The Peninsula Center for Estate and Lifelong Planning Williamsburg Estate Planning Attorney | Newport News Elder Law Lawyer | Yorktown VA Trust and Estate Attorney2026-02-11T05:15:56Zhttps://www.tpcestate.com/feed/atom/WordPress/wp-content/uploads/sites/1402152/2021/06/cropped-favicon-tpc-32x32.jpgOn Behalf of The Peninsula Center for Estate and Lifelong Planning<![CDATA[How can SLATs be utilized to maximize tax exemptions?]]>https://www.tpcestate.com/?p=481632024-12-27T19:26:50Z2025-01-02T05:07:36ZSpousal Lifetime Access Trusts (SLATs) help couples preserve wealth and maximize estate tax exemptions. These advanced estate planning tools reduce tax burdens by transferring assets strategically, providing financial security in the process.
Understanding SLATs and their benefits
A SLAT is an irrevocable trust established by one spouse for the benefit of the other. The primary purpose of this planning device is to take advantage of exemptions for gift and estate taxes. The grantor of the trust will no longer have access to the assets once they have been placed in the SLAT. The beneficiary spouse can access distributions during their lifetime, offering financial flexibility while protecting the trust's assets for future generations. These trusts are irrevocable and cannot be changed once established.
Leveraging estate tax exemptions
The current federal estate tax exemption, set at $13.99 million per individual in 2025, may decrease in 2026 pending the expiration of the Tax Cuts and Jobs Act of 2017. Transferring assets into a SLAT effectively lowers the size of the estate. Couples who create SLATs now lock in the higher exemption by transferring assets and lowering future tax liabilities.
Since a SLAT qualifies as a grantor trust the income taxes of the trust are the responsibility of the grantor. By remaining the payor of those tax liabilities, the grantor can continue to reduce their taxable estate. Additionally, the beneficiaries of the SLAT aren't responsible for these tax costs. Furthermore, the growth of the asset will not cause growth in the value of the grantor's estate.
Maximizing wealth while avoiding pitfalls
Effective planning is crucial to avoid common SLAT pitfalls. The "reciprocal trust doctrine" can nullify benefits if two SLATs share overly similar terms. Couples should draft trusts with distinct terms and beneficiaries. Transferring assets into a SLAT permanently removes them from the grantor’s direct control, so choosing assets that are not immediately needed is essential.SLATs reduce estate taxes and preserve wealth for future generations. By structuring SLATs thoughtfully, families adapt to tax law changes and achieve long-term financial goals. These trusts highlight the importance of strategic planning for wealth management and protection.]]>On Behalf of The Peninsula Center for Estate and Lifelong Planning<![CDATA[Executors need to know the risks of unpaid estate taxes]]>https://www.tpcestate.com/?p=481522024-12-27T18:29:06Z2024-09-25T09:57:38ZServing as an executor for an estate in Virginia comes with many responsibilities. One of the most important tasks is ensuring the payment of all taxes owed by decedents and their estates.
Understanding taxes that effect estates
When someone passes away, their estate may owe taxes at both the federal and state levels. This can include income taxes, federal estate taxes and possibly even inheritance taxes. Executors must file the necessary tax returns and pay any outstanding taxes before distributing the estate’s assets to the beneficiaries. Executors may overlook certain tax liabilities, such as unpaid property taxes, income taxes from the final year of the decedent’s life or even outstanding estate taxes if the estate is large enough to meet the estate tax thresholds.
Though Virginia does not impose an estate tax, the Department of Taxation requires estates to file a state fiduciary income tax return if income was received during the year.
The consequences of unpaid taxes
If taxes remain unpaid, the IRS or the Virginia Department of Taxation can impose penalties and interest on the amount owed. In some cases, the government may even place a lien on the estate’s property or assets, which could delay the distribution of inheritance to the beneficiaries.
The IRS imposes a penalty and interest for every month the taxes are overdue. The Failure to File penalty is 5%, and the Failure to Pay penalty is 0.5% on the amount of unpaid estate taxes, to a max of 25%.
Furthermore, the authorities can hold executors personally liable for any unpaid taxes if they distribute the estate’s assets without settling all tax obligations first. Unpaid estate expenses are the responsibility of the executor, and if assets have been distributed from the estate prior to the satisfaction of all estate liabilities, the executor could be at risk of further retribution.
Beyond the potential for increased expenses out of the estate, another consequence of unpaid taxes is delayed distribution of estate assets.
Avoiding tax consequences
To avoid these risks, executors should take the time to carefully review the decedent’s financial records. It is worth the time and effort to consult with tax professionals to address all potential tax liabilities. Executors should also ensure tax obligations have been settled before making final distributions. Additionally, keeping thorough documentation of the financial activity of the estate can protect the executor from liabilities of misconduct to the government, or beneficiaries of the estate.
