Tag Archives: Estate Planning

How to Update Your Estate Plan After a Divorce

estate planning after divorce

Updating Your Estate Plans After a Divorce
NOVA Estate Lawyers – Leesburg, VA

The divorce process is often a very long and painful one. Although you may have already moved on emotionally, some legal aspects of your life can’t move forward until your divorce is finalized by the court.

When you do receive that long-awaited divorce decree, one of your first priorities should be updating your estate plans. If you didn’t enter into a settlement agreement or obtain a “divorce from bed and board” during your separation period, your spouse may still have been entitled to inherit as much as 50 percent of your estate if you die during that time. Once you’re no longer legally married, your ex cannot benefit from your estate unless you want them to.

One exception is retirement accounts and life insurance if governed by federal law. You must update your beneficiary designations to remove your ex’s name from them if you want to be certain they do not inherit from you (see more on this below).

Which estate planning documents should I update post-divorce?

Following your divorce, you’ll want to review all your essential estate planning documents to see where your spouse is named. Here are a few common items to address:

Your will. As mentioned above, an ex-spouse won’t inherit anything left to them in your pre-divorce will, nor will they be allowed to serve as your executor if you named them as such. But if you don’t appoint a new executor and beneficiaries for your estate, a probate court will decide that for you. To reduce time, frustration, and costs for your family, make sure your will gets a thorough revision after your divorce. It’s important to note that any bequests to an ex-spouse’s family members will still be valid, so considering changing those as well.

Trust arrangements. Unlike your will, spousal trust arrangements are not automatically voided upon divorce. If you named your spouse as a trustee or beneficiary in your revocable living trust, consult with an estate planning attorney to make the appropriate changes. Unfortunately, if your trust was irrevocable, you cannot change it to exclude your ex-spouse unless that trust contains administrative provisions at the time it was originally drafted that permit you to void the document if you and your ex ever divorce.  In addition,  if you never funded that irrevocable trust, then you could control what happens with it by simply choosing to create a new trust and never titling any assets into the old irrevocable trust created during your marriage.

Power of attorney agreements. In Virginia, a durable general power of attorney (for financial decisions) where a spouse is the agent is deemed invalid upon filing for divorce or separation. However, a durable medical power of attorney – which lets your agent make medical decisions for you if you’re incapacitated – still stands, even after a divorce. If your spouse is currently named as your POA agent, change these designations as soon as possible.  If you’re entering into a settlement agreement, make sure it contains provisions that revoke your spouse’s role under all powers of attorney executed by you during the marriage.

Legal guardianship designations. If you and your ex have minor children, you likely named a legal guardian together in your wills in the unlikely event you both died. While courts typically grant custody to a child’s other parent when one dies (unless they are deemed “unfit”), be sure that any other guardians named in your will are people you still feel comfortable with, such as an in-law.

Direct beneficiary accounts. Insurance policies, retirement plans, and other “payable on death” accounts have their own separate beneficiary paperwork. By law, certain policies will not pay out to an ex-spouse, but it’s still important to appoint new beneficiaries after your divorce to ensure your money goes where you want it to.

What if I want to keep my ex-spouse in my estate plan?

The Commonwealth of Virginia automatically negates any inheritance to an ex-spouse in wills written prior to a finalized divorce. However, there may be circumstances in which you still want your include your ex in your estate plan, particularly if you have minor children.

If you want to leave money or property to your ex-spouse specifically for the care for your children, the best way to do this is to create a revocable living trust. This allows you to title your property in the name of your trust and then appoint your ex as the trustee, who manages the assets on behalf of your children until they reach adulthood. If you don’t already have a trust, an attorney can help you create one.

If you have an amicable relationship with your now-ex and still want to leave property directly to them, all you have to do is write this into a valid post-divorce will.

Ask an estate planning attorney.

Even if you know exactly how you want to change your will, trust, power of attorney agreements, etc. post-divorce, you should still consult with an estate planning attorney to make sure your documents have the proper legal language and offer the maximum benefits for your loved ones.

Located in Northern Virginia, The Law Office of Patricia E. Tichenor, P.L.L.C. is experienced in both estate law and family law, so we are uniquely positioned to help with your estate planning needs after your divorce is final. Contact us today to get started.

Gifting as an Estate Planning Tool: What You Need to Know

lifetime gifting for estate planning

Gifting as an Estate Planning Tool
NOVA Estate Lawyers – Leesburg, VA

For many people, passing on money and property to their loved ones happens after they die. However, if you have a sizable estate, you may not want to wait until then to give your heirs their full inheritance.

