What to Expect - Qualification Appointment

If you’re headed to qualify for the first time, you may have no idea what to expect. Thankfully, we have experienced professionals at your service who have attended probate and qualification appointments dozens of times. So, sit back, relax, and let us give you a window into what’s going to happen.

For an executor or administrator (hereinafter referred to as the “personal representative”) to have authority under the law to act as a fiduciary of a decedent's estate, they must qualify with a court of proper jurisdiction. To qualify, the personal representative must:

1. Schedule an appointment with the probate department of the Clerk of the Circuit Court,

2. Provide the required information about themselves and the decedent,

3. Meet the requirements of qualification under the law,

4. Attend the appointment in person, and

5. Pay the required fees to the Clerk.

The qualification appointment will occur in the office of the probate clerk. You will contact the Circuit Court Probate Department in the county or city where the decedent lived at the time of death. For example, if the decedent passed away while being treated at Henrico Doctors Hospital but lived in Church Hill, you will contact the Richmond City Circuit Court.

When you contact a Probate Clerk via phone, they will take preliminary information from you and may request you complete the county’s preferred form.

1. The Clerk will request you bring the following items to the meeting:

2. The original Will, if there is one. (The will must be the original.),

3. The original Death Certificate,

4. Your Driver’s License or another form of identification, and

5. Check, cash, or credit card for the taxes and fees.

At the appointment, the Clerk will prepare and review the following forms for you to sign.

1. List of Heirs,

2. Probate Information Form, and

3. Probate Tax Return.

As you complete these forms, the Clerk will require you to swear to an oath that the forms you have completed contain the true last will of the decedent (if applicable), so far as he or she knows, and that he or she will faithfully perform the duties of his or her office to the best of his or her judgment. This oath is accompanied by a Bond. A Bond is a promise in writing given by the personal representative in an amount set by the Clerk of the Circuit Court, for the faithful performance of the duties regarding the estate.

In addition to the completion of these forms, be prepared to pay the state probate tax as well as the qualification fees. Probate tax is $1.00 per every $1,000.00. For example, the estate value is $200,000. You would pay $200.00 in probate tax which is refundable to you from the decedent’s estate. Qualification fees vary from estate to estate but usually range from $20 to $100. The Clerk will provide you with an exact figure at your appointment and can provide you with an estimate at the time you make your appointment.

Lastly, in some instances but not all, Surety may be required. Surety is a person or corporation promising to pay the estate for the failures or defaults of the personal representative who gives the bond at qualification. This is most always an insurance bonding company engaged in the business of acting as surety, for a premium payment payable by the estate. Be sure to check with the Clerk of the Circuit Court to see if surety will be required on your bond at the time of qualification because Surety is often waived under the terms of the will.

Once all your paperwork is complete, the Clerk will return with your letter of qualification or your “golden ticket” as we like to call it. This ticket will give you the authority to speak with the decedent’s financial institutions and take control of the estate assets.

You are not required to have a lawyer assist you with qualification appointment however, the services of an experienced estate administration firm like Schooley Law Firm are often desirable. Many legal questions arise in the administration of an estate, large or small, which require the opinions and advice of an attorney.

If you are qualifying as a personal representative and need assistance, or if you need assistance determining the need to qualify, please contact us today at (804) 270-1300 to schedule a consultation with our estate administration paralegal and one of our attorneys.

Estate Planning after Divorce.

Divorce is a difficult process that can affect various aspects of a person's life, including their estate plan. If you have recently been through a divorce, it is important to review and update your estate plan to ensure that your wishes are accurately reflected.

One of the main ways that divorce affects an estate plan is through beneficiary designations. When you get divorced, you will likely want to change the beneficiaries on your retirement accounts, life insurance policies, and other financial assets. If you fail to do so, your ex-spouse may still receive the assets upon your death, even if you have remarried. 

It is important to review and update your will to reflect your current wishes and ensure that your assets are distributed according to your wishes. If you do not update your will, your ex-spouse may still inherit some of your assets, which may not be your intent. You may want to consider revising your will to remove your ex-spouse as a beneficiary or include additional provisions depending on the terms of your separation agreement.

Additionally, divorce can impact the appointment of fiduciaries in your estate plan. A fiduciary is a person who is appointed to manage your assets and make decisions on your behalf if you become incapacitated or pass away. If you named your ex-spouse as your executor, trustee, or power of attorney, you may want to consider changing those appointments to someone else.

In conclusion, divorce can have a significant impact on your estate plan. It is important to review and update your estate plan after a divorce to ensure that your assets are distributed according to your current wishes and that the right people are appointed to manage your affairs.

