Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, June 21, 1993 TAG: 9306190128
SECTION: MONEY PAGE: 6 EDITION: METRO
SOURCE: MAG POFF STAFF WRITER
DATELINE: LENGTH: Medium
If you don't have a will, you'll still get one because the state will write it for you, although it's less likely to follow your wishes.
For people who think they don't need wills, J. Lee Osborne notes that a will is a basic plan for an estate. Osborne is a lawyer with the Roanoke firm of Carter, Brown & Osborne.
In a simple situation, Osborne said, Virginia's estate plan may simply parallel your wishes for what's done after your death.
But again, current state law may not be what you want. And Osborne points out that even if it is, laws can change.
The second reason for writing a will is to provide guardians for your minor children and to name the person who will manage their assets.
Finally, by writing a will you can waive the requirement that an executor post security on the bond, saving money for the person you trust with this job.
Trusts are a way of reducing the amount of an estate passing through probate, or proving of the will. But Osborne said this is not a pressing matter in Virginia, which has simplified probate.
The most recent session of the General Assembly changed one probate law. Starting July 1, he said, the court must notify all will beneficiaries - as well as the people who would inherit under the law - that a will has been filed.
The state probate fee is $1 for each $1,000 of assets in the estate, Osborne said. Localities may also add their own fees. Roanoke, Salem and Roanoke and Botetourt counties all charge 33 cents per $1,000 for a total fee of $1.33, but this could vary elsewhere.
The filing fee is $13 for the first four pages and $1 a page after that. The executor will pay up to $30 to qualify.
The court demands an inventory of assets, which will cost $25 plus $13 for recording.
For estates that own stocks or bonds held individually, not by the broker, the cost is $50 to transfer them to a new owner. This fee is usually avoided if the assets are held in a trust at death.
The probate process provides court supervision for distribution of the estate. But whether this is seen as an advantage depends on the individual, Osborne said. Some see it as protecting their wishes; others feel it's an unnecessary intrusion.
There is a simplified system, however, in cases where the same people are both the executor and sole heir, such as a spouse or children. Those persons, he said, can use an affidavit accounting, which certifies that all debts were paid before the estate was passed to them.
Starting July 1, Osborne explained, a person who writes a will can waive a requirement that the trustee named in a will must file an accounting of financial records.
The heirs, however, still may petition for one. Trustees named in a will also must qualify with the court and file accountings.
Setting up a revocable trust before you die can keep money from passing through the estate, though a will is still necessary.
It doesn't affect taxes, though. Osborne said income from the assets is taxed to the grantor of the trust as if he still owned them. And a trust doesn't help avoid estate taxes.
One advantage of a revocable trust is protection against incapacity, Osborne said. It allows the assets to be used to care for the person during an illness. Plus it's superior in safety and in handling problems to a power of attorney, which more people use.
But a trust is also a tool to manage an estate. Osborne said it can be set up during a lifetime, but not funded until death. This is done through life insurance or a "pour-over will" that transfers assets at death.
Osborne said a trust avoids court supervision and is more difficult to attack. A disgruntled person can more easily challenge a will than a trust.
The drawback of a trust is the amount of work required to transfer assets into it. Osborne said many people set up a trust, but then dally about retitling all their assets into it.
A trust, like probate, costs money. Osborne said the cost of a simple trust is about $500. That can climb to several thousand dollars, depending on its complexity.
Trusts are useful for taking care of minor children, regardless of the size of the estate. Otherwise, he said, people using trusts should have assets of at least $100,000 - and usually more if a corporate trustee, such as a bank, is named to manage it.
Trusts are essential, he said, when a couple jointly own assets worth more than $600,000. In this case, he said, a trust can help to avoid estate taxes at the death of the second spouse.
by CNB