Revocable Living Trust vs. Last Will and Testament

Women and a man sitting at a desk with a laptop signing important documents

Written by Matthew Reinaker on February 1, 2023. Posted in Last Will & Testament, Legal Trusts.

Learn the advantages and disadvantages between a last will and testament and a revocable living trust and which one might be right for you.

We are faced with options day in and day out. Some are simple: Would you like cream and sugar with your coffee? Others are more complex, like what type of estate you will set up to protect your assets, who will care for your children in the event that you pass away, and what your medical care will look like at the end of your life.

A 2020 Gallup Poll discovered that only 46% of Americans have a will directing how they want their money and estate handled after their death. Tomorrow isn’t promised, so planning for the future now is the best way to care for your loved ones when you are no longer here. The first step in planning is knowing the tools available to you. Estate planning tools like a last will and testament and a revocable living trust each serve a specific purpose. Follow along to learn about wills and trusts–discover the advantages and disadvantages of each.

What is a Last Will and Testament?

A last will and testament functions as a set of instructions- think of your will as a step-by-step guide laying out your wishes, your chosen beneficiaries, and steps to manage the closing of your estate. Your last will and testament might designate who will inherit your vehicle, who will care for your children or pets, and who will be the executor of your will, ensuring that all of your wishes are executed in the way you laid out.

What is a Revocable Living Trust?

A revocable living trust is an estate planning tool that involves moving your assets into a trust managed by a trustee. A trust goes into effect immediately and protects your assets and privacy.

Advantages of a Revocable Living Trust vs. Last Will and Testament

Advantages of a Revocable Living Trust:

Immediate implementation: A trust goes into effect immediately after it is funded and signed.
Avoidance of probate: Assets held in a trust do not go through probate, which is the legal process of transferring assets from the deceased to their beneficiaries. Keeping assets in a trust can save time and money and help keep the distribution private.
Control over assets: A trust can provide more control over how and when assets are distributed to beneficiaries. A revocable living trust can be particularly useful for individuals with minor children or beneficiaries with special needs.
Asset protection: A trust can protect assets from creditors, lawsuits, and other claims if specific parameters are set around the beneficiary’s duties before assets are distributed.
Legacy: A trust can create a sense of legacy and reflect values important to the Guarantor.

Advantages of a Last Will and Testament:

Simplicity: Wills are generally simpler and less expensive to create and administer than trusts.
Flexibility: Wills can be changed or revoked anytime, whereas trusts are more difficult to change once they have been established.
Accessibility: A will is easily accessible and an excellent first step in working towards a comprehensive estate plan. This tool allows immediate naming of guardians for children and pets, designates who assets will be distributed, and lays out all final wishes and arrangements.

Disadvantages of a Revocable Living Trust vs. Last Will and Testament

Disadvantages of a Revocable Living Trust:

Cost: Setting up a trust can be more expensive than a will and typically requires the services of an attorney. Additionally, ongoing expenses may be associated with maintaining the trust, such as accounting and legal fees.
Complexity: Trusts can be complex legal instruments, and it may be difficult for some individuals to understand the terms and conditions of the trust fully.
Limited flexibility: Trusts are often inflexible and difficult to change once established. This can be a problem if the grantor’s circumstances or the needs of the beneficiaries change over time.

Disadvantages of a Last Will and Testament:

Probate: One of the main disadvantages of a will is that it typically goes through probate, which is the legal process of transferring assets from the deceased to their beneficiaries. Probate can be time-consuming and expensive, and it can also make the distribution of assets a matter of public record.
Limited control: A will only takes effect after the principal’s death, which means the principal has limited control over how and when their assets are distributed to beneficiaries, especially if an executor was not selected to carry out the last will and testament.

The Bottom Line: Revocable Living Trust vs. Last Will and Testament

In general, revocable living trusts are more useful when individuals want more control over their assets and how it is distributed after death. Choosing a revocable living trust over a last will and testament can avoid the costly and time-consuming probate process.

