Stephen J. Buhler, Attorney at Law

Salt Lake City Law Blog

Challenges parents face when dividing an estate among children

Decisions about how to bequeath assets to children and grandchildren sometimes challenge Utah residents. Conflicted feelings could arise among parents struggling to choose between equal distributions or fair distributions. No single approach defines fairness, and parents also might worry about the prospect of creating resentment among heirs.

Problems usually happen when some children have done well financially and others live paycheck to paycheck. Sometimes the children with few financial resources have already received support from their parents. When the socioeconomic circumstances vary among children, parents might feel compelled to provide larger shares to the less fortunate compared to their affluent offspring. The more fortunate siblings, however, could feel insulted by these choices, especially if they believe that their parents are rewarding irresponsible behavior.

How tax laws impact divorce planning

Those who are getting divorced in Utah may be impacted by the Tax Cuts and Jobs Act (TCJA). This law has altered how alimony is treated for divorces that are finalized in 2019 and later. For instance, alimony is no longer considered income to the recipient and a tax deduction for the person making the payment. This could have the effect of lowering spousal support.

While many assume that this will only impact women, it may affect men who are receiving alimony as well. According to the 2010 census, 3 percent of alimony recipients were men. Generally speaking, alimony goes from the higher-earning spouse to the lower-earning spouse. Since the higher-earning spouse typically has a higher tax rate, that person benefited more by deducting larger alimony payments each year.

Estate planning still has benefits even if you do not have kids

Everyone has unique reasons for wanting to create an estate plan. As beneficial as they can be, some people may think that for one reason or another that they do not need to create a plan. However, this notion could lead to considerable complications later on, and you may want to remember that all adults could benefit from having an estate plan.

You may find yourself among the many adults who do not have children. As a result, you may think that you do not need an estate plan because you do not have children to bequeath assets to. This mindset may not actually suit your circumstances. Even without children, you could have a number of reasons to create an estate plan.

How money problems may lead to divorce

Some marriages in Utah might end because of disputes about money. While this is a common reason for divorce, financial issues may take different forms.

Communication is one major problem, and failing to effectively communicate about finances is likely to lead to problems later. Some people may even keep secret accounts, and this can be a breach of trust that is hard to come back from. One solution is for couples to sit down every month and go over their finances, including how much each has saved and spent.

How retirement may be affected by divorce

Couples in Utah should be aware that divorce could mean a lower standard of living both before and after retirement. Furthermore, the passage of the Tax Cut and Jobs Act means a number of changes ahead that can impact divorcees.

Starting in 2019, it will no longer be possible for people who owe spousal support to deduct the payments from their taxes. Since people who receive alimony will not be required to pay taxes on it, they may fall into a lower tax bracket and be eligible for a rate of 0 percent on capital gains. As a result, they may benefit more from taking investment assets instead of the family home.

The benefits of a pour-over will

A pour-over will can help Utah residents make sure that assets are properly allocated into a trust. In effect, anything that isn't titled for the estate owner's living trust is automatically placed there when he or she passes on. Although it should not be used as a safety net, it can ensure that an estate plan is structured as desired.

It is important to note that a pour-over will is subject to probate even if assets inside a trust are generally not. This means that a court will examine the document to make sure that it is valid under state law. If an individual dies without a will or trust, he or she will be deemed to have died intestate. State law would then determine who would get any assets an individual owned at death.

Reasons driving divorces among older individuals

For many Utah couples who have been married for decades, their relationships represent an important aspect of their lives. Divorces among people age 50 and over, however, have been on the rise compared to other age groups. These are known as gray divorces. Although some people cite growing apart as the reason for their splits, a research project that interviewed 40 men and 40 women revealed very specific and concrete motivations for divorcing.

Some trends emerged along gender lines. Among men, financial issues and approaches to child rearing strained their marriages. In one example, a man reluctantly chose to divorce his wife because of her increasingly destructive spending habits. Another man explained that he resented his wife for undermining his desire to raise their children with a focus on responsibility and pursuing goals.

Probate: What is it and can it be avoided?

If you've recently lost a loved one, you likely have a lot of questions about what comes next. You know you need to close out his or her estate, but are not sure what you have to do in order to make that happen. In Utah, you may be required to go through the probate process. What is that and is there any way to avoid it?

People don't usually hear good things about probate. To most it seems unnecessary, expensive and just a way to drag out estate administration. The truth is that there are benefits to going through probate if doing so proves necessary.

The advantages of using a corporate trustee

Some people in Utah may find a trust a useful part of an estate plan. Trusts may protect assets in a number of different ways. For example, IRAs or life insurance policies can be placed in a trust so they can continue to accrue value while tax-free or tax-deferred. A person may also place assets in a trust with conditions on distributions to beneficiaries such as reaching a certain age. If there is a goal for the trust, such as providing for the education of grandchildren, that can be written into the trust as well.

However, at this point, many people make a common error, and that is appointing a friend or family member as trustee. This is usually done because the friend or family member knows the grantor and the beneficiaries and would understand the grantor's wishes. The problem is that the loved one may be unprepared to manage and administer the trust. The trustee may lack the time and the level of legal and financial knowledge required, particularly given that a trustee is liable for managing assets effectively.

Study: women earning more than their husbands can lead to divorce

Gender roles are rapidly evolving. As these roles change so do the effect they have on married couples in Utah and elsewhere. According to a recent study, a change in a married woman's role in the household often leads to divorce.

The study, which was completed by researchers in Sweden, found that women who enter marriages either not working or earning less than their husbands divorce more frequently when circumstances change, and they begin making more money than their husbands do. The divorce rate for couples that followed traditional gender roles surged in these circumstances compared to couples in gender-equal relationships. In many cases, women would earn less money early in their career due to things like having children or relocating with their spouses. As women's careers grow, many find themselves earning as much or more than their husbands do. With a bigger focus on their jobs, many women find they have less time to devote to household duties. With many husbands unwilling to take on additional household duties, the change in the status quo can lead to conflict and divorce.

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