Liquidation of an Estate Following Death

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Liquidation of an Estate Following Death
NOVA Estate Lawyers – Leesburg, VA

Liquidation in the simplest terms refers to the conversion of hard assets to cash. Liquidation of an individual’s estate does not just occur upon a death. It can also occur when a parent chooses to liquidate assets in order to fund something like the purchase of a second home or a child’s college tuition. Liquidation can also occur as a result of bankruptcy, where assets must be liquidated to pay off debts owed. For purposes of this blog article, we will focus on liquidation as a result of a death.

Liquidation of an estate most often occurs when someone in the family dies, and refers to the disposition of everything owned by that person. It can be divided into two classes: real property (real estate) and personal property (which includes tangible personal property such as a car and intangible personal property such as stock certificates, bonds or CDs).

An estate liquidation is typically held with the purpose of legally clearing out tangible personal property. Depending on the title of real property and whether there are any designated beneficiaries for a decedent’s intangible financial assets, there may also be some need to liquidate these assets.

Often a family will retain legal counsel to assist them with understanding exactly how to distribute the assets of a decedent’s estate if there is no Will or other directive in place, such as a beneficiary designation, that gives clear instruction. This could include: real estate, stocks, bonds, investments, other financial assets, jewelry, heirlooms, furniture, etc. Items that cannot be transferred to a specific beneficiary may need to be liquidated through auctions, estate sales, or donation.

The difference between an estate liquidation and an estate sale is that the liquidation can include stocks, bonds, real property, collections such as coins or fine art, and fine jewelry. Usually the estate liquidation involves the use of professionals such as an estate attorney, CPA, appraiser or Realtor.

Another consideration for liquidation is the payment of debts as well as estate tax, income tax or inheritance tax. An experienced estate and probate attorney can provide necessary guidance to families on how best to address these issues.

Hopefully, the deceased individual prepared an estate plan, to include a Will or Trust, or a designation of a survivor/payable on death beneficiary, to leave clear instructions on the distribution of their estate. If not, the estate would require possible costly probate of most (if not all) of their assets.

Steps to Handling an Estate Following a Death

• Locate any will or trust to determine who has been appointed to serve as executor or trustee.

• Obtain several certified copies of the death certificate.

• Gather the mail and notify any creditors of the decedent (e.g., mortgage company, utilities, credit cards) of the death, and to freeze further activities on any lines of credit other than what will be paid once an executor has been officially recognized by the proper court in the county/city where the decedent died. Never pay any bills with your own money. Most creditors will make a note of the death in their file and give some leeway on when the next payment may be due. In cases where the estate is effectively without assets to pay creditors, none of them should be paid without first speaking to an attorney about the enforceability of such obligations, as it is not uncommon for such creditors to simple write-off these debts as a loss on their books due to the fact that the estate it too insolvent to pay any debts.

• Secure any real or personal property, meaning lock down the decedent’s residence and do not allow family members to remove any items prior to the executor (referred to as an administrator if there is no Will) to qualify and properly itemize all the contents of the residence to the court as required by law. Distribution of assets is a formal process and requires the signing of a receipt by any beneficiary with the receipt providing protections to the estate and the executor should the item(s) need to be reclaimed later for legally-enforceable obligations such as federal and state taxes that the decedent might owe.

• Notify agencies such as the U.S. Dept. of Social Security, U.S. Dept. of Veteran’s Affairs, Office of Personnel Management, or other federal agencies who may have touched the decedent’s life, any insurance companies, and credit reporting agencies such as Experian, Transunion and Equifax, so that no one can use their social security number to obtain new accounts or credit.

• Secure guardians for minor children or dependent adults (if applicable).

Steps to Settling an Estate

• Consult with an experienced estate, trust and probate attorney in the state where the deceased lived at the time of death.

• Check to see if a revocable living trust is in place and whether any assets were titled into it or will be added to it by the decedent’s Last Will and Testament. After qualifying as executor, the executor must follow the terms of the Will, and any trustee must abide by the terms of the trust for distribution of property.

• Typically, the Executor of the Will will be responsible for fulfilling the legal duties under state law, and the administrative tasks such as inventorying property and assets, notification of creditors and payment of debts and taxes. However, if there is a Trustee, they should work together to ensure proper management and distribution of all assets of the decedent occurs.

