J. Simpson case). After the shooting, but prior to conviction and a civil judgment against him, RH and his wife went to their lawyer seeking asset protection strategies. The lawyer assisted them in various transfers using revocable trusts and an irrevocable trust. The attorney was not aware of the conviction or the civil case, and had no idea that RH and his wife were trying to hide assets from the judgment creditors. If the lawyer had known, things might have been done very differently. For example, he should might have refused to do some of the asset protection transfers based on attorney ethical standards.

A district court held that the transfers were fraudulent, so TL’s estate was able to get some financial satisfaction. TL’s widow was understandably upset and filed a complaint against the attorney for assisting RH and his wife. The Iowa Supreme Court concluded that if an attorney knowingly assists a client in committing fraud, he could, and should, be sanctioned. However, in this instance, RH made misrepresentations to his attorney, who had reasonably believed what was said, and therefore concluded that the asset protection transfers were legitimate and could be made.

The lesson for all is this: Asset Protection is a valid estate planning strategy. However, strategies fail if the attorney is not aware of the all the client’s circumstances and/or the client isn’t completely honest with the attorney. The attorney can face sanctions if he allows or assists a client in defrauding creditors. Great care must be taken in this area of the law. It’s not something that can be undertaken independent of your attorney. Work on asset protection strategies with an attorney who is well versed in the law, and make full disclosures about your circumstances..

The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about asset protection or estate planning in general, contact The Astill Law Office at 801-438-8698.

There are many reasons why you should have a will as part of your estate plan. One of the main things to consider is that a will is the only tool to appoint a guardian of your minor children. It is really important to appoint a guardian to ensure your children are cared for in your absence. Appointing a guardian can also help avoid a future family legal battle. Just as there are many considerations in estate planning, there are many things to weigh when deciding on who you should appoint as a guardian.

A guardian has the legal responsibility to take personal care of your children when you, the parent, cannot. Appointing a guardian is a very personal decision, and possibly one of the most important ones to be made in the estate planning process, because he or she will be parenting your children or will have the responsibility of placing the child with someone who will parent them. Therefore, it is important to pick someone who:
• loves your children
• is responsible
• is capable of raising your children
• has values similar to yours
• has a relationship with the children
• is liked by the children
• lives nearby so that the children do not get uprooted
• will provide your children with easy access to their other relatives

After you have chosen someone to appoint as the guardian of your minor children, you should discuss your selection with that chosen individual. This will help ensure they are willing to take on the responsibility and are prepared for the possible caregiving they will have to do. You should also consider appointing an alternate guardian in the event that the first cannot fulfill the duties or changes his or her mind. You should review your choice frequently. People and circumstances change over time and you don’t want to short-change your family.

And remember, even if you have a trust, you still need a will; only a will can be used to appoint a guardian.

The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.