Virginia Probate: How Lawyers Avoid Probate
Find out more about how to avoid the costly probate process, and how a lawyer can help you plan for your family's future.
Probate is generally the process by which a deceased individual’s assets are transferred to their heirs. The vast majority of property that an individual owns will pass through probate unless it is a small estate. Property that passes through probate may be sold to satisfy creditors or to pay for administrative fees. This means that some of an individual’s property, even if it is intended for a specific heir, may not make it to that heir depending on how much debt that person has.
However, Virginia law allows you to avoid probate for certain types of property. How is this done, and how can a lawyer help you avoid the costs of probate?
Payable On Death Accounts
One common example of an estate planning method used by lawyers is known as a payable on death account. These types of accounts typically hold a specific amount of assets which are held for a specific beneficiary. These assets are immediately transferred upon death to that beneficiary. This means that the beneficiary will be considered to own that property without having to go through probate.
Some common examples of payable on death accounts include a bank account with cash, a safe deposit box, or event real estate.
Life Insurance
Another common method of estate planning available to lawyers is to set up life insurance accounts with specific beneficiaries. This allows an individual to invest their savings into a life insurance plan that will transfer money immediately upon their death to a designated beneficiary. There are several restrictions on how much can be placed in such accounts and what financial institutions qualify to offer these services.
Sharing Real Estate
Finally, another option used by lawyers is to have individuals hold property in a “joint tenancy” arrangement. A common example of this method is to transfer a portion of ownership in a house to a beneficiary with a “right of survivorship,” which means that upon death that beneficiary will own the entire house without having to go through the process of probate.
Why You Need a Probate Lawyer
Each of these options carry with them unique tax and medical planning issues that need to thoroughly be addressed. Every person’s case is unique, and a combination of these plans may be needed to minimize the amount of taxes that are paid and to preserve the property. It is also important to hire a lawyer to understand when not to use these estate planning tools, as creditors may attack your transfers as an attempt to avoid their claims. Hire a lawyer to help you prepare your estate and to protect your heirs.
Virginia Probate: Size of Estates
Estates come in all shapes and sizes. What types of estates do you need to be familiar with if you have been appointed to probate an estate?
Virginia probate law comes in many different shapes and sizes. An executor's obligations largely depend on the amount of assets the estate has and the amount of liabilities the estate has. An estate can be split into three categories; insolvent estate, small estate, and large estate based on these characteristics. Each type of estate has their own tax liabilities and creditor issues that you need to be aware of.
Insolvent Estates
If your relative owes more debt than the value of the estate, you have an insolvent estate. This can impact the probate of a will if there is valuable property that needs to be sold to satisfy the creditors. For example, if your relative has a significant amount of medical debt and also has a ferrari, then the ferrari may need to be sold to pay for the medical debt. This occurs even if the will says that the ferrari is to be given to a specific beneficiary.
There can be some limitations on the ability of an executor to handle the sale of the estate’s property. For example, if there is no will that grants the executor a power to sell real estate, the executor may need to petition the court for approval to sell any real estate to satisfy creditors.
Finally, various types of creditors are treated differently depending on the nature of the debt. This is called priority. Some creditors are supposed to be paid before others.
Small Estates
Virginia law makes it easier to probate estates that are valued below a certain threshold. If the value of the estate is below Fifty Thousand, which excludes some specific assets, then the estate may qualify for small estate administration. Virginia law requires you to file specific forms and follow specific procedures in order to allow for a small estate administration. When considering whether a small estate administration is appropriate, it is important to consult with a lawyer to determine which assets are counted towards the threshold value. The benefit of small estate administration is that it does not have as many administrative requirements and the timeline is much shorter.
Large Estates
In contrast with small estates, large estates can take a significant amount of time to probate. These are estates that are valued at more than Fifty Thousand. A typical estate may take as long as two years to fully probate depending on the complexity of the estate and the types of debts that need to be paid. Generally speaking, a commissioner of accounts, a public official, helps manage the probate of the estate. The commissioner is important to work with, as they have significant powers over the administration of the estate.
The commissioner is likely to require several accountings and inventories which outline the assets and liabilities of the estate. These documents must be filed timely, or the executor may be subject to certain penalties depending on the nature of the violation.
Why you need a probate lawyer.
No matter what type of estate you have, you need a probate lawyer. Failure to properly administer an estate may result in personal liability. For example, if you fail to pay a creditor or timely file an accounting or inventory, you may be on the hook for a significant amount of money. Consult with a lawyer if you have been appointed pursuant to a will to manage probate, or if you have elected to do so on behalf of a relative that died intestate. Finally, an executor is entitled to certain compensation.
Virginia Probate: Intestate v. Testate
What is the difference between intestate and testate estates?
If a family member of yours has recently passed away or if you are planning for your future, there are a lot of different options available for passing property on to heirs. At a bare minimum, you need to be aware of the types of planning options that are available to you. The first distinction you need to be familiar with is what an estate is, and what the different types of estates are.
Many jurisdictions, including Virginia, distinguish between several different types of estates. For the purposes of this article, we will be looking at the distinction between “testate”’ and “intestate.”
What does "intestate" mean?
