Estate Planning FAQs
Why Do I Need a Will?
If you die intestate (without a will), Section 64.1-1 of the Virginia Code determines who receives the property in your probate estate. A properly drafted will ensures that property included in your probate estate is distributed according to your wishes. In addition to distribution of your probate estate, a will allows you to designate the guardian of your minor children if you are not survived by your spouse. A will also allows you to name the executor of your estate and eliminate the requirement that the executor provide a bond.
What Property is Included in my Probate Estate?
Probate is the legal term for proving that the will is the last will and testament of the deceased. Not all property in your taxable estate (all property in which you have an ownership interest at death) is included in your probate estate. The way property is titled determines how it is distributed at the death of the testator. Real property may be owned in the following ways in Virginia:
Fee Simple - The individual owns all interest in the property. If the individual dies intestate, the property passes to the decedents heirs under Section 64.1-10 of the Virginia Code. If the decedent dies testate (with a will) the will controls distribution of the property.
Tenants in Common - Two or more individuals own undivided interests in the property. When one of the tenants in common dies, his or her ownership interest passes to his or her heirs.
Joint Tenants with Right of Survivorship - Two or more individuals own an interest in the property, but when one of the joint tenants dies, his or her interest in the property passes to the surviving joint tenants, not to the decedents heirs. Property owned with survivorship rights passes outside of probate.
Tenants by the Entirety - Property owned by a husband and wife with the same survivorship rights as a joint tenancy. When one spouse dies, the other spouse owns all the property by process of law.
Accounts can be titled as TOD (transfer on death) or POD (payable on death). The accounts will be transferred to the named beneficiary outside of probate at death. Insurance, IRAs and retirement funds also pass to the beneficiaries named in the policy or plan outside of probate.
Who Are the Fiduciaries Named in a Will?
The Executor is responsible for the settlement of the estate and is named by the deceased. If the deceased dies intestate, an Administrator is named by the court to serve in the same capacity. If the deceased has minor children and is not survived by his or her spouse, a Guardian may be named in the will to physically care for the children until they reach the age of majority (18 in Virginia). In addition, a trust may be established in the will and a Trustee may be named to ensure that distributions to the minor beneficiaries are made in accordance with the wishes of the testator as dictated in the will.
What is a Trust?
A trust is a written instrument created by the grantor that describes how property is to be held and distributed by a trustee for the benefit of one or more persons known as beneficiaries. A trust created during the grantor's lifetime is known as an inter vivos trust. A trust created by the grantor's will is known as a testamentary trust. Distribution and handling of the property of the trust is determined by the written trust agreement. A trust may be revocable or irrevocable. A revocable trust may be changed by the grantor at any time prior to his or her death. This results in the property of the trust being included in the grantor's taxable estate and subject to estate tax. An Irrevocable trust cannot be changed by the grantor and if all incidents of ownership are severed, the property of the trust will not be included in the grantor's taxable estate.
What is a Power of Attorney?
A power of attorney is a document which gives an individual known as the "agent" or "attorney-in-fact" authority to act on the behalf of the "principal" or the person granting the power to the agent. A durable power of attorney remains in effect until it is revoked by the principal or the principal dies. The agent's authority is limited to the actions permitted in the document. For example, a health care power of attorney allows the principal to appoint an agent with the specific authority to make medical treatment decisions for the principal if the principal can not make them for himself or herself. The Power granted to the agent can also be general in scope allowing the agent to perform any act the principal could perform on his or her own behalf. The power may be granted immediately upon execution of the document or it may be "springing" whereupon the power is granted upon the occurrence of a specified event such as incapacitation of the principal.
What is a Living Will?
A living will is a document that specifies how the principal wishes to be treated should the principal be in a terminally ill or terminally injured condition which renders the principal unable to make medical decisions on his or her own. A living will comes into effect when the principal's condition is "terminable" and the treatment to be received is limited to easing pain and/or prolonging life for a limited amount of time.
What is a Health Care Advance Directive?
A health care advance directive combines the health care power of attorney and living will into a single document. The authority granted the agent is not limited to cases of terminal conditions of the principal.