Who do I want to manage my personal affairs if I am disabled?
Certainly, you only want someone you trust implicitly. While there are laws to ensure that individuals perform their duties correctly, you need to choose an individual or individuals wisely. Certainly a family member or friend you have trusted over the years is often the obvious choice, but you should ask them if they are willing to take on such a task.
After death, who do I want to administer my estate?
Oftentimes, the same person you appointed as your attorney-in-fact under your Durable Power of Attorney is the same person you would want to administer your estate. People have a Trust (fiduciary responsibility). They may be called an Executor, Trustee, Agent, Administrator or Personal Representative. It is always important to have a successor fiduciary noted, as well, in the event the person you initially choose is unwilling or unable to do the job.
What documents do I need for my estate?
For most people, some of the following documents will apply: (i) Advance Medical Directive; (ii) Durable power of Attorney; (iii) Revocable Living Trust; (iv) Irrevocable Life Insurance Trust; (v) Family Limited Partnership; (vi) Premarital or Marital Agreement; (vii) Special Needs Trust; and/or (viii) Will.
What is a Probate Estate and where is the Will filed?
In short, it is the estate within the Will which will need to be distributed according to the terms of the Will and the Code of Virginia. To reduce the amount of the probate estate, it is oftentimes, appropriate to retitle assets jointly with a right of survivorship. Annuities, life insurance policies, IRA’s, 401(k)’s, and retirement plan accounts are accounts which normally fall outside of the probate estate. An Executor must initially file a Will for probate in the circuit court where the deceased resided at the time of his or her death.
What is an Intestate Estate?
This is an estate where someone dies without a Will. The individual representing the Will for an Intestate Estate is called an Administrator.
What is a Testate Estate?
This is an estate where someone dies with a Will. The individual representing the Will for a Testate Estate is called an Executor.
What is required of an Executor and Administrator?
In sum, they are legally responsible for making sure that all the necessary steps are taken to comply with laws regarding creditors, taxation and distribution of assets to beneficiaries.
The Executor is responsible for opening an estate account and must also retitle all assets, changing the name to the estate. A tax identification number has to be acquired because the individual’s social security number becomes invalid at his or her death. In sum, the Executor has to follow the probate laws of the Commonwealth. They also need to pay probate taxes, federal estate taxes and federal and state income taxes.
What is a probate tax?
This is the tax due at the time the executor is qualified before the court, which is minimal. Based on current federal law, the vast majority of the states will not have to deal with the federal estate tax. Income taxes do have to be paid for income prorated by the state from the date of death to when the estate is closed. The executor is normally responsible for filing a personal income tax return.
What is an Estate Inventory?
Within four months of qualification, an Administrator and Executor must submit an Inventory of the estate’s assets with the Commissioner of Accounts who has been appointed by the court. This Inventory contains a detailed list of property in the Will and the market value of assets as of the date of death.
Who is a Trustee?
A Trustee is an individual appointed by a Trust to carry out the terms of the Trust. Under the Prudent Investor’s Act, the Trustee must invest trust assets so that they are preserved and also that they grow for the benefit of the beneficiaries. Trustees must follow the expressed terms of the Trust. They must also follow the Uniform Principle and Income Act.
Under this law, certain assets are designated as income, and other assets are designated as principle. This is very important under trust law, because designations affect payments to beneficiaries. Accountings must be filed periodically by the Trustee following the rules set within the terms of the Trust, the Virginia Probate Code, and the Uniform Trust Code. Trustees also need to file appropriate annual tax returns.
In sum, an Executor has a significant personal liability to make sure they perform precisely under the terms of the Trust and the law. Good faith efforts may not be enough. It is oftentimes important for the Trustee to hire a professional to help them. I represent beneficiaries, fiduciaries, executors, administrators, trustees, conservators and guardians.
Are there disagreements that must be resolved in court?
Yes. Sometimes probate and estate administration requires litigation before the court. Sometimes there are beneficiary disputes and Will contest. If the person is incapacitated, Guardianships and Conservatorships are necessary.
I have represented people in actions regarding these issues for over 20 years.