• If there is no trust or Will, for the deceased’s assets, check to see if the decedent held things jointly with another person who would inherit by right of survivorship, or if s/he named a beneficiary to receive the assets at his/her death, also referred to as a “transfer on death” or “payable on death” beneficiary designation. If not, then all assets of the decedent (with certain exceptions in states like Virginia which follows the “drop like a rock” doctrine for real estate) will be subject to the reporting requirements of probate and be supervised in terms of distribution by the Court (in Virginia, the Circuit Court and its Commissioner of Accounts). This can result in costly additional fees and taxes as well as delays in the ability to deliver inheritance to loved ones who may need financial support. Any surviving spouse should confer with an experienced probate attorney about his or her legal rights to statutory protections involving a family allowance, augmented estate rights, and more.

When faced with the challenge of liquidation arising from the death of a family member or friend, there are many legalities that must be followed. An experienced estate, trust, and probate attorney can guide you through the process, answer any questions you might have, and put your mind at ease.

Contact the Law Office of Patricia E. Tichenor

You have enough on your mind with the death of a loved one; let your estate attorney help ensure the smooth transition of assets and the settlement of the estate. For estate liquidation questions in the Commonwealth of Virginia, contact Law Office of Patricia E. Tichenor, P.L.L.C. located in Leesburg, Virginia. Since 2001, we’ve been helping families set up trusts, revocable living trusts, wills, living wills, and guardianship documents, as well as assisting them with probate/estate liquidation issues. You’ll like our warm, consultative style of interaction and no-nonsense approach to getting things done. Contact attorneys Patricia Tichenor or Camellia Safi today.

Protect Yourself During Times of Charitable Giving

Protect Yourself During Times of Charitable Giving

Protect Yourself During Times of Charitable Giving
NOVA Estate Lawyers – Leesburg, VA

December could be known as the “giving season” because that is when many people’s thoughts turn to gift giving and charitable donations.

You may also see that charities use this time of year to solicit donations. This is where you need to be careful, and do your due diligence to discover whether this organization is a legitimate one or not. Here are some tips to protect your donation:

1. Know who wants your money. You may receive telephone calls, letters or emails asking for money, but you have every right to ask what percentage of your donation actually goes to the charity or fundraiser. If you don’t get a clear answer or don’t like the answer, look at donating to another group.
2. Verify the charity. Before handing over money to an unknown person or caller, check with the charity to make sure this solicitation is legitimate. Unfortunately, there are scammers who use an organization’s identity to grab money.
3. Keep records of your donations. You may get a solicitation from someone thanking you for your donation of last year and asking if you’d like to repeat it again this year. If you don’t have a record of your pledge or don’t remember it, don’t automatically say “yes.”
4. Understand the difference between “tax deductible” and “tax exempt.” If the donation is tax deductible, you can deduct your donation on your tax return. Tax exempt only means that the organization doesn’t have to pay taxes.
5. Don’t send cash. For both tax records and security reasons, never send cash through the mail or give a cash donation. Use a credit card or check that can be tracked. If giving online, check the organization’s URL in the browser bar and make sure it begins with “https”. The “s” means that the site is secure and the private information you are entering (such as your credit card information and password) is encoded and protected from hackers.
6. Don’t trust the drop box. Groups place drop boxes around the area where you can donate clothing and household goods. Verity that the organization is legitimate before donating by calling the phone number posted on the box and checking the website.

Laws for Charitable Solicitation
Charitable organizations are required by law to register with the government before soliciting contributions, and those in Washington, D.C. must register in Virginia and Maryland as well as D.C., since their solicitation circulated in the Metro area.

Ways to Check Up

There are several ways to verify that the soliciting organization is legitimate. Try these resources:
BBB Wise Giving Alliance, Arlington, VA, 703-276-0100
Guide Star, Williamsburg, VA, 757-229-4631
• Military Relief Societies

How to Reduce Solicitations

If you feel like you are getting too many solicitations, there are ways to reduce the contact you receive:
Sign up on the Do Not Call Registry. Although charities may be exempt from the rule, this should reduce the number of calls you receive. Register online or call 1-888-382-1222 from the phone you wish to register.
• Sign up for the Direct Marketing Association’s Mail Preference Service. This will allow you to opt out from receiving unsolicited mail for five years.
• Send a note to the charity. Along with your donation, send a note requesting that your personal information (email, phone, address) and donation history not be shared, rented, sold or exchanged.
• Ask the charity to put you on their Do Not Call list. Legally, they cannot contact you again upon receiving this request. If they do, report their contact to the state Attorney General or the local consumer protection agency.
Bear in mind that the FTC’s Telemarketing Sales Rule requires that telemarketers reveal immediately the charity they represent, and to restrict their calling times to between the hours of 8 AM and 9 PM.

