Turner Lumpkins & Blackwell, PLC

Richmond Virginia Estate Trust and Real Estate Lawyers

Estate Planning

Estate Planning

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Having a current and proper estate plan in place is step one in making sure that your loved ones will not have the distraction and additional heartbreak that can follow when death occurs without a plan in place. Effective estate planning is, however, as much about lifetime planning as it is about taking care of your estate after death. For example, planning for incapacity and higher income tax rates are two areas of consideration. We represent and help families with “simple” estates and those with planning needs involving federal estate taxes, special needs, gift planning, or IRA distributions.

Planning steps with Turner Lumpkins & Blackwell

The planning process typically involves two meetings. At the first meeting we will discuss your estate planning objectives. We will review with you the operation of common estate planning documents, including wills, trusts, financial powers of attorneys and advance medical directives. In addition, we will discuss the options for selecting executors, trustees and other agents who are appointed by the various documents.  Where appropriate, we will also discuss estate and gift tax planning opportunities.  You will receive comprehensive estate planning recommendations, tailored to your specific goals and circumstances. At the conclusion of this initial meeting, your attorney will quote a fee for completing the recommended estate planning documents.

The second meeting is where you will sign your estate plan documents. Prior to that meeting we will prepare draft estate planning documents and email those to you for your review. After you review the documents, we will answer any questions you have and make appropriate changes, which can typically be accomplished via email or telephone. We can schedule a second meeting to discuss the documents in detail, if you feel that is needed. However, we find that most clients are prepared to execute the documents without an additional meeting. Once the documents are in final form, we will schedule a time for you to come in and execute the documents. We will provide a notary and the necessary witnesses needed to ensure all legal formalities are met. We will also guide you regarding any subsequent documentation you may need to fully implement your plan, including any recommended changes of asset ownership or of beneficiary designations.

Complete Planning

When you work with our law firm in your estate planning, we will typically engage, as needed, with your financial adviser, insurance agent, and your CPA in crafting their plan. A “complete plan” for our clients brings together the: 1) estate planning for property transfers at death, 2) income tax planning, 3) disability planning, 4) asset protection, and, where needed, 5) business succession planning.

“Future Proof” Your Planning

When you work with Turner Lumpkins & Blackwell for your estate planning, you will have a plan that is designed for varied possible, future events. Even though our representation of you ends when your plan is completed and delivered to you, it is important that you to stay in touch after the estate plan is completed. Particularly if you experience a significant life event (e.g., birth/adoption of additional children, death or divorce of a spouse, inheritance, serious health issues of a spouse or child, creditor issues of a spouse or child, etc.), we encourage you to contact us to see how such events may impact their estate plans. To that end, we extend an invitation to all prior estate planning clients to contact us when such events occur. As much as we would like it to be, estate planning is not a static process. We are prepared to help you keep your plan aligned with your circumstances and wishes.

What is Estate Planning?

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A couple of years ago I recently came across an excellent short article by Charlie Douglas. The key point of his article is that society (particularly those of us in the business of financial and estate planning) needs to do a much better job of defining “estate planning“. He contends that the lack of a workable and consistent definition contributes to confusion among the public and that in turn explains a lower engagement or participation level by the public in estate planning.

He suggests the following definition for “estate planning”:

A multidisciplinary process where planning professionals are collaboratively engaged in protecting, preserving and enhancing the family through the accumulation, conservation and distribution of one’s assets and values.

I agree with his contention and I like his definition. Estate planning is much more than documenting how you want to distribute your earthly possessions at your death. Mr. Douglas is also correct in observing that estate planning is not the same as financial planning, but it is rather a subset of it. Estate planning cannot be accomplished without the lawyer knowing and understanding the basics of the client’s financial holdings and financial plan. A quality estate plan will only come into being when the lawyer and the financial adviser collaborate in the development and implementation of the client’s estate plan.

Do I need a Last Will?

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Do I need a Will in Virginia?

If you want to control who inherits your probate estate when you die, then you should have a Virginia lawyer experienced in estate planning draft a Last Will and Testament for you.

If you want to appoint the responsible adult(s) who will have custody (guardianship) of your children until they reach majority, then you should have a Virginia lawyer experienced in estate planning draft a Last Will and Testament for you.

A Last Will and Testament is simply a written document that must be signed be you.

It explains how you want your probate estate to be distributed at your death.  Your Will is only effective at your death.  Unless you enter into a contract promising that you will not change your will, while you are alive (and mentally competent) you can amend the terms of your Will, or you can revoke your Will.

