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Hampton Roads Estate Planning and Administration Law Blog

Tuesday, August 1, 2017

The Case for the Joint Living Trust


By: Joseph T. “Chip” Buxton III, Certified Elder Law Attorney*

In recent years, the revocable living trust has become the choice of record for estate planning.  A trust is a contract between the maker of the trust, normally called the Grantor, and the manager of the trust, typically called the Trustee.  The trust is a set of instructions whereby the Grantor enters into an agreement with the Trustee to manage certain assets r-titled in the name of the Trustee.  For example, a Grantor may have a large investment account.
Read more . . .


Saturday, July 1, 2017

Spousal Rights in Their Deceased Spouse's Estate


By: Joseph T. “Chip” Buxton III, Certified Elder Law Attorney*

On January 1, 1991, the Virginia General Assembly enacted a new statute regarding the rights of a spouse in their deceased spouse’s estate.  This statute introduced the concept of an “augmented estate.”  What this meant was that when a husband or wife died, the surviving spouse had certain rights in their marital property defined as the augmented estate, even if the decedent had written a will or a trust designed to disinherit their spouse.  The surviving spouse could simply file a claim in court for a share of the couples augmented estate and could elect to take 1/3 of the augmented estate if there were children or ½ of the augmented estate if there were no children.
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Thursday, June 1, 2017

Payable on Death


By: Joseph T. “Chip” Buxton III, Certified Elder Law Attorney*

Payable on Death (POD) accounts are used by many individuals so that when they pass away the account is designated to a specific individual or group of individuals.  They are used on bank accounts, brokerage accounts, retirement accounts and/or insurance policies.  Naming a beneficiary on a financial account can be useful from an estate planning perspective, but is dangerous in many cases.  For example, if you have a large bank account or brokerage account and you name a child as payable on death beneficiary, and the child predeceased you, that account will normally go through the probate process at your death and be distributed by your Executor or your Administrator of the estate.
Read more . . .


Monday, May 1, 2017

A Legacy Trust: Making Your Estate Last For Generations


By: Joseph T. “Chip” Buxton III, Certified Elder Law Attorney*

A great estate planning tool is a revocable living trust called a Dynasty Trust designed to last for multiple generations.  The Dynasty Trust contains a special provision for the continuation of the trust after your death for the benefit of your children and beyond.  At your death, the Dynasty Trust creates a separate “Legacy Trust” from the original trust for the benefit of each beneficiary you name.  The Legacy Trust protects the assets in the Legacy Trust from the creditors of the beneficiary, from estate and death taxes at the death of the beneficiary, from claims of their spouses in the event of a divorce, and can insulate assets in the trust from being deemed “available resources” in the event the beneficiary seeks public assistance under Medicaid for nursing home care.
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Saturday, April 1, 2017

Legacy Trusts(s) for Children


A Dynasty Trust contains special provisions for the continuation of the trust after your death(s) for the benefit of your beneficiaries.  The Trust provides for the creation of a Legacy Trust.  A separate Legacy Trust will be set up from the original trust for each of the beneficiaries you have identified.  The Legacy Trust is designed to protect the assets in the Legacy Trust from the creditors of the beneficiary, from estate and death taxes at the death of the beneficiary, from claims of spouses in the event of a divorce, and to insulate assets in the trust from being deemed available resources in the event of the beneficiary’s disability in case he or she is otherwise eligible to receive public assistance such as Medicaid or supplemental social security income.

In most cases, the initial beneficiary may serve as the trustee of his/her Legacy Trust, and as such, will have full discretion with respect to the investment of the assets so long as they remain in the trust.
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Wednesday, March 1, 2017

The Inherited IRA


By: Joseph T. “Chip” Buxton III, Certified Elder Law Attorney*

An Inherited IRA, 401K, §357 or §403L Plan and Thrift Savings Plan are retirement accounts that are passed at the death of the owner to someone other than a spouse.  According to the US Supreme Court[1], an Inherited IRA (or similar plans) are subject to the claims of the beneficiary’s creditors.  This means if you leave your IRA or other retirement account to a child or another individual other than your spouse, a creditor (which might include a spouse of a child in a divorce suit) can come after that retirement plan to satisfy their claim.  This would require the beneficiary to cash out the IRA, pay the income taxes due, then pay off the creditor.
Read more . . .


Wednesday, February 1, 2017

How to Guarantee Litetime Income, Save Taxes and Help Charity


By: Joseph T. “Chip” Buxton III, Certified Elder Law Attorney*

Since 1969, the federal tax code has authorized the use of a very powerful estate planning tool to reduce a taxpayer’s liability for capital gains taxes, income taxes, and estate taxes, all while guaranteeing a steady flow of income.  This tool is called a Charitable Remainder Trust.  Here is how it works.

