Duties of a Personal Representative in Utah Probate Court

As a personal representative in Utah probate court, you are responsible for managing the estate of a deceased individual. This includes tasks such as locating and inventorying the deceased person’s assets, paying any outstanding debts and taxes, and distributing the remaining assets to the beneficiaries named in the will.

One of your key duties as a personal representative is to ensure that the estate is properly administered according to state law. This means that you must follow the procedures and requirements set forth by the Utah probate court, which can vary depending on the specific circumstances of the estate. This may include filing necessary paperwork, appearing in court, and providing regular updates to the court and the beneficiaries.

Another important duty of a personal representative is to protect the assets of the estate. This involves taking steps to preserve the value of the assets, such as maintaining real estate properties and keeping financial accounts secure. It also means that you must be careful to avoid any potential conflicts of interest, and make decisions that are in the best interests of the estate and the beneficiaries.

In addition to these responsibilities, you may also be required to manage the distribution of assets to the beneficiaries. This may involve selling assets, such as real estate or stocks, and distributing the proceeds according to the terms of the will. It is important to do this in a timely and transparent manner, and to keep accurate records of all transactions.

Overall, serving as a personal representative in Utah probate court is a serious and important role. It requires careful attention to detail, a thorough understanding of the law, and a commitment to acting in the best interests of the deceased person’s estate and the beneficiaries.

At Hastings|Smoak we provide probate services to clients through the State of Utah. If you are in need of assistance with a probate matter, please contact us to set up a free initial consultation.

Posted in Uncategorized | Leave a comment

Member-Managed or Manager-Managed

Limited liability companies have largely become the entity of choice when starting a new business.  One of the decisions that must be made when a LLC is formed is whether the LLC should be member‑managed or manager-managed.  This decision can dramatically affect how the business is operated and determines who is authorized to make the day-to-day business decisions for the company.

At the onset, it is important to understand the difference between a member of and LLC and a manager.  A member is similar to a stockholder in a corporation.  A member has rights of ownership in the company which include the right to vote on certain things, the right to view the records of the company, and the right to receive pro-rata distributions of profit.  A manager, on the other hand, does not necessarily need to be a member (if the LLC is manager-managed).  Rather, a manager is generally empowered to make the day-to-day decisions of the company in the ordinary course of business.  Such decisions would typically include deciding who to hire, how to price products, marketing decisions, borrowing by the company, paying out distributions to members, or causing the LLC to enter into contracts.

An LLC can be member-managed or manager-managed.  A member-managed LLC is managed by each of its members, with each member having equal rights of management regardless of their membership percentage.  In other words, for management decisions, each member gets 1 vote regardless of whether they have a 1% membership interest or a 99% membership interest.  A manager-managed LLC is managed by a manager, or group of managers, that are appointed by vote of the members.  Under Utah law, an LLC is, by default, member-managed unless the members assent to an operating agreement that provides that the LLC will be managed by managers.  See Utah Code ¶ 48-3a-407.

A key difference between member-managed and manager-managed LLCs has to do with whether the LLC can pay the members/managers for services performed for the LLC.  Utah law provides that a “member is not entitled to remuneration for services performed for a member-managed limited liability company, except for reasonable compensation for services rendered in winding up the activities of the limited liability company.”  Utah Code § 48-3a-407(8).  This provision of Utah law can become very important to a minority member in an LLC, to protect from unfair practices of majority members.  For example, imagine a member-managed LLC that has 4 members, one with a 10% membership interest and the others each holding a 30% membership interest.  The three members holding the 30% membership interests might try to take advantage of their majority by voting to pay themselves a salary while not paying the 10% member.  This is a common tactic used by majority owners to secure for themselves more of the profits of the company at the expense of the minority member.  If the LLC is member-managed, however, the majority members are prohibited from such practices by Utah law.  If the LLC is manager‑managed, the prohibition of § 407 does not apply.

Another key difference between member-managed and manager-managed LLCs is the degree of fiduciary duties that extend to the members and the managers.  In a member-managed LLC, the members have duties of loyalty and care both to the company and to the other members.  Generally, the duty of loyalty precludes a member from appropriating a company opportunity or engaging in activities that are adverse to the company (such as working for a competitor).  The duty of care requires members to “refrain from engaging in grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of the law.” Utah Code § 48-3a-409(3). In a manager-managed LLC, the duties of loyalty and care apply only to the managers and “a member does not have any duty to the limited liability company or to any other member solely by reason of being a member.” Utah Code § 48-3a-409(9).

