Estate Planning in Virginia

Estate Planning in Virginia
Publication Date: 2022
Electronic Forms: 61
Available Formats: Print (1,133 pages, softcover, 2 volumes)
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Product #: 856

Information

Content Highlights:
  • Interviewing the Client
  • Mapping the Plan
  • Drafting the Will
  • Drafting the Trust
  • Tax Planning
  • Planning for Closely Held Businesses
  • Powers of Attorney, Minor Children, and Assets in Other Jurisdictions
  • Choosing Fiduciaries
  • Transferring Assets Outside of Probate
  • Execution and Safekeeping of Documents
  • Terminating the Representation

"The depth and breadth of information provided in a well-organized format make this book an indispensable reference for every Virginia lawyer who counsels clients with regard to any aspect of estate planning. The authors are experienced and respected Virginia estate planning lawyers, whose advice and commentary reflect their expertise. Your malpractice carrier will be happy to know that you own this resource!"
- Marie McKenney Tavernini, Editor

Creating estate plans is increasingly a challenge. You need practical, real-world information on planning, drafting documents, and administering estates—something you can put to use every day. This essential reference guides practitioners through the entire estate planning process from initial client contact to finalizing a complete estate plan that accomplishes the client's goals. It clearly lays out estate planning options, their benefits and limitations, and the federal tax consequences to best implement the client's wishes. It also includes 61 ready-to-use electronic forms to create estate plans for your clients.

This 2022 edition of Estate Planning in Virginia addresses changes to Virginia law that present new planning opportunities and challenges. The Uniform Transfer to Minors Act now permits the custodian of property to hold this until the minor reaches the age of 25. Virginia also passed the Uniform Fiduciary Income and Principal Act which replaces the prior uniform act and gives more flexibility to trustees.

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Table of Contents

CHAPTER LIST

1. Interviewing the Client

2. Ethical Issues

3. Mapping the Plan

4. Drafting the Will

5. Drafting the Trust

6. Tax Planning

7. Planning for Closely Held Businesses

8. Powers of Attorney, Minor Children, and Assets in Other Jurisdictions

9. Choosing Fiduciaries

10. Transferring Assets Outside of Probate

11. Execution and Safekeeping of Documents

12. Terminating the Representation


CHAPTER 1: INTERVIEWING THE CLIENT

1.1 INTRODUCTION

1.2 STARTING THE PROCESS
        1.201 Initial Contact
        1.202 Scheduling the Interview

1.3 COLLECTING THE INFORMATION
        1.301 What to Ask For
        1.302 How to Ask for It

1.4 RECOGNIZING ETHICAL DILEMMAS

1.5 CONFIDENTIALITY AND CYBER SECURITY

1.6 PROPOSED METHODOLOGY FOR CONDUCTING THE
INTERVIEW

APPENDIX 1-1: INITIAL LETTER TO CLIENT

APPENDIX 1-2: ENGAGEMENT LETTER

APPENDIX 1-3: ENGAGEMENT LETTER—ALTERNATIVE FORM

APPENDIX 1-4: LONG-FORM QUESTIONNAIRE

APPENDIX 1-5: SHORT-FORM QUESTIONNAIRE


CHAPTER 2: ETHICAL ISSUES

2.1 INTRODUCTION

2.2 RELATIONSHIP BETWEEN CLIENT AND LAWYER
        2.201 Lawyer Competence – Rule 1.1
        2.202 Scope of Representation – Rule 1.2
        2.203 Diligence – Rule 1.3
        2.204 Communication – Rule 1.4
        2.205 Fees – Rule 1.5
        2.206 Confidentiality of Information – Rule 1.6
        2.207 Conflicts of Interest – Generally – Rule 1.7
        2.208 Conflicts of Interest – Prohibited Transactions –
        Rule 1.8
        2.209 Conflicts of Interest – Former Clients – Rule 1.9
        2.210 Imputed Disqualification – Rule 1.10
        2.211 Representing Client as Both Business Entity and
        Individual
        2.212 Client With Diminished Capacity – Rule 1.14
        2.213 Safekeeping Property – Rule 1.15
        2.214 Retaining Client’s Original Documents
        2.215 Declining or Terminating Representation – Rule 1.16
        2.216 Duties to Prospective Client-- Rule 1.18

2.3 LAWYER AS ADVISOR
        2.301 Nonlegal Advice
        2.302 Referrals to Other Professionals

2.4 LAWYER AS ADVOCATE
        2.401 Candor Toward the Tribunal – Rule 3.3
        2.402 Truthfulness in Statements to Others – Rule 4.1
        2.403 Communication With Persons Represented by
        Counsel – Rule 4.2
        2.404 Dealing With Unrepresented Persons – Rule 4.3

2.5 LAW FIRMS AND ASSOCIATIONS
        2.501 Responsibilities Regarding Nonlawyer Assistants –
        Rule 5.3
        2.502 Multi-Jurisdictional Practice of Law – Rule 5.5
    
