Welcome to CPA at Law, helping individuals and small businesses plan for the future and keep what they have.

This is the personal blog of Sterling Olander, a Certified Public Accountant and Utah-licensed attorney. For over seven years, I have assisted clients with estate planning and administration, tax mitigation, tax controversies, small business planning, asset protection, and nonprofit law.

I write about any legal, tax, or technological information that I find interesting or useful in serving my clients. All ideas expressed herein are my own and don't constitute legal or tax advice.

Update to Utah Probate Code

An update to the Utah Uniform Probate Code, H.B. 402 Probate Code Amendments, is effective May 8, 2018. It makes changes relating to guardianships, conservatorships, and powers of appointment, but since I recently discussed the provisions relating to probate proceedings at an NBI seminar, that is the focus of this post.

As I wrote in April, since 2013 the Utah Code allows the appointment of a personal representative or special administrator beyond three years after a decedent’s death. Since that time, a number of amendments to the probate code have been enacted to clarify what is allowable in the case of an appointment of a personal representative more than three years after death, and H.B. 402 is no exception.

By way of background, a surviving spouse and/or minor children are generally entitled to a homestead allowance of $22,500; an exempt property allowance of $15,000 worth of household furniture, automobiles, furnishings, appliances, and personal effects; and a family allowance of up to $27,000 for their maintenance during the period of administration. Such allowances generally have priority over all unsecured claims against the estate.

H.B. 402 clarifies that the homestead allowance, exempt property allowance, family allowance, support allowance, elective share of a surviving spouse, and a claim other than for an expense of administration may not be presented against the estate, even though a personal representative was appointed, if the appointment occurred more than three years after death. While not a significant change, this amendment further clarifies the nature of such an appointment proceeding.

Important New Probate Law in Utah

Earlier this week, Utah S.B. 241, Chapter 443, "Medical Benefits Recovery Amendments," was signed into law. By way of background, the Utah Office of Recovery Services seeks reimbursement for Medicaid expenses the state has paid on behalf of an individual from that individual's estate after death in order to supplement medical assistance programs and limit tax burdens. This law is intended to improve the state's ability to recover medical assistance it has provided.

The law does this in part through the enactment of new section 75-3-104.5 of Utah's probate code, which is effective as of May 8, 2018.  This section requires a petitioner or personal representative to send copies of pleadings relating to any "action" under Chapter 3, Probate of Wills and Administration, to the Office of Recovery Services. Such pleadings must be sent by certified mail within 30 days after the filing of the action. Failure to do so "tolls all limitations concerning the state's presentation or enforcement of a lien or claim" under the estate and trust recovery statute. This new law applies to all actions involving a decedent who was 55 or older.

The address to which pleadings must be sent is:
Office of Recovery Services
Bureau of Medical Collections
PO Box 45025
Salt Lake City, UT 84145-0025

The law is notable for requiring all pleadings for all actions filed under Chapter 3 to be provided to the Office of Recovery Services, when presumably the only information really needed to protect the state's interests is the identifying information of the decedent. Furthermore, only certified mail is effective to avoid the tolling of the statute of limitations. It will be interesting to see if these provisions are relaxed in the near future.

Time Limit for Probating a Will in Utah

In Utah, except in rare circumstances, a will cannot be the subject of a probate proceeding more than three years after the death of the testator. Accordingly, because the "the presumption of intestacy is final" after three years, any devisee under a will who receives a devise that is greater then their statutory share as an heir will want to ensure that the will is probated within this timeframe.

Until a few years ago, no proceeding to appoint a personal representative of a decedent's estate could generally be commenced more than three years after the death of the decedent. However, this changed with Utah H.B. 327, Chapter 364 (2013) and Utah H.B. 265, Chapter 134 (2014).

H.B. 327 "allows the appointment of a personal representative or special administrator beyond three years after a decedent’s death when the will was not previously probated." Specifically, the statute providing for the three-year limit was changed as follows: "No informal probate or appointment proceeding or formal testacy or appointment proceeding... may be commenced more than three years after the decedent's death..."

The bill also added "appoint a personal representative or special administrator to administer the decedent's estate" to the list of things that the court expressly has continuing jurisdiction to do.

H.B. 265 "makes technical and clarifying changes." Specifically, it deleted the provision previously found in Utah Code 75-3-301 that required appointment applications to state that "three years or less have passed since the decedent's death", which before the change was inconsistent with the changes made by H.B. 327. This bill also clarified that a court has continuing jurisdiction to appoint a personal representative formally or informally, notwithstanding the three-year limit found in Utah Code 75-3-107(1).

These new laws are not well understood. The form for an application for appointment of a personal representative provided by the Utah courts contains the statement that "not more than three years have passed since the person died" even though the form is specific to intestacy. Moreover, some courts in Utah still reject applications for appointment just because more than three years have passed since the decedent's death. Hopefully this post helps provide clarity.