Wills are more useful for individuals who want to keep things simple and straightforward and those with fewer assets to distribute. A will may also be better if the guarantor’s debts outweigh their assets. In cases with outstanding debts, it can be beneficial to go through the probate process because creditors have a limited time to seek the money they are owed. If the assets are in a trust, there is unlimited time for creditors to request the debts be settled.

Families might be better positioned in certain situations to have the probate process play out so all debts are accounted for. In many cases, clients will have both a will and a trust as part of their estate plan since a will functions as a directive and a trust functions as a layer of asset protection.

Mobile Estate Planning Made Easy

Serving clients throughout Virginia, our experienced and trustworthy professionals simplify the process using clear, understandable language free of legal jargon and provide flat-rate packages, so you’re never surprised by the bill. Contact us today and rest assured that your affairs are in order and your loved ones are protected.

Older women sitting outside with her computer while she writes notes with a pen

What is a Transfer-on-Death Designation?

Written by Matthew Reinaker on January 31, 2023. Posted in Estate Planning, Last Will & Testament.

Avoid the costly and time-consuming probate process by using the Transfer-on-Death Designation

Most people want to avoid probate court, and for good reason! Anyone responsible for being an Executor during the probate process knows how time-consuming, grueling, and expensive it can be. The good news is probate can be avoided with proper planning and using available estate planning tools like a Transfer-on-Death (TOD) or Payable-on-Death (POD) designation. If you want your loved ones to avoid probate, and your estate is simple and straightforward, then a TOD or POD might be a more viable solution.

What is a Transfer-on-Death Designation?

A transfer-on-death designation allows a principal to transfer the ownership of the property to a named beneficiary without going through the probate process. This designation is legally recognized in Virginia when a Virginia Transfer on Death Deed is filed. For a transfer-on-death designation to be valid, it must be filed before the principal’s death. A TOD is a helpful estate planning tool when the principal’s primary assets are real estate or bank accounts, and the principal only has a few other assets or debts. There are a few specific TOD designations:

Transfer-on-Death Deeds for Real Estate
Transfer-on-Death Registration for Vehicles
Payable-on-Death Designations for Bank Accounts
Transfer-on-Death Registration for Securities

In Virginia, a transfer-on-death (TOD) designation allows for the transfer of ownership of certain assets, such as bank accounts, brokerage accounts, and real estate, to a designated beneficiary outside of probate court. However, the current owner retains the right to manage the assets as they see fit during their lifetime. This includes the ability to mortgage, sell, or revoke the beneficiary designation without notifying or obtaining approval from the beneficiary. While the beneficiary may be aware of the TOD designation, they do not have any legal rights to the property until the death of the current owner. They cannot make any changes to the property or sell it on their own. The principal does not have to notify the beneficiary that they were named as the beneficiary. The principal can keep the TOD private until they revoke it or pass away.

It’s important to note that if there are any outstanding loans on the property, a TOD designation does not affect the creditors’ rights concerning those loans. Additionally, a TOD designation does not give the beneficiary’s creditors any rights to the property while the current owner is still alive.

Older women sitting outside with her computer while she writes her transfer-on-death designation with a pen.

Pros: Using a Transfer-on-Death Designation

One of the benefits of using a TOD is that it is not limited to property like land or real estate. It can also apply to personal property like jewelry, cars, and recreational vehicles. If the principal has a straightforward estate, they can avoid probate by using a TOD instead of a last will and testament. Another benefit of a Transfer on Death Deed is that putting a beneficiaries name on our deed ahead of time will mean they will own the property immediately after your death.

The primary benefit of having a valid Virginia TOD deed is that the beneficiary can avoid the hassle and legal expense of probate after death. The cost associated with getting a TOD in place is much more affordable than the costs associated with setting up a revocable living trust.

However, since the current owner retains the right to revoke the TOD designation at any time, it is considered an “incomplete gift” under federal gift tax laws. This means the owner is not required to pay gift taxes on the property transfer.

Cons: Using a Transfer-on-Death Designation

One drawback to a Transfer on Death designation is that it does not allow for continued beneficiaries like a trust would. The property will be given to the beneficiaries immediately upon the passing of the principal, and they can do with it what they want. If the property is in a trust, there are rules and stipulations around how the property is used, if it can be sold, or if it should continue to be passed down.

