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  • An Experienced Virginia Attorney Answers the Most Frequently Asked Questions About Mechanics’ Liens

    An Experienced Virginia Attorney Answers the Most Frequently Asked Questions About Mechanics’ Liens

    You delivered the work or materials on a project, and now the client keeps putting off payment or even outright refuses to pay. Now what?

    Sadly, many independent contractors, subcontractors, and suppliers find themselves in this tricky situation. Enough that Virginia has a legal provision that workers in the construction and home services fields can use to ensure they get paid: the Mechanics’ Liens.

    If you need help navigating the legal aspects of pursuing a client for non-payment in Northern Virginia, our experienced attorneys at PJI Law, PLC are here to help.

    What Is a Mechanics’ Lien and How Does It Work?

    A Mechanics’ Lien exists to guarantee payment to contractors, subcontractors, builders, construction firms, and suppliers that work on construction or building repair projects. In case of property liquidation, mechanics’ liens ensure that the contractors receive their payment before anyone else.

    The property’s owners typically have high motivation to settle a Mechanics’ Lien because an active lien makes selling an asset difficult. A title search would show any potential buyer that a lien exists, and complicate or even cancel a sale.

    Likewise, banks and other financial institutions usually won’t refinance a lien-encumbered property or provide a loan against a property until the owner receives a lien waiver from the contractor. An unpaid lien may remain on the property owner’s credit record for up to 10 years.

    Who Can File a Mechanics’ Lien?

    In Virginia, any party that provides labor, equipment, or materials worth at least $150 for building or structure construction, repair, or improvement can count on the protection of a mechanics’ lien. Typically, this includes:

    • General contractors
    • Subcontractors
    • Suppliers of custom-made materials for the project

    It’s important to understand that you can file a lien against a property even if you didn’t work directly with its owner. This is great news for subcontractors.

    Do I Need to Be Licensed to File a Mechanics’ Lien in Virginia?

    Yes. If your occupation requires a license according to the Virginia contractor requirements, you can only file a Mechanics’ Lien if you have been operating under a valid license. You will need to include your certificate or license number and its expiration date in the lien form.

    Likewise, if you are a licensed subcontractor and work with an unlicensed contractor, you cannot file a Mechanics’ Lien on the project if the property owner withholds payment.

    When to File a Mechanics’ Lien

    In Virginia, the deadline for filing a Mechanics’ Lien is 90 days from the end of the project or 90 days from the end of the month in which you last supplied materials or labor for the project. Once the deadline has passed, any filed liens will be invalid.

    Please note that the lien amount can only include the labor and materials you supplied within 150 days before finishing the project. A lien cannot include costs such as attorney’s fees and other legal expenses.

    In some cases, when pursuing personal liability against the property’s owner or general contractor, you must give a pre-lien notice within 30 days from the end of the project before the lien is filed. The pre-lien notice should verify the cost of labor and materials.

    I Didn’t Have a Written Contract. Can I Still File a Lien?

    Yes. In most cases, you can still file a Mechanics’ Lien in Virginia even if you supplied labor or materials following a verbal agreement and did not send a preliminary notice at the start of the project.

    Do I Need a Lawyer to File a Mechanics’ Lien?

    While you certainly have the right to file a Mechanics’ Lien yourself, working with an experienced business lawyer can give you a substantial advantage.

    A business attorney can help you fully understand the terms of your contract and ensure compliance with Virginia laws when filing a Mechanics’ Lien and any required pre-lien notices. If you end up proceeding to lien foreclosure, you will need a skilled attorney to represent you in court.

    PJI Law, PLC: High-Quality Legal Services in Northern Virginia

    Are you a contractor, sub-contractor, or supplier who did not get their due payment for a construction project in Northern Virginia? We know how to leverage the existing legal tools to protect your rights.

    At PJI Law, PLC, we help small business owners take legal headaches off their plates so they can focus on their work. To speak to a lawyer about a Mechanics’ Lien today, call (703) 865-6100 or contact us online.

    Copyright © 2021. PJI Law, PLC. All rights reserved.

    The information in this blog post (“post”) is provided for general informational purposes only and may not reflect the current law in your jurisdiction. No information in this post should be construed as legal advice from the individual author or the law firm, nor is it intended to substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting based on any information included in or accessible through this post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.

    PJI Law, PLC
    3900 Jermantown Rd, 2nd Floor
    Fairfax, Virginia 22030
    (703) 865-6100
    https://pjibe.webteam.ai/

  • What Are The Crucial Differences Between Trusts and Wills in Virginia? An Estate Planning Lawyer Answers

    What Are The Crucial Differences Between Trusts and Wills in Virginia? An Estate Planning Lawyer Answers

    Many people who look into estate planning ask, “What is the difference between wills and trusts?” While both wills and trusts deal with estate planning, they serve different purposes. In this post, the legal team of PJI Law, PLC, estate planning lawyers from Fairfax, VA, outlines the key principles of wills, trusts, and their role in asset protection.

