Having a will doesn’t avoid probate, the court-directed process of validating a will and confirming the executor. To avoid probate, an estate planning attorney can create trusts and other ways for assets to be transferred directly to heirs before or upon death. Estate planning is guided by the laws of each state.
In some states, probate is not expensive or lengthy, while in others it is costly and time-consuming. In Virginia, it is somewhere in between. However, one thing is consistent in all states: when a will is probated, it becomes part of the public record and anyone who wishes to read it, like creditors, ex-spouses, or estranged children, may do so.
One way to bypass probate is to create a revocable living trust and then transfer ownership of real estate, financial accounts, and other assets into the trust. You can be the trustee, but upon your death, your successor trustee takes charge and distributes assets according to the directions in the trust.
Another way people avoid probate is to have assets retitled to be owned jointly. However, anything owned jointly is vulnerable, depending upon the good faith of the other owner. And if the other owner has trouble with creditors or is ending a marriage, the assets may be lost to debt or divorce.
Accounts with beneficiaries, like life insurance and retirement funds, bypass probate. The person named as the beneficiary receives assets directly. Just be sure the designated beneficiaries are updated every few years to be current.
Assets titled “Payable on Death” (POD), or “Transfer on Death” (TOD) designate beneficiaries and bypass probate, but not all financial institutions allow their use.
In Virginia, you can have a TOD deed for real estate or vehicles.
Some people think they can use their wills to enforce behavior, putting conditions on inheritances, but certain conditions are not legally enforceable. If you required a nephew to marry or divorce before receiving an inheritance, it’s not likely to happen. Someone must also oversee the bequest and decide when the inheritance can be distributed.
However, trusts can be used to set conditions on asset distribution. The trust documents are used to establish your wishes for the assets and the trustee is charged with following your directions on when and how much to distribute assets to beneficiaries.
Leaving money to a disabled person who depends on government benefits puts their eligibility for benefits like Supplemental Security Income and Medicaid at risk. We can help you create a Supplemental Needs Trust to allow for an inheritance without jeopardizing their services.
Finally, in certain states you can use a will to disinherit a spouse, but it’s not easy. In Virginia, the spouse is entitled to a share of the estate; the share is a percentage of what is called the “augmented estate” which includes the total probate estate plus certain non-probate transfers (including assets that transferred upon death outside of probate). Your spouse can waive entitlement to a share of the estate if you have a properly prepared prenuptial or postnuptial agreement.
Reference: Arkansas Online (Dec. 27, 2021) “Before writing your own will know what wills can, can’t and shouldn’t try to do”
