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.

A Guide to Electronic Wills in Virginia

In early 2021, Virginia passed a law stating that testators could execute a valid Will electronically, as long as requirements are met. Since the passage of the Uniform Electronic Wills Act, individuals are increasingly exploring options for the electronic execution of their Wills.

If you’re considering signing your Will through digital means, here’s what you should know under Virginia law.

Traditional vs. electronic Wills

Just like a traditional Will, an electronic Will is a legal document expressing a person’s wishes for the distribution of their property and assets upon death. These Wills are the same as traditional ones as far as coverage, and they accommodate society’s growing use of digital technology — particularly those in younger generations.

It has long been the tradition for Wills to be prepared as hard-copy, written documents, signed in person by the Will-maker, (called a “testator”), in the presence of two witnesses.  With the passage of the Uniform Electronic Wills Act, a testator can now electronically execute a Will in the presence of two witnesses and/or a notary public present via digital means, such as a video conference, while they sign.

How COVID-19 influenced virtual Will signing

Due to the COVID-19 pandemic, demand for virtual Will signing grew significantly as a way to maintain social distance while keeping estate plans on track. As people grew cautious of potential exposures, many opted for a solution in which they could sign a valid Will without risking their health through an in-person meeting.

Even after stay-at-home orders and social distancing guidelines were lifted, many individuals found the ability to execute Wills by video or electronically to be a more convenient and accessible option than coordinating a time to sign in person at their attorney’s offices. Younger generations in particular tend to prefer electronic/digital/virtual options for completing and signing legal documents, which means more Gen Zers and Millennials than ever have begun making estate planning a priority. In fact, from 2020 to 2021, the percentage of 18-year-olds to 34-year-olds with Wills jumped from 16.4% to 27%.  The uptick in campus violence on college campuses has also played a significant factor for parents wanting to preserve their ability to help their recently emancipated children with financial and healthcare decisions should something take place while they are away at college.

Creating electronic Wills in Virginia

Whether it is executed in person or electronically, a Will must meet all of the following requirements to be considered valid in the Commonwealth of Virginia:

  • The testator must be age 18 or older.
  • The Will must be in writing (not oral). While the Will is usually typed, it can also be entirely in the handwriting of the testator. A Will written entirely in one’s handwriting is called a holographic Will, but must still meet all the other bullet-point requirements.
  • The Will must be signed by the testator.
  • The Will must be signed in the presence of two witnesses.
  • While not a requirement for a hard-copy Will, a notary must also sign if a Will is being handled using Virginia’s new law, and it is generally best to sign with a notary there to independently verify the ages and identities of the testator and the witnesses.

According to Virginia law, a Will that is executed electronically must meet the above requirements, as well as be “acknowledged by the testator and attesting witnesses in the physical or electronic presence of a notary public.” The notary can, if needed, serve as one of the two required witnesses.

If you wish to execute an electronic Will, you will typically need to schedule a video conference with all the appropriate parties. Most attorneys who prepare Wills for clients serve as the notary and provide witnesses for signings, and you should inquire of any attorney you hire if they offer this at no extra charge, as is the case with the Law Office of Patricia E. Tichenor, P.L.L.C.

Pros and cons of electronic Wills

Electronic Wills come with both added benefits and disadvantages for those looking to create one. On the plus side, they are much easier to coordinate, as witnesses and/or a notary doesn’t need to be physically present for the Will to be signed. Therefore, it offers the convenience of not having to travel or incur travel costs.

The downside, however, is that the electronic execution of a Will requires access to proper technology and a computer with internet connectivity and video/audio capacity.  In addition, it may give rise to more Will contests if certain family members believe there is anything suspect with the electronic signing.

Are you a Virginia resident wondering if an electronic Will could benefit you? If so, the Law Office of Patricia E. Tichenor can help. Schedule a free consultation to discuss your estate planning questions and needs.

Creating a Special Needs Trust in Virginia

Special needs trusts can help protect vulnerable beneficiaries after the death of a parent or loved one. Although planning for such an event can be emotional and overwhelming, it’s best to prepare as early as possible.

Learn why special needs trusts are so important and how you can create one as part of your estate plan in the Commonwealth of Virginia.

What is a special needs trust?

