Common Questions About Living Trusts in Virginia

One of the most common obstacles in estate planning is transferring ownership or control of your assets after you pass away. This can be tricky because if things like bank accounts or real estate are titled in your name, the assets can get stuck, and getting them unstuck usually requires a court proceeding, such as probate or guardianship.

Probate and guardianship proceedings can cost tens of thousands of dollars and take months and even years to complete. At our law firm, we can help you avoid these proceedings by assisting you with creating a living trust.

Here are some common questions about living trusts in Virginia:

What is a Living Trust?

Think of a living trust as a bucket that holds your assets. You control it if you are alive and well. But if you are not, you have written clear instructions for who should control the bucket’s contents in your absence. That person is called your successor trustee. Your instructions tell them how and when to distribute your assets to you or your beneficiaries.

All this can be done without going to court for a judge’s approval. You can even make special arrangements for beneficiaries with special needs, such as a disability, divorce,, substance abuse, poor spending habits, or financial inexperience. You can also shelter the beneficiary’s inheritance from lawsuits, creditors, and divorce with a living trust.

What is the Difference Between a Will and a Living Trust?

A Will is a document that goes into effect when you die. It names the executor of your estate, your heirs, guardians for your minor children, and contains instructions for the distribution of your property.

A Will does not provide any way to manage your affairs if you are merely incapacitated, and it does not give the executor the necessary authority to carry out your wishes after you die, such as the authority to access your accounts, pay bills, distribute funds, or sign deeds or titles. To get that authority, the executor must go through probate or, if you’re still living, obtain guardianship.

A living trust performs the same essential functions as a Will, only better. A living trust also works if you are alive but incapacitated. And most importantly, a living trust gives your nominee near-immediate authority to access your assets and accounts by eliminating the need for probate or guardianship proceedings, thus saving your heirs a lot of time and money.

How Do I Set Up a Living Trust in Virginia?

A living trust is a legal contract between you and another party who will hold and manage your assets for the benefit of others. To create a living trust properly, you must work with an experienced attorney who can draft the actual trust document. Your attorney can help ensure your trust contains the language required for a valid trust in Virginia, as well as the terms needed to fulfill your estate planning objectives. Once the trust is created, you will need to transfer assets into the trust by re-titling your assets to reflect the trust as their new owner.

Who are the Parties to a Living Trust in Virginia?

The parties to a living trust in Virginia are as follows:

1. The creator. Referred to as the Grantor, Settlor, or Trustor
2. The Trustee. You, someone you know, or a third party like a financial institution. The Trustee will manage your trust per the terms of your trust agreement. In most circumstances, you can be the creator and the initial trustee.
3. Beneficiaries. These are individuals or organizations you want to inherit your assets. Beneficiaries can include children, grandchildren, close family members, and even a favorite charity, or organization.

What Assets Should I Put into My Living Trust?

Except for certain assets that qualify for special tax treatment, such as IRAs, 401Ks, and healthcare saving accounts that may be subject to taxes, you can put anything you own in your living trust. This includes cash, bank accounts, houses, non-qualified after-tax investment accounts, stocks and bonds, etc. The more assets you put in your trust, the more effective it will be.

If I Have a Living Trust, Should I Also Have a Will?

Yes. Even if you have a living trust, you should also have a pour-over Will that will capture any assets not in your trust at the time of your death, then direct those assets into the trust so that they bypass probate as well.

Contact a Virginia Estate Planning Attorney for More information

If you have more questions about living trusts in Virginia, or need help setting up a living trust, contact our law firm at (703) 553-2577 or use the contact form to arrange a consultation with a knowledgeable Virginia estate planning attorney. We offer a free initial consultation.

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.