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Estate Law Legal Terms . . . Grab and Know – Reference Guide

By: Attorney Katherine S. Breckenridge, Esq.

Published February 14, 2019 – INSIDENOVA / Culpeper Times

Estate Planning : Legal Terms Reference Guide

There are Cliff Notes – capturing the highlights of novels (often used in preparation for book reports or oral arguments). There are Spark Charts – listing the elements one needs to know about subject matters (typically a tool used during preparation for matters taught within an educational system). What about a subject matter that touches everyone?

One may be reluctant by any reckoning to face the possibility of mental incapacitation, or the reality that death is a part of life’s cycle – yes, for each of us. Preparation for mental incapacitation and for graceful transitioning at the threshold of death is encouraged.

Unlike Cliff Notes and Spark Charts, which are written for individuals who have a specific task in mind, the following Estate Law Notes are a “grab and know” applicable to everyone in the Commonwealth of Virginia.

Power of Attorney – An instrument used by an individual to designate another person as her attorney-in-fact in writing, providing a clear written expression of the authorities conferred. Generally, a power of attorney addresses help with maintaining one’s quality of life, as well as financial matters. Such an instrument may be limited or broad in scope, and can be effective upon signing or upon the determination of mental incapacitation.

Who needs a power of attorney? Every individual over eighteen years of age should have a power of attorney in place.

What if a person does not have a power of attorney in place and becomes mentally incapacitated? The alternative to a power of attorney is an award by a circuit court for guardianship and conservatorship.

Advance Medical Directive – A document in which one sets forth the parameters for her medical care in the event she is determined to be incapable of making a medical decision for herself. The same, memorializes wishes for end-of-life, whether she wants life sustained by actions such as providing life support and/or hydration and nutrition. Within an advance medical directive a trusted agent is given legal authority to make medical decisions based on terms within the document.

Who needs an advance medical directive? Every individual over eighteen years of age should have an advance medical directive in place.

What if a person does not have an advance medical directive and is unable to make medical decisions for her care? The Code of Virginia gives authority to individuals in descending order, to whom a medical provider may turn for authorization.

Last Will and Testament – An estate planning document that is effective upon death, and distributes one’s assets that pass through probate to the beneficiaries in the will. The assets may include real property (raw land or land with improvement), tangible personal property (items one can touch), and intangible personal property (cash, savings, and wealth management).

Who should have a will? Every individual over eighteen years of age should have a will in place.

What are the signing requirements of a will? The individual signing the will, the Testator, must be over the age of eighteen of sound and disposing mind and memory, and under no undue influence.

Presence of Testamentary Capacity: The Testator must: (a) know she is executing a document disposing of her property upon death, (b) know her bounty and the intended objects of her bounty at death, and (c) appreciate that she is making a reasonable judgment.

Presence of Testamentary Intent: The Testator must: (a) know that the document is her will, (b) understand the terms of her will, and (c) acknowledge her belief that the will disposes of her property at her death in accordance with her desires.

The will must be signed by the Testator in front of two witnesses, who must sign the will in front of the Testator and in front of each other.

Intestate – When a person dies without having a Last Will and Testament in place, or when the terms of a Last Will and Testament fail.

The terms set forth in the Code of Virginia that state how assets shall pass in the event a decedent passes without controlling such distribution through a will. For example, all assets that pass through probate will pass to one’s spouse unless one has children outside of the marital unit. If there are children outside of the marital unit and one dies intestate, spouse takes 1/3 of the assets passing through probate, and children outside of the marital unit and within divide equal shares of 2/3rds of the assets passing through probate.

Probate – The process that administers an estate and distributes the assets within the estate that have not been controlled by joint ownership with rights of survivorship, payable on death, or beneficiary terms. Applies to estates passing through both wills and intestate.

Steps – (1) Qualification of an Executor, (2) Control of Assets, (3) Inventory within four months of qualification, (4) First Accounting within sixteen months of qualification (annual accountings due until estate is settled), (5) Debts and Demands Hearing, (6) Show Cause Against Distribution, and (7) Order for Distribution.

Transfer on Death Deed – Allows for real property (raw land or land with improvement), within the Commonwealth of Virginia, to be transferred outside of probate upon one’s death. It does not take the place of one’s current deed. You can still encumber your property or sell your property. Made available in July 2013, think of this as a “deed in waiting,” allowing for the designation of primary and contingent beneficiaries. Thus, if one owns interest in the specific parcel upon one’s death, the deed will be given effect- as long as it has been recorded in the land records prior to the grantor dying.

Revocable Trust – A means of managing assets while alive, and transferring assets outside of probate upon death. Five factors for considering a revocable trust: (1) if you own real property outside of the jurisdiction of the Commonwealth of Virginia, (2) your desire for assets to be managed seamlessly during your lifetime and distributed outside of probate upon your death, (3) whether you intend to micro-manage assets following your death – from the grave, (4) protection of your interests/intended distribution of assets, and (5) the private (non-public) nature of transferring assets.

Special Needs Trust – A Special Needs Trust is a trust that enables a person with disabilities to retain his or her own resources, or enables family members to provide an inheritance for the person with disabilities with the intent to keep from disqualifying the individual from benefits that are means-tested.

There are two types of Special Needs Trusts, self-settled and third party. A self-settled (first party) Special Needs Trust is funded with the beneficiary’s own assets. A third party Special Needs Trust is created and funded with the assets of a person other than the beneficiary with a disability.

Guardianship and Conservatorship – When a determination is made by a court that a person is a ward of the Commonwealth, and is not able to interpret her environment and is placing herself in harm’s way, a guardian and a conservator may be appointed. A guardian is a person appointed by the court who is responsible for the personal affairs of an incapacitated person – her quality of life, including responsibility for making decisions regarding the person’s support, care, health, and safety. A conservator is a person appointed to control, protect, and use for the benefit of the incapacitated individual, her assets.

Affects – Removes one’s ability to make decisions for oneself, with the exception of reserved rights, such as the right to vote. Not able to enter into contracts – thus a protective measure against scam artists.

Least Restrictive Means – Courts prefer the least restrictive approach, thus affecting a power of attorney while one has capacity is preferred.

Seek Legal Counsel – The above are merely summaries of estate planning terminology, and are not intended to be comprehensive, nor provide legal advice. Seeking counsel from an estate planning or elder law attorney is encouraged when one has a matter involving any of the above topics.