If you need help with updating your estate plan, contact us today to schedule a consultation and start planning for your future. Our team of experienced attorneys is here to help you create an estate plan that meets your unique needs.

Dying without a Will: Virginia Laws of Intestacy.

Virginia Intestate succession is the process by which the assets of a deceased person are distributed when they die without a will. When someone dies without a will, it is said that they have died "intestate."

In Virginia, the law sets out the order in which the heirs of an intestate person will inherit their property. The surviving spouse is usually the first in line to inherit the property. If the decedent has no surviving spouse, then their children are next in line. If there are no surviving children, then the property goes to the decedent's parents. If the decedent has no surviving parents, the siblings become the next in line, followed by nieces and nephews, and then grandparents. The law provides for a detailed order of inheritance, which considers various factors such as the degree of relationship of the heir to the decedent.

It is important to note that Virginia intestacy laws only apply to probate assets, which are assets that the decedent owned in their name alone and did not have a designated beneficiary. Non-probate assets, such as joint accounts with the right of survivorship, assets with a designated beneficiary, or assets in the name of a revocable or irrevocable trust are not subject to probate or Virginia intestacy laws.

When someone dies intestate, the probate court will appoint an administrator to manage the estate. The administrator is responsible for identifying the assets of the estate, paying off any debts, and distributing the remaining assets to the heirs according to the order of priority set out in the law.

Virginia intestacy laws provide a detailed process for the distribution of assets when someone dies without a will. It is always advisable to have a proper estate plan to ensure that your assets are distributed according to your wishes.

If you need assistance with setting up an estate plan, contact us today at (804) 270-1300 to schedule a consultation and start planning for your future.

End of Year Giving

December is the season of giving. Whether this increase in giving is spurred by the spirit of the holidays or squeezing in some last-minute deductions before the tax year ends, we are here to share some important information before you decide on your method of giving, and how much you want to give.

For any charitable gift to be eligible for this year’s tax deductions, it must be made by December 31. However, there may be benefits to holding off and doubling your charitable gifting next year, a process called “bunching.” Bunching allows a taxpayer to make multiple years’ worth of charitable gifts in one year and take the multiple years’ deductions. This can be beneficial based on whether the standard deductions or itemized deductions are greater for you. Give us a call to determine if bunching may be beneficial for you. Your CPA can also help you determine the maximum amount you are eligible to deduct, and therefore the maximum amount you can give and receive tax benefits for.

Regarding the method of giving, several methods may be right for you, depending on your circumstances. For example, many individuals choose to use Donor Advised Funds (“DAFs”). DAFs are accounts that assist in charitable giving. The donor sets up the account, funds it with money, and then can recommend that distributions be made to their favorite charities. DAFs allow your donations to grow tax-free while they sit in the account. They are also great for individuals who may not know just yet to whom they would like to give. The donor is allowed to claim the deduction in the year they contribute to the DAF, rather than the year in which the money is given to charity. Thus, if you are considering a last-minute gift for this tax year, but you are not ready to decide where you would like to donate, a contribution to a DAF may be a good option for you.

Another way to give is by making charitable distributions from qualified retirement accounts. For donors who have required minimum distributions, the donor may divert up to $100,000 directly to a qualifying charity (i.e., a public charity, not a DAF or foundation). While a charitable distribution does not allow the donor to take a tax deduction on the donation, it provides the benefit of counting toward the account holder’s required minimum distributions, without having to claim the distribution as income.

Finally, donors should strongly consider making donations in the form of appreciated, publicly traded stock instead of cash. This benefits the donor by allowing them to claim the fair market value of the stock for their deductions, without having to pay the capital gains tax on the increase in value. This means the donor gets double tax benefits – avoiding the capital gains tax and claiming the deduction! Further, there is no need to worry about passing off the tax burden to the charitable organization, because they are tax-exempt.

Whatever your reason for giving this season, you have several avenues available to you. Before making any donations, it is important to consult Schooley Law Firm or your tax preparer to ensure you are making the most advantageous choices for you.

    If you are interested in discussing year-end gifts, please contact us today at (804) 270-1300 to schedule a consultation with one of our attorneys.   

Jennifer Schooley Announced as Virginia Business Legal Elite 2023

Jennifer Schooley is thankful for being chosen by her legal peers again for inclusion in the Legal Elite List by Virginia Business in the Taxes/Estates/Trusts category for 2023.  This is Jennifer’s seventh consecutive year as a Legal Elite. 2023 has proven to be a year of growth and progressive change for Jennifer and the firm.