    Wills and Trusts in a Nutshell

    Here are the basic features of wills and trusts:

    A Will

    • Only comes into effect once the will-maker is deceased
    • States who will receive the decedent’s assets
    • Appoints an executor to carry out the decedent’s wishes
    • Is potentially contestable and must go through probate, a legal examination by the court

    A Trust

    • Can take effect immediately after its creation
    • Allows a person or an institution (a “trustee”) to hold assets for beneficiaries
    • Can distribute property before or after the trustor’s passing
    • Can be irrevocable or revocable/changeable
    • Assets in trust generally avoid probate

    While we recommend that everyone have at least a will (whether or not you also have a trust), trusts aren’t strictly necessary for all individuals. Trusts are particularly helpful for individuals who have assets that are potentially going through probate, own property across several states, or have minor children.

    Wills: the Basics of Estate Planning

    A will, also known as a last will and testament, is a legal document specifying how the will-maker wishes to handle asset distribution and other affairs after their death. A will typically includes all of the principal’s assets, such as real estate, vehicles, and other property, and usually a list of debts. A will may also provide directions for a funeral or memorial service.

    Usually, every will must go through a probate court before execution. In some states, it may be possible to avoid probate under specific conditions. Certain assets, such as insurance policies and retirement accounts, may, if planned properly, pass directly to named beneficiaries without probate.

    What Happens If a Person Dies Intestate?

    If an individual dies intestate (without an estate plan in place) in Virginia, estate distribution and other vital matters, such as guardianship of the decedent’s minor children, will follow state laws.

    In the absence of a will, a court ruling may not correspond to the decedent’s wishes. Family members may waste a lot of time, money, and energy on a lengthy civil lawsuit. Assets or guardianship may end up in the hands of the wrong people under the state’s family law regulations.

    To avoid such eventualities, make a legally valid will as soon as possible.

    Trusts

    Like wills, trusts are a way to transfer property. A trust creates a fiduciary relationship, allowing a trustee to handle the principal’s assets for beneficiaries. Almost any individual, or certain organizations, can act as a trustee.

    There are two types of trusts that will be discussed here: revocable living trusts and testamentary trusts.

    Revocable Living Trusts

    A revocable living trust comes into effect while the trustor, or property owner, is alive. Its terms may change during the trustor’s lifetime, and the trustor may retain full control of the assets the trust holds.

    When the trustor passes, the trust can fulfill its function of passing property directly and immediately to named beneficiaries, bypassing the probate court and saving heirs time, hassle, and attorney fees.

    Testamentary Trusts

    Unlike a living trust, a testamentary trust only comes into existence after the creator’s passing. The decedent’s will includes specific instructions for creating a testamentary trust and its terms, including the time when it stops operating (for example, when the beneficiaries become legal adults).

    Since a testamentary trust is part of a will, it must go through probate before it becomes active. A testamentary trust can be helpful to provide for beneficiaries who are minors or disabled adults.

    Planning for the Future: How an Estate Planning Attorney Can Help

    When people make an estate plan, they usually want to protect their estate from taxes, take care of their loved ones’ interests, and ensure that the right persons receive the right assets in time.

    An experienced estate planning lawyer can help you work out an individually tailored estate plan for maximum financial control and complete peace of mind. Your estate planning attorney may suggest legal strategies to minimize taxes, streamline estate administration, and avoid or simplify probate.

    PJI Law, PLC: Estate Planning Attorney in Fairfax, VA

    A detailed estate plan acts as a financial safety net that protects your assets during and after your lifetime. Start making an estate plan today to protect your family’s future and your legacy.

    PJI Law, PLC, is a highly respected law firm focusing on estate planning, probate, business law, and civil litigation. Each PJI Law client gets our total commitment, personal attention, and courteous, prompt service.

    For a consultation with an estate planning lawyer from the PJI Law legal team in Fairfax, VA, call 703-865-6100 or fill out our contact form.

    Copyright © 2021. PJI Law, PLC. All rights reserved.

    The information in this blog post (“post”) is provided for general informational purposes only and may not reflect the current law in your jurisdiction. No information in this post should be construed as legal advice from the individual author or the law firm, nor is it intended to substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting based on any information included in or accessible through this post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.

    PJI Law, PLC
    3900 Jermantown Rd, 2nd Floor
    Fairfax, Virginia 22030
    (703) 865-6100
    https://pjibe.webteam.ai/

  • Understanding Guardianship in Virginia

    Understanding Guardianship in Virginia

    Suppose an adult is incapable of managing their financial or personal affairs. In that case, the court may declare them legally incapacitated and grant a guardian or conservator the legal authority to handle their affairs.

    What is the difference between guardianship and conservatorship? A guardian takes care of the incapacitated person’s affairs in general, while a conservator handles finances specifically. One person can act both as a guardian and as a conservator.

