The articles from The Law Office of Patricia E. Tichenor, P.L.L.C. are focusing on
the areas of Family Law and Estate Law, and range of other legal areas.
Every family has its unique situation — and if you’re a stepparent, estate planning can get tricky. How do you handle splitting up assets between half-siblings or stepsiblings fairly? What about estranged children from a previous marriage?
Here are some estate planning tips for stepparents who want to ensure their blended families receive a fair inheritance.
Review your current estate plans
Estate planning is an ongoing process. As life events occur, review your estate plan to ensure your executor will distribute your assets lawfully and properly. A good rule of thumb is to review an estate plan every three to five years, but especially when a major life event happens — such as a divorce, remarriage, birth of a new child or grandchild, the marriage or divorce of one of your children, an unexpected medical diagnosis, death of a loved one or child.
While Virginia statute provides that entry of a final order of divorce effectively invalidates a former spouse from inheriting under an existing Will or serving as an executor (or as attorney-in-fact under a power of attorney), it’s still very important to do more than rely on a Virginia statute when it comes to protecting your estate plan. Whenever you’re facing a divorce or remarriage, it is critical to make sure you update your Will, trust, powers of attorney, payable-on-death accounts, and any other estate planning documents that may mention your ex-spouse or children from your former marriage. If you neglect to update your estate plan after a divorce, the laws governing probate in Virginia may end up passing your assets to persons you never intended or omitting persons you wished to inherit –completely contrary to your actual wishes.
As you update your estate plan as a result of remarriage, it’s a good idea to think about where your current spouse and any stepchildren fit in. In Virginia, absent a signed premarital or post-marital agreement, along with a properly drafted Will, your new spouse will inherit at least one-third of your estate by default, and any children you have from your former marriage will inherit the other two-thirds. In addition, unless you specifically name your stepchildren in your plans or legally adopt them, they will not inherit from you – which may, again, be contrary to your actual wishes if you would prefer to have your stepchildren inherit from you.
An estate plan is only as good as its accuracy. You will not be around to clarify wording or settle disputes, so you must ensure the proper distribution of assets.
Review a list of individuals that will benefit from your estate and a list of individuals you do NOT want to benefit from. To avoid disputes, be intentional and specific about how assets are divided.
Consider a trust
Sometimes a simple Will is not enough, especially in a blended family. You might need to consider a trust. A trust is a legal arrangement between two types of parties — the one who sets up the trust (called a “settlor” or a “trustor” or a “grantor”) and the one who will manage the trust assets (called a “trustee”).
Like a Will, the trust can leave assets to beneficiaries. A trust is unique in the control it provides the person creating a trust to coordinate how the funds will be allocated and even plan for contingencies should a named beneficiary of the trust die before receiving their trust assets. Trusts are also flexible for future planning, and you can freely add additional assets to or remove assets from the trust as well as update the named trustees and beneficiaries – along with, if needed, setting ages for direct distributions to beneficiaries too young to immediately inherit from you at your death.
Take advantage of lifetime gifting
Problems can arise even when you have previously executed a comprehensive set of estate planning documents; particularly given the significant changes to even the tax laws governing estates. To avoid possible contestation after your death, it may even be best to consider leaving a letter of explanation for beneficiary decisions in your estate planning documents. If you are afraid of disputes erupting from large assets, you might also consider gifting assets to individuals while you are still alive — especially for objects of sentimental value or making sure to name that individual as your direct, pay-on-death, or transfer-on-death beneficiary for a financial asset or real estate, so that it passes directly them outside of any will or trust.
Consult an experienced estate planning attorney
Estate planning is a complicated endeavor for a blended family. Without legal help, you run the risk of making costly mistakes while creating an estate plan or managing a trust. Having an attorney help you develop and manage your estate plans is the best way to ensure that your estate is fairly distributed to the people that you love.
Take the guesswork out of estate planning by contacting one of Northern Virginia’s most-trusted estate planning attorneys. The Law Office of Patricia E. Tichenor, P.L.L.C. will consult and guide you through the process of distributing your estate to the ones you love most. Schedule your free consultation with us today.
