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Estate Planning Tips for Every Age

It can be difficult and even upsetting to plan for the unthinkable but putting some forethought into your estate planning can bring added comfort to what often is thought of as the “bureaucratic side of death” that your loved ones will experience should you pass away.  No matter what age you are, there are some things you can do to start documenting your final wishes and the kind of legacy you leave behind.

 

There are incremental steps you can do at certain ages and stages of life to make an estate plan, and these steps will make the planning process far less daunting.  Here are some expert estate planning tips for every age, from your 20s through your 60s and beyond.

Estate planning in your 20s

You may not have many assets in your 20s, but your estate plan should, at the very minimum, include using beneficiary designations on your financial assets (and even your home if applicable using a Revocable Transfer on Death Deed).  In addition, you should ensure you have a financial power of attorney and healthcare power of attorney (POAs) in place to ensure if you’re injured, but not deceased, from an unexpected life event, you have the people you know and trust managing your financial or medical care decisions for you until you regain the capacity to handle those matters yourself.

POAs play a critical role for anyone at any age thinking of his or her estate plan.  Your healthcare agent (also known as an attorney-in-fact) under your healthcare (or medical) POA is someone you choose to make medical decisions for you should you become unable to do so.  This document can also include a healthcare directive or living will, which documents your end-of-life wishes if your injuries or medical condition become terminal and, in effect, irreversible (i.e., brain death).   Your agent acting under your financial POA is someone who handles all financial matters, your mail, your taxes, and even (if applicable) business affairs if you are unable to handle them yourself.

In selecting a person to serve as your agent for a healthcare POA or a financial POA, you should select someone you not only trust but, also, someone who you feel is organized and sufficiently savvy to manage (or employ others if needed to help manage) your affairs.

As for your Will, if you don’t have major assets, a spouse, or children, a simple Will may be enough to cover what you currently have.  However, it’s advisable to consult with an experienced attorney to find out whether this would be sufficient and whether avoiding probate entirely by using a different approach to your particular estate plan or assets is important (e.g., Do you need to provide for a pet or pets?  Do you want to be sure that what you leave can pass to a specific family member who has special needs and is not able to manage what you leave them personally should they inherit directly from you?).

Estate planning in your 30s

Many people in their 30s have a long-term partner or are married.  They may also own a home, have children, and have more substantial assets.  When you need to consider protecting and providing for someone other than just yourself, it’s even more critical to prepare a well-thought-out estate plan and periodically review that plan to ensure you address any important changes in your life, your spouse’s life, or your children’s lives.

It may be a good time to determine whether a trust, sometimes called a Revocable Living Trust, is a better tool to use than just an ordinary Will, especially if planning for young children to ensure they are not only protected but that someone can provide for their day-to-day needs should you and your spouse no longer be alive.

Unlike assets left to beneficiaries in a Will, a trust protects assets owned by the trust or made payable at death to the trust from going through probate.  It offers greater flexibility to provide for any minor children, while also controlling what happens with inheritance for children over 18 but not old enough (in many parents’ minds) to receive all of their inheritance at once.  A trust can also be a useful tool to provide for the care of a beloved family pet (or pets).  If you do have minor children, you will also want to grant power of attorney for a minor child or designate a standby legal guardian for them as part of your estate plan to ensure that if you and your spouse both become incapacitated and unable to care for them due to a medical or another issue, you have a trusted family member or close friend empowered to step in and protect your children’s interests.

Estate planning in your 40s

Many people begin accumulating more wealth and assets throughout their 40s.  At this stage, it is a good time to start talking to family members about your plans.  These conversations will be some of the most difficult discussions of the entire estate planning process. However, it’s better to start them early than leave your family in the dark about your estate plans.  Make sure to inform your loved ones of asset distribution and your wishes for medical decisions and long-term care if you develop a health condition.

Additionally, put together a list and folder of important records and documents that disclose where an executor for your Will or trustee for your Trust can locate your assets, and indicate if there is a designated beneficiary on such assets.  Include that person’s full name, date of birth, address, mobile number, and relationship to you (if needed).

Estate planning in your 50s

By the time you reach your 50s, you may want to look at estate plans made earlier in your life and update them to account for any life changes you may have experienced.  Perhaps you sold a home, got divorced, or now have grandchildren with whom you’d like to share your estate.

Ensure that all documents, including your payable on death accounts (like a retirement savings plan) and powers of attorney, are up-to-date, and that you have clear plans outlined for how your loved ones should handle your affairs in case of incapacitation.

Preparing a folder or binder with all the necessary information, contacts, and documents in one place can help loved ones navigate your affairs.  Many individuals even include a step-by-step guide to minimize difficulty and stress for their loved ones, especially if it would be their first-time being responsible for someone else’s legal affairs.  This includes caretaking instructions for young children and family pets.

Estate planning at 60+

By the time you’re age 60 or older, your estate plan should all be in order.  Beyond this point, it is wise to periodically review your documents for any possible discrepancies and update them as needed, especially if your health takes a turn or your family or financial circumstances change.  This kind of regular maintenance can help address changes before they become emergencies.  That way, your loved ones will know what to do when you pass away, and you can feel secure in the knowledge that your family will take care of your assets and distribute them according to the wishes set forth in your Will, Trust, or other estate planning documents.

However, if you have not yet gotten a chance to prepare your estate planning documents, you should prioritize them.  Although this may seem a daunting task, you can ease the process by consulting a lawyer experienced in estate and trust planning who has helped thousands of clients with working through things step-by-step to help prepare the necessary documents.

Estate planning at every age in Virginia

Regardless of your age, your estate plan should always include an inventory of your tangible and intangible assets, your list of beneficiaries as well as what they should receive, and your financial and medical powers of attorney.  In Virginia, you will need to have these items in writing and signed by two witnesses, and typically all of you in the presence of a notary public.  Different copies of your documents can be kept in a safe place in your home, with your lawyer, and with your appointed health care POA agent, financial POA agent, executor, and (if applicable) the successor Trustee to a Trust.

Tangible assets can be any property you own, like furniture or jewelry, while intangible assets can be intellectual property or bank accounts.  Consider any risks to your assets, such as overdue mortgage payments or property taxes.  Your estate will need to cover those costs, which you should factor into your planning.

Depending on the size of your estate, the executor of your Will may have to contend with federal estate taxes, so plan ahead for those in the preparation of your estate plan. Although Virginia does not place an inheritance tax on those who live in the state when they inherit, you may have to consider an inheritance tax if your beneficiaries live outside of Virginia. To plan for those instances, look into the inheritance tax laws in the actual states your beneficiaries live in.

Get help with your estate plans at any age

Whether you’re creating your first Will or updating an existing estate plan, the Law Office of Patricia E. Tichenor can help. We’ve been serving Virginia residents for 20 years and can advise you on the best estate planning tools for your current assets and needs. Contact us to schedule your complimentary consultation today.

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.