This article deals only with two discreet differences between member-managed and manager‑managed LLCs.  It’s important to note that the duties of members in both member-managed and manager-managed LLCs can be altered, to a certain extent, through an operating agreement.  If you are forming a LLC, it is important to consult a knowledgeable attorney to discuss your specific circumstances and goals to determine what form of management is appropriate for your LLC.

Posted in Business, Contracts | Tagged , | Leave a comment

What Deeds Do.

Transferring ownership in real estate from one party to another is typically accomplished by signing a deed.  However, there are several different types of deeds, each of which serve varying purposes.  This article briefly describes the most common deeds and their designed purpose.

Warranty Deed.  Perhaps the most common deed is the “warranty deed.”  A warranty deed transfers an interest in real property and also provides a “warranty,” or promise, from the seller to the buyer that the seller actually owns the property and that there are no liens on the property other than those specifically disclosed in the warranty deed.  However, there are two different types of warranty deeds.  A “general warranty deed,” provides the greatest protection for buyers in that the warranty extends back through the entire history of the property, covering even the time prior to the seller’s ownership. Like a general warranty deed, a “special warranty deed” provides a warranty that the seller has legal title to the property and can sell that interest, but the warranty regarding liens or other encumbrances extends only to the seller’s period of ownership. 

Grant Deed.  In some states an owner can transfer ownership in real property by “grant deed.”  Like a warranty deed, a grant deed transfers title with a promise that the seller owns a transferrable interest in the transferring property.  However, the grant deed may, or may not, contain promises that there are no liens on the property.  Generally, a grant deed is considered to provide less protection for a buyer than that provided by a warranty deed.

Quit Claim Deed.  A “quit claim deed,” provides the least amount of protection for a buyer or transferee. A quit claim deed does not guaranty that the transferor/seller has any legal title to the property nor does it warrant that the property has no liens.  In essence, the quit claim deed provides only that if the seller/transferor has an interest in the property, with no representation that she does, that interest is transferred to the buyer/transferee.  This type of deed is often used to transfer property between closely related parties when little or no money is changing hands.

Trust Deed.  A “trust deed” or “deed of trust” is used to protect the interests of a lender by transferring the right to sell the property to a third-party Trustee, which the Trustee can exercise only if the buyer does not repay the loan as promised.  All other rights in the property, such as the right to occupy and enjoy the property, are transferred to the buyer.  Once the loan is paid in full, the right to sell the property is conveyed to the owner.

Mortgage Deed.  A “mortgage deed,” is similar to a trust deed.  Like a trust deed, the mortgage deed is designed to protect the interests of a lender.  However, rather than transfer the right to sell to a third‑party trustee, the lending institution retains the right to sell in the event payments are not made as promised.  Once the loan is repaid in full the right to sell is transferred back to the owner.

While there are other types of deed, the deeds described above are the most common.  It is also important to remember that laws regarding the use and interpretation of deeds can vary from state to state.  Seek the advice of a qualified attorney in your area with questions specific to your location and circumstances.

Posted in Contracts, Real Estate Law | Leave a comment

What a Lawsuit Looks Like.

Deciding to file a lawsuit against someone is often difficult and daunting.  After all, the legal system can be pretty intimidating.  The process of suing, itself, is governed by a complex set of procedural rules that must be navigated in order to successful litigate a dispute.  Typical questions include; how does a lawsuit start; how is evidence collected; and how long will the process take?  Although there are a myriad of additional questions about the legal process, this article explores the basics of the civil litigation process in Utah.

The Complaint.  The process of civil litigation in Utah is governed by the Utah Rules of Civil Procedure.  Under these rules, in general, a civil lawsuit is commenced by filing a a “complaint” with the Court. Utah R. Civ. P. 3(a).  The Complaint must include a “short and plain” statement of the legal claim and the relief being sought from the Court.  Utah R. Civ. P. 8(a).  The Complaint will typically also include factual allegations supporting the legal claim.

Service of Complaint and Summons.  The Complaint and a Summons must be “served” on the named defendant to provide the defendant with a fair chance to respond.  A Summons is a document notifying a defendant that they are being sued and that they must respond to the Complaint or risk having judgment entered against them.  Utah R. Civ. P. 4(c).  Service can be accomplished through various means, but the most common is to have the Complaint delivered to the Defendant personally, or to the Defendant’s residence, by a constable or other person authorized to serve legal papers. See Utah R. Civ. P. 4.

