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Major life changes are as inevitable as death and taxes. As you look ahead to 2017, take time to consider and plan for the impact life-changing events can have on your will, trust and estate plan.
Let’s focus on some potential positive changes:
It’s possible! 2017 has already bestowed a million dollars each on three Virginians, including a Prince William County couple that purchased a winning ticket at a convenience store in Manassas.
For a prize-winning this large, it’s wise to talk to an attorney immediately to discuss how it affects your taxes this year. Prizes over $600 will be reported to federal and state tax agencies. If you win more than $5,000, taxes can be withheld automatically. Currently, the Lottery is required to withhold 25% for federal taxes and 4% for state taxes.
Many states impose their own estate tax, including Maryland, but luckily Virginia currently does not have an estate tax. Check with an estate planning attorney who has credentials in tax planning for advice that covers all angles.
A grandchild is one of the greatest joys in life. Make a gift to him or her that will pay dividends in the future. You may want to establish a college fund through the Virginia529, for example, This is helpful if your grandchild’s parents are not especially good with saving money. You can also create custodial accounts for the grandchild.
The Virginia529 provides four different programs to save for higher education, each with tax advantages, especially for taxpayers age 70 and over. As the account owner, you remain in control for the duration of the account, even while the beneficiary attends college.
Every Virginia529 account requires a Designated Survivor when the account is opened. It will be the individual who assumes responsibility and control of the account in the event of the account owner’s death. More detailed information is available here.
Becoming married is always a celebration! Of course you want it to last forever; however, should your or your new spouse pass away, it is important to know that surviving spouse inheritance laws in Virginia changed, as of January 1, 2017.
Virginia law protects the surviving spouse from being disinherited or impoverished by the decedent. Since 1990, Virginia law has provided that one-third of the decedent’s estate is owed to the surviving spouse if the decedent had surviving children or descendants. If there were none, then the spouse was entitled to one-half of the estate, no matter how long the two had been married. The percentage was based on only the decedent’s property and gifts.
As of this year, the law no longer differentiates based on decedents or children. The minimum share for the surviving spouse is now upwards to 50% of the augmented estate, regardless of offspring. Also new, the estate now includes the surviving spouse’s property along with that of the decedents.
Another change is that the length of the marriage impacts the percentage granted. The portion increases from 3% for less than one year of marriage to the full 50% for 15 years or more of marriage.
Virginia’s legal revisions reflect societal changes. Marriage has become more of an economic partnership than a supportive model for one spouse.
Every state has its own laws about wills, trusts and the probate process and they change frequently. Virginia’s current laws, accessible here, have changed often during the past five years. The same is true in most states. We recommend estate plans be reviewed every three to five years, whether or not you relocate. Moving to another state only fortifies the reason to have your estate plan reviewed by an estate planning attorney in your new home.
All states have laws that indirectly impact estate planning. Your adopted state may recognize an existing estate planning document, but you may not be aware of other related laws that differ from those in your former state, such as laws about: the definition of marriage, rights to marital property when divorced, rights to the deceased spouse’s estate (as noted earlier), estate taxes, and estate administration, among others. Those differences can have unexpected consequences on your existing will, trust or estate plan.
Ask an estate planning attorney in your new state review your current estate plan to avoid potential surprises later, during a difficult time when unexpected consequences are least desired.
Obviously, estate plans should be considered dynamic documents to be periodically reviewed, especially when life events happen. Every three to five years is a good baseline for having your plan reviewed by an attorney.
Legacy Law Group of Northern Virginia is experienced and trained in all matters of estate planning, probate, trusts and estate administration, as well as in-house litigation.
Call upon Legacy Law for personal service from attorneys named “Legal Elite” by Virginia Business, and ranked by their peers at the highest level of professional excellence for their legal knowledge, communication skills and ethical standards, earning the AV Preeminent distinction from Martindale-Hubbell.
Give Legacy Law Group of Northern Virginia a call, or email us, and let us assist you in dealing with the changes big life events can bring to your estate planning and administration.