Contact Your Estate Law Attorney

If you have questions about selecting or verifying a charitable organization, or the tax or estate planning ramifications of a giving campaign, contact Patricia E. Tichenor or Camellia Safi, estate law attorneys at The Law Office of Patricia E. Tichenor, P.L.L.C. We’re conveniently located in Leesburg, VA to serve clients throughout Northern Virginia.

If you have never thought about including a charity aspect in your estate plan, we can help you put that into place as well. Contact us today.

Navigating the Costs of Nursing Home and Long-Term Care

Navigating the Costs of Nursing Home and Long-Term Care

Navigating the Costs of Nursing Home and Long-Term Care
NOVA Estate Lawyers – Leesburg, VA

When you’ve worked a lifetime to accumulate wealth, you don’t want to lose it all due to a disability, prolonged illness or cognitive impairment such as Alzheimer’s disease. Since approximately 69% of the population aged 65 and older will develop disabilities before they die, and 35% will eventually enter a nursing home, reports the Family Caregiver Alliance, it is imperative to plan ahead.

The organization goes on to report that in 2010, about one in eight people age 85 or older (13%) resided in institutions, and by 2012, 1.4 million people lived in nursing homes nationally. Alarmingly, one in four people age 45 and up are not at all financially prepared if they suddenly required long-term care for an indefinite period of time.

Elder law and estate planning attorneys work with families to discuss techniques to protect families in the event that long-term care is necessary.

One method of protecting your financial security is to shift as much of the cost as possible onto a third party such as Medicare, Medicaid and private insurance. But be aware that Medicare does not cover the costs of long-term stays in nursing homes.

Long-Term Care Insurance
Another method is to purchase long-term care insurance. This is available to healthy individuals for potential coverage in the event that long-term care is required. However, this insurance can be costly, and therefore is not widely utilized.

Medicaid
A third option is Medicaid, the most likely to provide financial assistance. Qualifying for Medicaid is complicated, and may require an experienced attorney to help navigate its rules. For example, you may not be eligible if you carry assets above the allowance levels. Some of these assets can be used for debt reduction prior to applying for Medicaid. Medicaid also does not include assets like your home, car or personal assets in its qualification process. This allowable spending to purchase such items can reduce your cash assets and enable eligibility for Medicaid benefits. For example, instead of turning your money over to nursing home care, spend it on home improvements, a new car, or funeral arrangement prepayment, or use it to pay off outstanding debts.

Convert Assets into Income
Assets can also be converted into income, such as annuities, but specific requirements are needed in order to qualify for Medicaid planning. This again is where you need to speak to an estate or elder law attorney.

Transfer Assets

Some seniors pass along assets to their children or heirs early to preserve wealth and “spend down” their assets before applying. In order to prevent fraud in this area, Medicaid has implemented a five-year look-back transfer penalty law. To avoid a penalty, advance planning is a must. In fact, the farther ahead you plan, the more options you will have.

Create a Trust
The creation of an irrevocable trust can also help to preserve assets while allowing eligibility for Medicaid coverage. Select one person to act as your primary agent.

Set up Your Will
Leaving your money to a spouse can backfire when that spouse is in a nursing home or has developed a cognitive impairment like Alzheimer’s disease. The inheritance of assets may render them ineligible for government assistance such as Medicaid.

Consult with an Estate Law Attorney
What you don’t want to do is make a costly mistake. It is worth your while to speak with an estate law attorney to explore your options and select those that make sense for your particular situation. Again, planning early is the key—even if you are healthy now and don’t expect to need nursing home or long-term care in your future.