A TOD designation does not give the beneficiary’s creditors any rights to the property while the current owner is still alive. However, once the property is transferred to the beneficiary, it can be subject to property tax and liens, and the beneficiaries creditors can come after the property if they are owed money. It does not have the protection that a revocable living trust can provide.

How Does a Transfer-on-Death Help the Probate Process?

For many people, a Transfer-on-Death Designation is an affordable estate planning tool. A transfer-on-death designation can streamline the probate process by allowing assets to pass directly to the listed beneficiary without needing to go through probate. In addition, there is no requirement to notify your beneficiary that there is a TOD in place and ownership of the property will be transferred to them upon death, and in many cases, it is simple as providing proof of identification and a valid death certificate to complete the transfer.

Mobile Estate Planning Made Easy

How to Appoint an Executor For Your Will

Written by Matthew Reinaker on January 30, 2023. Posted in Estate Planning, Last Will & Testament.

The executor of your estate is responsible for distributing your assets, paying your debtors, and ensuring your beneficiaries receive their inheritance.

Have you ever heard the Winston Churchill quote, “He who fails to plan, plans to fail?” Failing to plan for the right person or entity to be an executor of your will after your death can lead to a long, arduous, and costly process. To best serve your estate and your beneficiaries you should appoint an executor for your will.

Young woman speaking to her grandmother about appointing an executor for her estate.

The one thing you don’t want your loved one to inherit is a headache! Appointing an executor is a detail that should not be overlooked in the process of planning a will. If you decide to not appoint an executor, the courts will appoint one on your behalf—this can be expensive and stall the process of estate settlement.

The executor’s role carries a lot of responsibility in protecting, managing, and distributing the estate assets to the named beneficiaries. In other words, you want to designate an executor you trust who is capable of intently carrying out your wishes. Thus, selecting an executor for your estate can be a difficult decision. Take time to consider a handful of candidates before deciding on one that can carry out all of the duties necessary to protect your estate.

What is an Executor?

An executor of a will is an individual selected by you, also known as the testator, to carry out the wishes laid out in your will. They will manage the estate settlement until the assets are distributed and the estate is closed. In some cases, the executor may be a corporate entity or bank, especially if there is a trust in place. But for many, the executor is someone close to the testator like a spouse, child, or close family member. You want the process of settling your estate to be as quick, cost-effective, and painless as possible.

What Responsibilities Does an Executor Have?

Executors can be subject to probate court oversight and carry many responsibilities that range from maintaining the assets while working through the estate settlement process to notifying government agencies of the testator’s passing. Here is a short list of some responsibilities that you can expect will fall under the executor’s duties:

File the will with the appropriate probate court and be available during the probate process
Notify all beneficiaries or interested parties listed in the will
Identify all of the testator’s assets
Maintain property and assets until distributed
Pay off all debtors
Pay all state and federal taxes
Distribute or transfer all remaining funds, assets, or property to the beneficiaries named in the will
Close or cancel any accounts like social security, credit cards, or subscriptions
Close the estate

How to Choose the Right Executor

Often, selecting the right person can be one of the toughest tasks in the estate planning process. This selection can be emotional and carries a lot of weight. You want to select an executor for your will who is available immediately and can manage the responsibility of starting the probate process even while dealing with their grief. The executor of an estate should be responsible, trusted, and not have any outstanding feuds with any of your beneficiaries.

The executor should be firm and direct about protecting all assets until the process is finished. Select an executor for your will who will not go against the interests of the beneficiaries or act against the provisions of the will. This process can be complex and time-consuming. Appointing someone responsible and diligent who understands that they can face legal and civil ramifications if they do not fulfill all of their duties is critical.

Appointing the Executor You Selected

If you decided on an executor to include in your will, congratulations! This is one of the hardest decisions in this process. Naming an executor is as simple as putting their name as the chosen executor in your will and giving the necessary information to the executor regarding where to find your will after you pass away. It is not required to share all of the details laid out in the will with the executor—this can stay confidential. In the event that you pass away, the named executor will file a petition with the probate court to be confirmed as the executor and start the process of closing the estate and distributing the assets—just as you laid out in your last will and testament.

