At Randall J. Borden, Attorney at Law in Fairfax, Virginia, we offer comprehensive legal services in wills, trusts, and estates. Recognizing the significance of future planning, our team, guided by Randall J. Borden, is dedicated to crafting personalized solutions for each client’s distinct needs. From drafting wills to setting up trusts and handling the nuances of estate planning, we aim to ensure your financial and personal intentions are effectively communicated and legally upheld. With a deep knowledge of estate law, we are committed to providing peace of mind through meticulous and empathetic legal guidance. For more details or to discuss your specific requirements in wills, trusts, and estates, please feel free to contact us.
What is a Will?
A will is a legal declaration by a person of his or her intentions or wishes, regarding the disposition of his property after his or her death, duly made and executed per the law. For a will to be valid, it can only be made by a person of sound mind and who has attained the age of majority. The will must further be signed and dated in the presence of witnesses.
A will is primarily concerned with disposing of property, but it can also be used for other purposes and incidental matters. They include the following; the appointment of persons to administer the estate of the testator, the appointment of trustees, the appointment of guardians for minors left behind by the testator, directions on how taxes and other bills are to be paid, and disposition of the deceased’s body.
Types of Wills
There are four types of wills.
1. Simple Wills
This is a type of will that deals with the distribution of property in a simple/uncomplicated estate of the deceased person. This type of will bears the name of the testator, marital status and a list of all assets and liabilities. The executor and a guardian (where necessary) must also be named in this type of will. The validity of simple wills is established when two or three witnesses (depending on the state one comes from) have appended their signatures and dates on the will; demonstrating its execution.
2. Testamentary Trust Wills
As the name suggests, this type of will put some of the testator’s property into a trust. Properties put in a trust are exclusively managed by a separate person. In some cases in a will, a trustee can be the same person who has been named the executor. The only difference comes during the process of administration of the property. While the executor hands over the entire estate following what the will requires, the trustee distributes the property in a peace mill, not in a lump sum.
3. Joint Wills
This is a type of will in which involves two testators. In joint wills, the testators leave their property to each other; meaning whoever dies first will leave his or her entire estate to the surviving person. Joint wills cannot be revoked unless it is with the consent of both testators. Like simple wills, this type of will specifies how the estate of the deceased is to be administered.
4. Living Wills
Living wills are more concerned with the type of medical treatment to be accorded to the testator when he or she is not able to give formal consent because of illness. It does not deal with the issues of property distribution.
Characteristics of a Will
The expressed wishes only take effect after the death of the maker of the will missing period
Since a will does not have a specific formula of drafting, any document duly executed, attested *to by the required number of witnesses and dated, and whose effect is to come after the death of the maker qualifies to be a will.
A will only operate (missing s?) as an expression of the intention
A testator merely expresses his or her intentions of how the state (estate)should be distributed. In essence, this does not confer the beneficiary of the legal rights over the bequeathed property. The testator, during his or her lifetime, can sell the property or give (it) out as a gift. The contents of wills, therefore, are a mere expression of intention.
A will is ambulatory
A will is capable of dealing with property that is acquired after the date of execution of the will. For instance, if Smith executed a will in 2018 stating in a specific paragraph that the entire testator’s land was to pass to Jane, this would include any land acquired by Smith after 2018.
A will is always revocable
In many cases, revocation and invalidation of will have been confused. While revocation is done by the maker of a will (testator), invalidation is done by courts especially when there is evidence of lack of capacity or fraud. The testator is at liberty to execute as many wills as possible during (as he chooses?(different phrasing)their lifetimes, so long as they have the capacity. The latest will that has been duly executed and attested as per the law will always revoke the former will.
What is a Trust?
A trust is a legal relationship where the property is held by a designated individual for the benefit of another party. The owner of the property (trustor/ settlor) creates a trust, transferring the property in his or her assets, to a trustee for administration for the benefit of a named beneficiary. For instance, if the beneficiary is a child or a person of unsound mind, the property owner may appoint another person to hold the property and it benefits such beneficiaries. Trusts are created in a written document clearly stating the powers and duties of a trustee. Such documents could a settlement document or a declaration of trust. In some cases, a Trust is created under a will. Therefore, the trustee is in a position of trust (fiduciary obligation) and must always act in good faith.
