Year: 2017

How Often Should I Review My Will, Trust, and Estate Plan?

There are two primary reasons for having an estate plan:

  • To make sure that your family and loved ones are taken care of to the best extent possible following your death, and
  • To provide clear instructions on what should happen to your estate following your death

Without a will or trust, the Virginia courts will apply state intestacy law to distribute your assets, regardless of what you wanted or promised.  The courts not only decide what happens to your assets, they may also decide what happens to your children.  Your will or trust and other estate documents are the most important legal documents you’ll probably ever sign. The goal of good estate planning is to ensure that your assets go to the people that you want to benefit after you’re gone.  Because life isn’t static and is filled with many changes over the years, your estate planning documents may need to change and be updated too.

Many people create a will relatively early in life to achieve these goals, because they understand that death can, unfortunately, come at any time. But as you move through adulthood, your life will probably change in ways that impact both the assets that you own as well as the people in your life that you want to benefit. You get married, have children, buy a house, have grandchildren, have a pension or open retirement accounts… the list goes on and on.  You may have created a basic will at some point, even a do-it-yourself will, without the help of an estate planning attorney.  But as your life changes and assets grow, an attorney with expertise in estate planning will help you understand strategic estate planning methods that better fit your situation and provide additional protections and benefits for beneficiaries than simply passing property through a will.

Your will and other estate planning documents should be reviewed whenever you have a life changing event.  But even without big life changes, it’s best to review your documents with a Virginia estate planning attorney every three to five years. Laws are ever changing and you want to be sure that your documents remain effective and efficient at expressing your wishes.

What events should prompt my estate planning documents to be updated?

  • Marriage
  • Divorce
  • Birth or adoption of a child
  • Children reaching the age of majority (18)
  • Death of a spouse
  • Death or incapacity of a beneficiary
  • Buying or selling a primary residence or vacation home
  • Buying or selling a major asset (boat, plane, collectibles)
  • A significant change in your estate’s value
  • Change in your executor, guardians, trustees, agents, or personal representatives
  • Receipt of an inheritance
  • Medical needs
  • Changes to state law
  • A move to a new state
  • Starting a new business
  • Planning for charitable or other organizational contributions

In addition to the list above, everyone should have all their estate documents reviewed before the age of 70 if you have an IRA or 401(k) that requires you to begin taking distributions at the age of 70 ½.

How do I change my will or trust?

There are several different ways to amend or update your estate planning documents and much depends on how big a change you are making.  It is best to consult an estate planning attorney when making changes to executed documents to ensure that all legal formalities are followed and the changes being made are effective.

Codicil:  A codicil is the formal way to amend your will.  It is a way to add a new provision to or revoke a part of your existing will.  Adding a codicil to your will can do a number of things, such as revoke the inheritance of a previous beneficiary or establish a new beneficiary for inheritance. However, you should not attempt to make substantial changes to your will through a codicil. Once the codicil is written, signed, witnessed, and dated, it should be kept with the original will.

Memorandum of Tangible Personal Property:  One issue you’ll want to consider when you’re writing your last will and testament is how you want your personal effects distributed, including things like jewelry, collectibles, antiques, artwork, china, silver, furniture, etc. In other words, who gets the grand piano and which daughter or daughter-in-law gets your diamond engagement ring.  If you have specific people in mind to receive certain items, you can list them and the property you’d like them to receive in a separate written list and attach it to your will.​  Using a personal property memorandum allows you to change these bequests without worrying about all the formalities of having a codicil or amendment signed and witnessed. It’s usually far easier to simply detach an old memorandum and replace it with a new one when you want to make changes.

Revocation:  If you need to make major changes to your will, it may be more beneficial to rewrite your will than to edit or amend the existing one.  To revoke your existing will, simply state that your new will revokes any previous wills.  Then sign and date your revocation in your newly established will. It’s best to destroy all known copies of the old will so that your beneficiaries won’t be confused.

Updating a Trust:  As long as your trust is revocable, you are able to make changes at any time. An irrevocable trust cannot be changed under any circumstances.  A revocable trust can be amended, revoked, or terminated at any time and for any reason. To make a change, you simple attach a signed and dated amendment to your revocable trust. The amendment may make changes to trust property, beneficiaries, or designations.  Be sure you attach your amendments to your original trust documents in order to reflect your changes.

No matter what changes you need to make, be they large or small, the important thing to remember is an outdated will or trust means that the court must abide by your outdated wishes, regardless of the changes in your life or your current wishes.

The laws of Virginia makes it relatively easy to update a will, trust, and other estate planning documents. This is a great time to speak with an estate planning attorney to assess all your documents and how updating your will or trust, along with incorporating other estate planning documents can best provide for you and your family for decades to come.

About Melone Hatley, P.C.

Melone Hatley, P.C. is a general practice law firm based in Reston and serves the Northern Virginia area.  Our practice areas include Family Law, Divorce and Special Needs Children, Traffic Ticket Defense, DUI/DWI Defense, and Trust and Estate Law.  Our philosophy is to provide all of our clients with the highest quality legal representation, innovative legal solutions, and unsurpassed dedication to customer service.  Through our high standards, we strive to be a trusted resource to our clients.

We know from experience that a successful attorney-client relationship depends on our ability to understand your needs and objectives.  For more information about wills, trusts, and our estate planning services, contact our office today at 703.995.9900 or reach us online through our contact page.

What is the Value of a Special Needs Trust?

A special needs trust, also referred to as a supplemental needs trust, provides for a person with a mental or physical disability and allows the beneficiary to receive gifts, lawsuit settlements, or other funds and yet not lose his or her eligibility for certain government programs, including, Medicaid, Supplemental Security Income (SSI), and other state benefits.

Under current Federal law, any inheritance of more than $2,000 disqualifies individuals with disabilities from most federal needs based assistance and some state public assistance programs may also be affected.  Creating a special needs trust may be essential to protect a disabled individual’s financial future.

As the name implies, a special needs trust is not designed to provide basic support, but instead to pay for other items that cannot be paid for by public assistance funds.  This includes things like education, rehabilitation, personal care attendants, out of pocket medical and dental expenses, specialized equipment, insurance, transportation, and home furnishings.  The trust can also be used for life-enhancing items like computers and electronics, recreation, entertainment, and vacations.

The primary advantage a special needs trusts offers over a direct gift or inheritance is that the assets in the trust do not actually belong to the beneficiary and so does not jeopardize the beneficiary’s eligibility for government programs. A special needs trust holds title to property for the benefit of the child or adult who is disabled. Because you cannot leave property or cash directly to your disabled loved one, you leave it to the special needs trust.

In its simplest form, a trust is a relationship between the person supplying the trust funds, the trustee who administers the funds according to the donor’s wishes, and the beneficiary who will receive the benefits of the funds. The person who supplies the trust funds has the ability to set forth in a document instructions regarding how he or she wants the funds to be spent.

How do I choose a trustee?

The most important and often difficult issue in creating a special needs trust is choosing the trustee who will have discretion over the assets in the trust and will be in charge of spending money on behalf of the beneficiary.

You must choose a trustee who has the necessary expertise to manage the trust, including making proper investments, keeping the accounts, paying bills, and preparing tax returns. Though a professional trustee will have these skills, they may be unfamiliar with the beneficiary and his or her unique needs. If you are uncomfortable with the idea of an unknown outsider managing your loved one’s affairs, it is possible to simultaneously appoint both a professional trustee and a family member as co-trustees. Make sure that whomever you choose is financially skilled, well-organized, and, most importantly, ethical.

Remember, the trustee you choose will have discretion over the assets in the trust, and will be in charge of spending money on behalf of the beneficiary. The special needs trust lasts for as long as necessary, which usually means the trust continues until the beneficiary dies, or the funds are entirely depleted.

How do I fund a special needs trust?

