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THE LAST WILL AND TESTAMENT IN VIRGINIA:
How to Write a Will or Codicil and Avoid the Expense and Risk of Dying Intestate
WHAT IS A WILL?
Writing a will is the way to specify who becomes the guardian of your minor children if you become incapacitated or die. If you do not have children, a will is a straightforward legal way to bequeath (leave) property to the people or charities you designate. Any person who is mentally competent and over the age of 18 can make a will. A properly written will can be part of a flexible plan that allows for things to be taken care of without unnecessary stress or expense. Nevertheless, the law that governs wills is complicated. Do not mistake this information as instructions on how to prepare a valid will or a substitute for a consultation with an estate planning or will attorney. Some people are tempted to try to save money by using a last will and testament form, a free will or buying do-it-yourself software or an online will (read the disclaimers that come with these products!) is like trying to save money by doing your own surgery. Having a bad will is worse than having none at all – you only learn what it costs after it is too late.
Wills are governed by state law. This summary is based on Virginia law and is meant for Virginia residents.
A codicil is an amendment to an existing will; it may add, remove or clarify provisions already made. A codicil is executed with the same formality as a will and is used to modify an existing will. Because a codicil has the same requirements as a will (and depends on the validity of the original will) it is an unfortunate reality that attorneys who do not focus in this area of the law often make mistakes when trying to modify a will. Most people are also not aware that writing on a will after it is signed usually invalidates it. If a person dies without a will in Virginia (or dies with an incorrectly done or invalidated will) they are called intestate.
Intestate means that the law considers them as having no will and default rules are applied to determine what happens. The default rules for intestate people (also called the laws of descent and distribution) are based on English common law and makes assumptions about who should inherit and in what percentages. These rules, like the rules of nobles and English estates, follow bloodlines and do not take into account aspects of many families like second marriages, children with sufficient assets of their own or relatives that people would not want to inherit. In addition, intestate estates must be administered through the court and substantial additional fees (often many times the cost of a well prepared will) must be paid in a process that involves a lot of red tape and a good deal of waiting around.
For those who want to keep what they have worked for and save their family money and stress by not dying intestate, there are several things to keep in mind.
To help your understanding of what wills are and how they work, it is important to know some basic vocabulary. The person writing a will is called a TESTATOR. People who would receive property when a person dies intestate are called HEIRS AT LAW. (Remember that even if your preferences match the default state rules you still pay more and have less control without a proper will). The persons who are named in a will to receive property are called beneficiaries. WILL BENEFICIARIES can be family members or other people who are not relatives. Beneficiaries can also be entities (an example of a bequest to an entity would be, “I give my estate to the public library.”).
The person in charge of an estate where there is a will is called an executor (or an executrix, depending on the person’s gender). An executor can be named as one person acting alone, or more than one person acting together. Executors can act unanimously or separately. Testators can also specify that if one executor is not able to act (because she has died or is ill, for example) then another executor(s) may act. No will fails for lack of an executor. An attorney who is a member of the local probate bar will often be appointed to serve as an executor if the executor named in a will cannot be found or is unable to serve for some other reason. There are also corporate executors and bonded professionals who serve as executors. The function of an executor (or an administrator in the case of a person who is representing an estate but is not named as an executor in the will) is to ascertain what the decedent owned, determine what creditors need to be paid (even nominal expenses, like an electric bill), and distribute the assets in accordance with the will’s instructions.
A trustee is a person or an entity that holds legal title to property for another’s benefit. Trusts can either be created during life or after the person has died in accordance with particular instructions set forth in the last will and testament (this is called a testamentary trust). A trust must own property and serve a specific purpose. It must also end at some time or upon some event. There are many different types of trusts, however, two of the most common trusts encountered in wills planning are those related to minors and spendthrift trusts. Trusts for minors are ways to protect property when the recipient is under a certain age (any age under 18 or up to a limit specified by the testator, often 21 or 25). A spendthrift trust is a way to benefit someone who cannot hold title to property or assets themselves for fear that they would spend them unwisely. There are other kinds of trusts that may be used in a will, including pet trusts and special needs trusts. Care must be taken to ensure that these trusts are enforceable and do not create ongoing expenses that will deplete a person’s estate.
