This is an introduction to issues of estate planning and wills in Virginia.
It covers general information, process, expectations and legal participation
involved in planning for the future of your family.
Your estate includes not only the real estate you own, but also stocks,
bonds, business interests, personal effects and any other type of wealth
you have accumulated during your lifetime. Most property is part of your
"probate estate", which your will disposes of. Exceptions are
life insurance policies or accounts with a designated beneficiary who outlives
you, or property held jointly with someone who outlives you. But even these
kinds of property are considered part of your estate for federal estate
tax purposes.
Current Law: Intestacy
Dying intestate (i.e. without a will) requires that a court decide how,
when and to whom your assets will be distributed. Life insurance and joint
ownership of property, while valuable guards against problems for your family
after your death, cannot replace a will.
Assets are distributed as follows in intestacy:
·All of your property passes to your spouse unless you have children
from a former marriage.
·If your spouse fails to survive you, your entire estate will pass
to your children (or to the descendants of any deceased children).
·If you are unmarried and have no children, Virginia law requires
that your estate pass to your parents.
·In the absence of parents, your property would pass to your siblings
(or descendants of deceased ones).
·Finally, if you have no siblings, nieces or nephews or other descendants
of siblings, Virginia law provides for one-half of your estate to pass to
your nearest maternal relatives and one-half of your estate to your closest
paternal relatives, divided in shares that are specified by state law.
Creating a will puts the choices in your hands, not the court's
·You select who receives your assets and how and when they will be
distributed, not the court.
·You elect who administers the distribution of your assets, not the
court
·You minimize costs for your executor and your family.
·You, not a judge, will choose the guardian you desire for your children.
·You can make many details of administering your estate easier for
your heirs and your executor
·You can decide which heirs need their property protected by a trustee
or custodian, for how long, and you can decide who will be the trustee or
custodian, and specify other details if necessary.
Comparing wills and trusts
A will provides only for the distribution of your wealth after death. It
can direct the disposition of your estate and nothing more. A trust, on
the other hand, is a means of long-term planning for your estate. With a
trust, further flexibility is allowed in the distribution of your financial
legacy. The Trustor (or the person creating the trust) selects a trustee,
or administrator, for the corpus (principal) and the income of the trust.
This trustee monitors the trust and distributes it to the beneficiaries.
Trusts can be established in several different forms, including living trusts,
irrevocable trusts, and other types. Some trusts are included in the will
and only are created if an heir is young or disabled. Speaking with your
lawyer can help you to determine which of these types is right for you and
your family, or if a will itself is sufficient.
Things to consider in estate planning and the creation of a will:
·Property ownership
Each state governs the division of property differently. Some states consider
the property of married persons to be community property , while other
states, including Virginia, do not. Other types of property ownership include
joint tenancy, tenancy by the entireties , individual tenancy and common
tenancy. These considerations of property ownership can change who the property
will go to after its owner's death. A property agreement between spouses
is a declaration of the ownership of the couple's assets that can be important
to estate planning. Prenuptial agreements are also a type of property agreement.
·Prior claims to your inheritance from previous marriages
When entering into the creation of a will in your second marriage, the claims
to your estate that would be made by your children from an earlier marriage
must be considered. Special types of trusts can provide for both the beneficiaries
from the first marriage and those from the current marriage. A Q-TIP, or
a Qualified Terminable Interest Property, Trust is one of the ways that
this distribution can be facilitated between the beneficiaries of both unions.
This can be explained in further detail by your attorney.
·The age of your beneficiaries
If you have children or other beneficiaries younger than the age of 18,
they should not simply inherit their shares of your assets. If they do,
they will have to go through court Guardianship proceedings. Providing for
their inheritances, then, requires special additions to the will that (A)
appoint Guardians or Custodians or (B) set up trusts for the distribution
of their shares through a Trustee appointed by you. An age of distribution
will be chosen by you in the preparation of your will. It will determine
when beneficiaries will be of age to come into their inheritance.
·Relationships between you and possible beneficiaries
Most modern families include relatives connected to the family in many different
ways, sometimes by adoption, non-marital or pre-marital birth, or by non-traditional
ways of marrying or having children. Even if you yourself do not have any
such relationships, relatives yet unborn may do so before you die. In creating
your will, you will need to decide how a family relationship will be defined.
The "by-default" definitions under current law may be more traditional
than you want; and on the other hand, by the time you die they might be
looser than you want. In this, as in other areas, the lawyer helps you consider
how to deal with situations that might arise, so that your will will be
clear and consistent with your wishes no matter what happens.
·Choosing alternate executors and trustees
Typically, your spouse will be the executor of your will after your death.
In writing your will, you will name a successor executor who will take your
spouse's role if required. If you create a trust, a trustee will also be
named in your will. Alternate choices for both of these roles are necessary
in the event that your first choices die first.
·Your spouse's will
Each spouse has an individual will. You should realize that each will may
be changed at any time without the knowledge or consent of the other spouse
(unless there is a contract that states otherwise).
·The value of your estate and possible tax consequences
Federal estate taxes as high as 55% can lay claim to estates larger than
a Congressionally-set exemption amount, which changes every year. It is
important to consider the taxes that your estate, or your spouse's, would
incur, and to plan accordingly. Speaking with your lawyer or with a financial
advisor can help you determine the best way to arrange your estate in order
to avoid paying most of it to the government.