    What is the legal process of assigning guardianship? What are a legal guardian’s duties? Are there alternatives to guardianship? Our estate planning and guardianship attorneys at PJI Law, PLC, have some answers for you.

    Appointing a Guardian

    Anyone can petition a circuit court in Virginia stating that a resident (called a respondent) is incapable of managing some or all of their affairs. The petition must go through the circuit court in the respondent’s county of residence.

    Next, the court will schedule a hearing to determine whether the respondent needs a guardian or conservator and who should act as such. Usually, evidence in these hearings includes records pointing to mental incapacity or severe illness.

    How Does a Circuit Court Decide That Guardianship Is Necessary?

    To decide on guardianship or conservatorship, the court must ascertain that the respondent cannot evaluate information or react to people and outside events adequately, to the extent of being unable to:

    • Take care of their own health, safety, and basic care, or
    • Manage their financial affairs or property

    In the first case, the court will appoint a guardian, and in the second, a conservator. However, guardianship and conservatorship often go hand in hand. A typical example is a family member handling the medical, personal, and financial affairs of an elderly relative who has dementia.

    The Duties of a Guardian and Conservator

    A guardian assumes responsibility for their ward’s personal affairs, such as making sure the ward has a suitable place to live, purchasing daily necessities, and paying household bills. They are also responsible for the ward’s medical treatment. The guardian should encourage the ward to take part in decisions as much as possible.

    A guardian must file yearly reports with the Virginia Department of Social Services, giving an account of their ward’s living arrangements, health condition, and other relevant information.

    A conservator must manage and preserve the income and assets of the ward and file annual reports with the Virginia Commissioner of Accounts , providing details on all funds received and expenses incurred on behalf of the ward.

    Guardians and conservators must act in their wards’ best interests to the best of their ability. The law can hold a guardian or conservator liable if they neglect their duties or improperly manage the ward’s finances.

    How Long Does a Guardianship Last?

    Generally, guardianship lasts until the end of the ward’s life. However, if the ward’s medical condition changes, it is possible to terminate guardianship. If the original guardian can no longer perform their duties, the circuit court may also appoint a new one. Any modifications to a guardianship arrangement require a petition and hearing in a circuit court.

    Alternatives to Guardianship or Conservatorship

    Guardianship and conservatorship are always the last resort since they take away an adult person’s rights and freedoms.

    One practical alternative to guardianship or conservatorship is a durable general power of attorney. However, a durable POA is a legal arrangement the principal has to make while still in full use of their mental capacities.

    If the incapacitated person only requires someone to assume responsibility for medical decisions, an advance medical directive enables the principal to appoint a chosen representative. Otherwise, a spouse, children, or other family members can make medical care decisions for the principal.

    Control Your Future with a Durable Power of Attorney

    Many people, especially seniors, are concerned about the possibility of needing a guardian someday as their health declines. It may be difficult to predict whom a circuit court will appoint as that guardian in some cases.

    The solution is selecting someone in advance to manage the principal’s affairs in case of an illness or incapacity. Once the principal decides on such an arrangement, the next step is obtaining a durable power of attorney for the chosen person, which he or she will use when the need arises.

    The possibility of guardianship is not something you should leave to chance. Contact our team at PJI Law, PLC for reliable legal counsel on all matters related to appointing a power of attorney, advance medical directives, and estate administration.

    PJI Law, PLC: Estate Planning Attorneys in Fairfax, VA

    At PJI Law, PLC, we provide top-tier legal services in estate planning, business law, probate, and civil litigation. As you can see in our most recent reviews , we go above and beyond for our clients to ensure they have the legal assistance they need at all life stages.

    Reach out to our estate planning and guardianship attorneys in Fairfax, VA, at 703-865-6100, or fill out our contact form for help creating an estate plan that protects your end-of-life wishes.

    Copyright © 2021. PJI Law, PLC. All rights reserved.

    The information in this blog post (“post”) is provided for general informational purposes only and may not reflect the current law in your jurisdiction. No information in this post should be construed as legal advice from the individual author or the law firm, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting based on any information included in or accessible through this post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.

    PJI Law, PLC

    3900 Jermantown Rd, 2nd Floor
    Fairfax, Virginia 22030
    (703) 865-6100
    https://pjibe.webteam.ai/

  • What are the Key Elements of Business Succession Planning in Virginia?

    What are the Key Elements of Business Succession Planning in Virginia?

    Family businesses form the core of the American economy, with up to 90% of all U.S. businesses being family-owned or family-operated. From traditional small businesses to companies on the Fortune 500 list, these businesses account for about half of the Gross National Product.

    However, only about 40% of American family businesses survive beyond the first generation—a sobering fact for founders hoping to stay in business for decades. Common causes of business failure include unstable finances, a heavy tax burden, and personal factors.

    What can business owners do to increase the chances of successful business succession in Virginia? Here’s an outline of the key elements from our estate planning and business lawyers at PJI Law, PLC.

