Transferring Property After Death in Virginia

We all have the right to own property while we are alive. However, we lose those property rights when we die. When a person passes away, ownership of their property must transfer to some other living individual or legal entity.

There are essentially two ways ownership of a person’s property passes to someone else when they die:

1. Through probate; and
2. Outside of probate

Transferring Property After Death Through Probate

Probate is the court-directed process by which a deceased person’s estate (their assets and debts) is summed up, finalized, and distributed to their heirs and creditors. Probate can be time-consuming for your heirs and can consume a significant portion of the estate you left behind for your loved ones. In addition, as a matter of public record, probate lacks the privacy that many families wish for their financial affairs.

If you die testate (with a valid Will in place), your Will, to a great extent, will dictate what happens to your property after it has been probated. On the other hand, if you die intestate (without a valid will in place) the probate court itself will decide what happens to your property.

So, if you do absolutely nothing to plan for the transfer of your assets after you die, your property will need to be probated, and a probate court will decide, according to Virginia intestacy laws, who your property will transfer to upon your death.

Transferring Real Estate After Death in Virginia

In Virginia, real property is handled differently in probate. After you pass away, title to any real estate you own solely in your own name “drops like a rock” (as it is said in Virginia) to your heirs, testate or intestate, immediately. Then, land records reflects this change in title when your Will is admitted to probate with a Circuit Court, or when a real estate affidavit is recorded (if there is no will). So title to that real estate conveys to whoever is entitled to inherit the property under the terms of the will, typically the residual beneficiaries, or the intestate heirs, and there is a filing obligation to update land records.

There is also a way in Virginia to convey ownership of real property to your intended beneficiary of real property outside of probate upon your death. A transfer-on-death deed can be executed prior to your death to enable you to designate a beneficiary or beneficiaries who will automatically inherit real estate upon your death. These must be recorded with land records prior to death or they are not given effect. They can also be revoked by the same method prior to the owner’s death.

Transferring Property After Death Outside of Probate

Some property passes outside of probate after you die by rule of law or by contract. These assets are referred to as non-probate assets.

Examples of non-probate assets include:

• Assets owned as joint tenants with rights of survivorship;
• Assets that transfer by beneficiary designations (pay-on-death or transfer-on-death); and
• Assets held in a living trust

Joint Tenants With Rights of Survivorship

You can enable some assets to avoid probate and transfer directly to your loved ones by the way you own the asset. For instance, when you share ownership of real estate as joint owners with rights of survivorship, when the first joint owner passes away, their ownership stake in the real estate transfers to the surviving joint owner without going through probate. This is often the way spouses choose to own their property.

Beneficiary Designations

When you designate someone as a beneficiary of your life insurance policy, that beneficiary will automatically receive life insurance benefits from your policy after you die, without court involvement. The insurance company will simply pay benefits to whoever is listed as a beneficiary on the policy.

Other assets that are commonly transferred by beneficiary designations include:

• Retirement accounts;
• IRA’s;
• Annuities;
• Bank accounts; and
• Investment accounts

After you pass away, the beneficiaries listed on these accounts will receive the proceeds directly, without court involvement. What’s more, the beneficiary designations associated with these assets supersede anything mentioned in your Will.

For example, if you listed your daughter as the beneficiary on your IRA, but listed your son as the beneficiary of the same IRA in your will, your daughter will receive the proceeds of the IRA account, even if the Will reflects your most current wishes.

Living Trusts

Assets held in a living trust are another type of non-probate asset. After you die, these assets are distributed to the beneficiaries listed in the trust document, without the need for probate.

To explain, any assets that you own solely in your own name, and that are not the subject of some other estate planning mechanism, must go through probate before they can transfer to your heirs and beneficiaries. That said, once you transfer title to an asset from your own name to the name of a trust that you own, you technically no longer own that asset, your trust does.

Because of this, it can be advantageous to transfer all of your major assets into a trust that you own before you pass away, to enable them to avoid probate and pass on to named beneficiaries without the time, expense, and other drawbacks associated with probate. What’s more, a living trust offers a number of other advantages. For example, a living trust can enable you to:

• Keep your family’s financial affairs private;
• Retain control over your property while you are alive and capable;
• Plan for the possibility that you might one day become incapacitated and incapable of handling your own affairs; and
• Minimize estate taxes (in some case).

In Virginia, whether you die testate (with a Will in place) or intestate (without a Will), any real estate you own solely in your own name automatically skips probate and “drops like a rock” to the party entitled to inherit that property. In other words, as soon as your estate enters probate, that real estate passes outside of probate to the beneficiary named in your Will, or to whoever is entitled to inherit the property according to the laws of intestacy in Virginia.

However, there is an even faster way in Virginia to enable ownership of real property to be conveyed outside of probate upon your death. A transfer-on-death deed can be executed to enable you to designate a beneficiary or beneficiaries who will automatically inherit real estate upon your death and to enjoy other estate planning benefits as well.

Consult with an Experienced Virginia Estate Planning Attorney

If you would like advice on the advantages and pitfalls of transferring your property at death, how best to do so, or any other estate planning matter, call our law firm today at (703) 553-2577 or use the contact form to schedule a consultation with an experienced Virginia estate planning attorney.

The information on this site is for general informational purposes only. The information presented in this site is not legal advice or a legal opinion. You should seek the advice of legal counsel of your choice before acting upon any of the information in this site.