Under current federal law, individual estates valued above $10 million or $20 million per couple (indexed for inflation each year through tax year 2025 – so for 2018, the amounts are $11.2 million and $22.4 million, respectively) are subject to a 40 percent federal estate tax at the top rate. Strategic lifetime or inter vivos gifting can reduce the size of your taxable estate before your death, and help your beneficiaries avoid this hefty financial burden.

Qualified gifting is the complete and irrevocable transfer of assets from one person to another, where the giver does not receive anything in return. Certain IRS exemptions allow you to make these gifts completely tax-free, provided their values fall within the federally allowed limits. Going above these allowable amounts means that you, as the giver, are obligated to report the gift to the IRS and pay a federal gift tax.

If you plan to use gifting as an estate planning tool, you’ll want to plan out your giving and time it properly, so you and your loved ones can avoid as much estate-related taxation as possible. Here is a basic overview of annual and lifetime gifting exemptions, and how you can make the most of them.

Annual Gift Tax Exclusion

For tax year 2018, the annual gift tax exclusion allows you to give any single individual up to $15,000 per calendar year, tax-free. That means if you have three children and give each of them $15,000 this year (or $30,000, if you are married and you and your spouse “split” the gift), you do not need to pay gift tax. However, if you give one child $16,000 in a single year, $1,000 of that is considered taxable, and counts against your allowable lifetime gift amount (see below).

By the same token, your recipient does not have to report annual gifts under $15,000 as income, but they must report any income or interest earned directly from that gift.

Lifetime Gift Tax Exemption

The lifetime gift tax exemption is connected to the estate tax exemption: The $10 million limit is the combined amount that you can give away prior to death and leave to others after death, without being subject to federal taxes. This means that if you give away $5 million in non-exempt gifts while you’re alive, only $5 million of your remaining estate is tax-exempt, and your estate must pay taxes on anything beyond that amount.

If you are married at the time of your death, your surviving spouse is entitled to their own individual exemption plus any of your unused exemption, if you properly invoke portability in your estate plans.

You must also consider that the estate tax exemption is currently set to return to its previous $5 million individual limit in 2026. If you are young and unlikely to pass away before then, you’ll want to adjust your gifting plans accordingly.

Exceptions to the rules

There are a few gifting scenarios that do not count toward the above limits:

  • Marital gifts. If both spouses as U.S. citizens, they can make unlimited lifetime gifts to one another without paying taxes on those gifts.
  • Medical and educational gifts. Payments made directly toward a dependent-beneficiary’s medical services or education (e.g. tuition expenses) is not included in your lifetime gifting amount.
  • Charitable gifts. You do not have to pay gift tax on gifts given to qualifying organizations like charities, religious or educational institutions, government agencies, and 501(c)(3) tax-exempt organizations.

You can learn more about gifting, including specific information about the state laws in Virginia, in our blog post.

Talk to an estate planning attorney about gifting.

If you’re considering making gifts to reduce your taxable estate, it’s important to speak with an experienced attorney who can educate you on federal gift tax laws and other implications of lifetime giving. You can also work with your estate planning lawyer to create a strategic gifting plan that reduces your taxable estate while leaving you enough to support yourself.

The Law Office of Patricia E. Tichenor, P.L.L.C. has been assisting Northern Virginia individuals with their estate plans since 2001, and we’d love to help you create the best strategy for your family’s future. Contact us today to talk about your unique estate planning needs.

Estate Planning Tips for New Parents

estate planning for new parents

Estate Planning for New Parents
NOVA Estate Lawyers – Leesburg, VA

Before you had your child, you only had to think about inheritance for your partner (and maybe your siblings or cousins). As self-sufficient adults, your heirs would be financially OK if you died tomorrow and left them whatever was in your estate. More importantly, they’d understand what to do with those assets and how to manage them.

Small children, on the other hand, cannot financially provide for themselves, and likely wouldn’t have the maturity or knowledge to handle the assets you left them. That’s why, when you have a child, your estate plans need to consider not only the money and property you’re leaving behind, but how your estate will be managed on your child’s behalf, and who will care for the child in your absence.

What’s the best way to provide for my child in my estate plans?

As a new parent, you’ll want to update your estate plans as soon as possible after your child’s birth or adoption. Here are a few key elements you should incorporate:

Legal guardianship designation

One of the most crucial considerations for parents of minor children is who would care for them if both of you were to die. It’s an unthinkable situation, but it could happen, so you’ll need to appoint a trusted, responsible legal guardian in your will. You may also wish to designate this person as a Standby Guardian, who can care for your child if you become permanently or temporarily incapacitated during your lifetime. Always ask a person before you include them as a guardian in your estate plans to ensure they accept and understand their responsibilities.

