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Virginia Probate Rules For Estate Planning
There are multiple ways to attempt to avoid probate including the use of beneficiary designations on life insurance policies, retirement accounts, and other similar accounts. Other ways to avoid probate are through joint ownership; however, joint ownership may not be the best approach in some situations (particularly between a parent and a child). Probably the most effective and smoothest way to avoid probate and to make sure your estate is handled properly is through the use of a Revocable Living Trust.
Virginia Uniform Real Property Transfer on Death Act
In 2013, a new approach to avoid probate of real estate was enacted. Virginia enacted the Virginia Uniform Real Property Transfer on Death Act. Under this act, a person may record a Transfer on Death Deed with land records that name a beneficiary for their real estate. The beneficiary can be an individual, including the trustee of a revocable living trust. The transfer does not occur until the owner of the property has passed away. The Transfer on Death Deed has to be recorded prior to the person’s death in order for the Transfer on Death Deed to work.
Transfer on Death Deed
Transfer on Death Deed is completely revocable during the owner’s lifetime. The owner maintains the property in his or her personal name while he or she is alive. Thus, the owner can still take out liens against the property or sell the property during his or her lifetime. If the property is sold and the owner no longer owns the property upon his or her death, it is as if the Transfer on Death Deed never existed. The owner can also revoke the Transfer on Death Deed by recording a Revocation or by recording a new Transfer on Death Deed that names different beneficiaries. Any mortgage on the property would remain with the property and pass to the beneficiaries upon the owner’s death (this is usually the case with any real estate passed through a Will or other estate planning document as well). Additionally, the beneficiary under the Deed is still subject to claims of creditors of the estate if the creditors have not been paid by other assets of the estate.
A Transfer on Death Deed is an option for some estate plans in order to attempt to avoid probate. One possible use for the Transfer on Death Deed is to use it as part of an estate plan incorporating a Revocable Living Trust. This way the owner’s real estate can remain in his or her personal name during their lifetime and then be transferred to their Trust at their death through the use of a Transfer on Death Deed. This may not be the best option if it is more ideal to have the real estate in the Trust during the owner’s lifetime. It depends on the circumstances of the individual.
A time where a Transfer on Death Deed may be impractical is where the owner wants to leave his or her estate to multiple beneficiaries. Creating a Transfer on Death Deed and naming multiple beneficiaries may be a bad idea if the beneficiaries do not get along and would not work together in maintaining the property or selling the property. Thus, leaving the property to flow through probate under a Will or through a Revocable Living Trust may be a better option in that scenario because then only the Executor or the Trustee will be the person handling the sale or maintenance of the property until transfer of proceeds to the beneficiaries.
Virginia offers a few shortcuts in probate that not every state offers
One such shortcut is if the only asset that needs to be probated is real estate in Virginia. That means all other assets either had a joint owner on them (for example, a joint bank account) or had a beneficiary named on them (for example, a retirement account that named a child as a beneficiary). When all there is to probate is real estate in Virginia, a full probate is not necessary and no one needs to qualify as the Executor or Administrator of the estate. If the deceased person had a Will, the person named as Executor in the Will should make an appointment with the probate office in the county the decedent resided in when they passed away. The purpose of the appointment is to simply record the Will. Once the Will is recorded, the real estate passes automatically to the beneficiary named in the Will.
That’s it! No full probate process — just one appointment. If the deceased person did not have a Will, instead of recording the Will, a “List of Heirs/Real Estate Affidavit” form must be filled out and recorded.
Whether or not the deceased person had a Will, at the appointment you would need to bring a certified copy of the death certificate, a list of the names, addresses, and ages of the heirs at law (and beneficiaries if there is a Will), and a legal description of the property (which can be found in the Deed). There will also be some probate fees collected at the appointment.
But that’s it. No further paperwork or inventories or accountings have to be recorded with the Commissioner of Accounts. The beneficiaries then own the property and can maintain it or sell it as they please.
Virginia offers a few more shortcuts in probate that not every state offers
One such shortcut is if the assets that need to be probated are under $50,000.00. This could occur if all other assets have beneficiaries named on them or have a joint owner on them, so perhaps there is only one or two bank accounts that needs to be probated.
When the assets that need to be probated are below this $50,000.00 threshold, a full probate does not need to occur and Virginia offers a simpler method for obtaining access to the funds for distribution.
If the assets are under $25,000.00 then under Virginia Code Section 64.2-602, such asset may be distributed after at least 60 days have passed since the decedent’s death and there has been no application for an executor or personal representative to be appointed that is pending in any jurisdiction.
If the assets are between $25,001.00 and $50,000.00, then a Small Estate Affidavit may be issued by the probate office naming the beneficiaries if there is a Will or naming the heirs at law if there is no Will. This Affidavit can only be issued if at least 60 days have passed since the decedent’s death and there has been no application for an executor or personal representative to be appointed that is pending in any jurisdiction. This does require an appointment with the probate office; however, there are no further steps to the probate process after this appointment.
This article was provided by the Law Office of Deborah N. Arthur.