Recent Changes in Estate Planning for Water Shares in Utah
It has been a busy last few months in Utah regarding water and changes in the law that impact how we plan for water rights and water shares. As a reminder, water rights are a direct ownership of water that is usually appurtenant to real property and generally transfer with the real property. Water shares on the other hand, are stock in a company that owns the water. Transfer of water shares does not happen automatically with the transfer of real property.
In this article we focus on a recent change to the Utah Probate Code that affects transferability of water shares following the death of the owner. As we have discussed in a prior article, if you have a trust, water shares should be held directly by the trust or by an entity, such as an LLC, that is owned by the trust. In the past, if a client died having failed to make this transfer, an all-too-common occurrence, it was not difficult to fix through a simple procedure known as the small estate affidavit. The small estate affidavit allows assets of the deceased to be transferred to the new owner without probate so long as the aggregate value of those assets are below $100,000. However, in Utah, as of May 7, 2025, stock in a water company is now excluded from permissible assets that can be transferred using a small estate affidavit.
What this means is that if you die, and you own water shares in your personal name, whether it is one inconsequential share in a small ditch company worth a few hundred dollars or multiple shares valued in the millions, your estate will be going to probate.
The action item is this, if you have a trust, make sure those shares are under the umbrella of the trust so they do not have to be probated. This is done by having the water company transfer ownership of the shares to the trust (or the entity owned by the trust) and issuing new stock certificates in the name of that trust or entity.
Nothing derails a good estate plan faster than poor trust funding. If you aren’t sure your trust is funded properly, talk to a competent professional who can help you with this important step in good estate planning.
This post is for informational purposes only and not for the purpose of providing legal advice. You should contact an attorney to obtain advice with respect to any particular issue or problem. Nothing herein creates an attorney-client relationship between Hallock & Hallock and the reader.