Month: November 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 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 LawDivorce and Special Needs ChildrenTraffic Ticket DefenseDUI/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 visit our website: www.MeloneLawPC.com.

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 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 LawDivorce and Special Needs ChildrenTraffic Ticket DefenseDUI/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 special needs trusts and our estate planning services, contact our office today at 703.995.9900 or visit our website: www.MeloneLawPC.com.

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