In January, Jennifer and the Schooley Law Firm Team took on the large overhaul of purchasing and renovating a 1960s mid-century modern building to accommodate the growing firm. In June, she spoke before the Greater Richmond SCAN (Stop Child Abuse Now) Board of Directors on the topics of planned charitable giving and estate planning.

Jennifer Schooley also welcomed two new lawyers to the firm this year. Associate attorney, Ryan Glaser, joined in March, and associate attorney (bar pending), Sydney Albrecht, joined in September.

Jennifer continues to enjoy her time as a Member of The American College of Trust and Estate Counsel (ACTEC) since 2020. ACTEC is an international organization of approximately 2,500 lawyers peer-elected to membership by demonstrating the highest level of integrity, commitment to the profession, competence, and expertise in the preparation of wills and trusts, estate planning, probate, trust administration, and related practice areas. Thus, Jennifer has spent time attending ACTEC meetings at the 2023 Annual Meeting (New Orleans, LA) in March, the 2023 Southeastern Annual Meeting (Hot Springs, WV) in September, and is looking forward to the 2023 Fall National Meeting this October in Louisville, KY.  If you will be attending in October, contact Jennifer to connect.

In addition to her stellar ACTEC attendance, Jennifer currently serves on the Family Law Task Force, the State Laws Committee, and the Practice Committee.

We have moved to a new office!

We are pleased to announce that Schooley Law Firm, PC has recently moved to a new office which is situated at 4118 Fitzhugh Ave, Richmond, Virginia 23230. Now easily accessible to main thoroughfares such as I-95 and I-64, making travel to and from other parts of the city, Short Pump, and Midlothian convenient.

The previous five years were spent on the third floor of the Ledbury clothing store in the Arts District.  As beautiful as our space was, the need for a larger space became apparent as the firm grew.

We do confess, the new office has been the biggest overhaul Jennifer Schooley has faced together with a brave team. We started from scratch, one design after another, changing the closed-in space with bright orange and blue walls to the very open, soft peach and white. With the help of Fultz&Singh and our many trusted suppliers and contractors, we made our office dreams a reality.

There are lots of things to enjoy about our new office:

1. Location!

   • Easily accessible to Richmond thoroughfares.

   • Close to popular lunch spots such as Stellas, Mr. Submarine, and Elephant Thai.

   • Close to banks and shopping centers such as Bank of America, Scotts Addition, and Willow Lawn.

   • Separate parking lot entrance and ample on-street parking for our clients and visitors.

2. Modern newly renovated building!

   • Large conference rooms with whiteboard space perfect for mapping out estate plans.

   • Renovated offices with fresh paint, large windows, and high ceilings.

   • An enclosed courtyard is perfect for lunch or reviewing documents on a nice day.

   • A sunny kitchen to share morning coffee, lunches, and sometimes after-hours beers!

   With all that being said, on the 5th of May, we invited some friends and colleagues to our new home to cheer us on the beginning of a new chapter in Schooley Law Firm history.

   Thank you to everyone for your support and trust in our work and our firm. This move would not have been possible without you.

Photo credits to Fultz&Singh.

We're Hiring!

Schooley Law Firm, P.C. is seeking a highly-motivated associate with approximately three to five years of experience in estate planning for high-net-worth individuals and families, trust and estate administration, and estate, gift, and GST tax planning to join its practice in Richmond, Virginia.  

We are a small firm dedicated to providing our clients with the highest level of service while practicing in a modern, positive, and family-oriented environment.   Candidates must possess the ability to focus on detail, be capable of self-direction but work well in a team, and possess excellent research, writing, and verbal communication skills.  Virginia Bar admission or eligibility is required.  Candidates with an LL.M. in Taxation or Estate Planning ranked in the top quartile of their law school class, or individuals who graduated from a top-tier law school are preferred.  Experience in business and marital planning is a plus.    

At Schooley Law Firm, it is great thinking and passionate client support that separates us from others.  We serve as trusted advisors to our clients, focusing on solutions to help them meet their most important goals. 

Please submit a cover letter, resume, transcript, and salary requirements to admin@schooleyfirm.com.  Candidates will be asked to submit a writing sample before interviews.

Do you really want to be an Executor?

            Serving as an Executor is not easy.  It requires organization, time management, diplomacy, and patience.  It also requires a basic understanding of property law, wills and trusts, accounting principles, and taxes.  Most individuals nominated to serve have never experienced anything to prepare them to serve as an Executor.  They are also often grieving the loss of family member or friend, which makes the work even harder.

            Most people nominated to serve as an Executor underestimate two things before qualifying.  First, they underestimate the way grief may impact their behavior.  An Executor’s job is to follow the law, to follow the terms of the will, and to be fair to all of the beneficiaries.  Grief can cloud a person’s judgment and cause them to make hasty, impulsive decisions.  Conflict often arises during the administration of an estate as the Executor and/or the beneficiaries stubbornly take irrational positions based on emotion and not on reason.

