Wednesday, June 19, 2024

Year End Estate Planning Check-In

As the year draws to an end, you may begin to reflect on the year end and may have even started jotting mental notes on goals and aspirations for the new year (read: the infamous New Years’ resolutions). One actionable item to check off is reviewing or considering estate planning. If you have existing documents in place, the new year would be an opportunity to review them and reflect on whether they need refreshing. Because existing estate plans are a snapshot of where you were at such given time, as a rule of thumb, estate plans should be updated every three to five years or sooner if a major life event (ie. new baby, new house, marriage or divorce, a new career) occurs.

Understanding Wills and Revocable Living Trusts

As the basis of estate planning, it is important to distinguish between wills and revocable living trusts. Wills offer a simple and well-understood basis for passing assets to your descendants. Revocable living trusts offer a popular, common and effective means of avoiding probate and holding assets in trust for your children (or young grandchildren) after your death. It is possible to create a trust which would hold assets for a beneficiary under the terms of a will (often referred to as “testamentary” trust) but testamentary trusts are monitored by the probate process for so long as such testamentary trust exists.

Revocable living trusts can establish at your death a non-probate trust for descendants, administered by your trustee of choice without the costs, paperwork burdens and delays often associated with probate. Revocable living trusts also afford you privacy relative to your family matters. Conversely, wills become a matter of public record once processed by the clerk of court.

Titleable assets such as accounts, stocks, bonds, life insurance and other assets (including your real estate) would be titled in the name of the trust. While you are alive and well, there are no complexities in managing or controlling your assets. No separate tax return is required. You remain in full control of assets held in a living trust, able to spend, move accounts, change investments and otherwise manage your financial life as you do today.

On successor trustees, best practices often involve a family member or friend with whom you have great confidence and who has some financial expertise. Corporate trustees, such as banks, lawyers, or trust companies, charge a fee for serving (can be as low as under one percent of the trust assets per year) but provide expertise and stability. Family members often serve without fee, but may also lack financial expertise necessary to achieve proper investment returns and properly administer trusts for the beneficiaries.

When creating a revocable living trust, it is important to create a “pour-over” will as a safety net. Although your goal would be to have all assets held in the living trust during your lifetime, simple wills should be in place which provide the assets you fail or forget to transfer into the living trust would be transferred to the trust at death.

Advance Medical Directives

Advance directives in Virginia allow the nomination of a health care proxy or decision maker. Standard Advance Medical Directive forms incorporate elements of the natural death declaration usually referred to as a “living will.” You appoint agents to make health care decisions for you in the event you are unable to give informed consent.

Executing an Advance Medical Directive should spark a larger conversation about healthcare issues while you are still competent and able to make well thought out decisions. You should have discussions with your doctors, your family, and the agents that you appoint in your Advance Medical Directive about your end of life expectations and care. By planning in advance and having the discussion about your wishes now, you can give your family and agents the knowledge and confidence to make decisions on your behalf if you are unable to make those important decisions for yourself.

Durable Power of Attorney

A power of attorney allows a person to act on behalf of you relative to certain monetary and property rights. It is effective over time and withstands incapacity until your death or revoked by you, as the principal.

About Kaufman & Canoles Estate, Trust & Wealth Transfer Practice Group

Benny Zhang is an Associate in the firm’s Williamsburg office, where his practice includes assisting clients and their families in their trust and estate planning and administration including advice on the proper transfer of businesses, and property. He can be reached at (757) 259-3822 or

Our Estate, Trust & Wealth Transfer Group is dedicated to providing experienced trust and estate planning and administration for families, professionals, business owners, charities and fiduciaries. We have offered invaluable service and counseling to clients across Virginia, making sure of the proper transfer of businesses, wealth, property and values of our clients.

The contents of this publication are intended for general information only and should not be construed as legal advice or a legal opinion on specific facts and circumstances.

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