2.6 INFORMATION ABOUT LEGAL SERVICES
        2.601 Communications Concerning a Lawyer’s Services –
        Rule 7.1
        2.602 Solicitation of Clients – Rule 7.3
    

CHAPTER 3: MAPPING THE PLAN

3.1 INTRODUCTION

3.2 FORMS OF OWNERSHIP
        3.201 Fee Simple
        3.202 Tenants in Common
        3.203 Joint Tenants with Right of Survivorship
        3.204 Tenants by the Entirety
        3.205 Community Property
        3.206 POD Accounts
        3.207 TOD Ownership of Securities
        3.208 TOD Ownership of Real Estate

3.3 PROBATE PROCESS—A BRIEF OVERVIEW
        3.301 Probating the Will
        3.302 Qualifying the Personal Representative and the
        Trustee of a Testamentary Trust
        3.303 Fiduciary Bond and Surety on the Bond
        3.304 Filing the Inventory
        3.305 Filing the Annual Accounting
        3.306 Statement in Lieu of Accounting
        3.307 Settling the Estate

3.4 THE AUGMENTED ESTATE
        3.401 Surviving Spouse’s Right to Elect a Share of
        Decedent’s Estate
        3.402 Description and Timing
        3.403 Included Property
        3.404 Excluded Property
        3.405 Meaning of “Estate” and “Property”
        3.406 How the Augmented Estate Is Satisfied
        3.407 Effect on Federal Estate Taxes

3.5 OTHER RIGHTS
        3.501 Family Allowance
        3.502 Exempt Property
        3.503 Homestead Allowance

3.6 REASONS FOR HAVING A WILL
        3.601 To Dispose of Property
        3.602 To Reduce Estate Taxes
        3.603 To Name Fiduciaries

3.7 COMPARISON OF TESTACY AND INTESTACY

3.8 TYPES OF TRUSTS
        3.801 In General
        3.802 The Virginia Uniform Trust Code
        3.803 Revocable Versus Irrevocable Trusts
        3.804 Living Versus Testamentary Trusts
        3.805 Grantor Versus Nongrantor Trusts

3.9 USES OF TRUSTS
        3.901 Avoiding Probate
        3.902 Managing Assets
        3.903 Tax Savings
        3.904 Providing for Minors and Other Persons Under
        a Disability
        3.905 Providing for Spendthrifts
        3.906 Providing for a Spouse, While Controlling the
        Disposition of the Remainder

3.10 ALTERNATIVES TO TRUSTS
        3.1001 Uniform Transfers to Minors Act
        3.1002 Uniform Custodial Trust Act
        3.1003 POD Bank Accounts, Savings Accounts and United
        States Savings Bonds, TOD Investments, and
        Real Property
        3.1004 Survivorship
        3.1005 Simultaneous Death Act
        3.1006 Limited Partnerships and Limited Liability
        Companies

3.11 OTHER DOCUMENTS
        3.1101 Durable Powers of Attorney
        3.1102 Advance Medical Directives
        3.1103 Burial Instructions and Appointment of an Agent
        to Dispose of Body
        3.1104 Anatomical Gifts

3.12 TRANSFER TAX CONSIDERATIONS
        3.1201 Overview of the Federal Gift Tax
        3.1202 Overview of the Federal and Virginia Estate Tax
        3.1203 Lifetime Versus Testamentary Gifts
        3.1204 Estates Subject to the Federal Estate Tax
        3.1205 Overview of the Generation-Skipping Transfer Tax
        3.1206 Estates Subject to the Generation-Skipping
        Transfer Tax

3.13 PLANNING FOR MARRIED COUPLES
        3.1301 Marital Agreements
        3.1302 Surviving Spouse’s Elective Share of the
        Decedent’s Augmented Estate

3.14 IMPLEMENTING THE PLAN
        3.1401 Need for Additional Information and Documents
        3.1402 Checklist for Preparation of Documents

3.15 CONCLUSION
        3.1501 Careful Review of All Information
        3.1502 Coordination with Other Professionals
        3.1503 Coordination with Existing Plan Documents
        and Transfers
        3.1504 Coordination with Estate Plans of Other
        Family Members
        3.1505 Following Up with the Client


CHAPTER 4: DRAFTING THE WILL

4.1 INTRODUCTION

4.2 WHAT CONSTITUTES A WILL?
        4.201 Definition of a Will
        4.202 “Will” Construed
        4.203 Essential Elements
    
4.3 WILL SUBSTITUTES AND ALTERNATIVE PLANNING
        4.301 General Considerations
        4.302 Necessity of a Will
        4.303 Coordinating Non-Probate Assets with the
        Estate Planning Documents