    The Human Factor

    Many businesses fall into disarray and disintegrate after the founder and principal owner retires, becomes disabled, or passes away. Planning for a suitable successor is crucial in ensuring that a business will continue to survive and thrive.

    Often, business founders dream of passing their life’s work directly to their children or grandchildren. However, in many cases, a long-term talented partner or employee is a better candidate for business management.

    Appointing and training the prospective successor should happen long before the original business owner plans to retire so that the management transition passes smoothly. Of course, there are always unexpected events (such as sudden disability or death). That’s why it is vital to have an emergency plan.

    Taxation

    Federal tax laws are complex and subject to change. For example, the new STEP (Sensible Taxation and Equity Promotion) Act may carry serious implications for people who inherit a family business. If the business has an unstable financial position, increased taxation could lead to its collapse.

    Understanding how tax regulations can affect your business upon inheritance or ownership transfer is crucial to creating a sound financial plan. If in doubt, it is best to consult a business attorney with thorough knowledge of Virginia inheritance and tax laws.

    Our legal team understands that business planning and estate planning go hand in hand. When you work with us, we do all we can to protect company assets, minimize taxes, and ensure a smooth and efficient company ownership transfer to heirs.

    Business Exiting Options for Small Business Owners

    Small business owners often choose between the following options while planning for an exit:

    1. Transferring Ownership to Family Members

    This route usually depends upon having a family member who is willing and able to take over. Company management requires thorough planning when several family members own interests in the business.

    2. Selling the Business to a Partner or Key Employee

    If your business operates under a partnership agreement, the agreement will typically determine the interest transfer in case of a partner’s exit. Otherwise, sale options vary and often include financing the business purchase over several years.

    3. Selling the Business to an Outsider

    Although a family-owned business may have high sentimental value, sometimes selling it to a third party is a better financial option. Preparing a business for sale includes several steps, including organizing company records, arranging for a business valuation, and addressing any weaknesses that might lower the company’s value.

    4. Closing and Liquidation

    If ownership transfer or business sale plans fail, the only remaining choice may be closing and liquidating the business.

    How a Business Law Attorney Can Help With Succession Planning

    Well-rounded legal counsel makes it easier to weigh your options. With the help of a business lawyer, you can make a more balanced decision and find a course of action that best serves your interests.

    A knowledgeable business attorney can help you overcome possible legal and financial hurdles that may arise during business succession planning. At PJI Law, PLC, we have years of experience in financial moves for business organizations, such as selling business interests, conducting buy-sell agreements, and helping families plan with their long-term business planning.

    As a business owner, you have worked hard to start and grow your business over the years. Don’t leave your company’s legacy to chance. Consult a corporate lawyer today to work out a personalized long-term business strategy for a secure future.

    PJI Law, PLC: Business Lawyers in Fairfax, VA

    Find yourself searching for a “business lawyer near me”? Welcome to PJI Law, PLC, a law firm that provides boutique legal services in business law, estate planning, probate, and civil litigation.

    Our team will go above and beyond to make your life easier, with courteous, prompt service and constant communication. We help small business owners of all types and can help take legal headaches off your plate so you can focus on your business.

    To get legal guidance for your business in Fairfax, VA, reach out to our team at 703-865-6100 or fill out our contact form.

    Copyright © 2021. PJI Law, PLC. All rights reserved.

    The information in this blog post (“post”) is provided for general informational purposes only and may not reflect the current law in your jurisdiction. No information in this post should be construed as legal advice from the individual author or the law firm, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting based on any information included in or accessible through this post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.

    PJI Law, PLC
    3900 Jermantown Rd, 2nd Floor
    Fairfax, Virginia 22030
    (703) 865-6100
    https://pjibe.webteam.ai/

  • What Are Your Rights as a Virginia Landlord During COVID-19?

    What Are Your Rights as a Virginia Landlord During COVID-19?

    Being a landlord requires familiarity with relevant local and state housing rules. However, the impact of COVID-19 has further complicated the rules and processes surrounding owning and renting a property because many tenants have enhanced rights, and courts are either backed up or possibly unwilling to hold tenants to their typical requirements.

    Tenants who have had their income impacted by the pandemic might attempt to postpone eviction cases for 60 days. They must simply provide the court with proof that they are not receiving wages or payments associated with the state of emergency declared by the governor.

    Under the Governor’s Declared State of Emergency, What Must a Landlord Do If a Tenant Is Late on One or More Rent Payments?

    Landlords rely on tenants to pay their rent on time. Per Governor Ralph Northam’s declared state of emergency, landlords must take some specific actions if a tenant is late on one or more rent payments:

    • Provide written notice to your tenant of the amount due and what they owe.
    • Give your tenant 14 days to pay the amount due and owed, make another payment arrangement, or enter into a payment plan.
    • Include details about providing a signed statement certifying additional expenses or income loss due to a declared state of emergency.
    • Explain the tenant’s ability to enter into a repayment plan for back due rent in the written notice.
    • The payments must be equal over the shorter of these two periods; the end of the lease term or the shorter of 6 months.
    • The landlord cannot include late fees in the repayment plan.