There can be a large risk associated with unpaid tax obligations, and the responsibility is on the executor to ensure the estate is in good standing. Understanding the risks and being fully aware of their duties is the best way executors can protect themselves during estate administration.]]>On Behalf of The Peninsula Center for Estate and Lifelong Planning<![CDATA[Common probate mistakes to avoid making]]>https://www.tpcestate.com/?p=481262024-06-20T20:42:35Z2024-06-28T06:10:14ZProbate involves administering a deceased person's estate by organizing assets, settling debts, and distributing the remaining assets to heirs. The process can involve complications and errors, but recognizing common pitfalls can help with navigating it more effectively.
Failing to file in a timely manner
One common error is not filing the will with the local court promptly after a death. Delaying can complicate matters, leading to added stress for heirs. To avoid this, it’s crucial to act swiftly and ensure you submit all necessary documents to avoid delays.
Ignoring the details of the will
Another mistake is to ignore the specifics mentioned in the will or trust. Each will is unique, and the conditions must be carefully followed to guarantee that the deceased's wishes prevail and legal issues do not arise. Paying close attention to the details and seeking professional advice if anything is confusing can help to avoid problems brought on by misunderstandings.
Poor communication with beneficiaries
The fiduciary is responsible for keeping the heirs of an estate informed throughout the probate process. Failure to communicate can lead to a lack of trust between beneficiaries and the fiduciary. Maintaining open lines of communication and providing updates regularly helps all involved parties and can even prevent litigation.
Premature distribution of estate assets
Prior to selling assets one should verify they have the proper authorization to do so. Additionally, knowing the value of the estate before paying debts or incurring expenses will help prevent spending in excess of estate assets. Funds should be retained for unexpected expenses or debts. Creditors have one year to bring a claim against the estate following the qualification of a personal representative.
Failure to perform proper accounting
It’s important for fiduciaries to maintain accurate financial records regarding the assets of the estate. This includes keeping records of receipts and transactions and ensuring the funds of the estate stay separate from any personal funds. Additionally, the decedent and the estate still have tax obligations that need to be addressed, including the filing of tax returns for both entities.
In our area, a common accounting error fiduciaries commit is using debit cards to perform transactions for the estate account. Electronic transactions do not provide an adequate paper trail for the Commissioner of Accounts. Instead, it is recommended to make payments with checks and retain copies of the financial records.
Key insights for managing probate effectively
Thorough preparation and attention to legal requirements are key in managing the responsibilities that come with probate. By staying informed and proactive, you can help ensure the process respects the wishes of the deceased and the rights of the heirs. Be cautious when receiving advice from those who are not estate planning attorneys. The laws impacting probate change based on state and even local government. The process and requirements of one area may be completely different from another. Many of these mistakes can be avoided by seeking assistance from counsel.
]]>On Behalf of The Peninsula Center for Estate and Lifelong Planning<![CDATA[The importance of revisiting your estate plan during, or after, divorce.]]>https://www.tpcestate.com/?p=480702024-04-24T19:59:09Z2024-03-28T08:43:17Z1. Beneficiary designations
It is most important to review all beneficiary designations previously made on all financial accounts, retirement plans and life insurance policies. Many people designate their spouse as the primary beneficiary, which is likely no longer your wish post-divorce. Failing to update beneficiary designations could result in your ex receiving assets you did not intend for that person to receive.
2. Asset distribution
Divorce involves the division of marital assets. This will impact your estate plan's provisions for the distribution of assets following your death. It is important to review your will or trust to ensure that it reflects your revised asset ownership and distribution preferences post-divorce. This may involve updating provisions related to property ownership, bequests, and inheritance rights.
3. Powers of attorney & Health care directives
Many people have also named their spouses as agent under their durable and medical powers of attorney. These documents empower your designated agent to make legal, financial, and medical decisions on your behalf if you become incapacitated. While going through a divorce, you may want to reconsider who you appoint as your agents on these important documents.
Taking proactive steps to update your estate plan during, or at least following, your divorce will provide peace of mind in ensuring that you have documentd your current desires regarding who will care for you during incapacity, administer your estate after death, and receive the assets you worked so hard to accumulate.]]>On Behalf of The Peninsula Center for Estate and Lifelong Planning<![CDATA[Who makes a good executor?]]>https://www.tpcestate.com/?p=480562024-01-19T21:00:36Z2023-12-29T05:54:06ZResponsible
A good executor needs to be someone who will take the job seriously. That person has to be reliable and able to assume all of the duties that are imposed on the executor in administering an estate. From handling the assets to answering beneficiary questions, the executor will have many responsibilities, and he or she needs to both be able and have the time necessary to handle all the that is required.
Organized
A successful executor is extremely organized. Dealing with an estate involves handling lots of paperwork, managing deadlines and working with professioal advisors.
