virginia
My client moved from FL to VA. In FL she made out a Living Trust, due to the probate tax problem in FL. Approx worth is 1.2 million and she is 91 yrs old.
Does VA have a probate problem like FL or should she get rid of the living will and start to gift some of her money away to her kids to reduce the amount under 1m in case she lives past 2010?
thanks,
Douglas
Permalink Submitted by Bruce Steiner on Wed, 2008-02-13 00:09
In the vast majority of cases, there is no probate problem in Florida. My office is in New York, I’m admitted in Florida (as well as New York and New Jersey), and we probate lots of Wills in Florida (sending the original Wills to the court by registered mail or Fed X so they won’t get lost). The filing fee is usually about a couple of hundred dollars. The forms are standard in every county in Florida. The legal fees to probate the Will are usually about the same as the legal fees for the living trust (and the client has to write the check for the living trust, while the legal fees for probating the Will don’t get paid until after the client dies, and the client doesn’t have to write that check).
While there are situations in Florida or elsewhere in which a living trust may make sense (it sometimes does in Florida because in Florida you can’t have a personal representative (executor) who is not a relative or a Florida resident), I would be very skeptical of anyone who does them absent some reason for doing so in the particular case.
Someone who is 91 years old is more likely, however, to want a living trust. She might give someone a power of attorney to manage her affairs, or to manage her affairs if she should become disabled. At one time, when powers of attorney were less common, some people had trouble getting financial institutions to honor them. This is not as much of a problem these days (especially if she tells the financial institutions in advance, so they’re not worried that someone is trying to defraud her). But if she creates a living trust and makes someone else a co-trustee, it may be easier for her co-trustee to deal with her assets.
Florida has no estate tax. The Federal estate tax is the same regardless of whether there is a living trust.
Bruce Steiner, attorney
NYC
also admitted in NJ and FL
Permalink Submitted by [email protected] on Wed, 2008-02-13 18:59
Bruce,
My client has the POA’s on file for both of her children as POA’s.
she wants both kids to divide equally the assets, which is in her will.
I quess my question is: isn’t it easier to divide the assets between the two of them without a living trust which becomes an irrevocable living trust when she dies? whats the sense of keeping the living trust?
It doesn’t look like the living trust helps her or heirs in anyway. The thought is to revoke the living trust and just keep all assets in her name alone and then the kids will take their shares when she passes away.
She & the kids don’t want to deal with the trust issues if there is no real benefit to them.
Thanks,
Doug
Permalink Submitted by Bruce Steiner on Wed, 2008-02-13 19:21
I’ve only had one estate in Virginia (with local counsel handling the local aspects). In that case, the decedent did not have a living trust, and that didn’t seem to add much complexity.
The real issue here that your client ought to be focusing on is whether she should be leaving each child his/her share in a lifetime trust rather than outright. Each child can effectively control his/her trust. That would better protect the inheritances from potential creditors (including spouses), and would keep the inheritances from being included in the children’s estates for estate tax purposes. If one child has a taxable estate, and his/her $600,000 inheritance grows to $2 million during the child’s lifetime, the estate tax savings of this at the child’s death could be about $1 million. Or if a child outlives his/her spouse and remarries, and prefers not to have to do a prenuptial agreement, protecting the child’s inheritance from the spouse’s elective share will save the family hundreds of thousands of dollars. In that context, whether it costs an extra couple of thousand dollars to create a revocable trust or to probate a Will is not worth worrying about.
According to the Virginia Department of Taxation’s website http://www.tax.virginia.gov/site.cfm?alias=Estate, Virginia repealed its estate tax effective July 1, 2007. It’s anyone’s guess what Congress will do, but I would guess that the Federal estate tax exempt amount will not go back to $1 million in 2011.
Bruce Steiner, attorney
NYC
also admitted in NJ and FL