    If a renter makes payments on time, as a landlord, you can proceed with an eviction filing hearing for other lease violations, as long as you do not use them as a proxy for the tenant not paying rent.

    What Is Covered by the CARES Act Rental Payment Protections?

    The CARES Act, which President Trump signed into law in March 2020, provided 120 days of eviction relief for those tenants living in federally backed housing. The eviction moratorium began on March 27, 2020, and ended on July 24, 2020, meaning that landlords could not serve renters an eviction notice until July 25th, 2020.

    Due to additional funds given to the Department of Housing and Urban Development for housing vouchers, housing for the elderly, rent assistance, and public housing support, your tenants could contact HUD rental assistance.

    The CARES Act extended eviction protections until January 31, 2021, providing an additional $25 billion in rent assistance support to those who had lost income due to the pandemic.

    The CDC’s Unprecedented Role in Extending Eviction Moratoriums

    On September 4, 2020, the Centers for Disease Control and Prevention (CDC) imposed a nationwide temporary federal moratorium on residential evictions for nonpayment of rent. The order’s stated purpose is to prevent the further spread of COVID-19, specifically by preventing homelessness and overcrowded housing conditions resulting from eviction.

    The action, which followed an Executive Order directing the CDC to consider such a measure, is unprecedented, both in terms of the federal reach into the traditional state and local governance of landlord-tenant law and its use of a public health authority for this purpose. The national eviction moratorium took effect less than two weeks after the CARES Act eviction protections expired on January 31, 2021. The CDC’s most recent order extends the residential eviction ban until July 31, 2021.

    When can a Virginia Landlord Proceed with an Evictions Filing?

    Despite giving a grace period and as much support as possible to tenants, a Virginia landlord might still need to move forward with an eviction. Since most of these orders expired on March 31st, 2021, if you have attempted to work with your tenants and have been unable to resolve the situation, be prepared to file and go to court with the support of an experienced attorney.

    A civil lawyer can assist you with navigating this complex process. Our team at PJI Law, PLC, knows these complicated issues and can support and prepare you for what to expect. A tenant might still bring up impacts of COVID-19 in court during eviction hearings, so an experienced attorney can advise you of the different requirements and what to expect.

    I’ve Filed an Evictions Lawsuit for Non-Payment of Rent in Virginia. What’s Next?

    After you have already filed an eviction case, it’s in your best interest to retain an attorney. Once a Virginia landlord has filed a Summons for Unlawful Detainer In the appropriate General District Court court and paid filing fees, the summons must be served on the tenant by a professional process server or a sheriff.

    Then an eviction hearing must be scheduled within a few weeks after the summons is filed with the court. If the judge rules in favor of the landlord, they will issue a writ of eviction, and the eviction process will proceed. A judge could issue the writ of eviction as soon as ten days after entering the judgment in favor of the landlord.

    If the writ of eviction is not requested within 180 days, however, the landlord will have to start the eviction process all over again. A sheriff typically delivers the writ to the tenant within 15 to 30 days of receiving the writ of eviction. The tenant then has 72 hours to vacate the property before the sheriff can return to evict them.

    Contact PJI Law, PLC

    Our civil lawyer team at PJI Law, PLC, has extensive experience supporting landlords who find themselves in these predicaments of having to navigate through COVID-19 and protect their investments and expectations. Our firm provides efficient, top-quality legal services in estate planning, probate, business law, and civil litigation. We focus on each client’s unique story while we offer personalized service and attention. Our professionalism, experience, and dedication manifest in our excellent reputation and stellar client reviews.

    Schedule a consultation with PJI Law, PLC, today at (703) 865-6100 to learn more about how we can help you proceed with an eviction case.

    Copyright © 2021. PJI Law, PLC. All rights reserved.

    The information in this blog post (“post”) is provided for general informational purposes only, and may not reflect the current law in your jurisdiction. No information contained in this post should be construed as legal advice from the individual author or the law firm, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.

    PJI Law, PLC
    3900 Jermantown Rd, 2nd Floor
    Fairfax, Virginia 22030
    (703) 865-6100
    https://pjibe.webteam.ai/

  • What You Need to Know about the Sensible Taxation and Equity Promotion (STEP) Act

    What You Need to Know about the Sensible Taxation and Equity Promotion (STEP) Act

    STEP Act

    In March 2021, the Sensible Taxation and Equity Promotion (STEP) Act proposal came into public view. What does it propose, how does it differ from the previous taxation laws, and how can it affect you and your property? In this article, the PJI Law, PLC team in Fairfax, Virginia, explains how this STEP Act might be relevant to you in your estate planning.

    The Stepped-Up Basis

    Until now, many American families have benefited from a system known as the stepped-up basis, which has enabled them to bypass capital gains taxes when someone inherits property. Under this rule, an inherited asset steps up in value when the original owner dies so that the heirs pay a lot less in capital gains taxes.