A special needs trust can hold almost any type of asset, including investments, stocks, bonds, a home, other real estate properties and cash.  But a parent or parents with a child with special needs should consider buying life insurance to help fund the special needs trust for the child’s future support. What may look like a substantial sum to leave in trust today may not be enough to continue the care that the parent(s) had previously provided.

The more resources you have available, the better the support that can be provided the child. And if both parents are alive, the cost of “second-to-die” insurance — payable only when the second of the two parents passes away — can be fairly nominal.  By creating the special needs trust early, extended family and even friends have the opportunity to make gifts to the trust or include the trust in their own estate plan.

Do I need to consult an estate planning attorney?

The most important thing you need to do when creating a special needs trust is to make sure that federal and state benefits are not put at risk or invalidated, and that the beneficiary receives the individual care that the parent(s) provided when they were alive.  There are several different kinds of special needs trusts.  And since this is a complex area, it is best to consult a Virginia estate planning attorney with expertise in special needs trusts.  Your attorney will make sure that the trust protects government benefits and is customized to your child’s future needs.

About Melone Hatley, P.C.

Melone Hatley, P.C. is a general practice law firm based in Reston and serves the Northern Virginia area.  Our practice areas include Family Law, Divorce and Special Needs Children, and Trust and Estate Law.  Our philosophy is to provide all of our clients with the highest quality legal representation, innovative legal solutions, and unsurpassed dedication to customer service.  Through our high standards, we strive to be a trusted resource to our clients.

We know from experience that a successful attorney-client relationship depends on our ability to understand your needs and objectives.  For more information about special needs trusts and our estate planning services, contact our office today at 703.995.9900 or contact us online today.

Why To Revise Your Estate Plan After Divorce

Your divorce is final, assets have been divided, child support, custody, and spousal support have been determined, and you’re ready to move forward with your life.  But you’re not quite done yet.  The final step in your divorce is an appointment with your estate planning attorney. The estate plan you created with your ex-spouse during your marriage needs to be revised and updated with new estate planning documents.  If you do not update and revise your estate plan, your ex-spouse or even your ex-spouse’s new husband or wife and children may inherit your assets.

If you have a will

During your marriage, you cannot disinherit your spouse through a will. After divorce, the best way to revise a will is to simply execute a new will, and revoke your old will.  This can easily be done by shredding or burning it, or by stating in the new will that you are revoking all prior wills. Making a new will ensures that your current wishes are reflected.  This includes the persons or entities you wish to receive your estate, the person you wish to be the executor of your estate, and most importantly, the person you choose to be the guardian of your minor children and their property.

If you die and your ex-spouse is still alive, in all likelihood your ex-spouse will be awarded custody of your minor children. If both parents are deceased, or the surviving parent is determined to be unfit, the court will appoint a guardian. Though the court is not required to follow your guardianship choice, it most often will do so.  If you have sole custody of your children, and don’t want your ex-spouse to have custody if you die, you need to put your reasons in writing and attach that statement to your will for a judge to consider.

If you have a revocable living trust

As with a will, it is best to create a new revocable living trust after your divorce.  Minor children can be beneficiaries of the new trust, and your ex-spouse can be prevented from controlling their assets if you wish.  You can designate the new trust to be the beneficiary of various assets, such as pay-on-death bank accounts, transfer-on-death brokerage accounts, and life insurance policies. Even IRAs, 401(k)s, 403(b)s, and pensions can designate the trust as beneficiary, but there may be tax ramifications that you should discuss with your accountant and estate planning attorney.  If the divorce decree allows one party to remain in the family home, a trust may be used to shelter the property from creditors or a future spouse.  Depending upon your circumstances and goals, it may be necessary to set up more than one trust.

Beneficiary designations

Your spouse is probably designated as the beneficiary on your various bank and other financial accounts, life insurance policies, retirement and pension plans and social security benefits.  You will need to change the designation of such beneficiaries, or else those assets will pass automatically to your former spouse by operation of law and outside of your estate plan. As discussed above, if you are setting up a new living trust, you may want to name the trust as the beneficiary, especially if you have minor children. Otherwise, a beneficiary who is a minor will need a trustee or conservator to manage their inheritance, and the court may appoint your ex-spouse.  To make a beneficiary change you will need to obtain the necessary forms from your financial institutions, brokerage firm, or employer.

Powers of attorney

A financial power of attorney can give your agent broad powers, such as to sell your property and remove funds from your financial accounts. If you have appointed your spouse as your agent on any financial power of attorney, you should immediately execute a document revoking it and deliver a copy to all of your financial institutions. This may be done even while your divorce case is still pending. If you determine it is necessary, you can execute a new power of attorney appointing another trusted person as your agent.

Health care directives

If you have a health care advance medical directive or living will, you probably appointed your spouse to make medical treatment decisions for you when you are unable.  It is best if you revoke the document and execute new health care directives appointing a trusted person as your agent.  Again, this can be done while your divorce case is still pending. Your health care providers should be notified of the change and given a copy of the new document for your file.

Other considerations

Sometimes divorced couples remain friends and continue to trust each other on various matters. Nothing prevents you from leaving a gift to your ex-spouse in your will, or designating him or her as your beneficiary, your agent in a power of attorney, or custodian of minor children.

The important thing to remember is that you should discuss your estate plan with an experienced Virginia estate planning attorney who will help you re-evaluate your plan, prepare and execute new documents, and make sure that your estate plan is complete and nothing has fallen through the cracks. This should be done as soon as possible to protect yourself as well as minor children.

About Melone Hatley, P.C.

Melone Hatley, P.C. is a general practice law firm based in Reston and serves the Northern Virginia area.  Our practice areas include Family Law, Divorce and Special Needs Children, Traffic Ticket Defense, DUI/DWI Defense, and Trust and Estate Law.  Our philosophy is to provide all of our clients with the highest quality legal representation, innovative legal solutions, and unsurpassed dedication to customer service.  Through our high standards, we strive to be a trusted resource to our clients.

We know from experience that a successful attorney-client relationship depends on our ability to understand your needs and objectives.  For more information about divorce and our estate planning services, contact our office today at 703.995.9900 or reach us online through our contact page.

Pet Trusts…What Happens to Fido When I’m Gone?

Your dog, cat, bird, horse, rabbit, guinea pig… are all important members of your family.  As part of the estate planning process, pet owners need to consider who will care for their pet(s) when they no longer are able to provide care themselves due to death or incapacity.  Should I leave my pet to a family member or friend? Can I support my pet financially after my death?  There are often many questions that an estate planning attorney can answer to give you peace of mind, and legal measures that you can take to ensure that your pet(s) will be taken care of in the future.

When a pet owner dies without providing specific instructions for the care of his or her pet, the pet is treated as personal property, just like furniture, jewelry, and other possessions that legally pass to the beneficiaries under the pet owners will or trust, or to the heirs of the estate if the pet owner dies intestate.  When a pet owner becomes incapacitated, their pet is often left with whomever has taken over the management of the property and finances of the pet owner.  To remedy this situation and make sure that your pet is taken care of according to your wishes, you can establish a pet trust.  Virginia code 64.2-726 Trust for Care of Animal, outlines the planning of a pet trust in Virginia estate plans.

What is the purpose of a pet trust?

A Virginia pet trust is a legal document that can direct the physical and financial care for an animal or pet after the death or incapacitation of the owner. This includes any pet that is living at the time of your trust’s creation and named as a beneficiary of the trust.  It does not include any future pets that might be acquired.  The pet trust is active from the time of your death or incapacity until the death of your pet, or death of the last pet included in the trust.  A pet trust only covers pets that are explicitly named in the trust document.  If you have multiple pets, even multiple species, they can all be covered under the same trust.