What is the Probate Estate?

It is critical to understand that a Will only controls distribution of your “probate estate”.  Property that is not part of your probate estate will not be controlled by the terms of your Will.  Virginia law names such nonprobate transfers, “nontestamentary transfers.”  If your goal is to “avoid probate” then you would not plan to direct your estate at your death by a Will.  The probate estate is, essentially, all property that is in your name at your death which does not pass by survivorship provisions (e.g., a bank account held as joint tenants with right of survivorship) or by beneficiary designation (e.g., a life insurance policy naming a surviving spouse as a beneficiary).

Avoiding “probate”, in my opinion, is something to consider, but it is not, for property passing in Virginia, a factor that should be allowed to interfere with the achievement of other objectives, especially as to the control of one’s property that is being administered for the benefit of younger beneficiaries.  The probate tax in Virginia is 10 cents per $100 or .1%.  Revocable Living Trusts can be a great tool, but in my experience too many individuals and couples that have them don’t understand what they have and they end up not effectively using their trusts.

There are many factors to consider in deciding whether to use a Last Will and Testament as your primary estate planning tool or whether a trust of some sort is appropriate.  I can help you understand the differences when you are preparing your estate plan.

Many of the following FAQ’s are drawn from information prepared and published by the Trusts and Estates Section of the Virginia State Bar.

Who may make a will?

Any mentally competent person who is at least eighteen years old may make a Will.  However, a subsequent challenge in Court with proof of any fraud, duress, or undue influence by another person on the testator may lead to the Will being deemed invalid.

Who should have a will and why?

Every mentally competent adult should have a Will. Here are a few of the reasons:

  • You can direct how you want your property divided at your death.
  • You can name the person you want to handle your estate (called the “executor” or “personal representative”).
  • You can reduce the expenses of administering your estate.
  • You can save taxes.
  • You can nominate a guardian for your minor children.
  • You may provide for a trust for the support and education of your children without the necessity of costly court proceedings.

Must a will be witnessed? Must it be notarized?

In Virginia, the signing of a will must generally be witnessed by two competent persons, who also must sign the will in front of the testator. An exception to the witness requirement is made if the testator writes out the entire will in his or her own handwriting and signs and dates it. Such a will written in the testator’s hand is called a holographic will. In 2007 Virginia passed a law that allows, in limited circumstances, a Circuit Court to excuse compliance with some of the formalities of the execution of a Will.

Although Virginia law does not require a Will to be notarized, it is a highly recommended practice that hopefully all lawyers follow. If the testator and witnesses take an oath and sign the Will before a notary public, the will is presumed to be properly executed and will be accepted by the court without testimony from the witnesses.  This extra page with the notary’s acknowledgement that all the parties made a certain oath and the signatures of the testator and witnesses, is called a self-proving affidavit or self-proving certificate.

How long is a will valid?

Your will is valid until you revoke it, generally either by physical destruction (tearing or burning it up, for example) or by signing a superseding will or written revocation.  However, if you get divorced after signing a Will, Virginia law in most cases will consider the Will partially revoked with respect to your ex-spouse.  Also, if you are married, your spouse may have rights in your estate regardless of what is provided in your will.  This is called an elective share and is calculated as a share of your augmented estate.

What happens if I don’t have a will?

This is called dying “intestate”.  In that case state law governs the distribution of your property.  Your bills and final expenses are still paid (from your personal property), but whatever probate property that is left in your estate will be distributed in accordance with state law.  In Virginia the first few steps are: first, to a surviving spouse, unless the intestate decedent is survived by children or their descendants any of whom are not children of their descendant of the surviving spouse (in which case 2/3 goes to all the intestate’s children and their descendants, and 1/3 to the surviving spouse); second, if not surviving spouse, then to all the intestate’s children and their descendants; third, if none of the above, then to the intestate’s father and mother or the survivor. There are eight more steps, for a total of eleven set forth in Virginia law.

Is joint ownership a substitute for a will?

No. As noted above joint ownership with survivorship will bypass the Will, but not all assets can be documented as being jointly owned or passed by beneficiary designation. Also if the co-owner with survivorship rights or the beneficiary predeceases you, or, for instance, dies in a common accident, then that property passes by intestacy. There are also potential tax problems with joint ownership.  If a married couple owns a large enough estate, joint ownership of assets between husband and wife may result in unnecessary federal estate taxes at the death of the survivor.  Joint ownership between parent and child can often foster disputes among family members and/or lead to unexpected and unnecessary federal gift taxes.

