You have worked hard to build a nest egg for your future and a legacy for those you love and care about. But without planning how your estate will be administered after you are gone, these assets could be distributed by the courts in ways you would not have chosen and your assets will be depleted by taxes, fees, etc.
A comprehensive estate plan should address all the various aspects of your financial life, the management and disbursement of your assets before and after your death, the protection of loved ones who may benefit from those assets, and your health and financial care if you become unable to care for yourself. Having a well-conceived estate plan in place optimizes the distribution of your assets, provides a roadmap for your loved ones and healthcare providers, and offers peace of mind for you. Here, the experienced Virginia estate planning attorneys at Melone Hatley, P.C. discuss why having a will is only a part of a comprehensive estate plan.
Why is Having a Comprehensive Estate Plan So Important?
You would never think of going on vacation without a plan, yet planning for the end of your life is downright scary. While that is understandable, everything you’ve worked so hard for throughout your life may be at risk without a plan. Furthermore, if you are caught in an end-of-life scenario and your healthcare providers and family have no firm direction, it can lead to conflict between loved ones and create a complicated emotional and legal quagmire.
With a comprehensive estate plan, you are ensuring that your long-term financial and healthcare affairs are in order, minimizing uncertainty, complications, and disputes within your family. Your estate plan can provide for your minor children, allow your loved ones to avoid probate, and reduce possible tax consequences for everyone. It will ensure that your wishes are respected and the right people are designated for your healthcare and financial needs if you become incapacitated. Bottom line: estate planning is about preparation for the future.
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What is the Purpose of a Will?
A will is not only for wealthy individuals or those with complicated assets. Anyone with assets or children should have a valid will.
A will is one of the foundational documents of what should be a broader estate planning strategy. In your will, you will be able to name an executor, a guardian for your minor children, and who will get what assets. It can also set out charitable donations and gifts. Without a will, the courts will make these decisions, following Virginia’s “intestate succession” rules.
How Can You Avoid Probate in Virginia?
Probate is the time-consuming and costly legal process of verifying and settling your estate through the court system. Even with a will, your estate must go through the probate process. Fortunately, some assets can bypass the probate process.
Non-probate assets will include:
- Assets held in living trusts – Placing assets in a living trust allows them to be transferred directly to your beneficiaries without going through the formal probate process. While you have control over the assets in a living trust while you are alive, the trust owns them, not your estate. Upon your death, a successor trustee will distribute them according to the trust’s terms. Living trusts are modifiable and revocable during your lifetime.
- Assets with joint ownership – Property owned jointly with rights of survivorship will automatically pass to the surviving owner without going through probate. This includes real estate held jointly or with revocable transfer-on-death deeds, or vehicles titled jointly or those with transfer-on-death registrations.
- Assets with beneficiary designations – Life insurance proceeds, retirement accounts, and payable-on-death (POD) or transfer-on-death (TOD) provisions will transfer to your beneficiaries upon your death, bypassing the probate process.
- Small estates – For estates under $50,000 in value, Virginia offers a more simplified process of distributing an estate’s assets without the formal probate process through a Small Estate Affidavit.
Non-probate assets will pass to your surviving co-owner or to the beneficiary you have named, regardless of whether you have a will or not. Only when beneficiaries are not alive to accept the assets will they be transferred according to intestate succession.
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Trusts
Trusts are powerful estate planning devices that can hold, manage, and distribute your assets after your death, provide for your own long-term needs or those of a loved one, or achieve other specific financial goals. Some trusts provide flexibility or added protections in your overall estate planning strategies.
There are trusts for almost any need, including:
- Revocable living trusts – A revocable living trust is prepared during your lifetime, allowing you to retain control of your assets while you are alive and designate how they will be distributed after your death. Upon your death or incapacitation, a successor trustee will take over management of the trust’s assets or distribute them to your beneficiaries.
- Irrevocable trusts – Unlike revocable trusts, an irrevocable trust cannot easily be altered or revoked once it has been established. These are often used for specialized long-term estate-planning strategies.
- Spousal Limited Access Trusts (SLAT) – A SLAT is an irrevocable trust created by one spouse for the benefit of the other. Although its terms cannot be modified, the beneficiary spouse has access to the assets in the trust through the trustee.
- Special needs trusts – Special needs trusts are specifically designed to provide financial support for beneficiaries with special needs without affecting their eligibility for essential government benefits.
- Charitable trusts – A charitable trust allows you to support a charitable cause while receiving tax benefits from that support.
Trusts can offer a variety of benefits, including the avoidance of probate, asset protection and distribution control, tax benefits, and provisions for asset management in the event you become incapacitated. Furthermore, trusts can be tailored to your unique specific needs and goals.
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Power of Attorney
If you become incapacitated, a power of attorney grants someone you trust authority to make decisions on your behalf. While a durable power of attorney designates someone to make a broad range of financial and legal decisions, a medical power of attorney grants authority to make healthcare decisions for you if you are not able to do so.
Advance Healthcare Directive
An advance healthcare directive, also known as a living will, outlines your wishes for medical treatment if you are unable to communicate them. These decisions will include life-sustaining measures, pain management, and organ donation. It will also provide guidance to your loved ones and providers, ensuring that everyone understands your wishes and that they are respected.
The Importance of Regularly Updating Your Estate Plan
Life never stays the same, and that means your estate plan should not be a set-it-and-forget-it arrangement. Any life change, be it the birth of a child, a marriage, a divorce, or a significant financial change, can all impact your estate plan. You will want to regularly review and update your estate plan periodically to ensure that it remains aligned with your current situation and wishes. You can do this by
- Updating your will and trusts, adding or removing beneficiaries and adjusting distributions
- Reviewing any beneficiary designations to reflect your current situation and intentions
- Reviewing your current financial picture and understanding the tax implications so you can address these with your attorney
An estate plan should be a holistic, dynamic, and tailored approach to your unique needs and wishes at each point of your life. Consulting with an experienced Virginia estate planning attorney will help you incorporate tools and strategies to ensure that you and your loved ones are protected, your wishes are honored, and your legacy is preserved.
If you are looking to protect your assets and last wishes, the Virginia estate planning attorneys at Melone Hatley, P.C. are here to help. With convenient locations in Virginia Beach, Chesapeake, Fairfax, Loudoun, Reston, and Richmond, we have served Virginia for over a decade with a full range of estate planning tools and services. No matter the size of your estate, we take the time to understand your needs and develop the best plan for the future. Call us at (877) 416-5071 or schedule a free consultation through our website contact form.
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