10/17/2018
ESSENTIAL ESTATE PLANNING DOCUMENTS
There are some things all couples can and should do to insure that their assets are distributed pursuant to their wishes upon the death of one or more of the parties to the couple. Nor does being married alone guaranty that one’s wishes will be realized because there are certain “land mines” that can catch re-married couples unaware that can have potentially disastrous results in this day and age of divorce and remarriage and blended families. Three of the most common potential “land mines” are the following:
1. Widow or Widower’s Share of Estate: § 64.1-1 of the Code of Virginia, which governs course of descent and distribution for those dying without a will, provides in relevant part:
First. To the surviving spouse of the intestate, unless the intestate is survived by children or their descendants, one or more of whom are not children or their descendants of the surviving spouse, in which case two-thirds of such estate shall pass to all the intestate's children and their descendants and the remaining one-third of such estate shall pass to the intestate's surviving spouse.
Many widows have found to their dismay that they can lose their homes and/or other assets to the deceased spouse’s children as a result of the decedent to execute a will to protect them.
2. Non-Adopted Step Children: Another common difficulty is that a step-parent’s step-children are NOT considered children for descent and distribution purposes unless they have been formally adopted. Thus, unless named in a will, these children receive nothing from the deceased step parent’s estate.
3. Authorization to Make Medical and Financial Decisions: The partner/spouse of an unmarried couple has no legal standing to make medical treatment or financial decisions for their partner/spouse absent a valid medical or financial power of attorney. Virginia’s Marriage Amendment applies to ALL couples, gay or unmarried heteros*xuals.
Unfortunately, far too many such couples fail to take the relatively simple steps to avoid the adverse and/or unexpected effects of current law.
NECESSARY DOCUMENTS AND STEPS: There are some basic documents and steps that every unmarried couple and every same-s*x couple should have prepared and duly signed. These include:
Will - A will specifies how you wish your property to be distributed upon your death. In a will, you designate the person you wish to handle your estate -- your partner or another individual. Without one, your partner receives absolutely nothing. Pursuant to § 64.2-400, et seq. of the Virginia Code, anyone who is over the age of 18 years and not mentally incompetent may make a will and thereby dispose of any estate to which he shall be entitled, at his death, including any estate, right or interest to which the testator may be entitled at his death, notwithstanding he may become so entitled subsequently to the ex*****on of the will. Inasmuch as neither § 64.2-400 or other provisions of the Virginia Code restrict permitted devisees to spouses or blood relatives, both unmarried heteros*xual couples and same-s*x couples may make wills leaving assets to their partners.
Trust - A properly established and funded trust avoids publicly probating assets owned by the trust at the time of one’s death and is more difficult to challenge in court than a will. In addition, a trust can provide beneficiaries with creditor protection in certain circumstances. Properly structured, a trust can provide support for one’s surviving partner for the remainder of his or her life, with the remainder to pass to other relatives and designated beneficiaries, bypassing potential taxes associated with the surviving partner's estate. Chapter 4, Title 26 of the Virginia Code governing the appointment, qualification, resignation, removal of fiduciaries, including trustees, contains no provision restricting permitted trustees or trust beneficiaries to spouses or blood relatives.
Health Care Power of Attorney - A health care or medical power of attorney allows one’s partner regardless of gender to make medical decisions on your behalf in the event you are not able to do so due to incompetency or other incapacity. Properly drafted, a health care power of attorney can also ensure hospital visitation rights to the designated attorney-in-fact
Advanced Medical Directive - § 54.1-2983 of the Virginia Code provides that any mentally competent adult may, at any time, make a written advance directive (i) authorizing the providing, withholding or withdrawal of life-prolonging procedures in the event such person should have a terminal condition, and (ii) appointing an agent to make health care decisions for the declarant under the circumstances stated in the advance directive if the declarant should be determined to be incapable of making an informed decision. Advance medical directives must be signed by the declarant in the presence of two subscribing witnesses who cannot be the spouse or blood relatives of the declarant.
There is no statutory restriction that one’s agent must be a spouse or blood relative. Rather, §54.1-2982 of the Virginia Code provides that under any such advance medical directive, an agent means “an adult appointed by the declarant under an advance directive, executed or made in accordance with the provisions of § 54.1-2983, to make health care decisions for him. . ." Such authority includes visitation rights, provided the advance directive makes express provisions for visitation.
General/Business Power of Attorney - This form of power of attorney allows a member of either an unmarried couple or a same-s*x couple to authorize their partner to handle their financial affairs in the event of disability or unavailability.
Title on Deeds and Accounts - How title to property is held can effect both future ownership and tax liability. Joint tenancy with rights of survivorship, for example, will ensure that the surviving partner will have full ownership upon the death of the deceased partner and avoid ownership disputes with surviving blood relatives. However, it can create certain negative estate tax treatment depending on the size of one’s taxable estate. Historically, deeds creating a tenancy by the entirety have been reserved for husband and wife couples. In light of the Virginia Marriage Amendment cited above, such a deed conveying title as tenants by the entirety to a same-s*x couple even though validly married in another state such as Massachusetts would not be effective in Virginia.
BENEFICIARY DESIGNATIONS: Most securities and retirement accounts provide for the designation of beneficiaries. These should be reviewed periodically to ensure that desired goals are achieved and also should include the designation of contingent beneficiaries to ensure the desired parties are named in the event of the death of the principal beneficiary.
NOTE: This article contains a general discussion of estate planning matters which vary greatly in asset structuring needs and potential tax liability based on the particular facts and circumstances of individuals and the nature of their assets. Therefore, it should not be relied upon as a substitute for individualized legal advice addressing one’s particular situation.