            Second, they underestimate how time consuming and emotionally exhausting it can be to serve as an Executor.   Estate administration is a marathon, which can last anywhere from six months to several years.  Estate administration involves the tedious work of gathering the decedent’s personal items, reviewing financial records and filing tax returns, spending hours on the phone with cell phone carriers and other companies to cancel services, and accounting for every dollar spent and received by you as Executor in a formal spreadsheet to the Commissioner of Accounts. 

            Executors are often completing these tasks in the evenings or on their days off because have their own jobs, families, and lives.  They are also having to diplomatically communicate with the beneficiaries of the estate, who are typically relatives or close friends.  These beneficiaries are grieving and want clarity during an uncertain and emotional time, which can drain the Executor emotionally.  Fortunately, a person nominated to serve as an Executor has options for seeking assistance.  

            First, an Executor may hire an attorney to advise them through the estate administration process and, in most cases, these legal fees and expenses may be paid from the estate.  An experienced estate administration attorney can provide guidance, streamline the process, and serve as the Executor’s representative to the beneficiaries.  An attorney can also serve as the Executor’s representative to answer questions and communicate unpopular decisions to the beneficiaries.  Executors often like this arrangement because they remain in control and retain ultimate decision-making authority, while also having a professional advisor to assist them with difficult decisions as well as the many filing deadlines and procedural aspects of estate administration. 

            Alternatively, a person nominated as Executor may (with the agreement of all legal heirs and beneficiaries), decline to serve and nominate an attorney to serve instead.  In this case, the attorney would take over control of the estate administration process and the person originally nominated as Executor would have no role (unless he or she is also a beneficiary).  The attorney would be entitled to all of the Executor’s compensation but would be able to streamline the process to make administration of the estate as seamless and easy as possible.

            Those nominated to serve as an Executor should think long and hard before accepting the role and qualifying.  The death of a family member or friend is incredibly difficult, and grief causes emotions that are hard to explain until you have experienced it first-hand.  Those nominated should seek the assistance of a professional to advise them through the estate administration process or even consider turning over all the responsibilities to a professional.  With the assistance of a professional advisor, the Executor will be relieved of the burden of the administration process and able to focus on celebrating the life of their loved one with family and friends.

            If you have been nominated to serve as the executor of a family member or friend’s will and you are in need of assistance, please contact us today at (804) 270-1300 to schedule a consultation with one of our attorneys.       

Using a UTMA Account as Part of Your Estate Plan

            A UTMA account is a financial account created to hold assets on behalf of a minor child.  UTMA accounts are established through banks, credit unions and other financial institutions and are governed by the Virginia Uniform Transfers to Minors Act.  When used properly, transfers to a UTMA account can be a useful part of an estate plan and a great way to transfer assets to benefit a minor.  However, there are several pitfalls and drawbacks to using a UTMA account that should be carefully considered.

            What is a UTMA account and how do I set one up?

            A UTMA account is like any standard checking, savings, or brokerage account, except the account is titled in the name of an adult custodian (usually a parent) on behalf of a minor beneficiary.  Typically, a UTMA is titled in the name of the adult “as custodian for [insert name of minor beneficiary] under the Virginia Uniform Transfer to Minors Act.”  This creates a fiduciary relationship between the custodian, who manages the assets, and the minor, who is entitled to enjoy the assets.  The custodian has access and control of the account but may only use the assets for the minor’s benefit.

            What are the benefits of creating a UTMA account?

            The primary benefit of creating a UTMA account is that it is a relatively easy, inexpensive way to transfer assets to a minor beneficiary.  Minors cannot own property in Virginia and most parents are reluctant to give large sums of money to a minor without any restrictions or supervision.  A UTMA account allows the transfer of money for the benefit of a minor under the care of a responsible custodian until the minor comes of age.  Prior to the enactment of the Virginia Uniform Transfer to Minors Act (and its predecessor the Uniform Gifts to Minors Act), a parent was limited to creating a trust or a guardianship for the minor, both of which can be prohibitively expensive for relatively small gifts.   

            What are the drawbacks of creating a UTMA account?

            Transferring assets to a UTMA account can be a beneficial part of an estate plan, but comes with several drawbacks, which should be carefully considered.

            First, a transfer to a UTMA account is irrevocable meaning the assets become the minor’s property as soon as the transfer is complete.  As a result, a custodian who subsequently has financial difficulties cannot unilaterally reverse the transfer without breaching his or her fiduciary duties to the minor.  In addition, because it is irrevocable, a transfer to a UTMA account may have gift, estate and income tax consequences. 