Is a living trust a substitute for a will?

No, a funded revocable (“living”) trust can be a valuable and important part of the estate plan for many people, but it does not eliminate the need for a will. If you have a living trust, you will still need a Will to dispose of those assets that have not or cannot be placed in the trust.

As useful as they are, living trusts are not appropriate for everyone.  As I noted above, in my experience I’ve seen too often persons have trusts in place as an integral part of their estate plan but because they did not understand exactly what they had, they fail to get the full benefit of their trust(s). Only a lawyer, fully informed as to your situation, can tell you if you should consider a revocable living trust, and only your lawyer should prepare it. And your other advisers such as accountant, financial adviser and insurance agent should be aware of an involved in the ongoing maintenance of your estate plan.

Can I “cut-out” certain family members from inheriting any property?

Yes, with limitations. The legal phrase for a spouse, child or descendant who is left out of one’s will is “pretermitted spouse” or “pretermitted heir”. Virginia law, which was recently significantly revised by the General Assembly, provides protection for a pretermitted spouse to claim an “elective share” of a percentage (that increases in relation to the length of the marriage) of the decedent’s “augmented estate”. There are several steps involved in calculating the augmented estate; it includes gifts made by the decedent during several years before death. So if a husband wrote a Will that left his wife nothing, upon his death his surviving wife will likely consider her rights under Virginia law to claim an elective share. Virginia law does not protect pretermitted children unless the child was born (or adopted) after the execution of the will. Related to this question, minor children whom the decedent owed an obligation of support have rights to claim some allowances from the estate (this right to allowances is in addition to anything the Will leaves the child).

Does the Court make sure that the instructions in my Will are followed?

In Virginia the Circuit Court has jurisdiction over most matters pertaining to the administration of estates and trusts, but there is no special “Probate Court” in Virginia.  Oversight of estate administration is conducted by a private office operated by a person with the title Commissioner of Accounts. Typically that person is a lawyer. In larger jurisdictions this is a full time job; in smaller counties and cities the Commissioner of Accounts will often maintain his or her own private law practice. The Commissioner is appointed by and serves at the pleasure of the Circuit Court judge(s) in the jurisdiction. The Commissioner’s duties are statutory.  The Commissioner is charged with the responsibility of supervising the timely and proper filing of fiduciary inventories and accounts by administrators and executors of decedent’s estates, trustees of testamentary trusts, trustees of trusts for minors, guardians of the property of minors, conservators for incapacitated adults and foreclosure trustees. The Commissioners’ offices typically serve the citizens well, however, they don’t have the resources to monitor every detail of the administration of the estate. If a beneficiary or other interested party suspects that an executor or administrator is not properly performing his or her duties, the beneficiary should promptly retain a lawyer to investigate.

Who should draft my will?

A person who drafts a will must be familiar with the law in order to avoid the many pitfalls and to comply with the formalities necessary to assure the will’s validity. Only a practicing lawyer is professionally qualified to give you advice regarding your will, to prepare your will, and to supervise its signing.

Practical Suggestions

Planning your financial affairs – for during your life and at your death – is a very personal and individual matter. You should decide for yourself the general purposes you wish to accomplish, then consult with your lawyer and any other advisors to plan properly how to accomplish your goals. Ideally your lawyer, financial advisor, and any accountant or life insurance agent you employee, should work together – at a minimum discuss with each other – the implementation of your estate plan.

Take these four practical steps to save time and help assure a sound result:

1.            Inventory your assets.  List in reasonable detail all of your property, real and personal; life insurance policies; and retirement plans, with your best assessment of their values. Determine current title on each asset and the current beneficiary designation so that your advisers may review and help you make and changes consistent with the plan.

2.            Inventory your liabilities. List all debts and obligations, including principal amounts, payees, and essential terms.

3.            Identify Persons and Roles. List your family members and any other persons or organizations whom you wish to benefit from your estate. Decide who might be an appropriate executor, trustee (for managing assets for the benefit of younger beneficiaries), or guardian for your minor children.

4.            Decide what you want to accomplish.  Determine what your objectives are and to whom you wish your assets distributed. Then meet with your lawyer and other advisers to work out the details and prepare the necessary documents. It will help if you have with you your working papers, list of assets and liabilities (identify retirement/IRA accounts, and whether traditional or Roth), and life insurance policies with you.