Whether you have inherited property or you’re planning on naming your own heirs, estate planning and inheritance laws are something lower on the totem poles of fun things to do. Especially when it comes to answering questions of drafting a will. Creating your last foreclosure will and testament can frequently dredge up hostile emotions, especially if the question of administration may ultimately entail going through probate.
While there are alternative options to consider, many Utah residents find wills to be the fastest and most effective way of ensuring the succession of property. Unfortunately, they’re also more subject to interpretation and highly contested, And it’s not just heirs who can contest property. It can be creditors as well. But there’s a few things to know about wills and inheriting property, both generally and in Utah specifically. Here are a few things you may want to keep in mind.
Utah’s Next of Kin Laws
As part of understanding the intricate details of Utah’s inheritance laws, it’s crucial to take a closer look at the state’s next of kin laws. These laws dictate how a person’s estate is distributed in the absence of a will, and understanding them is key to ensuring a smooth transfer of property after death.
In Utah, the rules of intestate succession (when a person dies without a will) apply. Under these rules, the estate is divided among the deceased’s closest relatives or “next of kin”. Here’s a simplified outline of how these laws work:
- Surviving Spouse: If the deceased is married, the surviving spouse has the primary inheritance rights. The spouse inherits all of the deceased’s estate if there are no descendants (children, grandchildren, etc.) or parents living. If the deceased has surviving descendants from someone other than the spouse, the spouse inherits the first $75,000 of the estate plus half of the balance.
- Descendants: If the deceased has no surviving spouse but has descendants, the entire estate is divided among them. The distribution follows a “per stirpes” approach, meaning the estate is divided equally at the first generational level where there are living heirs.
- Parents, Siblings, and Their Descendants: If there are no surviving spouses or descendants, the deceased’s parents inherit the estate. If the parents have predeceased, then the siblings (or their descendants) are next in line.
- Extended Family: If there are no immediate family members, the estate goes to the next closest relatives, such as aunts, uncles, cousins, etc., following a specific order outlined in Utah law.
1- What Happens If Someone Dies Without A Will Or A Living Trust?
Utah, much like other states, adheres to a process known as intestate law wherein any assets left behind not named within the terms of a will or trust are gradually distributed to close relatives; beginning with a surviving spouse. In fact, in most cases in Utah the spouse receives the vast majority of intestate property, assuming there is one; if not, it’s descendants of the deceased who receive the property, beginning with immediate children and eventually widening out to other non-immediate relatives. This can also be one of the chief causes for dispute in probate court, however; and a court-appointed executor of an estate does not need to have any history with either the deceased nor their heirs.
Certain assets are exempt from intestate laws, including:
- Property in a living trust
- Life insurance proceeds
- Funds in an IRA, 401(k), or other retirement account
- Securities in a transfer-on-death account
- Real estate held in a transfer-on-death or beneficiary deed
- Payable-on-death bank accounts
- Property owned with no outstanding debt in a joint tenancy
However since these are typically either co-owned or designated to a named beneficiary, they are almost universally never entered into probate disputes.
2- Do Taxes Need To Be Filed After Death In Utah?
Both federal and state taxes need to be filed by either the named personal representative of an estate (which can include an heir) for property not entered into probate; or a court-appointed executor for probate property. While taxes do not have to be paid out of pocket for either, they will have to be taken out of the estate prior to distribution to heirs and beneficiaries.
The personal representative or executor must create a separate tax identification number from the deceased for the estate in order to be filed. This can be done simply by filling out a downloadable SS-4 form located here.
3- Is There An Inheritance Tax In Utah?
Thankfully, there is no state inheritance tax in Utah. However, if the deceased had property in Iowa, Kentucky, Maryland, Nebraska, New Jersey, or Pennsylvania (the six states which still currently maintain estate tax), heirs in Utah could be taxed on assets over $25,000.
Utah residents can still be subject to federal estate tax laws only if the value of the deceased’s assets are greater than $11,400,000. Utah’s state inheritance tax exemptions do not preclude future property taxes on physical homes or capital gains taxes; the latter of which are taxes that are paid when an asset that has gone up in value is sold. Capital gains taxes are based on the difference from the value at inheritance and the value at the date of its sale. In Utah, long and short-term capital gains are subject to a personal income tax rate of 4.95 percent.
4- Does All Inherited Property Need To Be Entered Into Probate?
Property which is co-owned or designated to a named beneficiary is rarely entered into probate unless there is a suspicion of fraud or any outstanding debt is owed. If property falls below $100,000, there is an additional affidavit which can be filed known as a “small estate” affidavit which also exempts it from being entered into probate. A small estate affidavit is not filed with the court, but simply signed and notarized within a 30 day period; at which point, it’s submitted to any third parties which can claim the property (such as a bank.)
Utah law prevents physical property, such as a home, from being entered under in a small estate affidavit, nor does it permit the transference of any titles. The $100,000 threshold only applies to estates physically located in Utah; each state will have their own particular laws regarding small estates.
5- Can Creditors Claim Inherited Property?
Legally, creditors can not only claim non-probated property but are actually given chief priority over a spouse or other heirs. This is especially common in the case of homes in threat of foreclosure, but can also apply to banks and investment accounts, stocks, bonds and other non-physical assets. All remaining assets are distributed to heirs and beneficiaries only after collection by creditors.
In Utah, it’s the responsibility of the named executor (or court appointed, if property is entered into probate) to contact any ascertainable creditors in order to ensure the payment of any outstanding debts on an estate. State law requires this must be made through both personal contact as well as published notice in a newspaper over three consecutive weeks. Any legally entitled creditors to an estate have 90 days to submit a claim. Any claim made after that period can be subsequently barred.