An executor must also be able to keep detailed records. Selecting a person who is generally disorganized in his own life is setting that person up for failure.
Clear and direct
Being able to communicate well is also important. An executor must be able to speak plainly and clearly to explain the administration process to the beneficiaries and creditors of the estate. The executor will also be working closely with your professional advisors and must be able to keep them informed on her progress. Basically, the executor is the person who will answer all of the questions posed by anyone with an interest in your estate.
Skilled with money
Yuor executor does not need to be a financial expert, but he does need to at least know a little about managing finances. This person should be comfortable with reading through financial documents and should understand basic accounting. The executor can hire financial experts, but he still has to know enough to determine whether the "experts" are doing a good job. Ultimately, any losses to the estate are the responsibility of the executor unless they are incurred despite all of his best efforts and advice received.
The effort you put into selecting the best person to serve as executor of your estate will ultimately benefit your beneficiaries.]]>On Behalf of The Peninsula Center for Estate and Lifelong Planning<![CDATA[How can you talk to elderly parents about estate planning?]]>https://www.tpcestate.com/?p=480502023-09-28T13:51:14Z2023-10-10T07:04:02ZInitiate the conversation
Begin by expressing your concern for their well-being and the importance of planning for the future. Be empathetic and show genuine interest in their wishes and needs.
Outline the benefits
Explain the advantages of estate planning, such as ensuring they are protected in the event of incapacity by making decisions regarding who will handle financial and legal matters if they can't do so, confirming assets are distributed to beneficiaries after death as they desire, and minimizing potential conflicts among family members after they are gone. Highlighting these benefits can make the process seem less daunting.
Ask about their wishes
Encourage your parents to share their thoughts on how they want their assets distributed. This includes their home, savings, investments and any sentimental possessions. Make it clear that it is up to them, but they must make their decisions known through an estate plan.
Discuss healthcare directives
With an estimated 98 million Americans 65 and older suffering from at least one chronic disease by the year 2060, addressing your loved ones' healthcare preferences is important. Ask if your parents have a living will or an advance medical directive for healthcare decisions. Help them understand they have the right to determine who they want to make medical choices for them if they become unable to do so, but if they fail to designate someone, someone will be chosen for them.
Organize important documents
Help your parents gather and organize their important documents such as existing wills, bank and investment statements, insurance policies and property deeds. This will facilitate the planning process and make it easier to locate important information when needed.
Address concerns
Be prepared to address any concerns or fears your parents may have about estate planning. These concerns may include the potential cost, complexity or family disputes. Offer reassurance and support, emphasizing that planning now can alleviate these worries later.
Review and update
Stress the importance of reviewing and updating their estate plan regularly. This is especially important if significant life changes occur, such as marriage, death, or the birth of grandchildren as well as changes in financial and health circumstances.
By working together, you can ensure your parents secure their legacy for generations to come. This can also help them feel peace of mind no matter which stage they are in life.]]>On Behalf of The Peninsula Center for Estate and Lifelong Planning<![CDATA[4 examples of non-taxable gifts in your estate plan]]>https://www.tpcestate.com/?p=480232023-08-11T15:26:16Z2023-07-07T05:40:18Z1. Direct payments for educational expenses
You can make direct payments for someone else's tuition without incurring the gift tax. This has to be a direct payment to an educational institution for tuition. This does not cover other expenses like books, supplies, room and board or tuition paid to a trust or to the student.
2. Medical expense payments
You can pay for someone else's medical expenses without triggering the gift tax. Make these payments directly to the medical institution or healthcare provider. This strategy can include payments for procedures, hospital stays or even health insurance premiums.
3. Gifts to your spouse
You can give unlimited gifts to your spouse without incurring the gift tax, as long as your spouse is a U.S. citizen. This rule, known as the unlimited marital deduction, can be a powerful tool in estate planning, and is often used in conjunction with advanced planning techniques such as the Spousal Lifetime Access Trust.
4. Annual gift tax exclusion
Each year, you can give a certain amount of money (called the gift tax annual exclusion) to as many individuals as you wish without triggering the gift tax. This amount changes frequently as it is based on the annual federal cost of living adjustment. It is currently $17,000 (2023) per person per year.
Using these non-taxable gifts in your estate plan can be an effective way to pass on more of your wealth to your loved ones. Remember, your goal is not only to create wealth but also to preserve it for the future.]]>On Behalf of The Peninsula Center for Estate and Lifelong Planning<![CDATA[Why should new parents consider developing an estate plan?]]>https://www.tpcestate.com/?p=478182023-03-29T14:52:32Z2023-04-03T12:17:59Z1. Protecting your child's future
In the event of your unexpected illness or death, having an estate plan will ensure that your child's legal and financial care will be in accordance with your wishes. Many clients report that including their wishes in their estate plan provides peace of mind, knowing that their child will have the best possible financial and legal care in the future.