Alert: Fixing Problems with Online IRS EIN Applications

This post is an update to a prior post, with updated information about fixing rejected online EIN applications submitted on the IRS's website. Apparently, the IRS no longer allows entities to be the responsible party for an EIN application. According to the latest instructions for IRS Form SS-4, "Unless the applicant is a government entity, the responsible party must be an individual (i.e., a natural person), not an entity."

Previously, it was possible for an entity that had not obtained its EIN online to be the responsible party for a new entity's online EIN application. In recent months, I have become aware that many IRS online EIN applications are resulting in an error page that doesn't include a reference number. The cause of this error page could be identifying an entity as the responsible party. Unless you are a government entity, you'll need to list an individual with a social security number as the responsible party for all online IRS EIN applications. Thanks to Joel in New Jersey for bringing this to my attention.

Opening a Utah Probate Matter; Formal v. Informal

In my previous post, I discussed some of the basics of the probate process. In Utah, a key decision to be made when beginning the probate process is whether informal or formal proceedings will be utilized. That decision, and the existence or non-existence of a last will, dictate the assertions that need to be made in the initial petition or application filed with the court. The following chart summarizes the assertions that a probate petition or application must contain:

Informal Probate of Will Informal Appointment Only (no will)Formal Probate of WillFormal Appointment Only (no will)
Proceeding commences with application directed to Registrar; must be verified to be accurate and complete to the best of the applicant's knowledge  X(1)  X

Proceeding commences with petition directed to Court

 X(2) X
Requests an order as to the testacy of the decedent in relation to the will and determining the heirs

Requests an order that the decedent left no will, determining the heirs, and whether supervised administration is sought

Statement of interest of applicant X(5) X X(6) X(7)
Decedent’s name, date of death, age, and the county and state of domicile at time of death; names and addresses of the decedent’s spouse, children, heirs, and devisees and the ages of any who are minors X(8) X  X(9)  X(10)
Statement of venue, if the decedent was not domiciled in the state at the time of death  X(11) X  X(12)  X(13)
Address of any personal representative appointed whose appointment has not been terminated  X(14)  X  X(15)  X(16)
Whether applicant has received a demand for notice or is aware of any demand for notice of any probate or appointment proceeding concerning the decedent  X(17)  X  X(18)  X(19)
Original of decedent’s will is (i) is in possession of court; (ii) was filed electronically with court and is in possession of the applicant or attorney; or (iii) is an authenticated copy of a will probated in another jurisdiction...  X(20)
Whether original of will is in the possession of the court, accompanies the petition, or was filed electronically with court and is in possession of the applicant or attorney (if no original, state the contents of the will and indicate that it is lost, destroyed, or otherwise unavailable)  X(21)
Applicant believes the will to have been validly executed  X(22)  X(23) 
Applicant is unaware of any instrument revoking the will and believes that subject of the application is the decedent's last will  X(24)  X(25) 
Three years or less have passed since the decedent's death  X(26)   
Describe will by date of execution; state the name, address and priority for appointment of the person whose appointment is sought; state whether bond is required, and, if so, unless specified by the will, state the estimated value of the estate and income generated therefrom  X(27)  X(28) 
Applicant is unaware of any unrevoked testamentary instrument relating to property having a situs in this state, or, a statement why any such instrument is not being probated  X(29)     X(30)
The priority of the person whose appointment is sought and the names of any other persons having a prior or equal right to the appointment  X(31)     X(32)
If bond is required, the estimated value of the estate and income generated therefrom   X(33)     X(34)

1. Utah Code § 75-3-301(1)
2. Utah Code § 75-3-402(1)
3. Utah Code § 75-3-402(1)(a)
4. Utah Code § 75-3-402(3)
5. Utah Code § 75-3-301(2)(a)
6. Utah Code § 75-3-402(1)(b)
7. Utah Code § 75-3-402(3)
8. Utah Code § 75-3-301(2)(b)
9. Utah Code § 75-3-402(1)(b)
10. Utah Code § 75-3-402(3)
11. Utah Code § 75-3-301(2)(c)
12. Utah Code § 75-3-402(1)(b)
13. Utah Code § 75-3-402(3)
14. Utah Code § 75-3-301(2)(d)
15. Utah Code § 75-3-402(1)(b)
16. Utah Code § 75-3-402(3)
17. Utah Code § 75-3-301(2)(e)
18. Utah Code § 75-3-402(1)(b)
19. Utah Code § 75-3-402(3)
20. Utah Code § 75-3-301(3)(a)
21. Utah Code § 75-3-402(1)(c)
22. Utah Code § 75-3-301(3)(b)
23. Utah Code § 75-3-402(1)(b)
24. Utah Code § 75-3-301(3)(c)
25. Utah Code § 75-3-402(1)(b)
26. Utah Code § 75-3-301(3)(d)
27. Utah Code § 75-3-301(4)
28. Utah Code § 75-3-402(1)(b)
29. Utah Code § 75-3-301(5)(a)
30. Utah Code § 75-3-402(3)
31. Utah Code § 75-3-301(5)(b)
32. Utah Code § 75-3-402(3)
33. Utah Code § 75-3-301(5)(c)
34. Utah Code § 75-3-402(3)