            Second, assets of a UTMA cannot be used to directly benefit the parent of a minor.  Many parents still consider the assets of a UTMA account “theirs” and use it for purposes that either directly or indirectly benefit themselves.  The Virginia Uniform Transfer to Minors Act clearly states that the money must be used solely for the benefit of the minor child.

            Third, assets of a UTMA account cannot be used by a parent as a substitute for his or her obligation to support the minor.  Parents similarly run into trouble by using the assets of a UTMA account to pay for things that fall under their general obligation to support, such as food, shelter, clothing.  A custodian of a UTMA should consult with an attorney before making large expenditures of UTMA assets. 

            Finally, by default a UTMA account terminates upon the minor’s eighteenth birthday, as of the minor’s twenty-first birthday, and as of the minor’s twenty-fifth birthday.  The age at which the UTMA account terminates depends upon the documentation signed at the financial institution when the account is opened.  Nevertheless, more families are desiring to delay their children’s inheritance until even later in life for various reasons, including more financial maturity, particularly when those accounts that started small became million-dollar accounts through growth and annual giving.

             Conclusion

            Creating a UTMA account for a minor beneficiary can be a very useful, efficient way to transfer assets to a minor.  However, like any important decision, there are pros and cons that should be considered before making such a transfer.  As always, it is best to consult with your accountant, financial advisor and attorney before making a decision to use a UTMA account as part of your estate plan.  If you have any further question about Virginia Uniform Transfers to Minors Act or about your estate plan, please give our attorneys a call at (804) 270-1300. 

Supreme Court Provides Some Relief for Challenging “No Contest” Clauses

            “No contest” clauses are often a client’s dream and a lawyer’s nightmare.  A “no contest” clause (often referred to as an in terrorem clause because lawyers like to use Latin) is a provision in a will or trust which states that if a beneficiary contests any provision of a will or trust he or she forfeits his or her share of the estate.  Client’s often ask for in terrorem clauses to be included in their document in the hope it will prevent fighting among beneficiaries.  However, no contest clauses are strictly enforced, which too often causes a beneficiary to lose his or her inheritance, contrary to the testator or grantor’s intent. 

            The Supreme Court recently revisited in terrorem clauses in Hunter v. Hunter.  The plaintiff, Chip Hunter, sought an explanation for why assets in his mother’s trust dissipated significantly during a time when the economy was booming, and the market increased significantly.  However, his mother’s trust waived the trustee’s requirement to inform and report to the beneficiaries of the trust.  (We question whether such a provision is ever a good idea).  In addition, the trust contained a paragraph entitled “In Terrorem Provision” which stated that a “beneficiary’s interest would be revoked if the beneficiary were to contest any provision of the trust agreement.”  Chip was forced to either accept the fact that the assets decreased significantly in value, contrary to the stock market and the general economy, or pursue the matter in court and risk triggering the in terrorem clause.

            Chip chose to take a chance and his attorney filed a two-count Complaint.  Count I asked for a judgment from the Court that Count II would not violate the in terrorem clause in the trust.  Count II asked for an interpretation of the trust to require a financial report from the trustee but only if the Court first declared in Count I that Count II would not violate the in terrorem clause.  Instead, the trial court found that both counts of the Complaint had to be read as a whole, that the Complaint violated the in terrorem clause, and that Chip’s inheritance must be revoked.

            Chip appealed and the Supreme Court of Virginia reversed the trial court’s decision.  In its opinion, the Supreme Court made three key rulings: 

-       First, the Supreme Court expressly approved Chip’s two-step method of testing a no-contest clause.  Now, beneficiaries may feel comfortable using this method to first seek a declaration that they are not violating the in terrorem clause, and if (and only if) successful, seeking the substantive relief they desire. 

-       Second, the Supreme Court explicitly held that seeking an interpretation of the document is not the same as an outright contest.  As a result, litigants may feel much more comfortable seeking an interpretation of the will or trust without risking violating an in terrorem clause.  This particular issue has always been the concern of the drafting attorney and advisors on the use of in terrorem clauses.

-       Third, the court reiterated that in terrorem clauses will be strictly construed and strictly enforced “without any wincing on our part as to the alleged harshness or unfairness.” 

            Hunter is clearly a win for beneficiaries who are seeking to ask reasonable questions surrounding their inheritance.  However, Hunter does not negate the power of an in terrorem clause.  As a result, beneficiaries should exercise extreme caution and seek the advice of legal counsel before taking any action that may be interpreted as contesting a will or a trust.  In addition, we as drafters and estate planners must take extreme caution in advising our clients on the potential pitfalls of an in terrorem clause before including one in a will or a trust.