A special needs trust is a way for the parent or caretaker of an incapacitated individual to provide for that individual in the event of the parent’s or caretaker’s death. There are three different types of special needs trusts:

  • First-party special needs trust, which is used for assets that belong to the incapacitated individual, (whom we refer to as the “first-party”), often as a result of a personal injury or medical malpractice settlement, where a court enters an Order directing that the settlement funds be managed by a trustee for the lifetime care and benefit of the individual until his or her death, at which point any remaining assets pass to Medicaid for use in supporting other individuals with special needs who also require lifelong medical care. This type of trust allows the individual to qualify for Medicaid and other federal or state benefits even though he or she has received a large settlement.
  • Third-party special needs trust, is created by a parent or other loved one, (whom we refer to as “the third-party”), for the benefit of an incapacitated individual using assets that belong to the parent or loved one, never the individual himself or herself. Often, life insurance is used to fund this type of trust at the time the parent or loved one dies.  Because the incapacitated individual has no control over these assets and they are used solely to supplement their needs, in addition to Medicaid and other federal benefits, the assets held by this trust do not count against and cause the incapacitated individual to be disqualified from critical federal or state benefits during his or her lifetime.  If any assets remain in this type of trust at the death of the third-party parent or loved one who funded it, the Trust can provide for contingent beneficiaries (other family members) to receive whatever remains.  It does not pass to Medicaid to re-distribute to other individuals as is the case with a first-party special needs trust.
  • Pooled special needs trust, is created using a formalized legal agreement with a state-approved, nonprofit organization where the incapacitated person’s inheritance is pooled with others and used first for his or her care until death and then the balance is kept in a pool by a corporate trustee (selected by the nonprofit organization) to use for other members participating in the pooled trust. The benefit of a pooled trust is that it allows individuals with very modest assets to have a corporate trustee involved when parents or loved ones have no one else they can appoint as trustee and because many millions of dollars are part of this pooled trust, the corporate trustee management fees are spread out across a large number of assets and more affordable for all participants in the pool.

Why create a special needs trust?

If an individual’s disability keeps them from being able to work and fully support themselves, their caretaker or parent may want to make arrangements to continue providing for them after they pass away without fear that doing so will prevent the individual from continuing to receive critical federal and state benefits such as Medicaid.  Since assets held in a special needs trust do not count against the individual when applying for or continuing to receive such benefits, these trusts offer a lifeline of supplemental assistance where programs like Medicaid fall short, and provide an opportunity for “qualify of life” not just bare subsistence.  Special needs trusts serve as a money management tool, allowing a person or banking institution to use diligence to budget and plan for important expenditures that will never be covered by any federal and state program, such as buying or modifying a home (or vehicle) for the incapacitated person.

How to create a special needs trust in Virginia

1. Consult an experienced attorney.

To preserve your disabled loved one’s ability to continue receiving any government benefits, it is crucial to produce a special needs trust that is well. Work with a lawyer who is already an expert in special needs trusts and can guide you on which provisions need are required in your specific situation. As experts, they can also make recommendations based on your loved one’s age, needs, benefits, and living situation.

2. Establish the goal of the trust.

When preparing your special needs trust, decide what goals you have for the trust. What is important to you for the trust to be able to do? Do you want to avoid probate and have the trust be straightforward? Are you looking to protect the assets from third parties? Do you want to control or regulate the distribution of money? Your lawyer can guide you through those possibilities and make sure your special needs trust is doing everything you need it to.

3. Set parameters.

After figuring out the goals of the trust, work with your lawyer to carefully set all of the parameters. Identify an asset amount, decide when benefits are disbursed for your loved one, who can access those benefits, and, ultimately, what they can actually be used for. This is also a good time to consider a trustee; your trustee needs to be someone who can fulfill the regular maintenance of a trust, like accounting and tax returns, as well as caring for the specific needs of your loved one.

Special needs trust vs. ABLE Act accounts

You might be considering an ABLE Act Account in place of a special needs trust. An ABLE account is a tax-exempt savings account that can be used to hold an incapacitated individual’s own income or assets as well as gifts from others, and the first $100,000 in such assets will not be counted against the individual for purposes of obtaining Supplemental Security Income (SSI) and Medicaid benefits. Under current 2022 Rules, in order to set up ABLE Act Account, an individual must have become disabled before turning 26 years of age, and the contributions to such an Account are tied to the annual gift tax exemption which is currently $16,000 per year.

Although the ABLE Act Accounts can be very useful to hold assets that cannot be part of (or should not be part of a Special Needs Trust), this type of Account works like a first-party special needs trust in that all funds not utilized by the individual from this Account will be captured by and pass to Medicaid for use in providing future services to other individuals.  The balance cannot be passed on to other family members or loved ones.  For this reason, if the funds one has to give to an incapacitated person do not belong to them already and are really being left to them (or gifted to them) by a parent or other family member, it is generally best to utilize a Third-Party Special Needs Trust either in addition to or in lieu of the ABLE Act Account. An experienced attorney can help you determine the best approach.

Want to create a special needs trust to protect your loved one? For over 20 years, the Law Office of Patricia E. Tichenor has helped Virginia families plan ahead and address their unique estate planning needs. Schedule your free consultation today.

6 Estate Planning Tips for Stepparents

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.

Be specific

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.