Q. What is estate planning?
Estate planning is the process of preparing for the distribution and management of a person’s estate at death through the use of various documents (i.e. wills, trusts, power of attorneys, medical directives) and other arrangements (i.e. designating beneficiaries of a life insurance policy or retirement plan, re-titling property so that it will transfer through survivorship rights).
Q. What is a Will?
A Will is a legal document that a person uses to direct how his or her estate is to be distributed upon death. In addition to providing for the intended distribution of property, a Will is often used to designate a guardian for minor children, create a trust for any portion of the estate received by a minor child, and to designate an executor for your estate.
Q. What happens if I die without a Will?
If you die without a Will all assets that would be distributed under your Will are instead distributed pursuant to Va. Code § 64.1-1. This statute was adopted by the Virginia General Assembly to provide for the transfer of a person’s estate if he or she dies intestate (without a Will) while a legal resident of Virginia. Pursuant to that statute, all of a person’s estate will pass to his or her surviving spouse unless the deceased person has children who are not also children of the surviving spouse. In that case 2/3 of the estate will pass to the deceased person’s children and descendants of those children and 1/3 of the estate will pass to the surviving spouse. If there is no surviving spouse, the estate will pass to the deceased person’s children. If there is no surviving spouse or children then the estate will pass to the deceased person’s father and mother. The statute continues with a list of persons to whom the estate would pass in the event that the deceased person does not have a surviving spouse, surviving children, or surviving parents. If there are no surviving relatives that fall under any category listed in the statute then your property will pass to the state upon your death. If you, like many people, are not opposed to your estate being distributed pursuant to this statutory scheme, it is still advisable to have a Will to appoint a guardian for minor children, to minimize estate taxes (if applicable), to name the person who will be responsible for administering your estate (the executor), and to determine what will happen to any businesses and/or pets that you may own.
Q. Would a Will dispose of all property that I own at the time of my death?
Often a Will does not dispose of all property that a person owns at the time of his or her death. For example, often property is owned jointly so that another person has survivorship rights and will become the owner of the property upon your death (i.e. real property or accounts owned as tenants by the entirety or as joint tenants with rights of survivorship). Bank accounts, stocks, and similar items may have a transfer on death or payable on death provision that names the person who the property shall pass to in the event of your death. In addition, life insurance policies, retirement plans, and other assets often pass to a beneficiary who is designated on a beneficiary designation form that is provided by the company managing the asset. Items such as these will not pass through your Will and will not be subject to probate. However, such assets often are still counted as part of your estate for estate tax purposes.
Q. What is an executor? Who should I choose as my executor?
An executor is the person named in a Will to carry out the provisions of the Will. This person is responsible for administration of the estate. You may have heard references to a personal representative or administrator – there are other terms used to describe the person responsible for administration of an estate. An executor is a fiduciary, which means that he or she has a duty to perform any assigned duties with good faith, trust, confidence and candor. Any person over 18 years of age, or a corporation authorized to do business in Virginia, may serve as your executor. The executor is required to post a bond with surety to qualify as executor and must file regular accountings with the court. The surety and accountings may, in certain circumstances, be waived if the will specifies that it should be waived.
Q. What will happen to my minor children if I die?
When a parent dies the surviving parent of any minor children of that deceased parent will obtain custody of the children so long as that person is a fit and proper person to have custody. If there is no surviving parent a guardian must be appointed by the court. A parent can name a guardian for the children in his or her Will. To avoid complications both parents should name the same guardian. The guardian named by the parents will generally be appointed so long as the court agrees that it is in the best interests of the child. If a guardian is not named in a Will this process may be more difficult and the parents will not have a say in who is appointed by the court. The guardian will be responsible for raising the child and meeting the child’s basic needs (i.e. food, clothing, shelter). In naming a guardian it is important to consider who you think would best be able to meet the child’s needs, who would raise the child in a manner that you agree with, and whether that person would be willing to take on this responsibility. It will also be necessary to provide for your children financially after your death. Persons under 18 cannot legally own property in Virginia so your Will should also name a guardian for the property of the minor child. This is typically done by creating a trust for the child and appointing a trustee to manage the trust property and to make disbursements as needed for the care of the child. The trust assets will then pass to the child at an age designated by the parent in the trust document.
Q. What is a Trust?
A Trust is a property interest that is held by one person (a Trustee) at the request of another for the benefit of yet another person. There are several different types of Trusts. One of the most common types of Trusts is a Trust that is created to hold property for a minor child. Trusts are used in these situations because a child cannot legally own property in Virginia. Trusts are also often used to avoid probate for the Trust assets, to provide for the care of someone during his or her life but to designate the beneficiary of the Trust assets once that person dies, and to reduce estate taxes.
Q. What is a Living Will?
A Living Will is a formal legal document by which a person states his or her intention to refuse medical treatment in the event that he or she becomes terminally ill and unable to communicate this intention. In Virginia a Living Will is called an Advance Medical Directive.
Q. What is an Advance Medical Directive?
An Advance Medical Directive is a formal legal document that expresses a person’s desires and preferences about medical treatment in case he or she becomes unable to communicate these desires. By preparing an Advance Medical Directive you may appoint a person to make medical decisions on your behalf in the event that you are unable to do so, specify what treatments you do and do not want, and appoint an agent to make an anatomical gift of all or some of your body upon your death.
Q. What is a Power of Attorney?
A Power of Attorney is a formal legal document that gives another person the legal authority to act on your behalf. There are several different types of Powers of Attorney including General Powers of Attorney that allow your designated agent to act on your behalf regarding any and all matters and Specific Powers of Attorney that allow your designated to perform some specific act or acts on your behalf.
Q. How long is a Will valid?
Once a Will is properly executed it is generally valid until it is revoked or until a new Will is made. However, a Will should be reviewed every few years, upon major life events (i.e. the birth of a child, marriage, divorce, children all becoming adults, significant increase in assets), and if you move out of state to ensure that it continues to meet your needs.
Q. How can I make a change to my Will?
It is generally not advisable to attempt to change your Will without the assistance of an attorney who specializes in estate planning. It is generally better to prepare a new Will that will revoke all prior Wills if a change needs to be made, however, some minor changes may be accomplished by the execution of an amendment to the Will, which is called a Codicil.
Q. Where should I keep my Will?
Your Will may be stored in any location that it is safe and where it will be easily located upon your death. People often choose to store Wills in safe-deposit boxes at a bank. I use a small locked fire and water proof safe that I keep in my home that contains all of my important documents. Wherever your store your Will, it is important that one or more people that you trust know that it is there and how to access it upon your death.