Contact The Law Office of Patricia E. Tichenor
Attorneys Patricia Tichenor and Camellia Safi provide estate planning legal services. They can help you navigate the complicated maze of nursing home and long-term care options available to you that will help you plan a secure future and protect your hard-earned assets. Contact us today at The Law Office of Patricia E. Tichenor.

Trust Funds for Minors and People with Challenges

Trust Funds for Minors and People with Challenges

Trust Funds for Minors and People with Challenges
NOVA Estate Lawyers – Leesburg, VA

Trust funds aren’t only reserved for the rich; they are excellent opportunities to create protection for minor children, disabled adult children, and other family members who may be incapacitated due to mental and physical challenges.

Setting up a trust fund for someone you care about is one of the best ways to ensure that they will benefit from your assets.

To set up a trust fund, you, as the grantor, place money or assets allocated for that trust into a fund that is managed by a trustee for your beneficiary according to comprehensive instructions given by you on how they should manage the trust. This guarantees that your assets will be distributed or invested according to your wishes.

Types of Trust Funds
Each type of trust fund brings different benefits to the grantor and beneficiary. Based on when they take effect, trust funds can be divided into living and testamentary funds: living trusts serve a wide variety of purposes, such as tax mitigation; testamentary funds take effect after you pass away and are typically used for inheritances.

Another way to classify trust funds is by whether they can be amended or revoked. If you opt for a revocable trust, you can change the terms of the trust or revoke it at any time. An irrevocable trust, on the other hand, cannot be changed or revoked, although some limited powers can be reserved to amend the named trustee, trust protector or certain aspects of administration of the trust.

Benefits of a Trust Fund for a Minor
Establishing a trust fund for your minor child or children is one of the safest ways to pass money to them, as you determine how and when the assets will be distributed. Overseen by your trustee, it can provide your child with financial guidance even after you are gone. It can also give you peace of mind that your child will have some sort of financial security well into adulthood.

One of the biggest advantages is that you control how the money will be used. For example, you can dictate that the money be used for educational expenses until your child graduates from high school or college. For even more control, you can also leave instructions that your child shall receive monetary rewards for positive behavior and even include requirements such as drug testing. You might also use the trust to preserve a residence in which you want your guardian to raise the minor children after your death, or to allow your children to continue to live in the residence until the youngest reaches a specific age or completes his or her undergraduate education.

With a trust fund, your child cannot lavishly or wastefully spend all the money; by receiving money in accordance with your instructions, they can build a brighter future for themselves and learn how to responsibly manage finances.

Benefits of a Trust Fund for a Person with Disabilities
Setting up a trust fund for your loved one with special needs is one of the smartest financial decisions you can make. Special needs trusts are created with the sole purpose of benefiting mentally- or physically-challenged individuals, taking into account their specific care, lifestyle, and other needs, and funding those needs for the future.

One of the most important advantages of establishing a special needs trust is that you can ensure that your beneficiary will continue receiving government benefits, which is often not possible with a will. Even if your disabled loved one doesn’t need government benefits at the moment, you don’t know what the future will bring, so it’s better to have all options available.

Another benefit of a special needs trust fund is that if your beneficiary is ever sued, the money in their fund cannot be used in the lawsuit. In other words, the funds from their trust can only be used for the intended purpose which you set forth in the trust instrument.

How to Set Up a Trust Fund
Depending on whether you are setting up a living or testamentary trust, you can select yourself as a trustee or need to appoint one. You may also be required to select a custodian.

The next step is to decide when and how your beneficiary will receive the assets, a process followed by preparation of trust documents. When all this is in place, with the guidance of an experienced attorney and your financial advisor, you can then determine the best time to place your assets (which can include money, stocks, savings bonds, investments, and more) into the trust fund for future access.

Consult with an Experienced Estate Attorney
Since trust funds are often complicated, it is strongly recommended that you consult with an estate attorney, like the lawyers at The Law Office of Patricia E. Tichenor, P.L.L.C. if you are living in Northern Virginia. Attorneys Patricia Tichenor and Camellia Safi are experienced in creating trust funds for minors and those with physical or mental challenges and can help provide advice, guide you through the process and prepare and review your documents. Contact us today.

Where to Store Your Important Records

Where to Store Your Important Records

Where to Store Your Important Records
NOVA Estate Lawyers – Leesburg, VA

With all the news about natural disasters like hurricanes, floods and earthquakes, it makes one think about how to store and protect important records like your birth certificate, will or power of attorney designation.