EXECUTOR VERSUS TRUSTEE
A key difference between and executor and a trustee is that the trustee has discretion to make decisions based on principles that are set forth in the trust or the will (in the case of a testamentary trust). An executor can only distribute property and report when it is done. Therefore, trusts for the protection of minors are often an important consideration when deciding how to write a will. If done correctly, these provisions can not only provide for minors’ benefit when they are under the age of 18, but can preserve property until a beneficiary reaches a certain age (such as 21). Another feature of this kind of trust is that if it is written correctly it will not be created unless necessary, which saves money and time and also ensures that wills do not necessarily have to be re-written just because a minor reaches a certain age.
WHAT IS A LIVING WILL
One of the most common questions is what is a living will? A living will is different from a last will and testament and as the name implies only works while a person is alive. A living will (actually called an advance medical directive or in other states a healthcare power of attorney) is a document that appoints another person (or people) to make healthcare decisions for someone who becomes incapacitated, either temporarily or permanently. Incapacitated means that someone does not understand what it means to take an action or refrain from taking an action related to healthcare. There are other important aspects of a living will that make it one of the most important documents a person can have, but it is not the same thing as a last will and testament.
To Get Where You Want to Go, You Need a Map
Wills are just part of a total plan for ensuring that your goals are met. There are several steps that have to be coordinated carefully. These include statutes (you cannot, for example, disinherit a spouse regardless of what a will says), gifts made during life, deeds and other ways of transferring property. For example, a car can pass by rights of survivorship, just like a bank account. Other assets, like life insurance benefits, can be paid either inside or outside of an estate. Depending on the circumstances of the family doing the planning, the assets may be titled differently at different times during life. By using beneficiary designations, it is possible for many assets to be transferred without probate.
Care must be taken to ensure that one or another of the documents do not create a result that you would not want. When writing a will, it is important to remember that the will only controls property that is inside it. If property is gifted during life, for example, then that is not part of the probate estate and will not be administered in accordance with the will, regardless of what the will says.
HOW TO WRITE A WILL
How to write a will is determined first by a person’s own wishes. There is no single format or sample will that is right for everyone. At the same time, however, there are some basic provisions that are good starting points for most people. Most people want to maintain as much control as possible over their assets during their lives. People who are married often want the surviving spouse to inherit all or most of their assets with full control over them during their life. At the second death, people with children usually want to benefit their children in some way.
The manner of distributing assets is quite flexible and, subject to some tax considerations, is usually determined by the testator’s wishes and the dynamics of their family. It is a good idea to provide clear guidance for the executor(s) in case there is a question about how an estate is to be administered. An example of this would be a general directive to divide tangible personal property among persons in a class as those persons agree. A well-drafted will should also contain a provision that says what happens if they do not agree. In this way disagreements and associated bad feelings and expense of mediation, etc., can be avoided. Other examples include formulas for determining the sales price of an asset (e.g, a house to be sold by an estate or offered to a beneficiary and how the offer is to be made).
A will is a private matter. Whether and when to disclose plans that have been made is a very personal decision and will depend upon the dynamics within a particular family. Even families that get along well may not want to share copies of wills during life (perhaps the testator may decide to change their estate plan). Some documents, however, like living wills (medical directives) should be provided to both the agent, as well as other people, including a person’s primary doctor.
Think About The What Ifs
To write a will that lasts, the testator should think about possible short-term contingencies (such as accidental death) and the likely course of events if life goes as we hope. Good planning means that the person creating a will not only thinks about themselves, but the people named in the instrument. This planning may also include people who are provided for but who have not yet been born, such as future grandchildren.
Questions to consider include how to select an executor and a substitute executor. What happens if an executor who has been selected cannot serve (because of death or incapacity)? What happens if an executor who might otherwise have been able to serve moves away or declines to act? What about issues like divorce and remarriage? The same kinds of questions apply to beneficiaries.
It is important to remember that none of us has a crystal ball. It will never be possible to know all the answers about our assets (how many will we need for our own purposes? How many might be left over? What happens in the case of a complicated asset like a small business that is operating?). We can, however, do the best that we can with the information available to us and write wills that are designed to last as long as possible and work in as many likely situations as may occur.