In your pet trust you will determine:

  • Who will be the trustee, or the person in charge of the trust
  • Who will be the caretaker of your pet(s)
  • The beneficiaries (pet, or pets)
  • Reasonable expenses on behalf of the beneficiaries
  • Conditions of the trust
  • Responsibilities of the trustee

The Trustee:  When establishing a pet trust, you will need to determine a “trustee” or caretaker. The trustee will manage the trust and care for your pet. This is usually someone close to you who knows and likes your pet and is willing to take on the responsibility of pet ownership.  If you do not designate a trustee, the court will appoint an administrator who will oversee the management of the trust.  The trust property can only be accessed and used as the trust specifies.  The position of the trustee is to protect the trust beneficiaries, the named pet(s), and ensure the trust is well-managed.  If no family or friends are able or willing to act as caretaker, the pet owner may seek the advice of the pet’s veterinarian with regard to an appropriate organization to provide pet care.

In some cases, the pet owner may consider designating a non-caretaker as trustee of the trust.  A trustee, who is not the caretaker, could be given the authority to enforce the trust in the event the caretaker is not acting in accordance with the provisions of the pet trust.

Virginia law operates under the assumption that your named trustee is someone you will trust with the financial and physical responsibilities of caring for your pets.  Because of that, the trustee will not be subjected to the reporting, accounting, or appointments of court maintenance.

Funding the pet trust:  The funding of a pet trust will depend upon the life expectancy of the pet, the standard of pet care desired, and the estimated cost of veterinary care, food, and other appropriate expenses.  You will need to review your estate and determine which assets will be included to fund the trust.  Assets may include property that is accumulating income like stocks and bonds, assets from the sale of your estate, or money that has been set aside for the purpose of funding your trust.  Any property not included or used by the pet trust will be redistributed within your estate.

Standard of Pet Care:  A pet owner also may wish to include specific instructions within the trust detailing the standard of pet care to be provided.  This may include grooming, housing, feeding, veterinary services, and even things like exercise and socializing.  In addition, a pet owner may wish to clearly set forth the circumstances when surgery and other procedures, including euthanasia of the pet is appropriate, if ever, and provide guidance for the proper disposition of the remains after the death of the pet.

Trustee compensation:  The pet trust may also be a source of income for the caretaker that you designate to take responsibility for your pet.  Assets within the trust may compensate the trustee and caretaker you appoint (if they are not the same person.) This compensation acts as incentive for the trustee and/or caretaker to continue caring for your pet(s) as you wished.

Termination of the Trust

When all of your pets that are covered by the pet trust die, the trust assumes the final expenses. The funeral, burial, cremation, or other end of life expenses are all paid by the trust.  The trust is terminated at the death of the last pet named under your Virginia pet trust. The remainder of any assets in the trust then reverts back to your original estate.

Losing you can be completely life-altering for your pets and it’s important to have a plan in place. Knowing who will care for your pets when you can no longer take care of them will give you peace of mind.  Now is the time to consult an estate attorney about establishing a trust for your pets.

About Melone Hatley, P.C.

Melone Hatley, P.C. is a general practice law firm based in Reston and serves the Northern Virginia area.  Our practice areas include Family LawDivorce and Special Needs Children, Traffic Ticket Defense, DUI/DWI Defense, and Trust and Estate Law.  Our philosophy is to provide all of our clients with the highest quality legal representation, innovative legal solutions, and unsurpassed dedication to customer service.  Through our high standards, we strive to be a trusted resource to our clients.

We know from experience that a successful attorney-client relationship depends on our ability to understand your needs and objectives.  For more information about pet trusts and our estate planning services, contact our office today at 703.995.9900 or reach us online through our contact page.

The Importance of Advance Medical Directives

An advance medical directive, also sometimes called an advance health care directive, or living will is a legal document that gives you control over who makes medical decisions during times when you cannot make them for yourself because of incapacity, serious illness, or an accident.  These directives allow an individual, known legally as the declarant, to specify what his or her health care wishes are, how they should be carried out, and who can make decisions on their behalf.  This relieves a great deal of stress both from family members and physicians as the medical decisions can be made in advance by the patient themselves.  If you don’t have an advance medical directive and name someone you trust to oversee your care, important health care decisions may be placed in the hands of family members, doctors, or even possibly judges, who may know very little about you, your wishes, and what type of care you would want.

In Virginia, advance medical directives are authorized under the Virginia Health Care Decisions Act.  To be legally binding, an advance medical direct must be in writing and signed by the declarant in the presence of two witnesses who also sign the directive.

An advance medical directive should include the following three sections:

  • End of life care instructions: what treatments the declarant does or does not authorize with regard to his or her health care
  • Appointment of a healthcare agent or third party to enforce the directive and make healthcare decisions for the declarant when he or she can no longer make them.
  • Decisions as to anatomical gifts for organ and tissue donation.

What are the benefits of advance medical directives?

There are several benefits to creating an advance medical directive.

  • You can make your own health care decisions about your eventual care in advance.
  • Your directive and agent will speak for you and be your voice once you no longer can speak for yourself.
  • You can update, edit, or change your directive at any time.

Making decisions about life-prolonging medical treatments, such as hydration, feeding tubes, CPR, ventilator or respirator assistance, dialysis, and even antibiotics, when you are well and have time to think and consider what type and how much care you would want if incapacitated, in a coma, or terminally ill will give you peace of mind.  You may choose some, all, or no life prolonging treatments or extraordinary measures, or opt to receive pain medication and only palliative care.  And, you can specify certain treatments for a finite period of time, after which, if your condition does not improve, treatment should be stopped.

Your advance medical directive only takes effect when you cannot speak for yourself, so again, you must plan carefully about what you want your directive to say when it takes the place as your spokesperson. As long as you are competent, regardless of your condition, you will make your own decisions. When you are not, your advance medical directive and agent will guide the decisions used in your treatment.

Your directive can be changed at any time. If your health situation or personal beliefs change, you can edit, update or amend the details of your advance medical directive.  Be aware that this is a legally binding document and must be updated by legal means if you change your mind about all or part of your future medical treatment.

Who should I appoint as my agent?

An advance medical directive is also used to appoint an agent to carry out the declarant’s wishes, or otherwise to make decisions as to the declarant’s medical care.  Most people name a spouse, partner, close relative, or even a friend as their agent.  Under Virginia law, your agent must be at least 18 years old.  Your agent should, regardless of their own personal beliefs, be your advocate and be willing to enforce your advance medical directive and health care wishes.  Though your agent does not need to be a resident of the Commonwealth of Virginia, they must be able and willing to travel to Virginia if necessary.  Your agent will begin enforcing and making health decisions for you once you lack the capacity to do so for yourself, and must do so in person.

Who should have a copy of my advance medical directive?

Once you have created your advance medical directive, the declarant should inform his or her primary physician and a copy of the directive should be included in your medical records.  You should also make sure that copies are included in the files of specialists including cardiologists, oncologists, etc.  It is also a good idea to give a copy to your agent, so that it can be reviewed and discussed, if necessary.  You may want to share the details of your advance medical directive with your spouse, children, and other close relatives.  And as with all estate planning documents, your attorney should keep a copy in your legal file.

Get help from an estate planning attorney

An advance medical directive is not a one-size-fits-all document.  Meet with an experienced estate planning attorney to ensure that your final wishes as to medical care are carefully detailed so that they can be carried out as you planned.  In this way, you can make sure that your family members do not undergo the strain of trying to make key medical decisions on your behalf, during a stressful time.  In Virginia, Melone Hatley, P.C. is here to help. We offer a full range of estate planning services, including wills, trusts, powers of attorney, living wills and advance health care directives, estate tax planning, guardianship and conservatorship, and contested estate matters.

About Melone Hatley, P.C.

Melone Hatley, P.C. is a general practice law firm based in Reston, and serves the Northern Virginia area.  Our practice areas include Family LawDivorce and Special Needs Children, Traffic Ticket Defense, DUI/DWI Defense, and Trust and Estate Law.  Our philosophy is to provide all of our clients with the highest quality legal representation, innovative legal solutions, and unsurpassed dedication to customer service.  Through our high standards, we strive to be a trusted resource to our clients.