An estate is considered to be intestate when you have failed to create some kind of document which tells your state how you wish for your assets to be distributed. Common examples include wills and trusts. If you do not have a will or a trust, the law of the state where you last resided generally takes control.
In Virginia, these “intestacy rules” determine which of your heirs get which property. Virginia law states that, if you do not have a will and you do not have children from a different marriage, your spouse will take all of the property. However, if you have children from another marriage, those children are entitled to two-thirds (⅔) of your property, and your spouse is entitled to one-third (⅓) of your property.
In the event that your spouse has predeceased you, and all of your children are from that marriage, then your property will be split up into as many equal shares as there are children. For example, if you have three children, each child will get one-third (⅓) of your property. If one of your children predeceases you, that child’s share will then be split up into equal shares based upon the number of children that child had.
There are more rules than this, and this is just a simple example of how Virginia treats property if you do not have a will. If there is specific property that you wish to give to specific people, you must have a will or some other estate planning document.
What does "testate" mean?
Testate means you have at least some form of estate planning document, primarily a will. The purpose of the will is to direct your state on how you wish your property to be treated. There are many different types of wills. I will discussed the various types of wills in a later post.
Why you need a lawyer.
A lawyer is important for several reasons if you have a loved one who is recently deceased or if you are planning for your own future. A lawyer can help you navigate the complex probate process and determine what steps are best taken in order to distribute the property and minimize tax liability. Furthermore, a lawyer can help you prepare for the future and determine which type of estate planning document is best for you.
Virginia Divorce: Property Settlement Agreements
What is a Property Settlement Agreement, and what do you need to be aware of prior to signing it?
If you or your spouse is considering a divorce, there are some steps that can be taken now to protect both of your assets and your children. A Property Settlement Agreement is a written document which outlines how marital debt, marital property, and child custody will be addressed while the divorce is pending. This document is vital to have as it can save substantial legal fees from having the court make these decisions. However, there are also dangers to these documents.
What do you need to be aware of when entering into a Property Settlement Agreement?
It is a binding contract.
Virginia law is very clear on this matter, a Property Settlement Agreement is a binding contract. Therefore, you have to be very careful in reviewing the terms of the agreement before signing it. These documents may be drafted by a lawyer, and may include provisions that could prove harmful to you down the line. If there are such provisions in the contract, a court will be reluctant to change the provisions of the contract.
A common example of a dangerous provision relates to spousal support. Virginia law allows a Property Settlement Agreement to state that the amount of support may not be modified. That means, in the event that you lose your job and are obligated to pay support, you will not be able to reduce that amount without a prohibitively expensive court battle.
It requires certain provisions to be valid.
Virginia law requires that a Property Settlement Agreement contain specific provisions to be considered valid. Failure to include these provisions may result in the document being declared invalid by a court of law in the future. If you fail to consult with a lawyer during the drafting process, all of your efforts may prove to have been in vain.
It needs to be exhaustive.
Finally, a Property Settlement Agreement needs to address every aspect of your marital property. It needs to address debt, support, custody, visitation, etc. Failure to include a portion of the marital estate into the document may result in bad consequences such as a contested divorce case or the loss of certain retirement assets. It may even make qualifying for Medicaid more difficult.
Why you need a lawyer.
A lawyer is essential in creating a Property Settlement Agreement. For the reasons stated above, Virginia Law is strict about what can or cannot be included in the document. Furthermore, there may be words in the document that can be harmful to you. Therefore, if you are considering a Property Settlement Agreement, consult a lawyer for review prior to signing.
Virginia Divorce: Dating During Divorce Proceedings
Are you considering dating while your divorce is pending? Think again.
A common question I get in relation to divorce is whether you can date while your divorce proceedings are pending. The term people use is “legal separation,” and they want to know what that means. There are some states in the United States that allow for legal separation and for dating while your divorce is pending? Is Virginia one of those? No.
So how do you protect yourself while your divorce is pending?
How can dating impact your divorce?
As discussed above, there is no such thing as “legal separation” in Virginia. Until you are formally divorced by a court order, Virginia law still considers you to be married. Virginia law also has adultery as a grounds of divorce. If you date while your divorce is still pending, and the other side does not, that fact can be used against you in a number of different ways.
The first is property distribution. Virginia is an equitable distribution state. This means that marital assets and debt are divided based on what is “fair.” The court will take into consideration fault based grounds of divorce when deciding what is fair for property distribution purposes. If one of the parties is engaging in adultery, that can be used to obtain more assets.
The second effect is child custody. Courts in Virginia are reluctant to grant primary custody to a parent who is dating and has that person around the kids. Virginia law has restrictions on such “cohabitation,” and will generally favor the parent who is not dating. Therefore, dating while a divorce is pending can impact custody.
Finally, adultery is still an antiquated crime in Virginia. Dating during the divorce proceedings, while unlikely, may result in criminal proceedings.
How to protect yourself?
There are different types of divorce in Virginia, and one of those types may be able to allow you to start dating. Whether you qualify for this type of divorce will largely depend on the facts of your case. Most attorneys will encourage you to get a separation agreement executed with your ex before dating, and refrain from dating while the divorce is pending.
Speak to a lawyer if you are considering dating during your divorce proceedings. Your lawyer can let you know what your rights are and help prevent an unfair outcome.