Issue 11.12
You should know that the State of Utah has a default estate plan for you in the event you die without your own estate plan in place. The plan is part of the Utah Probate Code for people who die without a will. One of those default estate plans applies to those who remarry and have children by a prior marriage.
Under Utah law, if you die without an effective will and you are married to a spouse who is not the parent of your children, the following rules will apply to your estate: Your spouse gets the first $50,000 from your estate, plus one-half of whatever is left after that first $50,000 is paid to your spouse. Your children by your prior marriage get one-half of whatever is left after your spouse receives the first $50,000 of your estate. The law also provides that your spouse’s share will be reduced by the value of any property he or she receives outside the probate process, such as life insurance proceeds, retirement plan death benefits, pay-on-death accounts, and property he or she owned with you as a joint tenant.
For example, if you die and your only asset was $100,000 in a bank account that was in your name only, that bank account would be divided so that your spouse would get the first $50,000, plus one-half the balance, or another $25,000. Your children by your prior marriage would get the remaining $25,000 to divide among themselves. Your spouse would receive $75,000, and your children by your prior marriage would receive $25,000.
Let’s take that example one step further. Assume that in addition to the $100,000 in your bank account, you also owned $400,000 in life insurance that is payable to your spouse at your death. Although your spouse would get that full $400,000 of life insurance proceeds, it more than offsets the $75,000 that he or she was going to get from your bank account. So your spouse would get the $400,000 from your life insurance but nothing more. Your children would get the full $100,000 in the bank account.
Who ends up with your property under this law can vary greatly depending upon the nature, title, and value of your assets. Of course, this law only comes into effect if you fail to make your own estate plan through the use of a will or trust that designates how you want your assets to be handled at your death. You can avoid having the state impose its estate plan on your estate by creating an effective will or trust prior to your death.
Sean Sullivan is a shareholder with the firm of Brindley Sullivan, Pllc, 382 South Bluff, Ste. 150, St. George, UT 84770, (435) 673-9220.