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  • 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/

  • 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.

  • Does Your Will Encourage Lawsuits Between Your Family Members?

    Does Your Will Encourage Lawsuits Between Your Family Members?

    Many people in the Northern Virginia area are familiar with the concept of a Last Will and Testament (“Will”). Generally speaking, a Will is a document that dictates how and to whom your property will be distributed upon your death. However, have you stopped to wonder what would happen if those who survive you (family, friends, and those who claim are friends) feel snubbed by the distribution and try to contest and challenge the Will? That’s when things get tricky, and at PJI Law we help our clients implement strategies to avoid pitfalls such as will contests.

    Hope for the best, plan for the worst. If you fail to plan, a will contest could cost your estate significant legal fees, even if your true wishes prevail. It will also cause hardship for your loved ones and beneficiaries because your estate cannot be distributed during a will contest. Furthermore, you risk a judge making or changing some of your most personal and important decisions.

    Poor drafting can invite Will contests at a most difficult time for your family.
    Poor drafting can invite Will contests at a most difficult time for your family.

    The good news is, if you plan properly, there are ways to deter a will contest. One simple way is to include a provision whereby, if someone challenges your Will, he or she will forfeit that portion of the estate. Another way is to specifically identify who is not inheriting under your Will and explain that they are not receiving a share because they are provided for in another manner (for example through a life insurance policy). Another option is to create a revocable living trust that will hold the property, avoid probate, and appoint a trustee to act on your behalf to divide your estate. And last but not least, there are certain formalities that you can follow when executing your Will that will establish a presumption that it is valid.

    When establishing or revising your estate plan, these are only some of the issues the attorneys at PJI Law address to ensure you are protected now and in the future. If you would like to discuss your estate plan with us, please feel free to call us at (703) 865-6100 to schedule a consultation. We look forward to helping you!