The Answer.  Once the Complaint and Summons has been served, the defendant has a certain period of time (typically 21 days) to respond to the Complaint.  Utah R. Civ. P. 12.  Sometimes a defendant will respond by asking the Court to dismiss the case for various legal reasons.  However, it is most common for a defendant to answer the Complaint by responding in writing and admitting or denying all of the allegations in the Complaint. 

Statement of Event Due Dates.  Once a defendant has filed an answer to the Complaint, the Court issues an automatically generated Notice of Event Due Dates.  In general, the notice sets due dates for “discovery,” completion of alternative dispute resolution (“ADR”), and certification for readiness for trial. 

Discovery.  Discovery is the period of time in which the parties must disclose to each other any documents or witnesses they may use at trial, including expert witnesses.  Based on the amount of damages sought in the Complaint, discovery will generally extend for 162 days, 222 days, or 252 days.  Utah R. Civ. P. 26(c)(5).

Alternative Dispute Resolution.   In Utah all civil litigants are required, unless excused by the court, to participate in a form of ADR prior to trial.  Utah R. J. Admin 4-510.05 (1)(A).  The most common form of alternative dispute resolution is mediation, where the parties will meet with an independent third-party, usually a retired judge or seasoned attorney, to explore possible settlement of the case.

Certification for Trial.  Once discovery is concluded, and the ADR requirement fulfilled or excused, either party can certify the case for readiness for trial.  The Court will then set a trial date, which can be several months in the future.

The process outlined in this article is a very abbreviated explanation of the litigation process designed to provide only a basic understanding of the steps in Utah litigation.  As can be seen, litigation can be lengthy, expensive, and confusing.  If you have a legal claim that you want to pursue, it is always advisable to seek the advice of a knowledge attorney to discuss your options.

Posted in Litigation, Uncategorized | Leave a comment

Can I Get Attorney Fees? Maybe.

One of the most common questions a client asks when considering whether to file a lawsuit is “can I get an award for attorney fees?”  The answer to this question is a very unsatisfying “maybe.” 

As a general rule, in the American legal system, parties each pay their own attorney fees.  Utah follows the “American rule” regarding legal fees, with the exception that legal fees can be awarded if allowed by a specific contract provision or statute, or if it can be proven that the other party asserted claims or defenses in bad faith. 

Even so, an award of attorney fees is not always a given.  Even if authorized by a contract or statute, the right to an award extends only to the prevailing party.  Determining who prevailed in litigation can often be difficult, especially when the parties assert claims against each other and the parties obtain mixed results. 

Under Utah precedent, trial courts are tasked with identifying the prevailing party in a litigation by applying a “common sense flexible and reasoned approach to determine which party, if any, is the prevailing party.”  Fisher v. Davidhizar, 2021 UT App 38, ¶ 30, 491 P.3d 110, 117.  Under this approach, “the court not only considers which party obtained the net judgment, but also applies several ‘common sense factors.’” Id.  These factors include, “(1) contractual language, (2) the number of claims, counterclaims, cross-claims, etc., brought by the parties, (3) the importance of the claims relative to each other and their significance in the context of the lawsuit considered as a whole, and (4) the dollar amounts attached to and awarded in connection with the various claims.”  R.T. Nielson Co. v. Cook, 2002 UT 11, ¶ 25, 40 P.3d 1119, 1127.  Further confusing the issue is Utah case law holding that “in some circumstances both parties may be considered to have prevailed.”  R.T. Nielson Co. v. Cook, 2002 UT 11, ¶ 24, 40 P.3d 1119, 1126.  Ultimately, Utah law “leave[s] it to the trial courts’ discretion to decide which additional common sense perspectives are most appropriate to consider,” in determining the prevailing party in a litigation.” A.K. & R. Whipple Plumbing & Heating v. Guy, 2004 UT 47, ¶ 26, 94 P.3d 270, 277. 

As can be seen from this case law, determining who is entitled to an award of attorney fees after litigation is often a confusing, uncertain, and difficult task with no guaranties. The takeaway . . . if you decide to sue, don’t expect an award of attorney fees. That way, if you recover your attorney fees, its a bonus! 

Posted in Litigation | Tagged , | Leave a comment

Am I Married, or Not?

In the United States and around much of the world, the institution of marriage is recognized and promoted by providing married couple with specific benefits and rights regarding their spouse.  These rights include the right to inherit, the right to a share of assets accumulated during the marriage, parental rights regarding children, and the right to make decisions after the spouse passes away. 

