Estate Planning During Divorce

When going through a divorce there are many variables that must be addressed; do you stay in the home, do you sell assets, do you purchase assets, are you going to be able to negotiate an agreement or will this matter be hotly contested. One of the more overlooked aspects of the divorce process is preparing your estate for the unknown.

The following are common mistakes made during the divorce process and how to fix them:

 

  • Failing to update, or have in place, a power of attorney and advanced medical directive. If you do not have these documents in place, your spouse can make decisions until you are officially divorced, which may take over a year.
    • During this time, you want to create a power of attorney and assign that role to a trusted family member; a sibling or parent would be best. You will also want to create an advanced medical directive that lays out exactly what you want to happen in case you become ill and are not able to communicate your wishes. Even if you are temporarily unconscious, or under anesthesia, your agent can step in and make decisions on your behalf.
  • You do not have a will or have not updated your will. If you do not have a will, your spouse may get 100% of your estate if something happens to you during your divorce.
    • It is important to update your overall estate plan in order to direct your assets away from your soon to be ex-spouse. You can use beneficiary designations, revocable trust, and other estate planning tools to limit the potential exposure of your estate assets.
    • After the divorce is finalized, it is important to revisit your estate planning to ensure it fits in line with your goals. If you want to leave assets to a minor child, you’ll need to have a structure in place to ensure they receive the benefit you want without the risk of control by your ex-spouse.
  • Failing to update beneficiary designations on bank accounts or life insurance claims.
    • If you have not set your beneficiary designations and something happens to you; the assets will be subject to your estate and your spouse will potentially inherit 100%
    • Beneficiary designations are some of the most important elements of your estate plan, and can make a huge difference in the cost and time involved in probate. Make sure to review your options with a trusted financial advisor and estate planning attorney.

If you haven’t considered the impact of your divorce case on your estate plan, it’s essential to speak with a family and estate attorney who can advise you of your options. Make a plan today by consulting with our office in Reston 703-995-9900 or Virginia Beach 757-296-0580, or schedule a consultation online.

COVID-19 and Your Estate Plan

As COVID-19 continues to spread throughout the United States, more Americans are facing new realities. Dealing with school closures, quarantines, and stay-at-home orders has impacted businesses and families in new ways. During times like this, more families are getting to their “to-do” lists that may have been lingering on their minds for some time. These times of uncertainty have also reminded many families of the importance of estate and financial planning.[/caption]

As the rate of infections increases, the chance of illness touching your family becomes a real possibility. Making sure everyone in your family is protected properly before anything happens is essential. This is the time to be sure your estate and financial plan are up to date and in line with your wishes, especially if you or anyone in your family is considered at “high-risk” for infection.

Essential Documents

At a minimum, everyone should have in place a basic will, advance directive, and durable power of attorney. In addition to your essential documents, you should make sure all insurance policies and other beneficiary designations are up to date. On any account where you can name a “pay-on-death” or “transfer-on-death” beneficiary, you should make sure those designations are in place and up to date. Those designations will pass automatically upon your death, outside of your will and outside of probate. This type of transfer is ideal as it avoids any potential claims from creditors against the estate and creates a smooth transfer for your loved ones.

Will

Your will can include specific gifts of personal property or other financial gifts, your funeral and burial wishes, and any guardianship preferences for minor children. The objective of any estate plan is to maximize the financial benefit for your beneficiaries while keeping the transition smooth and clear to all those involved. If your funeral and burial wishes are clear, there will be no question between your family and loved ones as to what you would have wanted.

Advance Medical Directive

Your advance medical directive allows you to choose an agent to make medical decisions on your behalf if you are temporarily or permanently incapacitated. In Virginia, your advance medical directive also includes your living will, which allows you to make decisions about life-sustaining treatments if you are ever in a terminal, unresponsive, condition. Although the decisions can be difficult to make now, it’s much easier on your family and loved ones if your wishes are clear and enforceable should the unthinkable ever happen.

Durable Power of Attorney

Your durable power of attorney allows you to choose an agent to make financial decisions and engage in financial transactions on your behalf if you are unable to manage your own affairs. You can choose to have this authority only go into effect if you are incapacitated, which is referred to as a “springing” power of attorney. Otherwise, your power of attorney gives authority to act immediately as well as during incapacity.