            If you are a beneficiary seeking advice on how to proceed in light of a “no contest clause” or a interested in discussing your estate planning and the benefits or pitfalls of including a “no contest clause” in your estate plan, contact us today at 804.270.1300.

Jennifer Schooley Quoted in Bankrate's article "Leaving a Legacy: Why Everyone Needs an Estate Plan"

Jennifer was recently interviewed by a reporter from Bankrate and asked what are the most important qualities in a fiduciary. As she regularly tells her clients, here is the list:

1. Honesty —- it can’t be stressed enough;

2. Detail-oriented;

3. Can maintain records; and

4. Knows how, when, and where to get help.

Fulfilling fiduciary responsibilities is an important task, one being done for the benefit of the person creating the estate planning instrument and that person’s other intended beneficiaries. Not everyone, in fact most people, do not have a family member that has all of the characteristics and requisite skill set to do every aspect of the job. At least start by picking someone who is honest and displays good judgment. If that person is also detail oriented enough to not miss deadlines (taxes, payment of debts and liabilities, etc.), and can maintain the appropriate records, he or she can at least hire qualified help to do the rest such as investing, preparing tax returns, advise about legal duties fiduciaries owe, and preparing accountings.

To read the full article, click the image above or copy and paste the link below into your brower. https://www.bankrate.com/personal-finance/why-everyone-needs-an-estate-plan/

Schooley Law Firm’s Response to COVID-19

One of the most gratifying parts of our role as estate planners is when clients tell us they are relieved to finally have their estate planning done.  In our experience, clients value knowing that their documents are in place, their loved ones are planned for, and that they have proactively addressed issues that are important to them, whether they be estate taxes, guardianship for their minor children, or protecting their adult children from divorce or their own frivolousness.  In these uncertain times we want to make sure that we are available to you and your families so that your estate plan is in place and up to date.  Our hope is, in this time of worry, you have one less thing on your mind.

            In light of the unusual circumstances in which we find ourselves, we at Schooley Law Firm are making changes to the way we practice law, at least until things go back to normal.  These changes include the following:

-       First and foremost, we have resolved to offer virtual meetings through Zoom for any client interested in discussing their estate planning or estate administration from the comfort of their home.  We take our role in “flattening the curve” seriously, but we also want to be available to those who need our services.  Zoom allows us to virtually meet and to plan your estate without the risk of spreading COVID-19.  So far, our virtual meetings have gone superbly.

-       Second, we are offering “College Estate Planning Packets” for families with young adults who are home finishing the semester online.  These packets will be offered at a flat price and consist of consultation and preparation of a Durable Power of Attorney and an Advanced Medical Directive naming an agent to make financial decisions and health care decisions for the principal, if he or she becomes incapacitated.  Without these important documents in place, your young adult may need a guardian or conservator appointed by a court in the event of their incapacity.

-       Third, we have made it our goal to offer videos through our website providing estate planning education and information to our clients and the general public.  These videos will be on a wide variety of topics, ranging from the difference between a will and a revocable living trust, to gift and estate planning opportunities during a down market.  We understand that in the current climate, you have a lot of questions and we want to assist you by providing answers to those questions.

            In addition to these measures we are also considering several other steps to better assist our clients and we will alert you as we implement those changes.  We are all in this together and we all have a role to play.  We hope that we can provide you with peace of mind during this hectic time so that you can focus on your family and loved ones.

            If you are interested in discussing your estate planning, contact us at 804.270.1300 to set up a Zoom meeting with one of our estate planning attorneys.     

Jennifer Schooley Announced as Virginia Business Legal Elite 2019

Virginia lawyers vote on the best in their profession

Jennifer Schooley is thankful for being chosen by her legal peers again for inclusion in the Legal Elite List by Virginia Business in the Taxes/Estates/Trusts category for 2019.  It was a year of growth and progressive change for Jennifer and the firm.  

In June, associate attorney, Kevin O’Donnell, and paralegal, Victoria Perry joined Schooley Law Firm.

In July, Jennifer began her term as chair of the Trusts and Estates section of the Virginia State Bar's Board of Governors; and in October, she spoke at Virginia CLE’s Advanced Estate Planning seminar, along with the former chair of the Family Law Section, Ed Barnes of Barnes & Diehl, on the intersection of estate planning and family law.

