Q. What is probate?

A. Probate is the legal process that must be followed in some circumstances in order to legally transfer your assets, such as your house or other real property, to your heirs.

Q. How much can I give away during the course of my life without paying gift taxes?

A. Currently, the lifetime gift tax credit is $345,800 which will be shielded from gift tax the first $1 million that you give away over the course of your life. The current law establishing this lifetime credit is scheduled to be repealed at the end of 2010 and it is very likely that the gift tax laws will be amended prior to that time.

Q. What is the gift tax annual exclusion?

A. Currently, any gifts you make to an individual that is $12,000 or less does not count against your lifetime credit. In other words, if you are married and have three children, you can give each of your three children $12,000, and your spouse can give each of your three children $12,000, totaling $72,000 in gifts in 2007, without having to pay gift taxes and without using up any of your lifetime gift tax credit.

Q. How much of my estate can I pass free of estate tax upon my death?

A. A portion, and potentially all of your estate, may be excluded from estate taxes by means of the applicable exclusion amount in effect in the year that you die. The applicable exclusion amount in 2007 and 2008 is $2 million; the applicable exclusion amount in 2009 is $3.5 million; and in 2010 the estate tax will be repealed. However, the current estate tax laws are scheduled to be repealed at the end of 2010 and it is very likely that the estate tax laws will be amended prior to that time.

Q. What happens if I die without a will, trust or other mechanism in place for transferring my assets to my heirs?

A. The Utah State Legislature has been kind enough to make a will for you as set forth in the Utah Probate Code. Basically, your assets will pass to your surviving spouse and if you do not have a surviving spouse your assets will pass to your surviving children in equal shares. There are special provisions that apply to situations in which your surviving spouse is not the parent of your surviving children or if you don’t have any surviving children, etc. These default provisions may or may not be in accordance with your desires.

Q. What is the difference between a living trust and a testamentary trust?

A. A living trust is one that is established, funded and maintained while you are still alive. A testamentary trust is one that is established upon your death as part of the probate process.

Q. What benefits can be gained from the use of a trust in general?

A. If properly used, either a living trust or a testamentary trust can help you effectively use the estate tax exclusions available to you and your spouse to minimize, and in some instances completely avoid, estate taxes and can provide a means of distributing your assets to your heirs over an extended period of time and afford some measure of asset protection for your heirs while the assets are still held in trust.

Q. What benefits can be gained from the use of a living trust?

A. If properly used, a living trust can provide a means to take care of you while you are still alive but incapacitated an unable to handle your own financial affairs, and avoid probate and provide for the efficient transfer of your assets to your heirs in a private manner that is not a matter of public record.

Q. Who will take care of my minor children if I die?

A. If either one of a minor child’s parents are still living, the surviving parent retains legal custody of the minor child. However, if both of a minor child’s parents are dead, then it is necessary for the court to appoint a guardian for your minor child. You can designate your preference as to who will serve as the guardian of your minor child in your will.