We know from experience that a successful attorney-client relationship depends on our ability to understand your needs and objectives.  For more information about advance medical directives and other estate planning services, contact our office today at 703.995.9900 or visit our website: www.MeloneLawPC.com.

DIY Estate Planning…Is it Worth the Time and Trouble?

The Internet has made it very easy to find answers and instructions on just about anything, including how to develop a do-it-yourself (DYI) estate plan. There are websites and software packages, along with DIY estate planning books and kits that tell prospective customers that you no longer need an attorney to create a will, trust, durable power of attorney, or advance health care directives.  If you follow the simple instructions you’ll create your own estate planning documents that will be both legal and enforceable.

Though you’ll often hear the argument that it’s inexpensive and easy and that a DIY estate plan is better than nothing at all, the consequences of not fully understanding the process and making a mistake to save a few dollars are often too great.  As you consider your options, here are a few serious potential pitfalls of creating a do-it-yourself estate plan.

Valuable attorney advice…speak with an expert

Do-it-yourself wills and trusts, as well as other documents, lack the most important component of a solid estate plan… the advice and counsel of an estate planning attorney.  DIY estate planning sources provide forms, but don’t provide legal advice.  If you read the fine print, they make it clear that they are prohibited from giving legal advice and are never a substitute for an attorney.  Your estate plan involves much more than the production of documents.

The most crucial aspect of any properly created estate plan involves an in-depth discussion about not only your estate, but also your specific wishes and goals.  A good estate planning attorney is both an investigator and an educator.  It’s impossible to know, without legal knowledge and experience, what the best solution is to your individual situation. The actual documents produced are simply the tools used to put a plan that has been specifically tailored to your circumstances, wishes, and goals, into effect.

Estate law is determined by each state and the laws that govern an estate are determined by the state where the person resides when he or she dies. Individual state laws vary greatly on a lot of estate issues, including requirements for executing estate planning documents. Some online companies offering DIY estate planning documents assure consumers that these documents comply with requirements of the maker’s state of residence.

But that may not be the case.  An estate plan that is completed by a Virginia estate planning attorney will be written to comply with all current state laws.

Do you really want a one-size-fits-all plan?

Though online estate planning software may produce a legally enforceable document, it is not flexible. It’s a one-size-fits-all, fill-in-the-blanks solution. It minimizes many of the available estate planning options that might be best for your situation, in order to create a process and document that is easy for you to comprehend and follow.

The simplicity built into the online process usually cannot and does not address many of the more complicated, yet common areas that may be specific to your circumstances.  For example, the estates of families with young children are much different than those with adult children no longer living at home, or those of families with a special needs child.

The software treats all these scenarios the same way and asks the consumer to make estate planning decisions, often without the expertise or understanding to do so wisely.  Simply put, DIY estate plans do not have effective tools that protect the estate or the beneficiaries.

It’s only as good as the person filling in the information

An estate planning attorney has a legal education and continuing education courses, as well as years of experience working with different kinds of clients with many different needs and wishes.  An online question and answer form can’t answer a client’s questions or impart legal information or advice.  It is not individualized and treats your needs and wishes exactly the same as everyone else who uses the program.   Obviously, this is no substitute for the expertise of a knowledgeable attorney who will ask the right questions and create an estate plan for your unique situation.  Remember, the unintended mistakes made today, will likely impact your children and grandchildren in the future.

Are you making mistakes that jeopardize your estate plan?

Do-it-yourself software is typically set up to only handle simple estates and can’t deal with even the most common complexities such as children from a prior marriage, property that has appreciated in value resulting in capital gains, or estates that are large enough to be subject to estate taxes. In addition, DIY solutions generally fail to take advantage of sophisticated estate planning strategies because a one-size-fits-all package can’t account for an individual’s unique circumstances.

A DIY estate plan is made by going through an online questionnaire and there is always the risk of inadvertently making an error because you don’t understand the instructions or legal terms, give an incomplete or inaccurate answer, or even skip a question that doesn’t seem relevant to you. If any of those things happen, one of two results may occur: either your estate plan doesn’t do what you think it does, or it could be invalid in part or in its entirety.

The result is that the documents you create could include omissions or contradictions, be invalid, ineffective, or contain legal language that has consequences which you never intended.  All of this can complicate the administration of your estate.  Since your DIY estate planning documents are not reviewed by an attorney, you might not know if that is the case during your lifetime. But unfortunately at your death, your beneficiaries will find out and may suffer the lasting and potentially expensive consequences of your mistakes.

Make sure your final wishes are carried out

Saving time and money by making an online DIY estate plan may sound like an appealing idea, but there are many pitfalls and risks. The best way to ensure that your wishes for taking care of your loved ones and distributing your property are carried out after your death is to consult with a knowledgeable and experienced estate planning attorney. In Virginia, Melone Hatley, P.C. is here to help. We offer a full range of estate planning and probate services including wills, trusts, powers of attorney, living wills and advance health care directives, estate tax planning, guardianship and conservatorship, and representation for contested estate matters.

Estate planning is rarely black and white.  There are many gray areas that are important. A DIY program may not take some of these into account.  If you’re “filling in the blanks,” or even skipping a question or part of the form you don’t feel is relevant, you may not know what you’re missing.  Even mistakes in legal language can be costly.  Estate law is governed by the state where the person resides when he/she dies, and individual state laws vary greatly on estate issues.

The Commonwealth of Virginia has very specific requirements on how to execute estate planning documents, including who must witness these documents and rules surrounding a self-proving affidavit.  A small oversight now could cause huge, and often expensive problems for your loved ones later.  Failure to follow statutory formalities for execution may invalidate the entire will.

Probate or non-probate assets

Some assets pass to your loved one through your will or trust, while other assets pass by law through specific beneficiary designations.  Items like savings bonds, certificates of deposits (CDs), life insurance, retirement accounts, and certain types of bank accounts can be designated to automatically pay at death.  A knowledgeable estate planning attorney will review all your assets and advise you on how to pass each most easily and inexpensively to the beneficiary.  Properly drafted estate planning documents take both types of assets into consideration to ensure that your estate plan follows your wishes.

Drafting your own estate planning documents through a do-it-yourself program,may be a risky endeavor.  Though certainly less expensive, a DIY solution takes the most important element out of the process: the knowledge and advice of an experienced estate planning attorney with specialized education and legal training.

About Melone Hatley, P.C.

Melone Hatley, P.C. is a general practice law firm based in Reston and serves the Northern Virginia area.  Our practice areas include Family LawDivorce and Special Needs Children, Traffic Ticket Defense, DUI/DWI Defense, and Trust and Estate Law.  Our philosophy is to provide all of our clients with the highest quality legal representation, innovative legal solutions, and unsurpassed dedication to customer service.  Through our high standards, we strive to be a trusted resource to our clients.

We know from experience that a successful attorney-client relationship depends on our ability to understand your needs and objectives.  For more information about our estate planning services, contact our office today at 703.995.9900 or reach us through our contact page.

Probate: The What, When, Where, Why and How of Probate

We’ve all heard the term probate, or that a will has to go through probate.  But, what exactly does the term mean, what is involved once probate begins, and how does it affect beneficiaries?

Probate is the official way that an estate gets settled under the supervision of the court.  In the Commonwealth of Virginia, the Circuit Court or, in most cases, the clerk of that court in which the deceased person lived, has jurisdiction.  The purpose of probate is to prevent fraud after someone’s death and to prove before the court that the document offered as the last will and testament of the deceased is genuine.  Probate gives someone, usually the surviving spouse, adult child, or other close family member or friend, who is named as the executor of the estate the power to:

  • collect estate assets and keep them safe
  • have the assets professionally appraised, if necessary
  • pay bills, debts, and taxes
  • distribute the remaining property to the beneficiaries as the will directs.