Some believe that merely living together, or having children together, automatically creates a “common law marriage.”  But this is not the case.  In fact, there are only nine States that have specific laws recognizing un-solemnized marriages.  Although Utah is one of the nine States, Utah’s law does not extend marital rights until the un-solemnized marriage is recognized by a Court order. 

Under Utah law, in order have an un-solemnized marriage legally recognized the parties must prove that they 1) are of legal age and capable of giving consent, 2) are legally able to marry, 3) have lived together, 4) have assumed marital rights, duties, and obligations, and 4) can show that they have held themselves out to others as being married and have gained a general reputation in the community of being husband and wife.  Utah Code § 30-1-4.5

To legally marry the parties must be of legal age.  Generally, the age of majority in Utah is 18.  However, 16 and 17 year olds can legally marry with the consent of one parent. Utah Code § 30-1-9.  Also, the parties cannot already be married to someone else. Utah Code § 03-1-2.  Nor can the marriage be “incestuous,” meaning, it cannot be between a child and parent, siblings, aunts or uncles and nieces or nephews, or first cousins. Utah Code § 30-1-1.

The parties must have “cohabitated,” meaning, they have lived together. This is typically the easiest of the elements to establish.

The most difficult element to establish is usually the element of proving a general reputation in the community as a married couple.  Proof of this element typically includes whether one of the parties took the other parties last name, referring to each other as husband or wife, filing tax returns as married, and having their closest friends consider them married.

If any of the elements are absent, the alleged marriage will not be recognized under Utah law.  For example, if “the parties’ closest friends do not consider the parties married” or they are “not consistent in holding themselves out as married to the rest of the world,” the alleged marriage will fail.  Rivet v. Hoppie, 2020 UT App 21, ¶ 11, 460 P.3d 1054, 1057.

It is also important to remember that spousal “rights stemming from a common-law marriage must be perfected through a judicial proceeding before those rights take legal effect.” Matter of Adoption of K.T.B., 2020 UT 51, ¶ 109, 472 P.3d 843, 872.  This can be very important if your spouse dies before having the un-solemnized marriage recognized by a court.  Without the court order you may be unable to establish a right to determine the place and manner of interment or a right to inherit from the spouse.

Determining whether a couple is married can have significant ramifications.  Often, disagreements arise between parties to a relationship about whether they are married, especially when the relationship is ending.  A party alleging marriage may be seeking child support, alimony, or a share of assets acquired during the relationship.  The other party will likely claim that there is no marriage, and therefore, no right to claim child support, alimony, or assets.

In short, if you believe your relationship is a marriage that has not been solemnized, it is advisable to seek legal counsel to discuss how the relationship can be recognized under Utah law.  If you wait to do so until the relationship ends, or until after your spouse dies, you will very likely end up in a protracted legal fight.

Posted in Uncategorized | Tagged | Leave a comment

I Agreed to WHAT?

The Duty of Good Faith and Fair Dealing

Most people understand that when they sign a contract, they are bound by the agreements and obligations written in the contract. However, what most people don’t realize is that, in Utah, “all contracts contain a covenant of good faith and fair dealing.” Vander Veur v. Groove Entm’t Techs., 2019 UT 64, ¶ 9, 452 P.3d 1173, 1177. This is true, even if the contract does not include any text specifically referring to the covenant of good faith and fair dealing.

As explained by the Utah Supreme Court, the covenant operates by “inferring as a term of every contract a duty to perform in the good faith manner that the parties surely would have agreed to if they had foreseen and addressed the circumstance giving rise to their dispute.” Id. The inferred covenant provides that, “each party impliedly promises that he will not intentionally or purposely do anything which will destroy or injure the other party’s right to receive the fruits of the contract.” Id.

As an extreme example, suppose Betty signs a written contract with Sam to pay $1,500 for Sam’s mountain bike. The contract says Betty can take possession of the bike immediately, but doesn’t specifically state how or when Betty has to pay Sam. Betty, takes possession of the bike, but tells Sam she will pay him with $1,500 worth of potatoes from her garden after next harvest. Sam objects, but Betty claims she hasn’t breached the contract because the contract doesn’t specifically require her to immediately pay or to pay with cash.

Betty is wrong. She has violated the inferred duty of good faith and fair dealing that attaches to every contract in Utah. Under the circumstances, it is obvious that Sam expected to be paid in cash at the time Betty took possession of the mountain bike. It is extremely unlikely that he would have agreed to the contract if he knew he would be paid in potatoes a year from now.

Ultimately, the inferred duty of good faith and fair dealing is about equity and fairness. All parties to a contract must act in good faith and refrain from unreasonable, or unfair, practices in fulfilling the terms of a contract.