6- Are There Exemptions From Creditor Claims In Utah?
Under Utah state law, a homestead exemption can be claimed for up to $5,000 exemption from seizure if the property is not the primary residence of a single individual, and up to $10,000 if the property is jointly owned. A physical home which is a primary residence can be claimed for up to $24,000 for single individuals and up to $48,000 for joint tenancy.
Joint tenant property is subject only to claims for debts that are the shared responsibility of one or more tenants. In Utah, a tenant can force the sale of property upon another tenant’s death to meet creditor demands; and unfortunately, joint tenancy frequently also means a shared responsibility.
7- If I’ve Inherited A Home Under Debt Can I Force A Sale?
In order to meet creditor demands, yes. Short sales are the easiest way to avoid foreclosure, but frequently the most grueling to enact in a short period. Not only are there broker fees to consider, but buyers frequently tend to shy away from purchasing homes which were part of a deceased owner’s estate.
Gary Buys Houses offers a program we call “Sell Now Move Later.” It’s intended to help heirs of property which is in threat of foreclosure—or even those who simply don’t want to be burdened with maintenance or property taxes. We’ll purchase your house as is in as little as three business days; and we can even try to assist you by handling any remaining questions you have regarding ownership.
We know there’s a lot to consider when leaving property behind in a will. There’s even more to consider when inheriting property. And the more complicated an estate is, the more complicated a will can be. Inherit law can be a complicated issue. Just remember that in the end, the simplest option can be the most effective—so long as you know what to watch out for.
How To Change A Deed When You Inherit Property
1. Is The Property Part Of A Probated Will?
In Utah, probate may be required if a will specifically names an heir to real property. However, there is both an informal (where courts can appoint a personal representative for an estate without a hearing) probate and formal probate (where a hearing can be declared if there is some disagreement about the validity of a will) process. In some cases where an executor’s deed was drafted, the former should be a fairly simple process if there is no disagreement from the executor. In both instances, you must be at least 21 years old in order to file a case.
2. Was The Property Jointly Owned?
This will be indicated on the initial deed itself. If the property is jointly owned and one party on the deed is still living, the deed itself can not be transferred to you without their express consent.
3. Obtain A Certified Death Certificate
Under Utah state law, a transfer on death deed for real property can be obtained only with a certified death certificate. If a transfer on death deed was already signed for you previously (a fairly common practice), the deed should automatically be transferred to you upon proof of death.
4. Draft A New Deed Under Your Name As Property Owner
This should include:
- Your full name and current address
- The name and address of the deceased
- The address and location of the property
- The parcel number
- A description of the property
- The names of co-owners if you co-inherited the property
Upon drafting the new deed, have it notarized (the executor of the will may need to be present our allow their express written consent) and deliver it along with the will of the deceased and the death certificate to the county recorder’s office. The process in total should take no longer than 30 days.
Navigating Utah’s Intestate Succession Laws
When a person passes away without a will in Utah, their estate is distributed according to the state’s intestate succession laws. These laws dictate how the decedent’s assets are divided among surviving relatives, aiming to reflect what most individuals may have chosen in a typical will. Understanding these laws can help you make sense of what to expect when handling an estate in such circumstances.
In Utah, intestate succession laws operate based on the decedent’s surviving relatives at the time of death. Here’s a closer look at these regulations:
- Spouses and Descendants: If a decedent is survived by a spouse and descendants from the same spouse, the surviving spouse inherits the entire estate. However, if the decedent has descendants from a previous relationship, the surviving spouse will inherit the first $75,000 of the estate, plus half of the remaining estate. The decedent’s descendants will then inherit the rest of the estate.
- Parents, Siblings, and Extended Relatives: If the decedent is unmarried or has no descendants, the estate goes to other family members. Parents are the first in line, followed by siblings. If there are no surviving parents or siblings, extended family members like grandparents, aunts, and uncles are considered in a pre-determined order.
- Joint Property: Assets held in joint tenancy, like a shared home, automatically pass to the surviving co-owner(s), regardless of the decedent’s marital or parental status.
- Non-Probate Assets: Certain assets, such as life insurance payouts, retirement accounts, or payable-on-death accounts, are not subject to intestate succession laws. These assets typically pass to the named beneficiary.
Wrapping it Up
Understanding Utah’s inheritance, next of kin, and intestate succession laws can be a challenging task, especially while dealing with the emotional toll of losing a loved one. These laws guide how a decedent’s estate is divided among surviving relatives and can significantly impact how you manage an inherited property.
Remember, you don’t have to navigate these waters alone. Whether you’re dealing with the aftermath of a loved one passing without a will, considering selling a property you’ve inherited, or facing other real estate related issues tied to inheritance, professional guidance can make the process more manageable.
My name is Gary, a trusted and experienced real estate investor here in Utah. Over the past 12 years, I’ve guided numerous individuals through the intricacies of managing and selling inherited properties. My expertise extends to helping homeowners in challenging situations such as ‘Right to Cure’ notice scenarios or when needing to sell a property ‘as is’.
If you find yourself facing any of these circumstances and need a partner to help guide you through, don’t hesitate to reach out to me here. I’m committed to providing support, offering fair cash offers, and presenting the best solutions tailored to your unique needs. Remember, you’re not alone in this journey. Contact me today, and let’s find the best way forward together.
I am not an attorney. Please contact one for legal advice.