If probate is necessary, the executor starts the process by going to the appropriate circuit court. The executor will need:

  • the original signed will
  • a certified copy of the death certificate
  • an estimate of the value of all estate assets
  • a list of heirs

There will be a probate tax due based on the estimate of the value of the assets in the estate. There are also other court fees to open probate. All of these fees can be paid from estate assets.  The circuit court or clerk will give the executor a certificate of qualification. This document affirms that you are the estate’s personal representative and have legal authority over the deceased person’s assets.

An original will, not a copy, must be presented to the clerk.  The clerk will review the document and make sure that it meets all requirements under Virginia law, and if so, the document will be recorded by the clerk.  A valid will must be in writing, signed by the deceased, known as the testator, or some other person in the testator’s presence and at his or her direction.  The signature must be made in the presence of at least two witnesses.  A hand-written will, also called a holographic will, signed by the testator is valid under Virginia law.  If the executor presents a hand-written will for probate, the handwriting must be established as that of the testator by two disinterested witnesses.  A will may be self-proving if a properly executed affidavit is attached with the will. The clerk will accept a self-proving will for probate without further proof by witnesses.  If the will is not self-proving, at least one of the two witnesses who have signed the will must appear at the time of probate.

Depending on the size and complexity of the estate, probate can be a lengthy and sometimes complicated process.  Final distribution of the estate can take from as little as 6 months to several years.

What if there is no will?

If there is no will, or the person named in the will as executor isn’t available or chooses not to serve, the probate court will appoint an administrator. The administrator does the exact same job as an executor. Under Virginia law, anyone who will inherit from the deceased person can be appointed and agree to become the administrator. Both executors and administrators are commonly referred to as personal representatives or fiduciaries.  If there is no will, the administrator will distribute the estate as directed by Virginia intestate law.

Are there any assets that do not have to go through probate?

Not all assets in an estate must go through probate.  Some assets transfer automatically to beneficiaries with no probate required.  These include:

  • assets the deceased person owned with someone else in joint tenancy or tenancy by the entirety which pass automatically to the surviving owner
  • assets that have a designated beneficiary outside of the will, for example, IRAs or 401(k) plans, for which the deceased person named a beneficiary
  • payable-on-death and transfer on death bank accounts
  • life insurance proceeds or pension benefits that are payable to a named beneficiary
  • assets held in a revocable living trust
  • “Small estates” – If the value of the estate doesn’t exceed $50,000, there’s a simple affidavit procedure and it doesn’t require court supervision to settle.

Closing the Estate

After debts and taxes are paid, the fiduciary distributes the assets to all beneficiaries, following the instructions in the will. If there is no will, Virginia law dictates who inherits. When the court is satisfied that all debts and bills have been paid, tax returns have been filed, and all assets have been distributed, it will close the estate and relieve the personal representative of his or her duties.

Consult an estate planning attorney for help

Unless you are knowledgeable about wills, trusts, and probate, it may be helpful to seek legal advice before probating a will.  An attorney can review the will and give you direction.  An attorney can also advise you as to whether probate is necessary based on the circumstances of the estate.  If the will is not self-proving, an attorney can assist you with the requirements for witnesses, or if witnesses are not available, alternative procedures for admitting the will to probate.  In a case where the original will is lost or if there is a dispute over whether you have a valid will of the testator, an attorney can provide advice on appropriate actions.

About Melone Law, P.C.

Melone Law, P.C. is a general practice law firm based in Reston, and serves the Northern Virginia area.  Our practice areas include Family Law, Divorce and Special Needs Children, Traffic Ticket Defense, DUI/DWI Defense, and Trust and Estate Law.  Our philosophy is to provide all of our clients with the highest quality legal representation, innovative legal solutions, and unsurpassed dedication to customer service.  Through our high standards, we strive to be a trusted resource to our clients.

We know from experience that a successful attorney-client relationship depends on our ability to understand your needs and objectives.  For more information about trusts and estates, wills, and probate, contact our office today at 703.995.9900 or visit our website: www.MeloneLawPC.com.

Case Study: How Does a Revocable Living Trust Work?

In our last blog, we discussed revocable living trusts and their benefits.  In this blog, we’ve created a simple case study to illustrate the value of a living trust and estate planning, and how it is used once the grantors have gotten older, incapacitated, or have died.

Meet Jim and Susan.  They have been married for over 45 years and are now in their 70s.  They own their home, outright, and other possessions they’ve accumulated over the years (furniture, jewelry, artwork, etc.)  They own a small beach house in Bethany Beach, Delaware.  They also have bank accounts, retirement accounts, life insurance policies, and a small investment portfolio.  They both receive monthly Social Security benefits, and Jim also receives pension benefits now that he’s retired.  Their estate does not exceed the Federal Estate Tax Exemption ($5,490,000 in 2017.)

Working with an estate planning attorney, Jim and Susan executed a revocable living trust when they were in their late fifties and at that time transferred all of their assets into the trust.  They named themselves as co-trustees so that they both would have control of their assets, and named their son, John, as successor trustee after their death or incapacitation to continue to manage their assets and/or disperse them to their beneficiaries.

Their estate planning attorney helped them complete their estate plan by drafting a living will and advanced healthcare directives for each of them so that their personal wishes regarding life support and healthcare can be followed.  They also each have a durable power of attorney naming their spouse as agent.

Incapacitation and death

Jim developed Alzheimer’s disease in his late 60s.  He can no longer make decisions for himself and Susan can no longer take care of him.  Susan, with the help of Jim’s doctor, decided to put Jim in a nursing home.  Because of the healthcare directive, she will not have to go to court to be named his legal guardian and will be able to make decisions about his personal care.  Susan also became the sole trustee of the trust without any court action being required and can use the trust assets for Jim’s care. Between her authority in the power of attorney and as trustee, Susan does not need to petition the court to be Jim’s conservator and she can make financial decisions on his behalf right away.

Two years later, Susan had a stroke and could no longer take care of Jim’s or her own affairs.  Her son, John, becomes successor trustee without having to petition the court for guardianship or conservatorship of either parent, and uses the assets in the trust to take care of both Jim’s and Susan’s needs.

After the death of his parents, John took care of their funerals and related expenses, paid all final bills, and filed the appropriate income tax returns.  Within a month or so, John distributed the estate per the terms outlined in the trust documents.  No probate or other legal proceedings were required or necessary, even for the out of state beach house in Delaware.

Advantages of the Living Trust

  • Though the upfront costs of setting up the trust and funding it are usually more expensive than a last will and testament, the savings of numerous court proceedings and probate, later on, may make it worthwhile.
  • When the trust is prepared correctly, it avoids all probate. It even avoids multiple probate proceedings in different states where real estate or other assets are located.
  • By avoiding probate, money and other assets in the living trust are almost always distributed sooner to the beneficiaries.
  • The trust is a private document. Some financial institutions may require or request copies of the trust agreement before complying with its terms, but there are no public aspects to a trust as there are with a will and probate.
  • You will save attorney’s fees and costs, as well as time.  The successor trustee does not have to deal with probate or court appearances for guardianship or conservatorship proceedings when the grantor(s) become incapacitated or die.
  • A trust is flexible and can be changed or even cancelled at any time. As long as the grantor’s intentions can be expressed in words, they can be embodied in a trust.
  • A trust is easy to amend. It can be amended by a document signed only by the grantor. No witnesses or other formalities are necessary as with a will or codicil.
  • Copies of a trust document can be used as a substitute for a lost original. If an original will is lost or misplaced, the law presumes that the will was revoked, and someone will have to petition the court to use a copy in place of the original will. If the copy is not validated, the estate will be distributed to the beneficiaries according to the Commonwealth of Virginia law.
  • A trust is more difficult to contest than a will or codicil, because the grantor not only signed the documents but acted on them.