The named trustee must act in the best interests of the beneficiary. A beneficiary can enforce the duties of a trustee in a court of equity. A trustee is also entitled to compensation for the administration role he or she plays.
Types of Trusts
Trusts are broadly classified into two types: Revocable Trusts and Irrevocable Trusts.
1. Revocable Trusts
Revocable Trusts are created during the lifetime of the trust maker and can be altered, changed, modified, or revoked entirely. Revocable trusts are also known as living trusts. The creator of a trust transfers the property or title in the assets to the trust and places himself or herself in a position to remove the same in his/ her lifetime. This type of trust plays a critical role in avoiding probate. Property being owned under a revocable trust at the time of the trust maker’s death is not subject to probate.
However, it is important to note that revocable trust does not protect assets from the creditor’s reach. Creditors can petition the court for them to access the property held under a revocable trust. Upon the death of a trust maker, revocable trust changes to an irrevocable trust.
2. Irrevocable Trust
An irrevocable trust is a type that cannot be changed, modified, or revoked after its creation. The property that has been transferred to an irrevocable trust cannot be removed by anyone; not even the trust maker.
Other Types of Trusts Include:
Asset Protection Trusts
These types of trusts are created primarily to protect the assets of the maker from claims of future creditors. These types of trusts are usually created outside the country without creating the need to transfer the assets to those countries. In that regard, assets are insulated from attacks from creditors. The asset protection trusts are designed in a way that they are irrevocable for a specific number of years.
What is Estate Planning?
Estate planning is a method through which an individual decides what will happen to his or her estate after their death. It includes writing of wills and creating trusts for purposes of protecting one’s estate. Giving directions on how your health matters ought to be handled at a time when one is not capable of making sound decisions is part and parcel of estate planning.
As is the case with trusts, failure to plan for one’s estate paves the way for probate after death. One of the disadvantages of probate is that it calls for a judicial officer on what happens to one’s estate. It is also costly and will create a liability on the estate of the deceased person. To avoid all these, one could simply create a plan for his or her estate.
The question of taxation is also another reason necessitating the creation of estate planning. Both federal and state governments have a legitimate tax claim on the estate. By creating a trust, for instance, the proceeds of one’s estate can benefit the intended individuals.
After the death of the estate owner, many cases have been witnessed, where families are in constant conflicts on who should get what. This problem can easily be solved through the creation of an estate plan; stating clearly how the estate will be divided, and who should benefit from it.
Minors who should benefit from the estate are accorded protection through the creation of trust funds. Minors are a vulnerable lot. For instance, they can easily lose their estate share to inconsiderate family members. Through this estate planning arrangement, minors have a choice of taking over the estate when they attain the age of maturity.
How is Estate Planning Done?
Estate planning can be done by the writing of a will and or the creation of trusts. Depending on one’s choice, a directive on health matters and how they should be handled can be provided on in the will. Further, the estate executor (the one who will be in charge of estate administration) can be named in the will. Appointment of an attorney, through a power of attorney, is another means of estate planning. An attorney is a legal representative who is permitted by the law to act on behalf of an estate owner in legal transactions. Attorneys can execute any transaction within his or her authority and such transactions shall have the same effect as if the actual owner did the execution. Estate owners who are in different locations can appoint attorneys to represent them in different transactions. Such appointments are done by executing a power of attorney, a document donating the power to the appointed attorney.
- Steps to be followed
- Taking estate stock
This process entails identifying all the assets of the estate. The assets can be both tangible and intangible assets. Tangible assets among others include houses, vehicles, land, and real estate. Intangible assets, on the other hand, include savings accounts, stocks, bonds, insurance, health savings accounts, and business shares. All the identified assets need to be valued. (valued?)
Accounting for Family
This step requires one to assess how well his or her family is protected. Usually, insurance is looked at. Life insurance, health insurance, and children’s education if any, are some of the examples to be examined. Further, in instances where children are still of tender age, one might consider looking for a guardian who will step in in case the parents are not able to provide proper care.
Establishing Directives
At this stage, an estate owner makes directives regarding his or her health (medical care directive), the appointment of an attorney, and the directive on the creation of a trust.
