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Estate Planning FAQs

What is estate planning?

Estate planning is the process by which you create a plan which will guide management of your estate when you die. This process may also involve important personal decisions, such as indicating who you would want to be guardian of any children under the age of 18 and authorizing someone to make financial and medical decision on your behalf, if you were to become incapacitated. Estate planning can involve several fields of law, including property, wills, trusts, future interests, insurance, employee benefits, healthcare and taxation.

What is an estate?

"Estate" is the legal term referring to some or all your belongings. It's extends to nearly anything that you have ownership of: your house and any other real estate, your car and all smaller personal possessions, the contents of your bank accounts, your share of joint accounts, investments, life insurance, and so on.

When should I write a will?

It's important to not procrastinate on creating a will or any other estate planning document. Dying without some kind of estate plan means that your property will be divided according to your state's intestacy laws, risking the distribution of your assets in a manner that may contradict your wishes. Dying intestate will result in a court-appointed guardian for your children, rather than one that you have specified in your will.

What happens if I die without a will?

Each state has a predetermined process for the division of your assets upon your death, if you happen to die without indicating your desires in some form of estate planning (specifically a will). These state laws are called "intestate" laws and differ by state. The following paragraphs will specifically address Virginia's intestate laws.

If you do not create a will, many decisions regarding your assets will be made by either state laws or the decision of the Circuit court. For instance, if you do not indicate a preference for the guardian of your children under the age of 18, the Circuit court, with reference to Virginia law, will have full authority to determine a guardian.

Following funeral costs, debts, and other expenses, your estate will go to your spouse in its entirety, unless you have children from a previous relationship. If you have children from a previous relationship, they will receive two-thirds of your estate, and your spouse the remaining third. If you do not have a surviving spouse, then the estate will go your children. If you have neither spouse nor children, it will go to your parents. And if your parents are deceased, then to your siblings. If you have no surviving siblings, then your grandparents. If not have no surviving grandparents, then your surviving aunts or uncles. And so on and so forth, per the Virginia Law of Descent and Distribution. If you wish to alter this process at all, then you must have a legally-recognized will.

What is a will?

A will is a legal document that sets forth your last wishes, regarding the distribution of your property and the care of your children. In a will, you typically name 1) your direct beneficiaries, who will receive those assets which you explicitly name, 2) your alternate beneficiaries, who will receive the property if the direct beneficiaries were to pass away before you, and 3) residuary beneficiaries (and alternates,) who will receive all property not left to other beneficiaries directly. After the author of the will passes away, the will goes through probate, the legal process of being proved in court to be legitimate, before it is then implemented by the executor/personal representative/administrator that the author indicated in the will.

What is a trust?

A trust is the entity created by a legal document that is similar to, but more flexible than, a will. A trust can be designed for the administration of the author's last wishes, but it also allows the author to specify a trustee to manage money or assets before or after he or she passes. Unlike a will, a trust does not go through the probate process. Further, trusts (unlike wills) can be private and are not recorded in the public records. In order to form a trust, you will transfer your property into the name of the trustee who will manage the trust. You can be the initial trustee. The trustee will have full ownership and control of all the property in the trust, subject to the terms of the trust agreement. In the trust, you can name the beneficiaries of your assets after you pass, much like you would a will. If you name yourself as the trustee, you can appoint a successor, who will become the trustee upon your death and be fully responsible for the distribution and manage ment of the estate.

What is the difference between a will and a trust?

A will is a legal document, enforced by a court through the process of probate when someone dies. (See above section: What is a will?) A trust is also a legal document that can function like a will as a tool for the enunciation of the creator's last wishes, but can also be used before death and avoids the probate process. (See above section: What is a trust?)

What is probate?

Probate is the proves by which a will is proved legitimate in court, at which point the court will appoint a personal representative of the state to gather the assets and distribute them under the supervision of the court.

How do I avoid probate?

You can avoid probate by transferring all of your assets into a trust before you pass, and/or if you meet certain other requirements, like if your estate in under the threshold for the formal appointment of an executor, which is $75,000.00 for the full value of your estate in Virginia.

How much does writing a will typically cost?

The cost of writing a will can vary widely based on the complications (or lack thereof) involved in the estate plan. Simple estates are much easier to put together than complicated estates and as a result, cost less to create. To the extent that an estate plan includes trusts, businesses, etc., the cost can increase.

What is a financial Power of Attorney?

The financial power of attorney is the legal document which allows someone to make financial decisions for you, if you were to become incapacitated, incompetent, or otherwise unable to communicate. This can be helpful if you have ongoing bills or other financial problems that will need to be managed by someone in the event of your incapacitation, incompetency or inability to communicate.

What are the taxes on my estate?

There are several forms of taxes on any estate. In Virginia, probate taxes are applied to any estate. Virginia probate taxes are $1.00 per $1,000.00 of the estate, or 0.1%. Localities may also impose a probate tax equal to 1/3 of the state probate tax. There is a federal tax of 40% (in most cases) of all estates which are over an exemption amount currently set at $5.49 million. Also, the beneficiaries of an estate may be responsible for income taxes on any amounts from an IRA, 401k, or other benefit or retirement plan owned by the decedent.

What is an executor/administrator/personal representative?

A personal representative (as known as an executor) is an individual or individuals appointed as part of the probate process. There duties include collecting the decedent's estate, reporting to the court, and then distributing the estate in accordance the decedent's will or if he dies without a will according the intestacy laws of the state.

How do I appoint a guardian for my children?

In Virginia, you can appoint a guardian in your will who will gain custody of the children after both of the child's biological parents have passed. While a court can overrule a guardian selected in a will, courts are required to give great weight to the preferences of the parents regarding their choice of guardian.

What is an advance medical directive or living will?

An advance medical directive or living will is the legal document that both (a) allows you to specify what type of medical treatment you want if you are unable to communicate or decide and (b) allows you to appoint someone else to make medical decisions for you, if you were to become incapacitated, incompetent, or other unable to communicate.

What is the process if I use you for my estate plan?

If you would like to retain us in preparing to assist you with your estate plan, please contact us here: [insert link] We will set up a time for a consultation to discuss your wishes and the estate planning documents that you need. We will then prepare the documents and give them to you for review. Once they are acceptable, we will schedule a time for you to come in to execute them in the legally required fashion.

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