About Melone Hatley

Melone Hatley is a general practice law firm based in Reston, and serving the Northern Virginia area.  Our practice areas include Family LawDivorce & Special Needs Children, Traffic Ticket Defense, DUI/DWI Defense, and Trust & Estate Law.  Our philosophy is to provide all of our clients with the highest quality legal representation, innovative legal solutions, and unsurpassed dedication to customer service.  Through our high standards, we strive to be a trusted resource to our clients.

We know from experience that a successful attorney-client relationship depends on our ability to understand your needs and objectives.  For more information about estate planning and revocable living trusts, contact our office today at 703.995.9900 or visit our website:  www.MeloneLawPC.com.

Estate Planning: Is a Revocable Living Trust a Good Option?

A revocable living trust in Virginia, also called a living trust or inter vivos trust, has become a popular estate planning option because of the many benefits it offers.  A revocable living trust is flexible and the terms can be changed at any time, or the trust may be cancelled entirely. Currently, about 20% of Americans have living trusts as part of their estate plans.  A living trust may help you avoid the costs and aggravation of probate, preserve privacy, and offers ease of transition of your assets to your beneficiaries after you die.

What is a Revocable Living Trust?

A living trust is a legal document that holds the assets of the trust creator, known legally as the grantor, in a trust for his or her benefit during their lifetime. When creating the revocable trust you will need to name a trustee who has the responsibility of managing the trust assets. You can select anyone, but the most common practice is to name yourself so that you can maintain control of your assets while living. You will also need to choose a successor trustee to step in after your death or incapacitation to continue trust management and distribute the trust assets to your beneficiaries according to your directions. The successor trustee can be a relative, friend or an organization like a financial institution.

What are the benefits of a living or revocable trust?

Control of your estate

A living or revocable trust provides control of your estate, even after death, by setting out a clear plan to deal with all of your assets.  Although the assets are technically owned by the trust, you continue to use them as you normally would. You live in your home and spend your money as you wish. After your death, your estate will be handled exactly as you wish since the assets stay in the trust until the dates you have chosen for distribution to your beneficiaries. You may choose specific ages for beneficiaries to inherit or even set up a monthly allowance or other schedule.  You can provide extended care for a loved one with special needs and protect specific assets from others.  If, on the other hand, you pass your assets with a will, they are distributed once probate has concluded.

A Living Trust Avoids Probate

Probate is the court-supervised process of distributing a deceased person’s estate. Depending on the size and complexity of the estate, as well as the assets and individuals involved, probate may become a lengthy and costly process which can delay distributions to your beneficiaries and decrease the amount that they inherit.

The Commonwealth of Virginia has not adopted the Uniform Probate Code, so its probate procedures are lengthy and may be complicated. A trust avoids all of this red tape and allows you to pass your assets to your beneficiaries immediately upon your death, if you wish, unlike a last will and testament which cannot distribute assets until probate has concluded.

By placing your property in a living trust, you can avoid probate and those additional costs. Instead of the court supervising the distribution of your estate, the successor trustee distributes assets according to the trust creator’s instructions. This can mean a faster distribution to your heirs.  Probate may take months or years to resolve. Distribution by the successor trustee may only take a matter of weeks.

The avoidance of probate may be particularly helpful if you own property in other states, like a vacation home, as it would pass directly to your beneficiary through the trust and not be subject to probate in another state.

A note about cost savings:  Though there may be savings in probate costs, the initial up-front costs of setting up and funding a living trust are more expensive than creating a last will and testament.  A revocable living trust does not protect your assets from federal estate tax, Medicaid spend down, or creditors.

If you become incapacitated

If you become ill or incapacitated and can no longer take care of your own financial affairs, the person you have chosen as successor trustee can step in without the intervention of a court. All of your assets are already owned, controlled, and managed by the trust. In this way, you can avoid a conservatorship proceeding.  While a durable power of attorney can be rejected, a trust cannot.  Your financial life is protected by the trust.

A living trust protects your privacy

A living trust protects your privacy since its terms, assets, and beneficiaries are never disclosed to the public. Unlike a will, a living trust is a private document between the parties involved, and does not become part of the public record. No one can later go and search public records to find out more about the distribution of your estate.  A will is a public record, so everything in it becomes public as well.  Avoiding the probate process will help protect your privacy.

A “pour-over” will

Even if you have a revocable living trust, it is still important to have a last will and testament.  When you have a living trust and a will, the will is often referred to as a pour-over will because it’s designed to catch any unfunded property or other assets that have not been transferred into the trust.  A will may also outline your final wishes, something you generally do not put into a living trust document.

A pour-over will is a safety net.  It simply states that any assets that have not been transferred into your revocable living trust should go there when you die.  In other words, it names your trust as the beneficiary of any property that it does not already hold or that does not pass directly to a living beneficiary through other means, such as a beneficiary designation on a retirement account or life insurance policy.  A pour-over will requires probate.

If you don’t include a pour-over will in your estate plan, any property not funded by your living trust, will pass to your heirs according to Virginia intestacy law. This means that if you forget to fund your new vacation home into your trust and you don’t have a pour-over will, or any other type of will that directs the property to someone specific, the Commonwealth of Virginia will decide who inherits the home based on its laws.

In addition, if minor children are involved, the pour-over will can also be used to name potential guardians.  This is most important if you are a single parent or if your spouse is unable to provide the care your children will need.

Contact Melone Hatley

Having a comprehensive estate plan in place can ensure you minimize court costs, legal fees, and tax implications for you and your loved ones.  If you are considering a revocable living trust for your estate, speak with a knowledgeable and experienced estate planning attorney to learn more about the benefits and disadvantages of a revocable living trust on your life, assets, and family.  Call today at 703.995.9900 to set up a consultation.

Do I Have To Pay Spousal Support?

Spousal support can be a major aspect of divorce cases in Virginia. The court may order temporary support while the case is pending and may order time-limited or even permanent spousal support at the end of the case.  Spousal support, also known as alimony or maintenance in other states, is not to be confused with child support or equitable distribution (the division of assets).  The amount and length of time one may pay or collect spousal support depends on the circumstances surrounding each marriage and divorce.

A couple may decide to enter a spousal support agreement on their own or have an order dictated by the court.  In either case, the advice of an experienced and knowledgeable spousal support attorney will be to your advantage.

How is spousal support determined?

Unlike child support, the Commonwealth of Virginia does not have a statewide formula for determining either the amount or duration of spousal support.  The basic consideration for determining who pays, how much, and the duration of support is based on the recipient spouse’s financial need balanced against the other’s ability to pay.

Fairfax County does use guidelines, similar to child support guidelines, to determine temporary or “pendente lite” support: the support paid by one spouse to the other during the period after filing until the divorce is final.  Nevertheless, depending on the judge and the jurisdiction, circuit courts in Virginia may look to these local guidelines for assistance in determining a proper spousal support amount and many judges will use these guidelines as a starting point in evaluating spousal support.

Factors affecting spousal support in Virginia

Courts consider a number of factors in order to grant a fair spousal support agreement, including those listed in Virginia Code 20-107.1. While not an exhaustive list, here are some of the most common factors reviewed by family court judges:

  • Length of marriage
  • Standard of living
  • Income of both spouses including property and assets
  • Minor children and their ages
  • Age and health (physical and mental) of both spouses
  • Earning potential of each spouse
  • Current living expenses
  • Financial support and contributions each spouse made to the other’s education and career during the marriage and to the well-being of the marriage
  • Potential to receive inheritance or other assets
  • Retirement benefits
  • Financial obligations of each spouse
  • Time needed for dependent spouse to seek employment or earn the qualifications needed to obtain gainful employment
  • Tax consequences to each party

Types of spousal support in Virginia

Temporary spousal support:  This type of support is also referred to as pendente lite.  Temporary support is usually requested and granted during the pendency of the divorce case. Its purpose is to help the recipient spouse maintain their standard of living during the divorce process.  Keep in mind that the amount of temporary support awarded has no bearing on the type or amount of spousal support granted or its duration in the final divorce decree.