Mobile Estate Planning Made Easy

Serving the Greater Richmond area and beyond, our experienced and trustworthy professionals simplify the process using clear, understandable language free of legal jargon and provide flat-rate packages, so you’re never surprised by the bill. Contact us today and rest assured that your affairs are in order and your loved ones are protected.

What is a Holographic Will?

Written by Matthew Reinaker on January 30, 2023. Posted in Estate Planning, Last Will & Testament.

Should you DIY your own will and does it hold up in court? Here are answers to frequently asked questions and the pros and cons of holographic wills.

Maybe you’re planning an international vacation and you want to make sure that in the event something happens to you or your spouse, your children will be well cared for by the person of your choice. Maybe you were born into the Bezos family and want to secure your multibillion-dollar inheritance. Maybe you won the lottery and want to make sure that when you pass, a hefty sum of money goes to every animal shelter in the Northern Hemisphere. Whatever your final wishes may be, if you’ve ever wondered how to write your own last will and testament, look no further. Here’s how it works.

Writing Your Own Will: A How-To

Step 1: Take out a piece of paper and a pen or pencil. Yes, actual pen and paper.

Step 2: Write your will. It should look something like this: “I, [your name], leave my entire estate to my wife, Jane Smith.” Or, “I, Elizabeth Client, leave my estate equally to my children, Anna, Barry, and Chris.” Personalize this with your name and the names of your beneficiaries.

Step 3: Sign your will.

Voila! You (probably) have a valid will. For bonus points, write “Will” at the top so your family knows what they’re looking at. Not necessary, but a nice touch. If that feels too easy, you might have some questions right now. Let’s answer a few of them.

Couple sits down together to write their last will and testament.

What is a holographic will?

Writing out your own will and signing it yourself is called a holographic will and is typically considered valid in the state of Virginia. While this method is almost effortless and doesn’t cost you anything, it may not be the best or safest option. Aside from the important fact that the will was written by a layperson and not a lawyer or your holographic will contains unclear language or spurs uncertainty, this cheap and easy method could cost your loved ones more than just money after you’re gone.

Does a holographic will hold up in court?

A holographic will, or a will written by the testator, is typically considered valid in the state of Virginia, even without witnesses or a notary.

What if important details are missed in a holographic will?

You might also be wondering, “What about my minor children? Who’s going to watch them?” Or, “What about charitable gifts I want to make?” or “What about an Executor? Don’t I need one of those?” Or even more generally, “…isn’t there supposed to be more stuff in here?”

These are all great questions and all of this should 100% be included in a good will. The key word there is good will. This post is about writing a will. Every client is unique and every situation is a little different. So although a one-sentence will might be a valid legal document in Virginia, it’s probably not an adequate expression of your final wishes, nor can you guarantee they will be carried out.

Writing a Holographic Will: The Bottom Line

Sure you can go online and print out your own will pretty cheaply, just like you can scrawl out your last wishes in crayon on a dirty napkin if you like. To recap, the pros of a holographic will are:

A holographic will is free
A holographic will is easy
A holographic will can be made anywhere, including your local Waffle House
A holographic will has legal standing in Virginia
You can use your favorite color crayon in your holographic will

But the old adage “You get what you pay for” does ring true in this scenario when you consider the risks of a holographic will:

Holographic wills often omit important information that adversely affects your loved ones after you die
Holographic wills are not written by an experienced lawyer, leaving room for uncertainty, ambiguity, and potential inaccuracies, making your will prime for disputes, invalidity, or being contested by family members
Holographic wills often do not have witnesses to their creation, giving no proof that the testator wrote it
Holographic wills could be illegible because they are handwritten, adding more room for error

In short, your DIY will may have been free, easy, and even serve as a “valid” will. But probably what you want more than a piece of paper that says “will” on it, is the peace of mind of knowing you’re providing an ironclad plan for your loved ones after you’re gone. More than just a document, you want a plan that provides guidance and comfort to your family, so they know what your wishes are and so they can honor you by upholding them. Your loved ones are going to be stressed and overwhelmed and grieving at your loss—and one of the last new memories they have of you could either be finding a crumpled piece of paper stuffed in the back of a drawer with your hastily-written instructions on it, or finding a clear plan, crafted with the help of a professional and stored among your important documents, showing that you took the time to provide guidance and direction to your loved ones at a time when they needed it most.

