For most people it is difficult to think about and make plans for what happens after you are gone. But, planning for the future will provide you with peace of mind and will ensure that your property is handled in accordance with your wishes. With a will you decide who will inherit your priced possessions and assets. If you do not have a will you will die intestate and in that event the Commonwealth of Virginia will decide how to distribute your property.
A Simple Will, also referred to as a last will and testament, is the most basic form of estate planning. It allows you to distribute your property and assets as you chose after your death. Generally it specifies which heirs are to inherit specific assets. A Will may be revoked at any time until the person’s death, either by proper execution of a new properly drafted will, or by a physical act of the testator (the person who is passing on his/her assets by will) that destroys the will.
A valid Will in Virginia needs to meet the following requirements:
- It needs to be in writing;
- The testator must be 18 years old or older;
- The document is signed by the testator in the presence of two witnesses who then subscribe the document in the presence of the testator; and
- The testator must be of sound mind.
Important Issues to consider when drafting a Will are for example spouses and children from prior marriages and the age of the heirs. Furthermore, you should name an alternate executor, and if necessary an alternate trustee and guardian in the event in the event the person you chose initially as your executor, trustee, or guardian is unable or unwilling to serve.
Guardianship and Trust Will:
If you have minor children you should consider a Guardianship and Trust Will. In a Guardianship and Trust Will just like in a Simple Will you specify who will inherit which of your assets. In addition you also determine who will be the guardian of your minor children until they reach the age of 18 and with a trust clause you chose a trustee that will oversee the distribution of your assets passed on to your children until your children have reached an age, specified by you, when the trust will expire and the assets will be released to your children.
A Pourover Will is often used to catch assets that have not yet been placed into a trust. In a Pourove Will the testator has created a trust and decreed that the remainder of his or her estate not already in a trust will be distributed to the trustee of that trust at the time of the testator’s death.
Power of Attorney:
A Power of Attorney is a legal document that allows you to designate an Agent who will be able to conduct your business and financial affairs for you. In the event that you become either temporarily or permanently incapacitated, a Power of Attorney is very important to ensure your business and financial affairs are taken care of.
A General Durable Power of Attorney gives broad powers to your designated Agent, including the ability to enter into agreements with the IRS, bestow gifts, manage and transfer any and all assets, and create a trust or make changes to an existing trust.
A Specific Power of Attorney is used when you do not want your Agent to have such broad sweeping powers. In this case you specify which powers you want your Agent to hold.
Advanced Medical Directive:
An Advanced Medical Directive is a document that allows you to specify your desires in the event you have a terminal illness and death is imminent, to include being in a persistent vegetative state, with respect to what procedures you would like to have withheld or withdrawn and to designate an Agent to make health care decisions for you in the event you are unable to make these decisions yourself. Through this document you can also instruct your Agent to make anatomical gifts of all or part of your body upon your death.
Will vs. Trust
There are many types of trusts. What type of trust you need or whether a will is sufficient depends on your individual situation.
A Revocable Living Trust has become popular with many people.
A Revocable Living Trust is created during the Creator’s (Settlor’s) lifetime and thus allows the creator to administer the trust themselves until his or her death.
A trust does not need to be filed with the probate court and thus will not become a matter of public record. Therefore, the nature and value of assets owned at time of death remain private.
Because Trusts do not need to be filed with the probate court, trusts allow the trustee to distribute the trust assets in accordance with the trust document after the Creator has passed without any delays and probate costs.
However, while a trust avoids the probate administration expenses, the trustee must handle the administration of the trust assets and will incur expenses and generally will be entitled to compensation from the trust. Considering that Virginia has repealed the estate tax in 2013; thus, only federal estate tax is due and that only on estates in excess of $10 million, and the probate tax levied in Virginia is $1.00 or $1.33 per $1,000 of valued estate depending on jurisdiction, a trust might not provide you with significant cost savings.
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Special Needs Trust:
Some people have loved ones with special needs and want to ensure their loved one is taken care of without affecting his or her government benefits. A Special Needs Trust is an instrument created to benefit individuals with special needs and disabilities without affecting any government benefits they receive such as Social Security and Medic aid. Such a trust can be funded through the purchase of a life insurance policy or other assets.
Contact us to discuss your individual needs.