Permanent spousal support:  Permanent support is what most of us think of when we think of spousal support or alimony. However, it has become less and less common. Permanent spousal support is indefinite in that the payments will continue until one spouse dies or the dependent spouse remarries or lives with a new partner.  Typically this type of support is granted after a long marriage when the dependent spouse is unable to work due to age or health, or has little chance of finding gainful employment.

Rehabilitative spousal support:  Rehabilitative support has some similarities to permanent support but differs in that it is for a finite period of time. Its purpose is to provide for a dependent spouse until he or she is able to become self-sufficient. It accounts for the time the receiving spouse needs to gain new skills or education and find employment.  Rehabilitative spousal support is not indefinite and has a set date for termination. The court looks at the dependent spouse’s specific case. For example, an agreement may be made for the dependent spouse to receive support until the children enter high school or for a period of months or years to allow for time to obtain education and find employment.

Lump sum spousal support:  Support is often paid out over a period of time in monthly installments. However, paying the agreed amount in a lump-sum may be an option in some cases. It may be agreed upon as a settlement instead of dividing property or assets.  There are some benefits of taking a lump sum. When accounting for inflation, the money you receive all at once may have a greater value than the money you receive in future installments. It also gives you the opportunity to invest or start receiving interest on the money awarded. You won’t have to worry about missed payments or enforcing court orders if your spouse refuses to pay at a later date. However, you should discuss potential tax implications with your attorney, accountant, and/or financial advisor.

When Can Alimony be Barred in Virginia?

Adultery by one spouse will usually, although not always, bar the adulterer spouse from receiving spousal support.  However, there are many caveats to this, and proving adultery can often be very difficult. If you believe this may apply to your situation, you should consult an experienced Virginia family law attorney.

Contact Melone Hatley

Finally, remember that an experienced family law attorney will be able to help you reach the most favorable outcome, determine the type of spousal support best suited for your situation, and help you obtain it. Our attorneys can help protect your interests and well-being. To discuss your case and how to proceed, contact Melone Law today at 703.955.9900.

Should You Make A Trust For Your Kids?

When it comes to estate planning, most families have the same objectives: to provide income for their children or other descendants. Parents want their children to continue having the sa
me comfortable lifestyle and the freedom to pursue their education and career objectives. But what happens if your children are still under 18? What happens if they are 18?

For children under 18 the court will appoint a guardian to act as the children’s custodian. That individual may also have the authority to manage their inheritance. A guardian will have to post a bond with the court and make reports to the commissioner of accounts office. For children over 18 they will simply receive their inheritance outright when the estate is settled.

Now, many children may understand and recognize that the funds are meant to be used for their health, education, and welfare, but if they need a car, why not a Range Rover? If they are going to college, why not an international program or expensive private school? How can you be sure that your assets are utilized in the best way possible to promote your children’s success after you are gone? The answer, most often, is through a trust.

In establishing a trust for the benefit of your children you have several different options. Some of the most popular choices are to either set up a revocable family trust during your life that continues after your passing, or, a testamentary trust which is a directive in your will requiring a trust to be established after you pass. Both have their own benefits and drawbacks.

The Revocable Family Trust

This option allows you to receive the benefits of the trust during your lifetime. Many individuals manage their own revocable trusts, which keeps the management cost minimal. Families can transfer assets such as real estate, cash, investment accounts, and even retirement accounts into a trust during their lifetime. One major benefit of this type of trust is the ability to establish exactly what you want during your life and an easy transition after your passing.

If management of the trust becomes complicated and overly time-consuming, you always have the option to appoint an individual or corporate trustee. The trustee will manage the assets in the trust and follow the trust’s directives on making distributions. Some financial firms offer co-trustee services which provide a cost savings compared to other trustee services.

The Testamentary Trust

A few simple provisions added to your traditional will can direct that any distributions to parties under a certain age must be placed into a trust. It can direct how the trust is organized and name an individual or corporate trustee to manage the trust. In order for the testamentary trustee to be appointed, they will have to qualify with the court the same way an executor or personal representative qualifies. A testamentary trust may provide for distributions of income over a certain period of time, or it may provide for one payout once the beneficiary reaches a certain age.

Under either option the trust or the will may waive any requirement of a trustee to post bond and file reports with the commissioner’s office. You must balance any concerns over mismanagement of funds with convenience and ease of management for your guardian or trustee.

Revocable trusts and testamentary trusts can both help you achieve your estate planning goals, and provide income and support to your children after you are gone. The attorneys at Melone Hatley can help you evaluate your options and achieve your estate planning goals. Contact us for a free estate plan evaluation.

Estate Planning in Second Marriages Explained

Perhaps you are remarried, and now not only have a new spouse and a bright future, you also have a new, blended, extended family, including stepchildren. While there can be much joy involved in a second marriage and having a blended family, along with some normal bumps and bruises along the way, it is likely you now need to consider estate planning.

In most second marriages, both spouses bring different assets into the marriage, and may have completely different objectives regarding passing those assets to loved ones upon their death.

Since many times these objectives can be at odds with your new spouse—often to the complete shock and surprise of those involved—it may be time to discuss such matters openly as a couple with an experienced Virginia estate planning attorney who can express your intentions in a concise manner through the legal documents which make up your estate plan.

Getting Ready to Talk to an Estate Planning Attorney

Before you make an appointment with your chosen estate planning attorney, find a quiet time to sit down with your new spouse, and talk about your financial goals, how you expect to provide for one another should tragedy strike, and how you expect the assets you brought into the marriage, as well as the marital assets you are accruing, to be left to your children and/or others.

Typically, couples find financial issues the very hardest subjects to discuss, and if you believe the conversation is simply going to be too uncomfortable, consider including a trusted financial adviser or estate planning attorney who can help take the emotion out of the subject, and facilitate the meeting.

During this conversation with your new spouse, you will need to discuss the following at a minimum:

  • Your long-term financial goals;
  • How you hope to provide for one another, biological children and stepchildren, and other family members;
  • Any contractual or financial obligations you may have with your ex, as detailed in your divorce decree, and
  • Guardianship issues for any minor children in the home.

Discussing the Tough Issues

As you discuss these issues, ask yourselves the following questions:  Who would each of you want to raise your children if you died? Would it be your children’s remaining parent, your new spouse, your parents, a sibling, or even your best friend? This can be a truly eye-opening discussion as you may find the two of you have very different ideas on guardianship issues.  If you have a child or children together, who will the two of you choose as a guardian, keeping in mind that separating children from their siblings, even step-siblings, can be very difficult for them?

Consider the assets the two of you own, as well as those each of you brought into the marriage. For example:  Suppose you are all living as one big, happy family in your house—the house you plan to leave to your biological children. Assume something happened to you—where would your new spouse and his or her children live?

Review your divorce decrees from your prior marriages and determine which assets you are contractually obligated to have your ex involved in. As an example, perhaps you were ordered to leave your ex-spouse as the beneficiary of your retirement account. How will this affect your present spouse? Take a look at your life insurance policies and any other documents which could provide a not-so-nice surprise to your current spouse in the event of your death.

As you can see, these are touchy questions, potentially fraught with serious emotions. As tough and uncomfortable as it can be, it’s important to honestly put your goals and wishes on the table, and have your new spouse do the same. Then consult with an experienced estate planning attorney who will help you work out each issue to everyone’s satisfaction. The one thing you shouldn’t do is put your estate and financial planning on a back burner.  The last thing you want to leave your loved one with is a surprise after your death.

Your ages will factor into the decisions you make as a new couple, as will the ages of any children, the assets each of you brought to the marriage and the assets you have accrued together. Finally, the marital property laws in the state of Virginia will also have bearing on the decisions you will or can make. Decide to make the tough estate planning decisions now, and let a knowledgeable Virginia estate planning attorney help you through the process.