It is important to ensure that your or your loved one’s final wishes are respected, and in certain situations, a holographic will may be the only option, but given the potential concerns of ambiguity, errors, and critical omissions, a formal will prepared with an estate lawyer’s advice will be far superior to—and protect you more than—a holographic will.

Mobile Estate Planning Made Easy

The process of getting a legitimate will in place for you and your family can be overwhelming, confusing, and costly, but it doesn’t have to be! At Assurest, we offer simple, affordable solutions for your legal needs and make the process easy by coming to you for the conversation—meeting you in your home or, if you prefer, virtually or over the phone.

Serving Richmond, Virginia and beyond, our experienced and trustworthy professionals simplify the process using clear, understandable language free of legal jargon and provide flat-rate packages, so you’re never surprised by the bill. Contact us today and rest assured that your affairs are in order and your loved ones are protected.

What Makes a Will Invalid?

Written by Matthew Reinaker on January 30, 2023. Posted in Last Will & Testament.

There are a number of reasons a will could be considered invalid. Here’s how to identify and contest an invalid will in Virginia.

One of the most important documents you will ever write is your last will and testament; yet many, to their own detriment, erroneously believe that they don’t need a will. These common misconceptions include not owning “many” assets, not being “old enough,” or just assuming their closest relatives are aware of and will carry out their wishes. And contrary to popular belief, holographic wills—or handwritten wills by the testator, or person making the will—may not hold up in court.

A man is sitting at table looking out the window and is stressed about his invalid will.

In a perfect world, everyone would band together when a loved one dies and be aligned on carrying out their last wishes. In reality, though, not having a valid will can create a ripple effect of family disputes that end up in probate court, costing time, money, and irreparable damage to relationships within families with the courts making the final decisions. It is not uncommon for family members who feel slighted by a loved one’s last will and testament, who didn’t get what they believe to be their fair share of the estate, to attempt to have a will declared invalid by contesting it in court.

Most people who end up in a lengthy, costly court battle contesting the will of a recently-deceased loved one (or being on the receiving end of a disgruntled family member contesting a will they may not have been included in) didn’t consider that this could be an outcome for them. Unfortunately, it’s not until it’s too late that they realize the gravity and dire consequences of not having the proper, legally-standing documentation in place much sooner.

Here’s everything you need to know about what makes a will invalid and how to contest an invalid will.

When is a Will Invalid?

A will may be declared invalid if it does not follow state law requirements. Additionally, a will that is too ambiguous, contains missing information or inaccuracies, or appears written under suspicious circumstances, someone may try to contest or challenge it, having it declared invalid in probate court.

Some common reasons a will may be declared invalid include:

The will has been forged
The deceased lacked testamentary capacity, or the mental capacity to coherently make decisions and write a will
The deceased was a victim of undue influence or was manipulated or pressured when writing their will
The deceased was a victim of elderly abuse or duress, threatened with violence, abuse, or other unethical, coercive action
The will was not signed, witnessed, or notarized appropriately
The deceased did not approve the contents of their will
The person who created the will can be proven to have been mentally ill, incapacitated, or otherwise lacked the capacity to make a will

How to Contest an Invalid Will

While laws vary by state, to contest a will in Virginia, you must:

Confirm that you are an “interested person” by legal definition. An interested person means someone who is entitled to receive property under the will or under the intestate laws of Virginia.
Determine whether or not you have grounds to contest the will based on the aforementioned reasons a will could be deemed invalid.
Submit a bill explaining your interest and reason for challenging the will per Virginia Code section 64-1.88.

If you believe a will is invalid, acting quickly is critical as the time limit for contesting a will is typically one year from the date the will is probated (or filed in the clerk of court’s office). If you are involved in a will contest or have questions about the validity of a will, seeking trusted specialized legal counsel can help simplify the process, ensure important deadlines are not missed, and give you peace of mind.