    The stepped-up basis principle has allowed families to pass on assets for generations while bypassing taxation.

    How Does This Work?

    Let’s say that Mr. and Mrs. Jones, a couple that has worked hard for their family and invested wisely, conduct multiple real estate transactions during their lifetime. The value of their assets grows, and during the next 30 or 40 years, their property appreciates impressively.

    If Mr. and Mrs. Jones were to sell their property during their lifetime, they would need to pay considerable capital gains tax. But when they die and their children, Michael and Laura, inherit all assets, the current income tax laws disregard the appreciation in the value of the Jones property.

    As this process goes on throughout generations, it can effectively keep money and assets in the Jones family without paying taxes on the gains.

    The New STEP Act Proposal

    The STEP Act has been developed to change the step-up basis tax rule. In practice, the act’s provisions would mean that any property transfer would be subject to a transfer tax either as inheritance or during the individual’s lifetime.

    The updated tax regulations would apply to any gain exceeding $1 million at death or $100,000 during a lifetime, provided that the recipient is not a spouse, charity organization, qualified disability trust, or cemetery trust.

    Many individuals have been using the step-up basis method of transferring assets to a trust as a means to avoid income tax. The STEP Act would remove this practice, making transfers to a trust also taxable.

    The STEP Act would require all non-grantor trusts to report gains on appreciated assets once in 21 years. If a trust has over $1 million in assets or over $20,000 of gross income, it would need to provide a balance sheet and income statement to the IRS, along with a list of trustees, beneficiaries, and grantors.

    If the STEP Act passes as a retroactive provision, any inheritances or gifts transferred after December 31, 2020, could be taxable.

    Criticism of the STEP Act

    The STEP Act proposal has evoked some resistance and warnings about its possible implications. In particular, it has raised concerns among farmers who may own considerable landed property and extensive farm equipment but who often struggle with fluctuating incomes and high agricultural business expenses.

    Farms and other illiquid properties would be taxable even if they stayed in the family – in the event the children carry on their parents’ business, for instance. The heirs would have 15 years to pay the transfer tax. For some farmers, the tax would make it impossible to hold on to an inherited family property.

    The proposed STEP Act could also become problematic in the scenario of adult children having guardianship over an elderly parent, such as incapacitation, mental illness, or dementia.

    Under the current step-up basis approach, the legal guardians have an incentive to retain any property during the family member’s lifetime. But if the STEP Act passes, one may expect that more guardians would choose to sell family property, potentially leaving many elderly people financially vulnerable.

    Furthermore, eliminating the step-up basis would create considerable difficulties for estate administrators trying to ascertain the change in the basis value of the inherited or gifted property.

    What Would Changes in Property Taxation Law Mean for Me?

    It is important to remember that the STEP Act proposal has not passed yet, so its final form is subject to changes.

    If you have any concerns about property transfer regulations or taxes, we recommend consulting a knowledgeable estate planning attorney who can recommend a viable property and inheritance management strategy.

    PJI Law, PLC: Estate Planning Attorneys in Fairfax, VA

    Welcome to PJI Law, PLC, a law firm that provides efficient, top-quality legal services in the areas of estate planning, probate, business law, and civil litigation. We focus on each client’s unique story while we offer personalized service and attention. Our professionalism, experience, and dedication manifest in our excellent reputation and stellar client reviews.

    To get in touch with a member of the PJI Law, PLC team in Fairfax, VA, call 703-865-6100 or fill out our contact form.

    Copyright © 2021. PJI Law, PLC. All rights reserved.

    The information in this blog post (“post”) is provided for general informational purposes only, and may not reflect the current law in your jurisdiction. No information contained in this post should be construed as legal advice from the individual author or the law firm, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.

    PJI Law, PLC
    3900 Jermantown Rd, 2nd Floor
    Fairfax, Virginia 22030
    Phone:703-865-6100
    https://pjibe.webteam.ai/

  • 9 Questions Everyone Has About Revocable Living Trusts

    9 Questions Everyone Has About Revocable Living Trusts

    1. What is a revocable living trust (“RLT”)?

    An RLT is a powerful estate planning method that gives you complete control over your assets both during your life, and after. It is a legal entity that holds property for you and others.

    2. If I die leaving only a Will, how will my estate be settled?

    In Virginia, as in nearly all states, if you have a Will, without an RLT, the executor of your Will must file your Will with the probate division of the clerk’s office, file requisite forms and accountings, pay taxes on your estate, and distribute your assets to your beneficiaries. Probate costs, including attorney’s fees, court costs, appraisal costs, etc. can range between 5% to 10% of the value of the estate.

    Also, the probate process is a matter of public record. This means that anyone, for any reason, can go to the clerk’s office and look at your probate records to see a list of assets, liabilities, and heirs.

    3. What are the advantages of having an RLT?

    An RLT allows you to have full use, enjoyment, and control over your property during your lifetime and still gives you the control to determine what happens to your estate once you pass away.

