By: Joseph T. Buxton III, CELA*, Founder, TrustBuilders Law Group 

When a person dies owning property in Virginia, someone will need legal authority to take charge of the person’s property making sure that the individual’s bills are paid and distribute the property to his or her heirs or beneficiaries.  There are several techniques that people may use to provide authority for someone to take charge of their assets at their death. 

The simplest and most often used is the joint account.  In my last article, I discussed the perils of joint accounts.  The same warnings apply to using payable or transfer on death, which is putting individuals on your accounts to take over those accounts at your death. 

Another common technique is the Last Will and Testament.  However, if an individual passes assets by Will, then in most cases, someone needs to qualify to pay over their assets before the Circuit Court in the jurisdiction in which they passed away.  This process is called Probate.  In Virginia, probate is supervised by private attorneys appointed by the court.  These attorneys are known as Commissioners of Accounts and are paid from assets in the estate.  Every city or county in the Commonwealth have Commissioner of Accounts who are responsible for supervising the administration of estates, whether or not there is a Will.  If there is a Will, the person named in the Will, known as the Executor, manages the estate and is supervised by the Commissioner of Accounts.  If there is no Will or the individual dies without naming an Executor, the court will appoint an Administrator.  The Virginia Code specifies who may serve as Administrator.  The Administrator is also supervised by the Commissioner of Accounts.    

The Probate process generally involves the filing of an inventory of the assets, which is due within four months of qualification.  Then every year thereafter, the Executor or Administrator needs to file accountings on the income and receipts and payments from the estate until the final accounting is approved and the estate is closed.  The probable process generally takes a minimum of six months and on an average takes a year to 18 months to complete.  Most folks would need to hire an attorney to help them navigate the requirements of the Probate process. 

To avoid probate, an individual would need to use an alternative technique.  The easiest is the small estate affidavit, which can be used on estates of $50,000 or less.  Virginia recently modified the statute on small estates.  To get custody of the asset(s) the individual(s) or entity, such as a trust, entitled to the estate may use an affidavit signed by all those entitled to receive the assets declaring that the total estate is less than $50,000.  Normally the Will, if any, has to be filed with the Clerk of Court, together with a list of the decedent’s heirs.  Once this is done the Small Estate Affidavit can be presented to those holding the assets.  The asset can be turned over to the individual(s) entitled to the asset.  If the estate is below $15,000, then any of the heirs can sign the affidavit.  Otherwise, all of those entitled to the property need to sign the affidavit.  The affidavit is used in lieu of someone qualifying as Executor or Administrator on the estate.

Another alternative to the probate process is to create a revocable living trust.  This would be a Will substitute where the individual transfers all of their assets to the trustee, usually themselves, and appoints a back-up or successor trustee to take over the trust at their death.  The trustee then pays the bills and distributes the assets to the beneficiaries without going through the probate process. 

Lastly, individuals might give assets away during lifetime.  By doing this, they could avoid probate.  There are, however, some adverse tax consequences that apply to gifts. Therefore, giving assets away before death should be discussed with a qualified professional, such as an accountant or attorney, to make sure that the gift is not subject to either the gift tax or capital gains tax.

 

* Certified Elder Law Attorney by the National Elder Law Foundation