When a couple with children is making their estate plan, they typically don’t think twice about leaving the majority of their estate to those children. A couple without children may have more to consider when determining how to distribute their assets and possessions, whether it’s to their parents, siblings, nieces, and nephews, or other close relatives and friends. In some cases, they may also choose to leave some or all of their estate to a charity.
In the event of a childless couples’ unexpected deaths, inheritance may be tied to individuals they are related to or associated with by intestate succession laws if they have no estate plan in place. That’s why it’s so important for couples to establish their estate plans early and designate their beneficiaries on their financial assets, through a Will, or as part of a trust.
Here’s what childless and child-free couples need to know about making their estate plans, regardless of their age or financial status.
Do child-free couples need a Will?
Whether you have a Will or not, some part of your estate will likely involve probate, which is a court-supervised process that can be very burdensome without proper estate planning. If you die without a Will or other type of estate plan in place, your entire estate may end up being governed by the law of intestate succession and pass to persons you never would have intended to inherit from you. Worse yet, if you have no living heirs-at-law under the intestacy statute, your estate could become the property of the Commonwealth of Virginia.
For a couple without children to ensure their assets are inherited by the people (or charities) of their choosing, they will need a Will or Trust to specify who their beneficiaries will be in the case of simultaneous death or after the death of the surviving spouse.
Additionally, a Will or Trust allows a couple to designate an alternate or contingent beneficiary, so that if they both die together or if one of their named beneficiaries dies before (or with them), their assets pass to a person or persons they would wish, as an alternate, to receive their assets. A well-written Will or Trust (along with the use of beneficiary designation forms) can also prevent a family member from contesting your plans.
Estate planning goals for childless couples
Here’s how to approach estate planning as a couple without children.
Name an executor for your Will
Your executor is an individual or entity who is entrusted with the responsibility of implementing the desires and arrangements laid out in your Will. This person should be someone who has the capability and character to abide by your wishes and is accountable and up for the task to carry out this important responsibility.
Establish your power of attorney documents
A power of attorney is a legal document that gives another person the power to address the person’s affairs if that person becomes incapacitated and cannot handle such matters on their own (but is not deceased). These include decisions regarding real estate, investments, taxes, debts, and medical care decisions. Even if you are married, your spouse will not have these powers simply by being your spouse; you must execute a power of attorney that formally grants them these powers to act on your behalf. It is also critical to have at least one backup person to step in the shoes of your spouse should your spouse become incapacitated or die such that he or she cannot serve in the role as your attorney-in-fact.
Make sure your beneficiaries are updated
As far as your retirement records, life insurance policies, and other financial accounts are concerned, you should make every effort to identify a primary beneficiary (such as your spouse) as well as an alternate, contingent beneficiaries. You should review and update (as needed) any such beneficiary designations given these assets will pass outside of your Will and probate only if the named beneficiary actually outlives you.
Support your favorite organizations
Couples that don’t have children to leave their estate to may consider giving back to organizations that match the values and interests they have. For example, you may wish to make donations to your alma mater, church, or a favorite nonprofit organization and designate this in your Will or Trust.
Plan for the affairs of your pets
Many child-free couples have beloved pets, and if you do, it’s important to plan carefully for their well-being if they survive you. Options include naming someone in your Will to take over the responsibility of your pets, setting up a pet trust to be funded by your executor or trustee from your existing assets after you die, or choosing an organization to assist in placing your pet in the care of a new, loving family.
Get help with your estate plans
Even if you don’t have children of your own, it’s still extremely important to have an estate plan and to keep it up-to-date. There are many tools available today beyond an ordinary Will or Trust which allow you to create an effective, efficient, and possibly tax-free estate plan. If you have questions regarding estate planning or need help with organizing the future of your assets, set up a consultation with the Law Office of Patricia E. Tichenor, P.L.L.C. today.
