Frequently Asked Questions about
Estate Planning, Wills, Trusts, and Probate

• Are there drawbacks to probate in Virginia?

There are some significant drawbacks, which lead many people to seek to avoid probate. (The drawbacks to probate in Virginia, however, are fewer than in states such as California, Connecticut, and New York, the home states of the authors of most of the  “Avoid Probate Now!” bestsellers.)

The probate process takes a careful executor at least six months, and commonly a year or more, especially where there are many heirs and other beneficiaries, or where the estate has debts that approach the total of its assets. Although distributions may be made as soon as six to seven months after qualification of an executor, cautious Virginia executors generally prefer to wait a full year before making distributions. Sometimes, especially in large estates where creditors of the deceased person have large or numerous claims, or where disgruntled family members contest wills, probate may last even longer. Successor trustees of living trusts, however, may face similar waiting periods and delays, which are not dictated by whether a will or a living trust is used so much as by the makeup of the estate itself, the claims against the estate, the personalities of the takers of the estate, and the vagaries of the federal and Virginia tax laws applicable to estates and trusts. Virginia law also allows a period in which a surviving spouse, if not satisfied with the provisions of a will or living trust, may claim his or her “elective share” of an estate.

Often, surviving family members do not find these delays significant. They usually have immediate access to joint bank accounts, and rapid access to life insurance proceeds. If special needs exist, the Circuit Court will usually allow preliminary distributions or payment of an allowance to family members.

(In Virginia, if the total value of a deceased person’s personal property otherwise subject to probate is less than $15,000, an affidavit procedure may be used to transfer personal property after 60 days without any need to qualify an executor. If the deceased person owned any real estate that does not pass by survivorship, however, probate will be necessary. In relatively small estates, the advantages and disadvantages of appointing an executor should be carefully weighed, and legal advice should be sought.)

Virginia and local taxes are imposed in connection with the probate process. A probate tax of about 0.133% ($1.33 per thousand dollars of value in the probate estate) (usually excluding life insurance, retirement accounts, and entireties or survivorship property) must be paid. Statutory filing fees must be paid to the Commissioner of Accounts when inventories and accountings are filed.

Some costs and fees are avoidable, or at least negotiable. Virginia executors and trustees are entitled to charge reasonable fees for administering estates and trusts. If the executor or trustee is also the sole beneficiary of the estate, however, he will usually waive charging an executor’s fee, since it is subject to income tax. Many executors will serve without fees, or for out-of-pocket expenses only, when all beneficiaries are family members and favored charities and friends.

Note, however, that even if one manages to “avoid probate,” it’s still hard to avoid paying fees of some sort. An attorney and/or accountant usually must be hired to help administer a deceased person’s estate, whether it passes by will or by trust. Attorneys (and paid executors or trustees) charge fees for handling the transfer of property and the filing of estate, probate, and gift tax returns; filing final federal and state income tax returns for the deceased person; filing income tax returns for the estate or trust itself (yes, estates and trusts are subject to income and capital gains taxes); settling with creditors; requesting and attending commissioner's hearings and court hearings; and conserving and investing property during the probate process. In addition, Virginia trustees may charge reasonable fees for managing ongoing trusts (until young beneficiaries reach the specified ages to receive distributions, for example). Unless the deceased person has waived surety upon his executor’s or trustee’s bond, the estate will expend funds to purchase a surety policy from an insurance company. The executor or trustee may require the services of accountants and appraisers to value property in the estate or trust.

The most common complaints heard from executors in Virginia deal with the strict - and non-standard - accounting requirements that Commissioners of Accounts impose upon executors. Every penny of estate funds, and every significant asset, must be accounted for by the executor under a unique fiduciary accounting system used by most Circuit Courts. (Strict fiduciary requirements also apply to successor trustees of Virginia living trusts, but trustees are not usually required to use the Circuit Court's accounting system.)

As in most states, Virginia wills are filed with the Circuit Court and open to public inspection, as are the associated administrative files of the Court. Living trusts need not be filed with the Court or any other public officer. If privacy is important to you, consider an estate plan centered around a living trust rather than around a will.

“I do everything for a reason. Most of the time the reason is money.”
   –Suzy Parker