While many clients may believe that it is impossible to completely avoid probate in Virginia, the truth is that there are a couple of ways to get around the process legally. In fact, these methods can be used to greatly reduce the number of assets that must go through the system.
In Virginia, any estate valued at greater than $50,000 at the time of the owner’s passing must go through the probate procedure. That means that if you die with a small estate or take the steps necessary to transfer assets to intended beneficiaries far ahead of time, you have a much greater chance of avoiding probate and estate tax in Virginia altogether.
What is probate in Virginia?
“Probate” is a term that has earned itself a negative connotation in recent years, and some of it is well deserved. Many people have endured their own miserable experiences with the process, while others may have heard horror stories from friends or read urban legends online about probate court.
Probate, however, is nothing but a legal process that the Commonwealth of Virginia incorporates to oversee the lawful and equitable distribution of a person’s assets after his or her death. It was put into place to ensure that an individual decedent’s bills, debts, and other last expenses were paid in full, and his or her tax returns have been completed, timely filed, and paid, if applicable.
It is also used to determine that the deceased person’s assets, wealth, and property are distributed to his or her beneficiaries in accordance with his or her wishes, as expressed via a last will and testament document, that has been proven to be completely valid. If the deceased person is intestate, or doesn’t have a valid will, the process can be complicated.
Larger estates have been known to take several years to a decade to go through probate, though this is quite rare. The average decedent’s estate, as long as there are no complexities or complications, takes under a year to go through the process. Very small estates usually take weeks to go through the system.
What can I do now to avoid probate?
There are several steps that you can take right now to avoid probate and ensure that your assets are placed with those whom you choose to bequeath. Looking into these options prior to your passing ensures an easier transition for your loved ones and will allow you to put your mind at ease as you get older, knowing that your wishes will be followed.
6 Ways To Avoid Probate
1. Consult with a Virginia Probate and Estate Attorney
The easiest way to successfully avoid probate is by hiring an experienced Virginia estate attorney. He or she is specially trained to analyze and itemize all the assets that make up your estate, invoke your plans for distribution, ask appropriate questions, address your concerns, and file all the necessary paperwork to ensure legitimacy.
2. Create a Revocable Living Trust Instrument
A revocable living trust is an instrument that is created while you are still living. You will transfer all your assets, whether it be your home, vacation homes, investment accounts, etc. into such a trust, and you will manage it during your lifetime.
Once you pass away, a successor trustee, a personal representative chosen by you, will distribute the assets of the trust to your designated beneficiaries in accordance with your requests. This process could take as little as a few weeks because the estate is owned by the trust and does not require probate.
Remember, however, that a revocable living trust is a malleable document that is not set in stone. As long as you are alive, you have the right to change, edit, or even revoke the document.
3. Add Beneficiaries to Appropriate Bank Accounts
You are allowed, by law, to add beneficiaries to a variety of different bank accounts, including, but not limited to, checking, savings, retirement, pension, and money market accounts, as well as life insurance policies.
Once you die, the money in these accounts will be passed directly to your added beneficiaries and have the added advantage of avoiding probate. The beneficiary can then use the money immediately.
4. Open Transfer on Death (TOD) or Payable on Death (POD) Accounts
This is not unlike adding a beneficiary to any other account as described above. Instead, you will simply add a person or persons to your account paperwork with your financial institution that is designated to be paid out from the account in the event of your death.
5. Transfer Property Prior to Death
You can begin gifting property long before the end of your life. Collectibles, art, jewelry, and even cash can be gifted far in advance. While you may not want to give away significant amounts of money at present, since you may be unsure of the future, items like paintings, furs, cars, and other valuables are fair game.
That said, another advantage to gifting early is that, in the state of Virginia, you are allowed to “gift” each beneficiary up to $14,000 in assets each year without subjecting your loved ones to a gift tax.
6. Add a No Contest Clause to your Will
This verbiage will not assist you with directly avoiding probate, but it may prevent the spectacle of your will being drawn into a long, tedious dispute. Basically, the clause states that any named beneficiary that contests the will is putting his or her inheritance at risk, meaning that if his or her challenge is unsuccessful, he or she must forfeit any inheritance coming to him or her.
Prevent Probate by Being Prepared
Probate is a costly, stressful, and time-consuming process. It can become burdensome to your loved ones, especially since they may still be grieving. It can be difficult for a person with a full-time job to be an executor and devote the time and energy needed to work with lawyers and the court.
The fees accrued for legal representation and managing the estate can grow quickly and must be paid in full before any distribution of the estate can be made to your beneficiaries. That may mean that some remaining assets won’t go to the beneficiaries, as you wish, but will need to be liquidated to cover fees and estate taxes.
Northern Virginia Trusts & Estates
Northern Virginia Trusts & Estates provides affordable estate planning services for Virginia families. Our firm understands the intricacies of Virginia law, estate planning, and offers a range of services from simple, a la carte pricing for single items, to comprehensive offerings and packages that cover a variety of preparations and legal advice.
For more information about wills and our estate planning services, and packages, contact our office today at (703) 938-3510 or visit our website: www.NorthernVirginiaTrustsAndEstates.com.