Equally important to remember is that a will can be changed as long as the person who wrote it is living and has the mental capacity to change it. Note that physical disability alone does not prevent someone from changing their will. Therefore, it is important to keep track of major changes within your family (births, deaths, marriages, divorces and allowances for gifts or loans during life, among other things) and to make sure that your estate plan is updated if necessary. Nevertheless, it is important to anticipate as many things as possible when writing a will so that the need to change it later is not built in from the start.
State and Federal Law
Even though wills are creatures of state law and determined by the jurisdiction where a person lives, federal law does play a part, as well. Prior to 2013, federal tax laws made for very uncertain estate planning. The recent changes in federal tax law mean that most people’s estate planning decisions are not driven by taxes.
Spouses can pass an unlimited amount of assets to each other without penalty. In 2016 for transfers to other persons (including children), an individual has a federal estate tax exemption of $5.45 million. This can be doubled for a couple (provided certain tax return rules are followed), meaning that the exemption for a couple is $10.9 million. In addition to this limit, individuals can give up to $14,000 each year to another individual (such as from a parent to a child) with no tax consequence to either party.
Virginia tracks the federal law (there is no separate Virginia estate tax, such as in Pennsylvania). These limits are so high for most people that they do not have to worry about estate taxes. This is not to say that Virginia does not collect money from people who do not plan carefully. Commissioner of Accounts and probate fees average $900-$1,100 per each decedent ($2,200 per couple), depending on the amount of assets and the complexity of an estate. These fees are mandatory if the assets are administered through probate and may as well be called taxes. The actual Virginia probate tax is a rather smaller affair: Virginia assesses a tax at the rate of 10 cents per $100 on estates over $15,000. For example, the tax on an estate valued at $15,500 would be $15.50. Localities may also impose a local probate tax equal to 1/3 of the state probate tax.
Careful planning with an experienced attorney will allow people who write wills to greatly reduce or eliminate most of the expenses associated with estates.
There are provisions within the law by which a person named in a will (or not named in a will) may challenge the will. The reason for challenging a will may be a desire to return to a prior will (see above for discussion about not necessarily sharing estate plans with family members) or to try to overturn it in favor of the default rules in state law. The two basic challenges to a will are that it was procured by fraud or that it was written by someone who was subject to undue influence (think about the situation where an elderly parent says repeatedly that she wants all of her children to inherit equally, but after she dies a new will is found naming a family friend – upon whom the parent depended to get to the doctor and manage the house – inherits everything).
There are legitimate and illegitimate will contests. A parent is not required to leave his child any property. It is wrong to assume that there must automatically be difficulty in families after parents die. It is risky, however, to write a will without considering what happens if someone (a family member or otherwise) tries to challenge it. Good practitioners can address this situation when writing the will so that there is minimal risk of any such contest later.
Don’t Forget The Things That Money Can’t Buy
By itself, even a well-written will is just a device to achieve objectives within the bounds of the law. To maximize the effectiveness of your documents, remember to think about what you want your legacy to be and how to communicate that to the people responsible for carrying out your wishes. Some of those communications will likely be made verbally during your lifetime, while others may be in writing.
GUARDIANSHIP and other provisions
Some of the most obvious aspects of a legacy are provisions for guardianship for children. Other components may include a plan to keep a family business running or to preserve a family home or farm. When thinking about what instructions to leave, it is wise to also leave some details about the reasons for the instructions. In this way, the writer can communicate the principles behind the provisions in a will. These are often difficult to communicate and can change over time. The ways of communicating these parts of a legacy are varied and as unique as the individuals who create them. For some, a family meeting(s) may be in order. For others, they may want to leave a video or perhaps explicit language in the will or trust. Others may want to type a letter(s) or perhaps write one in their own hand to be kept with the documents. Although important to consider and useful to include with documents related to what a person owns and what to do in the event of incapacity or death, do not let these statements of principle be an impediment to writing a will. You do not have to know exactly how everything is going to go or everything that you will want to say in order to get started. Getting started is the most challenging part of most projects. Protect your family by creating a plan.
All content written by and copyright Clint Sellers