Clients often give much thought and effort to avoiding probate through titling, beneficiary designations and revocable trusts. Sometimes – in fact often times – an asset or two are left out, thereby triggering probate. One example of forgotten assets are those inside a safe deposit box. As my colleague Brian Abbott explains below, although some states such as Virginia will allow an "interested party" to access the decedent’s safe deposit box, such access is only to retrieve the Will. The Will does not entitle the interested party to the safe deposit box assets. How to get the assets? Probate may be necessary.
The bottom line is you should think of naming an adult child or family member or friend as a joint owner, with a key, so not only can testamentary documents be obtained, but so to can the assets without going through probate. And then confirm with your bank that your plan will work as intended.
Brian Abbott’s explanation:
In practice, a testator will sometimes store his or her original will in a safe deposit box. Under Virginia law, this process, while not uncommon, can present obstacles to retrieving the original will upon the testator’s death for interested parties (e.g., a spouse or heir), along with accessing other contents stored in the safe deposit box. Further, in the event that the will is a "pourover will" into a revocable living trust, the storage of the original will in the safe deposit box by a sole lessee can defeat the aim of outright probate avoidance, forcing the named executor to qualify with Probate for the sole purpose of retrieving the contents of the safe deposit box.
Where a decedent stores his or her original will in a safe deposit box, Virginia law provides a specific process through which an interested party may access the safe deposit box of the decedent lessee. VA. Sec. 6.2-2302 indicates that upon the death of a sole lessee of a safe deposit box, a safe deposit box company "may permit limited access to the box by the spouse or next of kin of the deceased lessee, a court clerk, or other interested person for the limited purpose of looking for a will or other testamentary instruments." Upon request from an interested party to access the safe deposit box, the safe deposit box company may require proof of death as it deems necessary (e.g., the death certificate of the decedent lessee of the safe deposit box). The safe deposit box company may then grant access for the limited purpose of retrieving the original will. The safe deposit box company is required under statute to supervise this process and also is required to retain a copy of the will to maintain in the safe deposit box.
Once the interested party obtains the original will, the named executor should generally make an appointment with the Probate clerk to qualify as executor of the estate. In practice, the Probate clerk has generally allowed an executor to qualify as executor of the estate for the sole purpose of retrieving other contents of the safe deposit box. At the appointment with the Probate clerk, the executor will report the value of the Probate assets in the estate and pay a Probate tax on the reported value. The Probate assets are generally assets that the decedent owned in his or her sole name at the time of death. If there are no such Probate assets, the executor would report the value of the estate as zero and would not owe any Probate tax, although will incur Probate fees.
Upon qualification, the executor will receive a certificate of qualification which will allow the executor to access the contents of the safe deposit box as executor of the estate. Based on policy at Probate, if the will is a pourover will into a trust, the executor will subsequently need to file an inventory and accounting with the Commissioner of Accounts and keep the estate open six months, even if the assets are reported as zero at the time of qualification.
On July 27, 2016, I gave an estate planning presentation for Clark & Associates and their clients, covering fundamental estate planning issues and the potential impact of the November election. The presentation is attached below.
The 2016 Virginia General Assembly enacted legislation, signed into law by the Governor, affecting elder law. Two changes of note are the following:
1. Assisted living facilities now are not required to provide hospice care to their residents, provided there is a disclosure statement signed by the prospective resident prior to admission. Thus, facilities that choose not to provide hospice care will likely see less demand as prospective residents and their families seek alternative homes.
2. Guardians now must allow an incapacitated person to continue to communicate, visit and interact with persons with whom the incapacitated person has an established relationship. The law is intended to prevent the Guardian from unduly controlling the incapacitated person. What constitutes an "established relationship" will likely be subject to some question as this law is tested.
My partner, Catherine Schott Murray, recently wrote an insightful Post about the Virginia law changes to the "elective share" statute, which I have copied verbatim below. The elective share concept allows a surviving spouse to choose to receive a portion of the deceased spouse’s estate, regardless of what was provided in the deceased spouse’s Will. All states have laws addressing this issue, although the laws differ in the details. The concept is easy to understand, but not its application. The bottom line is that this new law is another reason why pre-nuptial agreements are often necessary and becoming more accepted.
Copy of Post by Catherine Schott Murray:
Revised Elective Share Statute in Virginia
Beginning with the estates of decedents dying on or after January 1, 2017, the elective share statute to be applied in Virginia will be significantly changed. Under current law, a surviving spouse has the right to claim one-third (1/3) of a decedent’s estate if the decedent left surviving children or descendants, or one-half (1/2) of the decedent’s estate if the decedent had no surviving children or descendants. These calculations were based solely on the assets (or augmented estate) of the decedent.
Under the new law, a surviving spouse will have the right to claim a percentage of one-half (1/2) of the value of the marital property included in the augmented estate. What does this mean? First, the marital property consists of the following: (a) a decedent’s net probate estate, (b) a decedent’s non-probate transfers to others, (c) a decedent’s non-probate transfers to the surviving spouse, and (d) a surviving spouse’s property and non-probate transfers to others. (Yes, you read correctly. A surviving spouse’s assets are now included in the calculation.)
Of the total value of the marital property portion of the augmented estate, the surviving spouse may be able to claim up to fifty percent (50%). The determination of whether the surviving spouse can claim the full 50% depends on the length of marriage. Thus, if a couple is married for 5 years, then the surviving spouse could claim 30% of the 50% elective share available or 15% of the augmented estate.
Furthermore, under current law, certain statutory allowances are available to a surviving spouse who claims the elective share. Those statutory allowances include the family allowance and exempt property allowance, but specifically exclude the homestead allowance. Under the new law, a surviving spouse could claim all three allowances and still make a claim for the elective share.
Finally, current law has no explicit process by which an incapacitated surviving spouse can make his or her claim. Under the new law, an incapacitated surviving spouse, by way of his or her conservator or agent under a durable power of attorney, will have the ability to claim an elective share. In addition, any elective share amount that is awarded to an incapacitated surviving spouse must be set aside in a testamentary trust and administered for the surviving spouse’s needs. At the surviving spouse’s death, provided he or she has not regained capacity and terminated the trust, any remaining assets in the testamentary trust will be distributed in accordance with any residuary clause of the predeceased spouse’s will or to the predeceased spouse’s heirs by intestacy. Effectively, in that situation, the elective share will not benefit the heirs of the surviving spouse.
So, how does this change impact you? If you are considering getting married and plan on entering into a pre-nuptial agreement, or are already married and looking to enter into a post-marital agreement, the right to the elective share can be waived. But, you should first understand the right you are waiving. Second, if you are the conservator or agent under a power of attorney of an incapacitated individual whose spouse died leaving him or her very little, then the elective share may be a viable option depending on the length of the marriage.
Third, in subsequent marriages, the families (i.e., children) of the first marriage are generally concerned with the distribution of their parent’s assets, particularly if the new spouse is the surviving spouse. Now the length of the marriage is factored into the equation and the amount available to a surviving spouse is as low as 3% for less than 1 year of marriage (or 1.5% of the augmented estate). This is a huge difference from the one-third (1/3) share available under current law and may alleviate concerns about financial exploitation.
Thus, this change appears to be in response to shifting attitudes towards marriage, that is, marriage is an economic partnership and is less about avoiding spousal impoverishment. And the changes to the elective share statute help bring Virginia up-to-date with the current dynamics of marital relationships. However, as with any new law, only time will tell what tweaks may need to be made as the law is implemented and to determine whether there are any unintended consequences as a result of the changes. #estateplanning #electiveshare #incapacityplanning #estateadministration @bgnthebgn