Newsletter

NEWSLETTER 

      This section contains articles on various legal topics which may be of interest to my clients and potential clients. I hope that this information is useful to you

ESTATE PLANNING

   Estate planning is the process of planning for the transfer of your assets to persons or entities upon your death. Estate administration is the process of settling an estate by a personal representative after one dies. Good estate planning makes for faster, easier and less costly estate administration. This means that the person or persons who will settle your estate, (usually your spouse or chidren) will not be unnecessarily burdened by complicated and costly probate proceedings. The primary tools that are commly used in estate planning are wills, trusts, powers of attorney and advance medical directives. Each one of these will be explained and discussed below.

     Will - A will is a legal document that directs how your property will be distributed upon your death. A will designates a person who is charged with the responsibility to settle your estate. That person is called an Executor. The Executor has the duty and legal authority to administer the estate. The Executor takes control of all estate assests, pays all estate debts, and then distributes the remaining assets to the beneficiaries named in the will. A will may also designate a Guardian for minor children. A will does not go into effect until the person making the will, the testator, dies. After the testator dies, the will must be filed with the Probate Office at the Courthouse, and the will must be probated before any distributions can take place. The Executor is required to post a bond and file an inventory and accountings with the Court.

     Living Trust - A living trust is an estate planning document which directs the transfer of your assets to your beneficiaries upon your death. It serves the same function as a will . However, a living trust is very different from a will. After the trust is created, the person creating the trust, called the "Settlor", transfers all of his or her assets into the trust. This is called funding the trust. When the Settlor dies, he does not own anything. His trust owns all assets. Thus, no probate is necessary. The estate is settled by the Successor Trustee who has the legal authority to adminsiter the estate without court supervision (probate). Avoidance of probate is the chief advantage of a living trust over a will.

     Other favorable characteristics of a living trust are that it goes into effect immediately. It can be used to manage assets during your lifetime. You can name yourself as Trustee of your trust thereby retaining control of all of your assets during your lifetime. You can revoke or amend the trust at any time. Married persons can use a living trust to achieve maximum estate tax savings. If the married couple's estate is $4 million dollars or less, estate taxes can be avoided all togehter.

     Power of Attorney - A power of attorney is a legal document which authorizes another person (your agent) to act for you if you become incapacitated by injury or illnes to the extent that you are incabable of paying your bills and managing your affairs. The document permits your agent to sign documents such as checks, contracts etc. and take all actions necessary to manage your affairs, including making health care decisions, during the time that your are incapable of doing so.

     Advance Medical Directive - This is a legal document, sometimes referred to as a living will, that expresses your desire that you not be kept alive by articial life support if you should become terminally ill with no hope of any recovery. An advance medical directive will avoid or minimize hospital bills which could drain or even wipe out your entire estate during the time these conditions exist.

     All of these documents can and should be used together for effective estate planning. All of these documents have technical legal requirements and important legal consequences. Thus, it is essential that you have competent legal counsel draft these docuement for you.

FamilyLaw/Premarital Agreements

      Family law includes divorce cases, custody, visitation and child support matters. One very useful tool in family law that is oftern overlooked is a premarital agreement. A Premarial Agreement is a legal contract that is entered into by two people who are planning to get married. It is a very useful tool for persons who have assets that they want to remain separate in the event of a divorce. It can also be used in cases of second marriages and for estate planning purposes.

     For example, lets say John and Mary are planning to get married. John has two children from a prior marriage. He has a moving company business which has substantial assets. Mary owns real estate in her own name. A premarital agreement can be used in this case to keep John's business and Mary's real estate separate property. The agreement will specify that in the event of a divorce neither party can make a claim to any separate property of the other. The agreement could also state that any appreciation, increase or addition of separate assets will also remain separate property. The premarital agreement can also specify how property acquired during the marriage will be owned and how it will be divided in the event of a divorce. These provisions can avoid difficult and expensive trials concerning marital property that frequently arise in divorce cases where the couple owns significant assets.

    A premarital agreement can also be incorporated into an estate plan. In the above example, John may want to include conditions which state that upon his death, his separate assests will pass to his children, free of any claims of the wife. Under Virginia law, a surviving spouse has certain rights to the surviving spouse's estate which exist regardless of what the will says or even if there is no will. By statute, a surviving spouse receives 1/2 of the estate if there are no children and 1/3 of the estate if the deceased spouse left children or their decendants. Va. Code Sec. 64.1-16. In addition, a surviving spouse is entitled to a share of the income, (either 1/2 or 1/3) earned on all of the assets of the estate during the period of administration. For example, let's say John's will says that upon his death all of his separate property passes to his children and nothing goes to his wife. In this circumstance, the wife would still be entitled to 1/3 of all such assets is she so elects. However, this result can be avoided by a premarital agreement. A spouse can waive her statutory rights in the other spouses estate in a properly drafted premarital agreement.