Scholarship is always a priority, and thus Jennifer was pleased to start the new year by attending a week of continuing legal education at the Heckerling Institute on Estate Planning and meeting her next co-panelist, Linda Radvin, who will present with Jennifer this June at the Virginia State Bar’s annual meeting.   The 82nd VSB Annual Meeting is scheduled for June 18-20, 2020 Click to learn more.

If you will be attending in June, definitely reach out to Jennifer to connect.

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Contact Schooley Law Firm to today to see how we can help you or a client with Estate Planning services.

804.270.1300

admin@schooleyfirm.com

Charitable Giving And Your Estate Plan

Charitable giving is a great way to leave a lasting legacy on your local community. Donors often want to include charitable giving in their estate plan but are often unsure of the best way to achieve their charitable goals. Most donors typically want to make sure of two things. First, that their gifts are actually used for their intended purposes and, second, that the donor receives the maximum tax benefits for making the charitable gift. While not a complete discussion of charitable giving, below is a brief summary of some ways in which donors can make charitable gifts.

Gifts During Lifetime

Making an outright gift to charity during a donor’s lifetime is the simplest way to make a charitable gift. A donor simply picks his or her favorite charitable cause and writes a check to the charity for the desired amount. Donors who plan to give regularly, can even make monthly automatic transfers directly from their bank account to the charity. In addition to feeling good about contributing to their favorite cause, donors may report the gifts on their income tax return and receive a charitable deduction if they itemize deductions.

The rules for taking a charitable deduction are too complicated to discuss in detail here. However, as a general matter, a gift of cash to a public charity will result in a deduction from the donor’s adjusted gross income equal to sixty percent (60%) of the value of the gift. If the gift is of something other than cash (such as gift of stock, artwork or other tangible property) the amount of the deduction will depend on the type of property given (i.e. ordinary income property, long term capital gain property, business interest). The donor must also comply with the Internal Revenue Service’s substantiation rules for all types of gifts, or risk being denied a charitable deduction on their income tax return.

Donor Advised Fund

A donor advised fund (“DAF”) is another way to make a gift to charity. To create a DAF, the donor contributes a gift to a financial account under the control of a “sponsoring organization” in which the donor retains advisory privileges. Donors can make either one large gift, smaller continuing gifts, or a bequest to the DAF in their will or trust. The donor receives an immediate charitable deduction in the year of the gift (unless the gift is by bequest) and the money is held by the sponsoring organization which then invests the assets. The gift is irrevocable and the donor gives up all right, title, interest and control in the gifted property but the donor may advise the sponsoring organization on how he or she would like to see the gift used.

A sponsoring organization generally charges administrative fees for managing the account and some have minimum requirements to set up a DAF. However, DAFs are advantageous because of their flexibility, because donors have a meaningful say in how their gifts are ultimately used, and for taxpayers that do not itemize deductions, DAF’s can allow for one “bunched” gift that is deductible and sprinkled out in small doses to various charities over the year. They are also less complicated to create and therefore less expensive than a Private Foundation. If, for example, a donor wants to make a charitable gift but also wants to retain flexibility in the event their charitable goals change over time, a DAF can be a great vehicle to use for charitable giving.

Private Foundation

A Private Foundation is another vehicle for making charitable gifts. Creating a Private Foundation involves the formation of a separate legal entity with its own tax identification number that must request tax exempt status from the Internal Revenue Service. As a result, Private Foundations will typically require substantial legal and tax advice from a lawyer and/or an accountant and are typically used by donors making very large gifts ($5 million or more). However, the donor or donors who create a Private Foundation receive an immediate charitable deduction on their income tax return (of up to 30% of adjusted gross income for cash gifts) and are able to maintain complete control over giving during their lifetime and in perpetuity through family and board members (unlike a DAF or outright donation).

Specific Bequest in Will or Trust

Some donors choose to make charitable gifts at their death through a bequest in their will or trust. By giving at death, donors have the benefit of retaining control over their property until they no longer need it. However, because the gift does not actually occur until death, a donor does not receive a charitable deduction on an income tax return. Instead, the donor receives a charitable deduction on an estate tax return, if they are required to pay estate taxes. Fortunately, most Americans need not worry about filing an estate tax return because the estate tax currently applies only to individuals with more than eleven million dollars.

Despite the lack of a tax incentive, many donors still choose to leave a portion of their estate to charity. However, giving to charity through a bequest in a will or trust can be tricky without the proper advice. Some donors, for example, bequest a specific dollar amount to charity in their will or trust which can have unintended results. If the donor bequests “$100,000 to Charity A” and only owns $125,000 in assets at his death, for example, Charity A receives $100,000 while donor’s other beneficiaries receive only $25,000, which was probably not the donor’s intent. This result can be easily avoided with proper planning (such as expressing the bequest to charity in percentages) and sound advice.