You establish an irrevocable trust naming yourself as the trustee and contribute highly appreciated assets such as land, stock and/or rental property to the trust.
Read more . . .


Sunday, January 1, 2017

To Trust or Not to Trust: Should your Trust be the Beneficiary of an IRA?


By: G.P. Wakefield Buxton, JD, LL.M., MBA

One of the more difficult questions facing estate and financial planners overs the last few decades has been whether or not to name an individual’s trust as the beneficiary of a retirement account.
Read more . . .


Monday, December 26, 2016

Estate Planning Don’ts

Preparing for the future is an uncertain business, but there are steps you can take during your lifetime to simplify matters for your loved ones after you pass, and to ensure your final wishes are carried out. Planning for what happens to your property, or who cares for your family members, upon your death can be a complicated process. To simplify things, the following list can help you avoid some of the pitfalls you may encounter before, or even long after, you create your estate plan.


Don’t assume you can plan your estate by yourself. Get help from an estate planning attorney whose training and experience can ensure that you minimize tax implications and simplify the process of settling your estate.

Don’t put off your estate planning needs because of finances. To be sure, there are upfront costs for establishing the estate plan; however establishing your estate plan is an investment in the future well-being of your family, and one which will result in a far greater cash savings over the long term.

Don’t make changes to your estate plan without consulting your attorney. Changes in one area of your estate plan could impact other provisions you have made, triggering unintended legal or tax implications.

Don’t assume your children will intuitively know your wishes, and handle the situation appropriately upon your death. Money and sentimental items can cause a rift between even the most agreeable siblings, and they will be especially vulnerable as they deal with the emotional impact of your passing.

Don’t assume that once you’ve prepared your estate plan it is set in stone. Estate planning documents regularly need to be revised, often due to a change in marital status, birth or death of a family me

mber, or a significant change in the value of your estate. Beneficiary designations should be periodically reviewed to ensure they are up to date.

Don’t forget to notify your family members, friends or other beneficiaries of your estate plan. Make sure your executor and successor trustee have access to your end-of-life documents.

Don’t assume your spouse will handle everything if something happens to you. It’s possible your spouse may be incapacitated at the same time, for example if you both are injured in the same accident. A proper estate plan appoints alternate representatives to handle your affairs if both you and your spouse are unable to do so.

Don’t use the same person as your agent under both the financial and healthcare powers of attorney. Using the same individual gives that person an incredible amount of influence over your future and it may be a good idea to split up the decision-making authority.

Don’t forget to name alternate agents, executors or successor trustees. You may name a family member to fill one of these roles, and forget to revise the document if that person dies or becomes incapacitated. By adding alternates, you ensure there is no question regarding who has the authority to act on your or the estate’s behalf.


Monday, December 19, 2016

Can I Get In Trouble With the IRS for Trying to Reduce the Amount of Estate Tax That I Owe?

You’ve likely heard that one of the many benefits of estate planning is reducing the amount of federal, and state, taxes owed upon your passing. While it may seem like estate tax planning must run afoul of IRS rules, with the proper strategies, this is far from the case.

It is very common for an individual to take steps to try to reduce the amount of federal estate taxes that his or her "estate" will be responsible for after the person's death. As you may know, you may pass an unlimited amount of assets to your spouse without incurring any federal estate taxes. In 2015, you may pass $5.43 million to non-spouse beneficiaries without incurring federal estate tax and if your spouse died before you, and if you have taken certain steps to add your spouse's $5.43 million exemption to your own, you may have $10.86 million that you can pass tax free to non-spouse beneficiaries.

If your estate is still larger than these exemption amounts you should seek out a qualified estate planning attorney. There may be legal, legitimate planning techniques that will help reduce the taxable value of your estate in order to pass more assets to your loved ones upon your death and lessen the impact of the estate taxes. After your death, the duty normally falls on your executor (or perhaps a successor trustee) to file the appropriate tax returns and pay the necessary taxes. Failure to properly plan for potential estate taxes will significantly limit what your executor/trustee will be able to accomplish after your passing.

If you have taken steps to try to reduce the taxes owed, it is possible that the IRS may challenge the reported value or try to throw out the method you used. This does not mean that the executor/trustee will be in trouble; it just means that they will need to be prepared to support their position with the IRS and take it through an audit or even a tax court (or other appropriate court system). In the event of a challenge, a good attorney will be critical to ensure all of the necessary steps are taken.


Monday, December 12, 2016

Important Steps to Plan for the Future of a Special Needs Child

#1 Establish a Comprehensive Plan

Most estate planning attorneys will say that no person should use a “do-it-yourself” will kit to establish their estate plan.  If you have a child with special needs, it is extremely important to seek competent legal counsel from an estate planning lawyer with special needs planning experience before and during the process of writing your will.