Like all state-specific Will laws, Virginia Will laws come with their own unique sets of rules and restrictions. Before working with a lawyer to create your Will, it’s important to be aware of what statements, claims, or promises should not or cannot be included in a legally-binding Will in the state of Virginia.
Here’s what not to include when writing a Will under Virginia estate planning laws.
1. Naming a non-parent as a minor’s guardian (if the other parent is living)
If you are separated or divorced and your minor child’s other parent is not a major part of your lives, you may think you can use your Will to name someone else as your child’s guardian if you pass away. According to the Code of Virginia, if the court deems a living parent “fit and proper” to care for the child, the parent will become the child’s guardian before any non-parents who are named in the Will.
You can, however, name someone as a standby guardian, who will assume responsibility for your minor child in the event that the child’s other parent is deceased or otherwise incapacitated at the time your Will is executed. Choosing a standby guardian for your child can be a difficult and emotional decision, and one you should consider in great detail when you are ready to create your Will.
2. Shielding your estate from the public record
Probate can be slow and expensive. “Probate” refers to the legal process for distributing property after you die that passes through your Will. Not all property will pass through your Will; however, if you proactively fill out and sign beneficiary designations forms for all of your financial accounts to allow them to be paid-out directly to your named beneficiary (beneficiaries) simply by presenting your death certificate to the financial institution holding those assets.
This is called non-probate planning, and it can also ensure protection of those assets from your creditors. Unsecured creditors like credit card companies can only file action against the assets that actually pass through the Will; however, if a Will has little or no assets (or no financial assets), then these unsecured creditors have to simply write off these debts as uncollectible.
Probate is a public record, so if you do wish to keep a section of your estate private, work with your lawyer to review which estate planning documents you need to complete your estate plan, such as a trust. A trust is another excellent way to avoid probate, especially if your beneficiaries are young children or individuals you believe are not ready to manage the inheritance you are leaving to them.
3. Avoiding debt collectors
They say the only certain things in life are death and taxes. When creating your Will in the Commonwealth of Virginia, you must include provisions that direct the payment of both from the assets which pass through your Will.
According to Virginia probate tax laws, if you do have assets passing through your Will, then your executor must use those assets to first pay any taxes you owe as well as debts before distributions to your beneficiaries.
4. Direct bequeathing of property to a pet or improper bequeathing to a person
In the Commonwealth of Virginia, pets are considered property and therefore cannot directly inherit any part of your Will. However, you can speak with your attorney about including pet trust provisions in your Will, or leaving a specific amount of money to a loved one who agrees to take your pet when you die, called a “specific bequest.” Depending on what you want to include in your estate planning, you should work with your lawyer to decide which common types of trust you want to include in addition to your Will.
You also cannot bequeath any property that does explicitly belong to you. According to Virginia estate planning law, this includes shared property with right of survivorship (but not property owned as a tenant-in-common, where each owner holds his or her own 50% interest in the property), unowned property, and illegally obtained property. An example of shared property is a house or car that you co-own with a spouse or other individual who is still living at the time of your death.
5. Overruling beneficiaries
The executor of a Will has a duty to represent the best interests of the deceased, but that does not grant them the right to overrule beneficiaries. If you have previously named someone as the “Payable on Death” beneficiary of a bank account, retirement fund or life insurance policy, those assets will not be controlled by your Will. Always make sure to confirm that those beneficiaries are still the people you intend to inherit from you, and if you know you want those assets to pass through your Will, make sure to update your designations to remove all named beneficiaries so that no one is identified, or identify “my estate” as the named beneficiary for all or a percentage of that your account that you wish to pass through your Will. If you do not take these steps, your named beneficiaries on your accounts will, in effect, overrule any contrary intentions you might have put in your Will.
Drafting your Will is a highly personal and often complex process, and what you can and cannot include in your Will varies by state. At the Law Office of Patricia E. Tichenor , P.L.L.C, we offer Virginia residents over 20 years of experience with state-specific estate planning.