    It is more difficult for your beneficiaries (or would-be beneficiaries) to challenge the decisions you make in your RLT, compared to a Will.

    The RLT will also avoid probate so, the Trust can directly distribute assets to your loved ones. Your privacy is also protected by avoiding probate.

    Your RLT can also help shelter your loved ones from taxes.

    4. Are there disadvantages to an RLT?

    As with all of your estate planning documents, you should frequently review them to ensure no changes are necessary (changes in named parties, changes in assets, etc.).

    There may also be costs associated with transferring property into the name of the RLT for your existing assets (for example the cost of filing the deed with the clerk’s office). Good estate planning law firms will include such transfers in their services.

    5. What property can I put into my RLT?

    An RLT can hold bank accounts, life insurance proceeds, stocks, bonds, real estate, and personal property.

    You may list your property in the schedule attached to your RLT. When the property’s status changes – such as when you sell your home or close out an account – it is appropriate to make a note next to the item on the schedule, include the date and what happened.

    6. If I make an RLT, do I still need a Will?

    Yes. The Will is important to ensure that any property you’ve left out of the RLT is “poured over” into your RLT once you pass away. If the assets outside of your Trust are less than a certain amount, your loved ones can still avoid probate when you pass away. A Will also enables you to name a guardian for your children.

    7. What do I do after I set up my RLT?

    When you set up your RLT, you can begin naming your assets in the Trust using the Trust schedule. If you are transferring title to the RLT, you will need to contact each institution to fill out the proper paperwork to change the title or beneficiaries of your property. You can do this for bank accounts, stocks, and insurance, for example. As for your real estates, new deeds have to be prepared and filed with appropriate local department of land records. A good estate planning law firm will do all of this for you.

    You should also notify the Successor Trustee named in your RLT to advise that person of the Trust and their role in it. Also make sure you tell them where the original document is stored.

    8. Where should I keep the RLT documents?

    You should keep the original RLT in a fireproof file box or safe. Do NOT keep it in a safety deposit box at a bank because a safety deposit box is often inaccessible upon your death.

    9. How can I create, change or revoke my RLT?

    You can amend or revoke your RLT at any time, however bear in mind that changes must be done with the same level of formality (including signing process) as the draft of your original trust. Please contact PJI Law at (703) 865-6100 or trusts@pjilaw.com and we will be happy to work with you to update your Trust – or to create one if you don’t already have one.

     

  • What Happens if I Die or Get Incapacitated Tomorrow, with No Plan in Place?

    What Happens if I Die or Get Incapacitated Tomorrow, with No Plan in Place?

    What’s the most popular estate planning option? Will-based planning? Trust-based planning? Unfortunately, it’s neither. Number one on the list in Virginia is: doing nothing. The more technical term for this lack of planning is called “dying intestate.”

    “Dying intestate” simply means that you have decided to depart this world without doing any estate planning whatsoever. While your family will be horrified at this prospect, your unintended beneficiaries, the government and the probate court will all be delighted.

    By dying intestate, you will have allowed the government to draft your estate plan for you. As a result, they can tax your estate and impose other costs at the maximum amount allowable by law. In addition, your assets will go to people according state law’s priorities, not your own. For example, most married couples want their share of the estate to be used by the surviving spouse before the children inherit. However, if you have a blended family situation and provided no direction ahead of time, when you die, the court will only give one-third of your estate to your surviving spouse and two-thirds to your children from a previous marriage.

    This problem is exacerbated before you die if you have no incapacity planning documents in place. If (and more likely, when) something happens to you that renders you unable to handle your own affairs, without you having a proper legal plan in place, you will have to go through a legal proceeding where a court appoints a guardian to handle your personal affairs and a conservator to handle your finances. The procedure is oftentimes referred to as “living probate.”

    Living probate can be a living nightmare for you and your family for several reasons. First, it can be a humiliating process. You are declared incompetent in a public proceeding. Next, the court is in charge. It will decide which people will manage your affairs; it’s neither you nor your family’s choice.

    Because of this court proceeding, there is lag time in the management of your affairs due to paperwork and delays. Of course, these hassles can add a lot of stress and expense to what is already a very stressful situation for your family.

    Finally, living probate can be very expensive. Typically, there are court fees, attorneys’ fees, expert witness fees and accounting fees. Additionally, once your conservator has been appointed by the court, this person has to give an annual accounting to the court on how your financial affairs have been managed. This is true even if the court appointed your spouse or one of your children as your conservator.

    Doing nothing hurts you, but hurts your family even more. Most of our clients tells us that the reason they’re doing proper planning is to protect their family. If that sounds like what you wish to do, we at PJI Law are here to help. Call us at (703) 865-6100 or email us at family@pjilaw.com.

