A living trust in Virginia is an estate planning option that allows you to place your assets in trust while continuing to use and control them. The trust passes the assets to your beneficiaries after your death. A revocable living trust (inter vivos trust) offers unique control and flexibility.
Living trusts in Virginia
A Virginia living trust is established by you, the grantor, the person setting up the trust and placing assets into it. The assets in the trust are managed for your benefit during your life. The goal is usually to place as many assets into the trust as possible, however there are some assets not eligible, such as life insurance and retirement accounts. When you create a living trust in Virginia, you need to name a trustee who has the responsibility of managing the trust. You can select anyone, but common practice is to name yourself so you can maintain the utmost control. You will need to choose a successor trustee to step in after your death to continue trust management and distribute the trust assets to your beneficiaries. Your revocable trust can be changed by you at any point during your life, whereas an irrevocable living trust cannot be altered.
Virginia's living trust allows you to keep your trust assets out of probate, a court process required for approving a will. Probate can take months to complete and racks up the costs of an attorney, executor, and court fees. Since Virginia has not adopted the Uniform Probate Code, its procedures are lengthy. A trust avoids all of this red tape and allows you to pass your assets to your beneficiaries immediately upon your death if you wish, unlike a will which cannot distribute assets until probate is concluded. Your trust allows you to avoid probate in any state in which you own property as long as you include that property in your trust.
Virginia does offer a small estate procedure for estates worth less than $50,000 which do not contain real property (real estate). This process is faster and less expensive than regular probate and is also less expensive than setting up a trust, but does not offer the benefits of a trust.
Do I need a living trust in Virginia?
Living trusts offer a wide variety of benefits that may be beneficial in your estate planning. Your revocable living trust protects you should you become mentally incapacitated. All of your assets are already controlled, owned, and managed by the trust and a conservatorship proceeding is likely unnecessary. While a durable power of attorney can be rejected, a trust cannot be. Your financial life is protected by the trust.
A living trust protects your privacy since its terms, assets, and beneficiaries are never disclosed to the public. In contrast, a will must be probated and made public record. A trust is also more difficult to contest than a will, providing security that it will remain in place as you intended.
Control is another benefit provided by a revocable living trust. The trust allows you to remain in complete control of the trust assets during your life. Although the assets are technically owned by the trust, you continue to use them as you normally would. You live in your home and spend what you want. After you die, you continue to maintain control over the trust because the assets stay in the trust until the dates you choose for distribution to your beneficiaries. Some people choose specific ages for beneficiaries to inherit to ensure maturity. If you pass assets with a will, they are distributed once probate concludes.
Living trusts and estate taxes in Virginia
Although Virginia does not impose an estate tax, federal estate tax applies to estate over $5 million. Living trusts do not protect your assets from estate tax. However, a specially constructed trust called a marital trust (also known as an AB trust or a QTIP trust) avoids estate tax by passing assets from the deceased to the surviving spouse. Note that revocable living trusts do not protect assets from Medicaid spend down or from creditors.
How to create a living trust in Virginia
Creating a living trust in Virginia occurs when you create a written trust document and sign it in the presence of a notary. The trust is not official until you transfer assets into it. A living trust can offer a variety of benefits that may appeal to you. Consider what is best for you.
Ready to create a living trust in Virginia? LegalZoom can help you create a living trust. Start by answering a few simple questions; LegalZoom will review your answers and send your complete living trust package by mail.
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