Creative Planning

In addition to the above documents, there are other ways to control distributions to your beneficiaries in a way that will maximize the financial benefits of your estate. For many families, one of their largest assets is their real estate, which ordinarily has to pass through probate after the owner’s death. Another option available in Virginia is the Transfer on Death Deed. This type of transfer does not create any interest in the property for the beneficiary during the owner’s life and may be revoked at any time. It allows the real estate to pass outside of the will and outside of probate to the chosen beneficiary, just like a life insurance policy or other financial account with a pay-on-death designation.

Another option for families with young children, or irresponsible adult children, is the revocable family trust. This option allows families to put assets into a vehicle, known as a trust, and control how distributions are made after their death. Beneficiaries may have certain expenses paid on their behalf and may receive distributions at certain ages or other intervals.

About Melone Hatley

Melone Hatley is a family and estate firm serving Virginia Beach and Northern Virginia. 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, contact our Reston office today at 703.995.9900 or Virginia Beach at 757.296.0580 or visit our website: www.MeloneLawPC.com.

 

How to avoid or reduce probate in Virginia

Is it Possible to Avoid Probate in Virginia?

The short answer is no.  It is almost impossible to completely avoid probate in Virginia, but you can reduce the number of assets that need to go through probate.  Many people have a negative view when it comes to probate.  It may stem from a personal experience or from horror stories you’ve heard from friends.

In Virginia, an estate will need to be probated when a person dies with property valued at more than $50,000.  So, to avoid probate, you must die with either a very small estate, or you must take steps to make sure that your assets transfer automatically to beneficiaries.

What is probate?

Probate is the process that the Commonwealth of Virginia uses to oversee the distribution of someone’s estate after death.  Its purpose is to prove that the last will and testament of the deceased is valid, the decedent’s debts and bills are paid, final tax returns have been submitted and paid, and the decedent’s property and assets are distributed to the beneficiaries, per his/her wishes. Depending on the size and complexity of the estate, probate can take as little as a few months, or as long as several years.

What can I do now to avoid probate?

  1. Consult a Virginia estate attorney: The best way to avoid probate is to work with an experienced estate attorney.  Your attorney will itemize and analyze your assets, listen to your plans, ask the right questions, and help you create the documents that will fulfill your wishes now and after you have died.
  2. Create a revocable living trust: A revocable living trust is created during your lifetime.  You transfer your assets, such as your home, vacation home, cars, bank accounts, investment accounts, etc. into the trust, and manage and use them while you are alive.  Upon your death, a named successor trustee distributes your assets to your beneficiaries per your wishes, usually within weeks.  Because legally, the trust owns the assets, your estate does not have to go through probate.  A revocable living trust is a flexible document that can be changed or even revoked at any time.
  3. Add beneficiaries to appropriate accounts: Many checking, savings, money market, retirement accounts, pensions, life insurance, and other accounts allow you to add a beneficiary directly to the account.  After your death, the money in these accounts passes directly to your named beneficiaries without having to go through probate and can be used immediately.
  4. Transfer or pay on death accounts: This is similar to adding a beneficiary on your account(s).  You can designate a person or persons to whom the account is paid upon your death.
  5. Joint tenancy with right of survivorship: To ensure that real estate does not have to go through probate, you can change your sole ownership of property to a joint tenancy with a right of survivorship and make your intended beneficiary the other co-owner of the real estate. This will enable the other co-owner to take control of the property immediately, upon your death, since the title will remain with them.
  6. Transferring property now, not after death:You may begin gifting property like jewelry, collectables, and art, as well as money, prior to your death. Since you never know how your financial situation may change in the future, it may be best not to gift significant amounts of money now.  Virginia tax laws allow you to gift up to $14,000 in assets annually to each beneficiary without gift tax collection.
  7. No Contest Clause: This does not avoid probate, but it can prevent your will from being drawn into a long and ugly probate process.  If a beneficiary contests your will, he/she will be risking their inheritance.  The no-contest clause states that if the challenge is unsuccessful, they will forfeit their inheritance.

Probate is a costly, stressful, and time-consuming process.  It can become burdensome to your loved ones, especially since they may still be grieving.  And, it can be difficult for a person with a full-time job to devote the time and energy needed to deal with lawyers and the court.  The fees accrued for legal representation and administrating the estate can grow quickly and must be paid in full before any distribution of the estate to your beneficiaries.  That may mean that assets won’t go to beneficiaries, but will need to be liquidated to cover fees.

About Melone Hatley

Melone Hatley is a general practice law firm and serves Virginia Beach and 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 probate and estate planning, contact our office today at 703.995.9900 in Northern Virginia or 757.296.0580 in Virginia Beach, or visit our website: www.MeloneLawPC.com.

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.

© 2021 Melone Hatley, P.C.