Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, July 11, 1994 TAG: 9408030006
SECTION: BUSINESS PAGE: 6 EDITION: METRO
SOURCE: MAG POFF STAFF WRITER
DATELINE: LENGTH: Medium
Perhaps because someone once wrote a book about avoiding it, or maybe because it is expensive and complicated in some states, many people are afraid of having their estates go to probate.
"People hear all these crazy stories and think it's a horrible process," said Bruce Stockburger, a tax and estate specialist with the Roanoke law firm of Gentry, Locke, Rakes & Moore.
But in the past 10 to 15 years, he said, the process of probating - or proving - a will has been greatly simplified, especially in Virginia. He defined probate as the court-supervised transfer of a decedent's assets to the rightful beneficiaries. The court process ensures that the assets go where the decedent wanted them to go or, if there is no will, to the place where the state says they should go.
There are reasons to set up a living or revocable trust, he said, but "avoidance of probate is not a motivating factor."
The reasons for putting an estate in trust are many and complex, and they deal mostly with taxes. One reason, he said, might be ownership of real estate in more than one other state by Virginia residents. The estate would have to be probated in each state. A trust would avoid this because the trustee would own the real estate as personal property, he said; it would not be passed because of a death.
But that does not affect very many people, Stockburger said.
People may confuse the probate tax, which is small, with the federal estate tax, which is onerous, Stockburger said. A revocable trust will not escape the federal estate tax, which ranges from 37 to 55 percent (for estates over $600,000), with a Virginia levy starting at 16 percent on top of that.
The Virginia probate tax is $1 per $1,000 of value, while the locality adds another 33 cents per $1,000.
There are other expenses, such as the premium on a bond that ensures funds for the estate if the executor or administrator absconds with the decedent's money. That can run into thousands of dollars, Stockburger said, but can be avoided. Most people provide in their wills for waiver of the bond because the executor is a person they trust, such as a spouse or child, he said.
If there is no will, Stockburger said, an estate valued at more than $5,000 must go through probate. In that case, the court must appoint the administrator and the bond cannot be waived. Without a will, he said, handling an estate becomes "expensive, onerous and cumbersome," especially if there are minor children and real estate involved.
The process is not complicated if there is a will.
A couple of weeks after death, Stockburger said, the executor would file the will with the local circuit court. The executor must also supply a list of heirs and persons who would be heirs under state law. All such people must be informed of their status.
The executor must file an inventory of the estate's assets with an estimate of the values. Ultimately, he or she must file an accounting with the commissioner of accounts, showing how the assets were distributed.
In a small estate where the state-designated heirs are the same as those who actually inherit, the accounting can be bypassed. The executor merely supplies an affidavit that all known debts have been paid.
Wills are public records. This protects people who believe they might have an interest in an estate, Stockburger said, but it also means that a nosy neighbor can go to the courthouse to read the document and see the valuation.
Wills are rarely published, he said, but the few cases in which they have appeared in a newspaper can frighten some people who greatly value privacy. They therefore resort to a trust so that some of the value is removed from the probated estate.
The probate process is so simple that lay people can handle it easily unless the accounting is complicated. In the case of a simple estate, Stockburger said, his law firm routinely advises clients to take care of probate themselves.
The best way to approach estate planning is to do it ahead of time, Stockburger said. If a bond is unnecessary, draft the will to waive it. If a trust is advisable, set it up in advance.
Probate shouldn't scare anybody, Stockburger said. People who want to control how their assets are distributed should be more afraid of failing to draw up a will, he said.
by CNB