Revocable living trust and trustee

When you pass property through a will, it goes through a lengthy, expensive probate process. It also becomes tricky when you try to leave assets to a minor child, as they may not be capable of managing money and property yet. Instead, you can set up a trust, in which an appointed trustee manages your assets on behalf of a beneficiary (i.e., your child) until they are old enough to inherit it. A trust has the added benefit of keeping the inheritance process out of court, which means it is faster and more direct.

You can learn more about how a trust works to provide for your minor child or a beneficiary with special needs in our blog post.

Beneficiary designations

If you have payable-on-death assets that require a special beneficiary designation form, such as a life insurance policy or a retirement account, update these to include your child as a new primary or secondary beneficiary.

Aside from the above, a complete estate plan also includes your will, a durable general power of attorney, and a durable medical power of attorney.

You may be tempted to put off estate plan updates because you’re too busy worrying about your child’s immediate needs, but it’s imperative to make time for this. The only thing more important than caring for your baby right now, is making sure they’ll be taken care of if something happens to you.

Speak with an estate planning attorney today.

Every family is different and has their own unique estate planning needs. The Law Office of Patricia E. Tichenor, P.L.L.C. has been assisting Northern Virginia families with wills, trusts, legal guardianships, and other estate-related documents for more than 15 years.

Contact us today to learn how we can help you create the best plan for your family, and ensure that your child’s future is secure.

Estate Planning Documents: What Do I Need?

estate planning documents

Essential Estate Planning Documents
NOVA Estate Lawyers – Leesburg, VA

You probably know you need to write a will to distribute your property and financial assets following your death. This is a good start, but for a comprehensive, complete estate plan, you’ll need a few more essential documents.

Other estate planning tools, such as a living trust and a power of attorney (POA) agreement, work in conjunction with your last will and testament to make sure your intentions are honored on all fronts. Without these additional documents, a probate court may have the final say over what happens to parts of your estate, a process that is both costly and potentially heartbreaking for your loved ones.

Before concluding that your estate plan is complete, be sure that you’ve determined whether you actually need all or some of the following estate planning documents to achieve your specific goals for your plan:

1. Last will and testament

When drafted according to your home state’s laws, your will is a binding legal document that tells a probate court how to follow your final wishes. Every will needs an executor – whether it’s a family member, friend, or trusted professional like an attorney – to oversee the management of your assets after your death. This person will pay your final debts and expenses, file estate taxes, and make distributions to your named beneficiaries.  They will also distribute items from your tangible property list to named beneficiaries if you leave such a list.

2. Revocable living trust

While you still always need a will, many estate planning attorneys recommend distributing some property via a revocable living trust. A trustee of your choosing will manage the assets titled into the name of your trust (before and after your death) – without court interference – on behalf of the beneficiary you designate.  If you decide to add a living trust to your estate plan, then you can have a very simple will that functions as what’s called a “pour-over will,” to allow your executor to merely serve to transfer to the control of your trustee and your trust any assets that you did not title in the trust prior to your death, did not name the trust as the beneficiary of prior to your death, or did not name a living person to receive at your death.

3. Durable general power of attorney and durable medical power of attorney

The person(s) you name in your power of attorney agreements are the ones who have the legal right to make financial and healthcare decisions for you if you become incapacitated during your lifetime. Your POA agents should be individuals whom you trust to act in your best interest if you are mentally or physically unable to communicate your intentions.

4. Beneficiary designations:  Guidance on Non-Probate Planning

Most people know that for assets such as retirement plans and insurance policies, you need to fill out the beneficiary designation forms provided by the company that holds your account. Forms for such assets supersede your will instructions, so always keep them up-to-date, especially if you’ve had any recent major life changes.  However, you can do this with many other types of assets and are encouraged to seek guidance on doing so as part of a comprehensive estate plan.

5. Legal guardianship designation

If you have minor children, you’ll need to choose a trusted legal guardian to care for them if you become disabled or die before they are of age. It’s wise to have this discussion with your potential guardian before naming them in your estate plans. If you don’t, the process can be costly and stressful for the children and family members to deal with, including home visits, possible foster family care, and court appearance to have someone appointed guardian.

Optional: Letter of intent

Although it’s not considered a legally valid estate planning document, you may want to create a letter of intent to guide your estate executor with specific instructions to follow upon your death, including potential funeral arrangements.  Such letters could be a good way to communicate your final burial wishes or the reasons for making certain gifts to certain beneficiaries.   Lastly, such letters might also help a probate court interpret your will and intentions if any part of it is called into question.