A medical care directive, also referred to as a living will, is made and clear directions on how the estate owner’s future health issues will be handled, are given. An attorney who is authorized to transact on behalf of the estate agent is also appointed at this stage. Attorneys have different powers; some have general powers while others have limited powers depending on the Power of Attorney (a deed executed by the estate owners giving authority to the attorney). The creation of trusts also happens at this stage. As discussed earlier, trusts play a vital role in protecting the estate. Probate can easily be avoided by the creation of a trust.
Review of Beneficiaries
This stage ensures that all the estate planning documents created are up to date and have the right people as beneficiaries and also have not left out any beneficiary. It is important to keep track of and update every document. For instance, children born after the creation of a will ought to be provided for, a fact necessitating the amendment of wills. (rewrite)
Review of Estate Taxes
It is important to review taxes due and payable to the estate during estate planning. In some states, estates of a certain value are exempted from taxes. Therefore it is important to do estate valuation to determine whether one is required to pay any taxes. Sometimes, states overtax estates and without proper review of the estate tax, one may end up overpaying.
What is Probate?
Probate is the legal process applicable to transferring the property in the estate of individuals when they die. In an ideal situation, the process involves the following; firstly, the testator writes a will dispensing his or her property to persons of choice, secondly, the courts verify the validity of the written will, making an account of the estate, the contents of the will are interpreted, taxes and other bills are paid before the final step of the actual distribution of the property and other assets. Probate is normally carried out in a court of law presided over by a judge.
Once the court evaluates the validity of the will and after taking stock of the estate inventory at the time of the deceased person’s demise, the estate will then be subjected to probate and administration rules. In the absence of an estate plan, probate becomes necessary especially when the titles of the different estate properties are still under the name of the deceased person.
When a will written by the deceased person has been declared valid by a court of law, an executor/ executrix will be required to carry out the administration of the estate as per the will. In some instances, the deceased person names the executor/executrix in the written will, while in some, it does not. In General, executors, named in the will or otherwise, must have the probate authority before carrying out the administration of the estate. Therefore, when the executors have been in the will, they have to apply to the court for confirmation of probate powers; and when there is no executor/ executrix named in the will, the law requires either the spouse or adult children or in some cases creditors, to apply to the court to be granted probate administration authority. Executors or estate administrators can sometimes be referred to as personal representatives.
Petitioning the Court
The application for probate in court is done by way of a petition. Such a petition is done by lodging to the probate court with the written will and the certificate of death together with the estate inventory and the proposed mode of distribution by the petitioner. Before the petition is lodged, all the beneficiaries must be notified and must not object to the said application. Creditors must also be informed that the estate owner has died and that probate proceedings are on course. This is an opportunity given to the creditors for them to make their claims over the estate if any. (rewrite)The court will, after assessing the estate inventory, do the valuation of the entire estate.
Administration of the Estate
Upon successfully petitioning the probate court, the administrator commences the estate administration by; payment of debts, taxes, and other expenses. The executors of the estate must identify the legitimate creditors and their relevant dues owed to them by the estate, and pay them accordingly. They must also calculate the amount of tax payable and pay them as well. Depending on the state one comes from, the law varies in terms of tax payable in different estates. In some states, there is a minimum set value the estate must be worth for it to be taxed. Therefore, it is equally important to understand the law of one’s jurisdiction during probate. Understanding the law on taxation is also important because estates can be taxed at both levels of government and without such knowledge, an estate may end up being overtaxed.
After the court has confirmed the executor’s powers to distribute the estate, the executors will then distribute the net estate to the legitimate beneficiaries as per the will. The state title will be transferred to the beneficiary’s name at the end of the probate process. In instances where there is no will, the distribution of the estate is done as per the rules on intestacy known as Intestate Succession. The person in charge of distributing the estate of the deceased person in intestacy is known as an Administrator.
Contact Our Wills, Trusts, & Estate Planning Attorney in Fairfax, VA
As demonstrated above, probate is a subjective process involving court procedures and time-consuming formalities. The outcome of this may not be favorable to the beneficiaries at the end of the day. Ultimately, one may ask if probate is necessary anyway. Well, probate can be avoided. As discussed earlier, there are other alternatives to probate such as; creating trusts, and estate planning. Property held under unlimited trusts, for instance, is not subject to probate. Contact our attorney to schedule your consultation.