Posted in Business, Contracts | Leave a comment

What is “Probate?”

The LawMost people have heard the word “probate,” but may not be sure what, exactly, a probate is.

Probate refers to the court proceedings and processes required by state law to pass a person’s “estate” to those designated to receive it.  The word “estate” means all the property held in a person’s name when they die.  For example, most people have financial assets like bank accounts, brokerage accounts, or retirement savings accounts.  Many people own real estate such as a personal residence and may own vacation or investment real estate.  Other common assets include tangible personal property (i.e. clothes, cars, collectibles, electronics, etc.), life insurance policies, and safe deposit boxes.

In Utah probate is required when a person dies with an estate worth $100,000 or more, or if they own any real estate.  If probate is required, the estate assets will be inaccessible to the inheritors until the probate is commenced.

So, how does a person begin a probate in Utah.  The first step is to file an application for probate in the district court in the county were the person last resided.  The application must include specific information about the person who died (the “decedent”), the decedent’s currently living heirs, whether the decedent had a will, as well as other important information.  The application must also identify a person who is designated, or wishes to be, the “personal representative” of the estate.  Once appointed by the court, the personal representative will receive authority from the court to take control of the estate assets, contact heirs and creditors, pay estate debts, sell estate property, and ultimately distribute estate money and assets to the appropriate inheritors.

At first glance, probate may seem straight-forward.  However, it can be confusing, time consuming, and expensive to have to deal with the required court proceedings.  Also, because probate is conducted in the courts, it is a public process.  For these reasons, many people prefer to avoid probate, if possible.

Posted in Estate Planning | Leave a comment

The Power of the “Power of Attorney”

Power of AttorneyA “Power of Attorney” is an important legal document that grants to another person the legal right and ability to act on your behalf.

Powers of attorney can be broad or narrow, depending on your needs.  A “general” power of attorney grants broad powers to another to do just about anything you can do for yourself, such as enter contracts, open bank accounts, or make other financial decisions.  A power of attorney can also be “limited” to specific actions, such as signing a single document on your behalf.

A “durable” power of attorney remains valid even if you become incapacitated and can’t make decisions for yourself.  A “Durable General Power of Attorney” is commonly used in estate planning for just such a circumstance; making it possible for your designated agent to make financial decisions on your behalf if you are incapacitated for any reason.

It’s important to remember, however, that the Durable General Power of Attorney allows your agent to act on your behalf even if you are not incapacitated, and you will bound by the actions of the agent.  Some people feel uncomfortable with this and choose to execute a “Springing General Power of Attorney,” which “springs” into effect upon a persons incapacity.  While the “springing” power of attorney grants no authority to act in your name until you become incapacitated, it has the negative feature of needing certain formalities to occur before your agent can act for you.  For example, many springing powers of attorney require that a physician issue a letter documenting your incapacity before the agent can act for you.

All powers of attorney become void upon your death.

It is advisable to have some form of power of attorney in place in case of your incapacity.  Otherwise important financial assets may become locked and actions delayed upon your incapacity.

Posted in Estate Planning | Leave a comment

Know Before You Rent!

Room for RentWith the advent of the sharing economy and websites such as airbnb.com and vrbo.com, many people have considered renting their primary or second residences to supplement income or defray maintenance expenses.  This practice can lead to disputes with neighbors and local governing authorities.  While renting is typically a “property right” that inures to the owner of real estate, it can be limited by restrictive covenants, home owners association agreements, and/or local zoning ordinances.

Most modern subdivisions include “covenants, conditions, and restrictions,” or CCRs, that run with the land.  CCRs often restrict an owners ability to rent the property or, in the alternative, set certain conditions that must be met before rental can occur.  Similarly, some properties are part of a home owners association, or HOA.  HOAs impose, by contract, certain restrictions on the use of member properties.

Local zoning ordinances may also restrict or prohibit renting of a residence.  In some cases, the zoning ordinance will only allow rental as a “conditional use.”  As the term implies, in these instances, rental is allowed so long as certain “conditions” are met.  Establishing that a property meets the imposed conditions can be a complicated process that typically requires notice to surrounding property owners, interaction with local fire, building, and other authorities, and public meetings.

Renting prior to fully understanding restrictions that may apply to the property can lead to disputes and imposition of fines.  We are often asked to assist homeowners to determine if they have the right to rent out their residence or to assist in the “conditional use” process.  We would be happy to assist you in the event you are contemplating renting out your residence (or are already doing so).

Posted in Real Estate Law | Leave a comment