Need estate planning forms? Speak with your attorney.

Not sure where to begin with your estate plan documentation? The The Law Office of Patricia E. Tichenor, P.L.L.C. can help. We have been assisting Northern Virginia families with their estate planning needs since 2001.

Contact us today to learn how we can help you create the best plan for your family’s future, and ensure that all the necessary forms are complete and legally sound.

The True Costs of Probate: How to Save Your Loved Ones Money

Probate costs and fees

How to Save on Probate Costs and Fees
NOVA Estate Lawyers – Leesburg, VA

You might think you can save on estate planning costs by skipping the lawyer and writing your own will, or forgoing a will altogether. While a good estate planning attorney does cost money, their fees pale in comparison to what your loved ones will have to pay if your assets get tied up in probate court.

Probate is the process through which a deceased person’s estate is divided and distributed among his or her named beneficiaries if there is a will or to the heirs, as defined by statute, if there is no will. If a person dies intestate (without a will), a probate court will approve an administrator to manage the distribution of the deceased person’s estate as well as the payment to the administrator for providing these management services under the court’s supervision.  Assets where no will exists or where a will is improperly drafted may pass to persons you might never have intended to benefit from your estate.  In addition, if there are not sufficient assets passing through the will, your beneficiaries therein may not (due to improper planning) receive all that you might have otherwise desired.

Even if you write a will and designate your beneficiaries, a probate court still needs to review and accept the document before your beneficiaries receive their inheritance – and you can be certain that the court will take a percentage of it before passing it on.

What are some common probate fees an estate has to pay?

Like any court proceeding, the probate process will incur certain fees that are taken out of your estate, thereby reducing the total value of assets received by your beneficiaries or heirs. Here are a few common probate costs your loved ones may have to deal with upon your death:

  • Court fees. The probate court takes its fees out of your estate’s total value, as dictated by state law.
  • Appraisal fees. To determine the value of your property (both real and personal) and any business interests you owned at the time of your death, your estate will need to pay an appraiser.
  • Executor/Administrator fees. The executor of your will, whether appointed by you or the court, is entitled to a “reasonable fee” paid by your estate for carrying out their responsibilities. However, it is common for executors to waive this fee if they are already receiving a substantial inheritance from your estate.
  • Attorney’s fees. Like your executor or administrator, the attorney representing your estate in the probate process is entitled to receive payment for their services consistent with their hourly rate.
  • Accountant fees. Depending on the value and complexity of your estate, your executor/administrator may need to hire someone to file the proper tax forms, if not prepared by the attorney.

Your estate will also likely be subject to the probate tax.  In Virginia, this tax is imposed on the probate of wills and grants of administration for estates worth more than $15,000.  The tax applies to most estate property in Virginia, except: jointly held property with rights of survivorship; payable-on-death bonds; insurance proceeds paid to a named beneficiary; and property passed through a trust (see below).

How to reduce probate costs

The easiest way to lessen the financial burden of probate is to create a living trust. This estate planning tool allows you to place certain property and financial assets in the care of a designated trustee. While you may be your own trustee during your lifetime, your successor – an appointed family member, friend, or corporate bank entity, for instance – will inherit the assets in your trust upon your death, and manage them on behalf of your beneficiaries (trust beneficiaries are often minor children or grandchildren). If it is a revocable living trust, the terms can be changed at any point during your life.

Because ownership of property held in a trust does not go through the probate process, your family will not have to pay the court fees to receive their inheritance. It’s also faster and more direct than passing property solely through a will, since the court will not challenge or interfere with your decisions. As an added bonus, a trust can even help your family save on estate taxes.

Speak with an estate planning attorney

An experienced estate planning attorney knows the ins and outs of probate law, and will be able to tell you the most cost-effective ways to distribute your assets based on your circumstances. Your lawyer will ensure that your trust is properly created and legally valid, so that when the time comes, your family can receive their inheritance efficiently, and with the least costs incurred.

For more than 15 years, The Law Office of Patricia E. Tichenor, P.L.L.C. has assisted Northern Virginia families with their estate planning needs. Contact us today to learn how we can help you create the best plan for your family’s future, and potentially reduce probate court costs for your loved ones.

The Law Office of Patricia E. Tichenor, P.L.L.C.
Professional Legal Services or Legal Representation
(703) 669-6700

Contact

  • High quality service with both personal and a professional touch. I would highly recommend their services, they helped prepare my estate in the event of my demise. They also prepared the necessary documents to complete my wife's estate after her passing, both with outstanding results. - Jim D.
  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19