Introduction to Probate Proceedings

One of the primary purposes of the probate process is to provide an efficient system for liquidating the estate of a decedent and making distributions to his or her successors in interest. When someone passes away with assets titled in their name, a system must be in place to deal with those assets and transfer them to the proper party. State courts oversee the probate process and have jurisdiction over (1) the estates of decedents who were domiciled in that state at death and (2) property located in that state belonging to decedents who were domiciled elsewhere. Venue for a probate proceeding is in the county where the decedent was domiciled at death or, if they lived elsewhere at death, in any county where property of the decedent was located.

If a decedent owned property in a state other than the one where the probate case is opened, an "ancillary" probate proceeding may be commenced in the other state. The personal representative accomplishes this by filing in the court of the ancillary jurisdiction authenticated copies of his or her appointment order or other certification of authority.

All property of a decedent devolves to persons named in their last will or, if there is none, to the decedent's heirs at law. In order "to be effective to prove the transfer of any property or to nominate a personal representative, a will must be declared to be valid" by a court. Thus, contrary to popular belief, a will does not avoid probate, it merely provides instructions to the probate court. Regardless of whether the decedent left a will or not, certain probate property can be distributed without a probate proceeding pursuant to a small estate affidavit.

Probate proceedings in Utah can be formal or informal. The key distinction in the commencement of a formal proceeding is that a court hearing is required before a court will appoint a personal representative. While no hearing is required to commence an informal proceeding (making it less costly and faster at the outset) the downside of informally probating a will is that any heir or devisee, even if they didn't object to the informal probate of the will, can subsequently petition the court to set aside the informal probate of the will.

In summary, the four primary types of probate proceedings are (1) informal probate in intestacy (no will), (2) informal probate of a will, (3) formal probate in intestacy, and (4) formal probate of a will. If all heirs will affirmatively agree on the key aspects of the probate proceeding and there is no will, informal probate will likely suffice. If such agreement cannot be obtained and there is a will, formal proceedings should be considered.

Estate Planning Fundamentals

Every estate plan should include a last will, power of attorney, and health care directive; additional benefits can be realized by including a revocable living trust. Each document serves a particular and important purpose that cannot be served by any of the other documents; these purposes are described below.

A last will and testament specifies who will receive and who will manage and distribute your assets upon your death. It also names a guardian for your minor children. If you pass away without a will, you are said to have died “intestate,” and the laws of the state will determine who receives your assets. In addition, since all minor children under 18 years of age must have a guardian, a guardian will be selected for your children through a judicial process if you pass away without a valid will.

A will does not allow your estate to avoid the probate process; it simply gives directions to the probate court, and a will must be probated in order to be effective. Probate is the legal process for establishing the validity of your will and transferring your “probate property” in accordance with your will. However, incorporating a revocable living trust into your estate plan can allow you estate to avoid the probate process and achieve additional planning objectives.

A revocable living trust is essentially a contract whereby you, as “grantor,” transfer your assets to a “trustee” with specific instructions contained in the trust agreement describing how the trust assets are to be managed. You will typically serve as the initial trustee of your revocable living trust as well as the grantor, meaning that you retain complete control over all of your assets while you are living. A trust can be an especially useful tool for reducing estate taxes that would otherwise be owed or establishing protective trusts for the benefit of your descendants upon your death.

When the grantor of a trust passes away, the successor trustee distributes the trust assets according to the instructions in the trust agreement. This is the mechanism for avoiding probate; the successor trustee legally takes over the management and distribution of your estate. Any property transferred to your revocable trust will avoid probate. Note that some assets pass by operation of law without the need for a trust or probate; these include property held in joint tenancy with rights of survivorship, retirement plans and life insurance policies that have a beneficiary designation, payable-on-death bank accounts, etc.

If you have a revocable living trust, you still require a last will and testament just in case an asset remains in your estate upon death. If your plan includes a trust, your will is often referred to as a “pour-over” will since it simply directs that all of your assets be “poured-over” into your trust to be disposed in accordance with its terms.

A durable power of attorney authorizes whoever is named in that document to act on your behalf to the extent authorized in the document. This document is effective if you are physically or mentally incapacitated, but ends upon your death; this allows another individual to manage your affairs during any time that you are unable. A power of attorney may be drafted so that it is effective from the moment it is signed, or may become effective only if you become incapacitated. After death, the successor trustee of your revocable living trust (or the personal representative named in your will if you do not have a living trust) will possess the powers of management and the right to distribute your assets to your beneficiaries.

An advance health care directive specifies your preference for health care treatment, such as whether life support systems should be continued if there is no hope of recovery. It also appoints someone else to make these decisions for you if ill health prevents you from being able to specify your own wishes. An estate plan may include any number of addition documents, but these are the basics.