2. Naming a guardian
One of the most critical aspects of estate planning is naming the guardian who will take care of your child in the event of your untimely illness or death. It is important to note that without a designated guardian, the court will decide who will care for your child; a costly process which often pits extended family members against each other and incentivizes testifying as to family members' worst habits. Naming a guardian in your estate plan ensures that a trusted person who shares your values and beliefs will care for your child as if they were their own.
3. Creating a will and trust
As a new parent, creating a will that directs your assets to your child after your death is essential. If you do not have a will, the probate court will distribute your assets according to state law, which may not align with your wishes. Furthermore, the lack of a will may likely open your estate up to litigation, and, unfortunately, oftentimes frivolous lawsuits completely deplete the estate leaving nothing for those you intended your assets to go to.
In addition to a will, you can also consider establishing a trust. A trust can provide several benefits to your child including protecting their inheritance from creditors, divorce, or even your child if they have issues handling money or themselves become incapacitated. A trust can also ensure that your child's inheritance may grow over time while providing for specific needs like education and health. A Trust may also direct that at some point the inheritance is distributed outright at a specific time, like when your child graduates from college, or at a specific age, like twenty-five or thirty.
The important thing to remember is that we cannot plan for all of life's uncertainties, but that developing an estate plan early and updating the documents as your child's needs change will certainly help you care for them no matter the circumstances.]]>On Behalf of The Peninsula Center for Estate and Lifelong Planning<![CDATA[Tips for excluding someone from your will]]>https://www.tpcestate.com/?p=477732022-12-12T15:42:02Z2022-12-19T15:34:47Zexcluded family members.
Mention Excluded Persons by Name
One of the most common issues we find when a testator has excluded someone from a will is that person's belief that the exclusion was accidental, or that the excluded person believes he is entitled to receive something from the estate. Many people, especially children, feel entitled. In actuality, the only person who cannot be disinherited under the law is a spouse.
This problem can usually be avoided by a direct reference to the exclusion of an individual in the will. Where the will clearly states the exclusion of a specific person was intentional, the likelihood of that person challenging the will is significantly reduced.
Adding a "No Contest" Clause
It is possible to further disuade any potential contest by including a statement in your will which provides that should a beneficiary challenge the will, any benefits provided in the will for that person will be automatically revoked. This will reduce potential litigation to situations in which the challenge relates only to the testator's capacity or undue influence of another (usually a primary beneficiary).
Offer Smaller Forms of Recognition
Another option is to leave people for whom you are not providing a direct bequest some sort of token form of regocnition, such as a donation in their names or an item of tangible personal property such as jewelry or furniture. This is a viable alternative where you may wish to remember someone but do not want to leave them money or other types of property.
Consider Direct Messages
If you do decide to disinherit a family member for any reason, consider leaving a that person a personal message providing them with your reasoning. While you do not have to explain your decisions, it can sometimes help family members understand when you are no longer able to explain.
You are not obligated to leave anything to anyone. You have the right to choose how your assets are distributed and to whom. However, should you decide to disinherit someone, these suggestions may come in handy.]]>On Behalf of The Peninsula Center for Estate and Lifelong Planning<![CDATA[Common times to consider estate planning]]>https://www.tpcestate.com/?p=477652022-09-30T16:17:10Z2022-10-03T07:06:15ZAfter having children
A time when people many begin to think about estate planning seriously is after they start a family. Bringing a new little one into the picture can change how you look at the future. Wanting to protect your children and provide for both their care and support if you should die young is everyone's strongest desire; and those decisions are best made by the parents themselves.
After retiring
For many, finally being able to retire changes how they look at life in general. This can cause people to change their plans when it comes to their estates, in both major and minor ways; values may change, financial goals may shift, thoughts about beneficiaries and fiduciaries may have been altered, and the laws may also have changed. You may find that you have new ideas about what you want the future to look like, as well as new ideas about how to look after your loved ones when you are gone.
After death of a loved one, a "near death" experience, or a concerning medical diagnosis, and before a medical procedure
These are, by far, the most significant catalysts causing people to think about estate planning because when any of these things arise (and at least one will occur for all of us), it brings to mind our own mortality. Any of these occurrences will motivate people to plan because, all of the sudden, they realize they should get their ducks in a row before something happens... just in case.
After handling mom's or dad's estate
Some estates are more difficult to administer than others. This depends not only on the value, nature, and complexity of the assets, but also on the amount of work invovled and, often, family dynamics. For those who have already administered an estate, whether by will or trust, the common denominator prodding people to action is the desire to make things as easy, or easier, on their children.
Estate planning can feel overwhelming and intimidating, but it doesn't have to be. If you have the right attorney, whether you are going through a transitional period in your life, have new health concerns, or have had or witnessed a tragic event, making decisions now, rather than having them made for you later, will provide peace of mind for both you and your family.]]>