A properly drafted estate plan should also address the possibility that a chosen charity may no longer exist at the time of the donor’s death. Some donors have a loyalty to a particular cause rather than the particular charity designated in their estate plan. With the donor’s permission, the donor’s estate planning documents may grant their executor or trustee discretion to make the gift to a different charity supporting the same cause, if the charity designated in the will or trust is no longer in existence. Other donors, however, may desire for their gift to go to one particular charity and no other and their estate plan should reflect that intent.

Finally, some donors desire to be very specific about how they want their gift to be used. If so, the bequest language needs to be very carefully drafted. Overly specific language could lead to an administrative burden on the charity or in extreme cases create a dispute or litigation between the charities and the donor’s family members. Overly broad language, on the other hand, could result in the gift being used for purposes not intended by the donor. Donors should seek advice to ensure the language is specific enough to ensure the donor’s intent is achieved without causing administrative problems for the charity or litigation after the donor’s passing.

Giving to charity is a great way to leave a lasting impact on your local community. If you are thinking about making a charitable gift, do not hesitate to meet with your local community organizations, your tax advisors, and your estate planning attorney. Doing so will provide valuable resources and education to make sure your gift reaches its maximum impact on the local community, you receive maximum tax benefits, and you ensure your gift actually achieves your goals.

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Call Schooley Law Firm to today to see how we can help you create a charitable giving plan that helps you make your money do more for the world while enabling you to receive maximum tax benefits.

804.270.1300

How an ABLE Account Can Supplement Your Estate Plan

A special needs trust is a key component to an estate plan for clients with a special needs beneficiary.  Special needs trusts allow a beneficiary to receive the benefits of their inheritance while maintaining eligibility for “means tested” governmental programs such as Medicaid or Supplemental Security Income (SSI).   However, special needs trusts have drawbacks, including the requirement that the trustee have complete discretion over distributions from the trust.  As a result, the special needs beneficiary is subject to the trustee’s decision to make or withhold distributions and the beneficiary cannot force a distribution when the trustee says “no.”  Trustees of a special needs trust are also generally prohibited from making distributions directly to the special needs beneficiary and from making indirect distributions to pay for the special needs beneficiary’s food, clothing or shelter. 

            An ABLE account is a way to provide financial independence for a special needs beneficiary while maintaining eligibility for governmental benefits and should be considered by parents with a special needs beneficiary.  ABLE accounts are fairly new to Virginia.  The Stephen Beck, Jr. Achieving a Better Life Experience (ABLE) Act was signed into law by President Obama in December 2014 and Virginia passed legislation in 2015 instructing Virginia529 to create and administer ABLE accounts within the Commonwealth.  The basic goal of an ABLE account is to provide financial independence for Virginians with special needs while not interfering with their ability to receive government funded assistance.    

            Some important things to know about ABLE accounts:

·      In order to open an ABLE account, an individual must be disabled (under the eligibility rules set forth by the Social Security Administration) prior to reaching age twenty-six.

·      A special needs beneficiary may only have one ABLE account.

·      The funds in an ABLE account may only be used for “qualified disability expenses” such as housing, transportation, and job training (among others).

·      At the death of the special needs beneficiary, funds in the ABLE account must be used to reimburse Medicaid for the costs spent on the special needs beneficiary’s care during his or her lifetime. 

            However, some of the major benefits of an ABLE account are:

·      A special needs beneficiary (or family and friends) may contribute up to fifteen thousand dollars ($15,000) per year to an ABLE account (matching the Gift Tax Annual Exclusion Amount).

·      The ABLE account may hold up to a maximum of five hundred thousand dollars ($500,000) without effecting a special needs beneficiary’s eligibility for Medicaid (which usually requires a person to have less than two thousand-dollars ($2,000) in assets to qualify).

·      The ABLE account may hold up to one hundred thousand dollars ($100,000) without effecting a special needs beneficiary’s eligibility for Supplemental Security Income. 

·      Money contributed to the ABLE account is eligible for certain tax benefits such as tax-free growth (much like an IRA) and a state income tax deduction of two thousand dollars ($2,000).             

            ABLE accounts are by no means a perfect solution for parents of special needs beneficiaries.  However, if you (or a client of yours) wants to provide a special needs beneficiary with financial independence and avoid the complexity of a special needs trust, an ABLE account should be considered as part of your estate plan.

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 Schooley Law Firm is dedicated to estate planning, elder care, supporting estate and trust administration appointees and staying on top of the laws that impact these subjects.

Call us to set up a consultation, 804.270.1300, if our services could benefit your clients’ custom life planning.