In your estate plan, make sure that any bequests to your child are left to his or her trust (see #2, below) instead of to the child directly.  Your will should also name the person or persons you want to serve as guardian of your child (see #3, below).

Once your estate plan is complete you should give copies to all the guardians and executors named in the will.

#2 Establish a Special Needs Trust
A special needs trust is the most important legal document you will prepare for your child.  In order to preserve your child’s eligibility for federal financial benefits like Supplemental Security Income (SSI) and Medicaid, all financial assets for your child should be placed into this trust instead of being held in your child’s name.  This is because federal benefit programs restrict the amount of income and assets the recipient may have.  If your child has too many financial assets, he or she could lose his eligibility for important federal assistance programs.

You can use this trust as a depository for any money you save for your child’s future, money others give as a gift, funds awarded in a legal settlement or successful lawsuit, and other financial assets.

Should you create a special needs trust if your child doesn’t currently have any financial assets?  Yes.  Once you create the special needs trust, then the trust can immediately become the named beneficiary of any life insurance policies or planned bequests, either yours or family members’.

#3 Appoint a guardian and complete necessary guardianship papers

Like any parent, you worry about who will care for your child if you were to die before the child becomes an adult.  Unlike other parents, you worry about who will care for your child and provide guidance even after he or she is an adult.

A legal guardian is the person who will care for your child after your death and until the child turns 18.  If your child is unable to live independently, then you can either make arrangements for adult care or discuss your preferences with the appointed guardian.

As you consider choices of a guardian for your special needs child, consider how much time is required to raise a child with special needs.  Who do you know who can respond to the challenge?  Who do you know who has already formed a bond with your child?

After you make a choice, ask the individual if he or she will accept the responsibility of serving as your child’s named, legal guardian.  It is never wise to keep this decision a secret.  Also, discuss with your selected guardian how he or she will probably still have responsibilities toward your child even after his or her 18th birthday.

#4 Apply for an adult guardianship

Even if your child is still a minor, you can start planning now for when he or she reaches the age of majority.  When children turn 18, the law considers them adults and able to make their own financial and medical decisions.  If your special needs child will be incapable of managing his or her own health and finances, consider a legal guardianship.

#5 Prioritize your savings account
Parents of special needs children quickly learn that their children need many resources and equipment that insurance and school systems do not cover.  The more financial assistance you can give your child, the better.  Start saving as early as possible for your child’s lifetime needs – just remember to not open the savings account in your child’s name

Savings can help pay for therapies, equipment, an attorney to advocate for your child in the school system, or a special education expert who can help you make sure your child is getting access to all the programs he or she qualifies for.

#6 Plan for your child’s adulthood

Early planning for your child’s adult years will help you bring the legal and financial picture into sharper focus.  Will your child continue to live with you?  If so, will he or she need in-home assistance?  How often?  Do adult day care programs for people with special needs exist in your community?  How are they rated?

Is your goal for your child to live independently?  If so, what support will he or she need?  Will your child live in a group home, an assisted living community, an apartment with on-site nursing care, or another type of situation?  The earlier you research available options in your community, the sooner you can add your child’s name to the waiting list for the living situation you both prefer.

#7 Write a letter of intent
A letter of intent is not a formal legal document.  It is more like a manual of instruction, containing your wishes for your child’s upbringing.  In the best case scenario, you would give this letter of intent to your child’s chosen guardian and to anyone else who will play a significant role in his or her life after your death. 

  • What is your child’s daily routine?  What kind of weekly and monthly routine does she have?
  • What does he find especially comforting?  What frightens her?  What are favorite foods, books and movies?  Be as detailed as you wish.
  • List all of your child’s health care and educational providers.
  • List all current medications, doses and schedules.
  • List all allergies.
  • Are there people you don’t want your child to spend time with? Be specific.
  • Are there people you want your child to spend time with? Who?
  • Are there activities you especially want your child to try, such as sports or arts and crafts?

Update this letter at least once a year.  Keep a copy wherever you keep copies of your will.  And be sure to give a copy to your child’s appointed guardian.

#8 Talk with family members
Either in person or in writing, explain the major decisions you have made to important family members.  It is especially important to explain to generous grandparents and other relatives why they must not leave gifts of money – or inheritances – directly to your child.  Give relatives the information about your child’s special needs trust and instruct them to leave any financial gifts to the trust.  Similarly, explain that family members should designate the trust – not the child – as the beneficiary of life insurance policies and so forth.

If you have made decisions you fear will be unpopular (such as naming a guardian), consider explaining your reasons directly to family members whom you fear will be unhappy.  You could also consider including the named guardian in these difficult conversations.

The process of planning for your special needs child’s future may seem long and arduous at times, but you will experience a great relief when the major pieces of the plan are in place.  Creating a plan for the future will allow you to relax and enjoy the present with your child and family.


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