Keeping originals of these important records in your home may make them easy to reach, but may not be the best method for safekeeping them in the long run. Here are some alternatives to storing important records.

On Site
It is okay to keep one copy or original of your important documents on site in your home or office, as long as you choose a protected location for them. Place them into a waterproof, fireproof box or home safe that will protect them and enable them to be retrieved in the case of a fire or other disaster. Documents stored here can include: insurance policies, deeds, living will, will, powers of attorney, and trust documents, along with a list summarizing what you have for open credit cards accounts, other lines of credit, all investment and banking accounts, other assets, and any pre-paid burial arrangements or wishes regarding burial.

Safety Deposit Box
Storing the original documents offsite in a safety deposit box at your banking institution may add an extra layer of protection. Items like your birth certificate, CDs, legal agreements, marriage/divorce/ adoption documents, prepaid burial plots and funeral contracts, property deeds, personal property inventory and documentation, vehicle titles, and stocks and bond certificates should be stored here. Only store your original will there if one or more of your named Executors is a signatory and authorized to access the box without you being present. Otherwise, do not store your original will here, as your safety deposit box will be sealed upon your death; a copy is fine. Documents can also be scanned into a flash drive that is kept in the safety deposit box.

With Others
Depending on how likely it is that you will update or make changes to your estate plan within the next 5 years, there are certain documents you should both maintain photocopies of with your attorney and share photocopies of with your first alternate designated agent(s) or executor(s) or trustee(s), along with instructions. You may also want to share photocopies of your financial and medical powers of attorney, financial plan, burial instructions, and perhaps a second safety deposit box key, along with the name and contact information of your attorney and executor. Another approach is to let a trusted friend or family member know where you are keeping these items in your home should you die. At the Law Office of Patricia E. Tichenor, P.L.L.C., we only retain a photocopy of the final signed documents for our clients, as we disfavor the practice often engaged in by other law firms of keeping clients’ originals in storage with our firm. We strongly believe our clients should be given all originals of their documents to take home after signing.

In the Cloud
Important documents can be scanned and stored on a cloud storage provider such as Amazon Cloud Drive, Google Drive, Dropbox or Microsoft SkyDrive as well as in an external hard drive. In the case of a natural disaster, however, these documents can only be accessed through a powered device; if electricity is lost, they may not be readily accessible, so keep a hard copy on hand as well.

Wallet Card
You should always carry information on a device or in a purse/wallet of who to contact in case of emergency. You may be unconscious, or heaven forbid, dead, and unable to give instructions. Items to keep in your purse/wallet include your driver’s license and personal identification cards, health insurance cards, medical information such as your blood type, an organ donor card and any specific medical information, including the contact information for your doctors. However, do not carry your social security card in your wallet, or any document containing your social security number. Photocopy both sides of any documents (including credit cards) kept in your purse or wallet, and keep those copies at home in a safe place. Many folks now store such photos on their mobile devices, stored in the cloud and on services like Dropbox, thus eliminating the need to carry hard paper documents everywhere.

Places Where You Should Not Store Important Documents

On Your Computer
Scanning important documents and storing them in your computer may not be the best alternative, as computers crash and all your valuable information can be lost, unless you use a cloud-based backup service like Carbonite or iCloud. In addition, unless you implement proper and up-to-date security software, computers remain vulnerable to being hacked, giving thieves access to your personal information.

In a Box or File at Home
Simply placing your important papers into a file will not protect them against damage. If you must keep them, consider storing photocopies with another trusted individual at a different location than your home.

No matter where you decide to store your documents, keep a list of where they are and how to access them. Share that list with your designated executor and consider perhaps keeping that information on file with your certified financial planner, CPA, or attorney.

Create Important Documents with Your Estate Attorney
If you have not prepared a will, trust, power of attorney, or other needed estate planning document, please know that it is never too soon or too late to do so. The lawyers at The Law Office of Patricia E. Tichenor are here to help. Contact attorneys Patricia Tichenor or Camellia Safi at their convenient Leesburg, Virginia office for an appointment. Disasters, unexpected accidents, and illness can hit us at any time, so don’t wait. Get your affairs in order now.

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

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