  • 3 Reasons Why Adding Your Children as Co-Owners on Your Financial Accounts Is an Awful Idea

    3 Reasons Why Adding Your Children as Co-Owners on Your Financial Accounts Is an Awful Idea

    It has become common practice in Virginia for a surviving parent, after their spouse has passed away, to name one of their children as a co-owner of some or all of their financial accounts. There are a few reasons parents do this, but oftentimes it is to make sure that the child can access the parent’s account for the parent’s benefit if the parent becomes mentally or physically incapacitated. It is sometimes perceived as a shortcut to creating a proper estate plan with a portfolio of legal documents drafted by an attorney.

    However, adding a child as a joint owner of your financial accounts is fraught with peril. Here are three of the main reasons:

    1. By adding your child as a joint owner, you are exposing your financial accounts to your child’s creditors. If your child ever goes through financial hardship (perhaps even due to a tragic accident), their creditors may try to collect by garnishing your child’s financial accounts, including ones where you established your child as a joint owner.
    2. Second, you are exposing your finances to your child’s control before you need to cede control. You hope that your child will continue to act in your best interests once you add them as a joint owner to your accounts. Most children will. But some do not, sometimes due to pressure from a spouse. And when they do not, you cannot simply remove the child from your accounts. You must have the child’s written permission to have them removed as a co-owner. Or you can close the account and withdraw all of the funds; of course, you have given your wayward child the ability to do the same thing.
    3. Finally, you may unintentionally disinherit your other children. For example, you have three children, two of whom live in another state, and one lives locally. It is not rare in such a case for a parent to add the child who lives locally as the joint owner on the financial accounts. However, if that is done, joint accounts usually have a survivorship clause in the contract. Which means when the one co-owner dies, the account is now solely the property of the surviving co-owner. Which means the local child inherits all of your financial assets at your death while your other children receive nothing.

    There are more problems, of course, but no need to pile on.

    So, what do you do? How do you properly allow a child to help you with your finances without adding the child as a co-owner on your accounts? One method is to make your child an “authorized signer” on your financial accounts. That way, the child can sign checks and engage in transactions on your behalf while exposing your finances to only some, but not all, of the perils of co-ownership.

    A far stronger solution is that you can, as part of your estate plan, name a child your financial agent in a General Durable Power of Attorney document. Under such a document, your child has the power to engage in financial transactions of your behalf, but they are not considered a co-owner of the accounts. The child has obligations to meet under the law to act in your best interests as your agent and you can revoke the Power of Attorney documents at any time, unless you lack mental capacity.

    There are additional aspects of an estate plan that can even make it easier on your child to help you, while simultaneously protect you and your family even more. If you would like more information, please call our team at PJI law at (703) 865-6100, or email us at poa@pjilaw.com.

  • Should I Consent to Judgment in Court?

    Should I Consent to Judgment in Court?

    Sit in the courtroom during any lengthy Virginia General District Court civil return docket, in Fairfax or elsewhere in Virginia, and you will likely see the following scenario play out: a pro se (meaning “unrepresented”) defendant will approach the front of the courtroom, whether in response to a lawsuit filed by a credit card company, homeowners association, medical provider, or any other type creditor, and the judge will ask the nature of the Plaintiff’s claim and the amount of damages alleged—sometimes thousands of dollars and sometimes hundreds. The judge will then ask the defendant whether or not he or she agrees with the claim, and the individual either responds affirmatively or acknowledges owing the money but attempts to explain that they have unsuccessfully tried to resolve the matter outside of court, or that the debt constitutes a hardship.

    Occasionally a judge will ask or prompt the creditor’s attorney to speak with the defendant in the hallway to see if the matter can be resolved, but most of the time the court will proceed to enter “judgment by consent” and then encourage or instruct the defendant to follow up with the attorney to make arrangements to pay off the judgment. The entry of the judgment alone will almost always end up on a defendant’s credit report, and many judgments are taken when both sides would have benefited from making arrangements to satisfy the debt and thereby avoiding the entry of judgment.

    Many creditors might assume that getting the quickest and easiest judgment always leads to the optimal recovery of the debt, but often times the threat of judgment is a more effective tool than the judgment itself in causing a debtor to pay the debt or entering into a satisfactory settlement or payment agreement. Collection and enforcement of a judgment can be frustrating and time consuming, and a voluntarily agreement or resolution is almost always the most effective path towards recovery of the debt. When judgments are obtained quickly either by default or by consent, it frequently signals that the debtor might not have many assets or revenue sources to protect.

    Any defendant can answer the judge’s questions at the return date in a manner that will effectively constitute a sufficient denial of the claim that will result in a trial being set. This trial date is usually months down the road, and if nothing else, this provides the defendant with time to make payments or time to try and work out a settlement agreement or payment plan to resolve the debt. For creditors and their counsel, the pending trial date and continuing threat of judgment provides great incentive for the defendant to resolve the debt, if possible.

    We at PJI Law can provide advice and assistance to both creditors and debtors, both prior to litigation, during litigation and during the post-judgment collection period. Contact our office today at (703) 865-6100 to schedule an in-person or remote appointment.