Tag Archives: trust

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.

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.

Will Your Estate Plan Be Impacted by the New Tax Law?

Estate Planning Under the New Tax Law

Estate Planning Under the New Tax Law
NOVA Estate Lawyers – Leesburg, VA

When the Tax Cuts and Jobs Act (TCJA) was signed into law in December 2017, it brought numerous, significant changes for individuals and businesses alike.

With Tax Day 2018 behind us, many taxpayers have already felt the impact of this sweeping tax reform. Overall, the changes promise to benefit the average American – some of the provisions of the new law include:

– A lower top tax rate
– Increased standard deductions
– New or increased credits for qualifying children and dependents
– A deduction equal to 20 percent of “qualified” pass-through business income; and, beginning in 2019
– The repeal of the “individual mandate” for minimum essential health coverage and its associated penalty

One important change to the tax code under the TCJA is an increase to the estate and gift tax exemption. Previously, estates and lifetime gifts valued at $5 million (or $5.49 million, indexed for inflation) and higher were subject to federal estate taxes. The new limit, effective January 1, 2018 through December 31, 2025, is $11.2 million ($10 million base) for individuals and $22.4 million ($20 million base) for married couples. Put simply, the vast majority of American estates are now exempt from federal estate taxes.

It’s important to note that if you live in one of the 15 states with an estate or inheritance tax (or both), your estate may still be subject to state taxation if its exemption limits are not tied to the federal limits. Detailed information can be found on the Tax Foundation website.

Why Now is the Right Time to Review Your Estate Plans

Although your current assets may be nowhere near the new federal exemption limit, now is a good time to review your current will, trust, powers of attorney, or other estate planning documents. These new limits are only in place through the 2025 tax year, and will return to the previous $5 million limit afterward. The limit increase could even be reversed sooner, depending on congressional and presidential elections between now and then.

During this temporary increased exemption period, you can clarify your estate plan and ensure that your loved ones are set to reap the maximum benefits – with the least amount of taxes – when you pass away.

Of course, taking advantage of these exemptions requires estate planning documents with the proper legal language and specificity to make sure your wishes are honored. For example, married couples must invoke portability in their estate plan for the surviving spouse to avoid the estate tax on spousal inheritance that was within the exemption limits.

It’s also critical to customize your powers of attorney with specific instructions regarding the distribution and gifting of your financial assets. If your POA is too vague or general, your estate executor and/or financial agent now may not be able to distribute your estate plan to ensure the greatest tax savings to your estate or may have access to  a loophole to legally distribute your money as they see fit – and  not  in ways you intended.

Contact an Experienced Estate Planning Lawyer

Any time there is a change in tax law, life circumstances, or both, you’ll want to consult an experienced estate planning attorney who can help you navigate the complex and often emotional facets of planning for your family’s future. Contact The Law Office of Patricia E. Tichenor, P.L.L.C. to speak with one of our counselors about your estate planning needs today.

What You Really Do and Don’t Need from Your Estate Planning Attorney

What You Really Do and Don’t Need from Your Estate Planning Attorney

What You Really Do and Don’t Need from Your Estate Planning Attorney
NOVA Estate Lawyers – Leesburg, VA

Meeting with an estate planning attorney at various stages or milestones throughout your life can save you – and your heirs – a substantial amount of money and headaches, and ensure that your wishes are carried through in the event that you are disabled by illness or injury, and following your death.

Here are two things that you really do need to put into place with your estate planning attorney, and one that you may not:

You DO Need to Assign Powers of Attorney
Everyone DOES, however, need, and should have, a financial and medical power of attorney. Thinking about death is scary, but being under a medical or other disability without a plan in place as to who you trust to manage your assets, pay your bills, or make your medical decisions for you is even scarier.

Without an assigned attorney-in-fact (sometimes referred to as “an agent”) to manage your financial affairs and medical decisions (including end-of-life decisions), the courts may be called upon to decide, and could select a person that you may have never wanted in those roles. It is also far more expensive to go this route than to have powers of attorney drafted and signed in advance—about 10 times more.

You DO Need a Standby Guardian
When individuals have children under the age of 18, they need a Designation of Standby Guardian that appoints a trusted friend or family member to wait “on standby” in case they are needed to care for a child or children should the parent suffer a severe illness or injury that does not kill them but prevents them from being able to care for the children during a period of recovery.

Not Everyone Needs a Trust
“Many people coming to see me for estate planning services for the first time are confused about whether they really need a Trust,” according to attorney Patricia E. Tichenor, managing attorney of the Law Office of Patricia E. Tichenor, P.L.L.C. “Trusts can be very useful, but they are also very expensive and require additional steps after you sign to fund them or re-title your assets in the name of the Trust.”

With the current Federal death tax “credit” (sometimes referred to now as “the allowable amount”) being more than $5.46 million and subject to annual cost of living adjustments, meaning you owe no additional death taxes to the I.R.S. if your estate is less than that amount, there is a lot less pressure on individuals to use Trust Planning for tax reasons. Of course, some States have adopted their own separate state death tax provisions which may still result in a tax being owed by an individual’s estate. In addition, some States have very costly probate taxes (i.e., California), which make the use of Trusts absolutely necessary.

This is why it’s very important to use an attorney licensed in the State where you reside; one who is very familiar with both Federal and State tax death tax laws. Moreover, if the beneficiaries of your estate are residents of a State that does not have an inheritance taxes, you may then only need a well-written Last Will and Testament rather than a Trust as part of a comprehensive estate plan.

Non-Probate Planning
Along with your Will, you do need to get guidance from your attorney on the pros/cons of utilizing non-probate planning, which means that you by-pass your Will and instead designate beneficiaries by name as a payable on death or transfer on death beneficiary on your bank accounts, insurance, retirement funds, etc., to avoid probate altogether. This is call non-probate planning, as these assets will never pass through your Will, and therefore, will escape probate taxes.

Contact Your Estate Planning Attorney
If you do not have powers of attorney in place or if what you have is more than five years old, we strongly recommend that you meet with your estate planning attorney to set them in place immediately. You never know when illness or an accident will strike, nor do you know the impact it will have on your family or children if you have no plan or an outdated plan in place.

We, at the Law Office of Patricia E. Tichenor, P.L.L.C., will be glad to help you with any legal advice or documents needed to ensure your estate’s security. Contact Northern Virginia attorneys Patricia E. Tichenor and Camellia Safi today to set your appointment.

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

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  • 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.
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