Conclusion

The experienced and knowledgeable attorneys at Melone Hatley will assist you through the estate planning process and help you make good decisions that will protect the ones you love.  Contact us today to get started!  Knowing that your family is taken care of, in the manner you wish, will bring you and your new spouse peace of mind.

Estate Planning Documents for Adults with Special Needs

Thanks to technology and medical research, more and more children with special needs are living productive lives well into adulthood, making it more and more likely that they will outlive their parents. As a result, parents must plan for their adult children with special needs.

A significant number of these adult children with special needs will require government programs such as Medicaid and SSI as well as other programs. The problem lies in the fact that the resources considered to be available to a special needs adult can reduce, or totally eliminate, that person’s eligibility for such programs.

A carefully-crafted special needs trust can preserve the eligibility for government benefits while providing additional financial resources for the special needs adult.

Self-Settled Special Needs Trust

While a special needs trust is considered the “centerpiece” of any estate plan intended to benefit a special needs adult, there are other pertinent documents as well.

One of these is a self-settled special needs trust, which is funded with the child’s own assets, such as an inheritance, accumulated wealth or a personal injury settlement.

Any type of asset which the disabled adult has the legal right to use without restriction can be placed into a self-settled special needs trust. There are downsides to this type of special needs trust, however, so it is important to consider the following:

  • Medicaid must be reimbursed from the self-settled trust for benefits received by the beneficiary, upon the beneficiary’s death;
  • A self-settled special needs trust can limit the types of payments made by the trustee;
  • A self-settled special needs trust may, in some instances, require an annual payment be made to Medicaid;
  • The assets in a self-settled special needs trust will be taxed as though the assets still belong to the beneficiary;
  • The beneficiary must be under the age of 65 for a self-settled special needs trust to be established, and
  • If the rules of a self-settled special needs trust are not followed to the letter, the beneficiary’s eligibility for SSI or Medicaid could be compromised.

Other aspects of an estate plan which must be contemplated when considering the future of a special needs adult include the following:

  • When you are planning for the future of your child as a special needs adult, you may not want to name that child as beneficiary of your retirement plan or retirement account, as this could make them ineligible for government assistance programs. A better choice might be to leave your retirement plan or individual retirement account to another beneficiary, then make an equalizing gift of other assets to the special needs trust.
  • If you currently have term life insurance, you might want to purchase a permanent life insurance policy. While this type of policy is more expensive, you can expect this type of policy to more fully provide for your special needs adult child, no matter your age at death. Permanent life insurance does not require you to re-qualify for life insurance once the policy is in force. If you are in deteriorating health, it can become difficult to continue to qualify for a term life policy.
  • If your adult child with special needs will require some level of caregiving, you will want to make sure to have a will which has a provision appointing a guardian, as well as a successor guardian in the event of the original guardian’s incapacity or death.
  • Many estate planning attorneys will advise clients seeking to ensure the future of an adult child with special needs to have a nonbinding letter or statement of wishes regarding care and custody of the adult child during the interim, before the guardian has taken over the duties. There is usually a period of time before the payment of life insurance proceeds and the appointment of a successor guardian when everything is somewhat “up in the air.” Thus, a nonbinding letter can advise those taking care of the adult with special needs about medications, dietary restrictions, housing arrangements, and any other pertinent details.

While taking care of all of the above issues is important, as noted, a special needs trust is the backbone of any estate plan for parents of an adult child with special needs. Your Virginia estate planning attorney can offer practical short and long-term considerations tailored to your unique situation, and the nature of your adult child’s disability.

There may be others in the family, such as siblings, grandparents, aunts or uncles who want to help provide for the adult special needs child in their own estate plans, therefore the special needs trust could apply to others, in addition to the parents.

The experienced Virginia estate planning attorneys at Melone Hatley. can help parents and relatives of an adult with special needs to ensure that assets will pass to the child, but will not be considered available assets for the purpose of governmental assistance. Contact us today for a consultation.

Estate Planning Myths in Virginia & How To Avoid Mistakes

According to a Forbes article, at least 51 percent of Americans between the ages of 55 and 64 don’t have a will. That number is even higher among those between the ages of 45 and 54, at 62 percent. Perhaps one reason these numbers are so high is due to the number of myths and misunderstandings associated with estate planning. Whether due to inaccurate information from friends and family members or incomplete reports by the media, these myths can sometimes stop those who were intending to engage in estate planning from doing so. If you have any assets at all—and most everyone does—and you want to ensure you leave those assets to loved ones you choose, then it’s essential that you have an estate plan. You may have heard one or more of the following estate planning myths:

Probate is expensive and difficult. 

If your estate goes through probate, that probate could cost your heirs a considerable amount of money and can cause the process to drag on for months and months, or even years. There are certain costs associated with probate, such as court filing fees, attorney’s fees and certain miscellaneous costs, however attempting to avoid probate can also result in costs. Your Virginia estate planning attorney can tell you the pros and cons of probate as opposed to other possible options that avoid probate. Generally speaking, a simple probate can last from six to 18 months. The costs associated with the probate process are typically about 2-5 percent of the value of the estate, although this can vary significantly. For those with an estate valued under $50,000, the probate process is simple and cost-effective. Proper use of beneficiary designations can reduce or eliminate the need for any assets to pass through probate.

The government will seize all your assets if you die without a will.

This is absolutely not true. State law will dictate how your assets are divided among your heirs. Should you have absolutely no living relatives—even a third cousin twice removed—then your assets will go to the state of Virginia. You can avoid this scenario by ensuring you have a comprehensive Virginia estate plan in place.

I don’t need a Will if I have a power of attorney. 

A power of attorney loses its authority when the individual dies. Without a designated agent named as executor or personal representative, the court will need to appoint an administrator to pay your final expenses and manage distribution of the estate.

I’m married, so I don’t need a Will. 

You may not want your spouse to inherit your entire estate. Consider the possibility that your spouse may find a new partner, or have extended family, that you may not want to receive the benefit of your estate. A proper plan allows you to preserve a benefit for both your spouse as well as for children, grandchildren, or others.

A trust will significantly reduce the costs associated with probate.

While a trust does not require probate, therefore there are no direct probate costs, a trust can have a higher upfront and maintenance cost. When set up to provide financial distributions over a period of time, there will be additional tax preparation fees, and probably additional attorney’s fees as well. probate

I have a trust, so my assets are protected. 

A revocable living trust does not shield all assets from business risks, creditors, or lawsuits. Since the trust can be amended or revoked at any time, any assets held in trust are open to claims from third parties. In certain situations, an irrevocable trust can provide protection for certain assets, but several criteria must be met.

Estate taxesalso known as “death taxes”—are unfair.

You may have heard that when you die, the government will tax money you’ve already paid taxes on. While this could be true in certain instances, more often it is not. Most estate taxes are imposed on income on which you have not previously paid taxes.

By engaging in estate planning, you have protected your assets.

It is important to understand that estate planning is not asset protection, and even a family trust will not protect your assets from business risks and lawsuits.

Only the very wealthy need an estate plan.

Absolutely not true! If you have any assets at all, you could benefit from an estate plan. Furthermore, an estate plan is not only for leaving your assets to those you choose. Estate plans also ensure your finances and health care decisions will be taken care of as you would wish in the event you become incapacitated, and that your children will have a guardian of your choice in the event of your death.

You think you are too young for an estate plan.

Of course, no one ever wants to think about a tragedy happening to a relatively young person, but, unfortunately, they do occur. By the time you actually need an estate plan, it could be too late, no matter your age. Take the time now to speak with an experienced Virginia estate planning attorney at Melone Hatley to ensure those you love will be well-taken care of in the event of your death or incapacity. Contact us today to learn more.
melone hatley, p.c. logo
Speak to a Client Services Coordinator

the national triallawyers top 40

Fill Out the Contact Form Below to Send Us a Message. All Fields Are Required.

"*" indicates required fields

This field is for validation purposes and should be left unchanged.