4.4 FUNDAMENTAL WILL PROVISIONS
        4.401 Exordium Clause
        4.402 Tangible Personal Property
        4.403 Specific and General Bequests
        4.404 Real Property
        4.405 Residuary Estate
        4.406 Powers of Appointment
        4.407 Trusts for Certain Beneficiaries
        4.408 Guardians
        4.409 Presumption of Survivorship
        4.410 Debts and Expenses of Administration
        4.411 Taxes
        4.412 Appointment of Executor and Trustee
        4.413 Testimonium
        4.414 Attestation
    
4.5 BASIC CONSIDERATIONS
        4.501 Clear Identifications
        4.502 Limitations
        4.503 Will Speaks as of Date of Death
        4.504 References to Virginia Code Sections That
        Predate Enactment of Title 64.2

4.6 PREREQUISITES FOR A VALID WILL
        4.601 Statutory Formalities for Drafting
        4.602 Testamentary Capacity
        4.603 Statutory Formalities for Execution
        4.604 Multi-Jurisdictional Issues
        4.605 Holographic and Nuncupative Wills
    
4.7 AMENDING THE PLAN: CODICIL OR NEW WILL

4.8 THE AMERICAN TAXPAYER RELIEF ACT OF 2012 AND
THE TAX CUTS AND JOBS ACT OF 2017: ESTATE, GIFT,
AND GST TAXES
        4.801 American Taxpayer Relief Act of 2012
        4.802 Tax Cuts and Jobs Act of 2017

4.9 MATCHING THE ESTATE PLANNING DOCUMENTS
WITH THE CLIENT
        4.901 Candidates for Simple Wills with No Trusts
        4.902 Candidates for Simple Wills with Guardianship
        Provisions and Contingent Trusts for Children
        4.903 Separate Share or Single “Pot” Trust?
        4.904 Marital Deduction Planning
        4.905 Exemption Bypass Planning
        4.906 Portability Versus Bypass Planning
        4.907 Marital Deduction Planning Options
        4.908 Funding the Marital Deduction
        4.909 Providing for Postmortem Marital Deduction
        Tax Planning
        4.910 Integrating Generation-Skipping Transfer Tax
        Planning with the Marital Deduction
        4.911 Candidates for Pour-Over Wills and Living Trusts
        4.912 Drafting Issues for Prior Marriages
    
4.10 SELECTED PROBLEM AREAS
        4.1001 Troublesome Client Scenarios
        4.1002 Checklist of Common Problem Areas in Drafting
        4.1003 The Roots of Most Drafting Problems

4.11 COMMON CLAUSES AND UNCOMMON RESULTS
        4.1101 Debts of the Decedent
        4.1102 Death Taxes
        4.1103 Tangible Personal Property
        4.1104 Residuary Estate
        4.1105 Real Property
        4.1106 The Changing Fraction
        4.1107 Spendthrift Clauses
        4.1108 Marital Deduction Reduction
        4.1109 Delayed Vesting or Postponed Enjoyment?
        4.1110 Pour-Over to Inter Vivos Trust
        4.1111 No Contest Clauses
        4.1112 Doctrine of Equitable Election

4.12 MODERN TRUST LAW

APPENDICES TO CHAPTER 4

APPENDIX 4-1: NON-TAX WILL FOR SINGLE PERSON WITH
TRUST FOR YOUNG BENEFICIARIES

APPENDIX 4-2: NON-TAX WILL FOR MARRIED PERSON WITH
TRUST FOR CHILDREN

APPENDIX 4-3: WILL WITH SPECIAL NEEDS TRUST FOR
DISABLED CHILD

APPENDIX 4-4: TAX WILL WITH OUTRIGHT DISPOSITION OF
MARITAL SHARE

APPENDIX 4-5: TAX WILL WITH QTIP OR GENERAL POWER
OF APPOINTMENT MARITAL TRUST

APPENDIX 4-6: POUR-OVER WILL

APPENDIX 4-7: CODICIL

APPENDIX 4-8: DRAFTING SUGGESTIONS FOR CLAUSE
TO ELECT PORTABILITY


CHAPTER 5: DRAFTING THE TRUST

5.1 INTRODUCTION AND SCOPE

5.2 VIRGINIA UNIFORM TRUST CODE
        5.201 Overview
        5.202 Drafting Considerations
        5.203 Default Provisions; Mandatory Provisions
        5.204 Default Provisions That May Be Overridden

5.3 REVOCABLE LIVING TRUST: WHAT IS IT?

5.4 OVERVIEW OF THE POUR-OVER WILL AND LIVING
TRUST ARRANGEMENT

5.5 ON FORMS
        5.501 Length and Complexity
        5.502 Obtaining and Using Forms

5.6 ONE APPROACH, WITH PRACTICE POINTERS

5.7 BASIC REVOCABLE TRUST PROVISIONS
        5.701 Preamble: Declaration or Agreement
        5.702 Identification of Assets
        5.703 Provisions During Grantor’s Life
        5.704 Distribution at Grantor’s Death
        5.705 Revocation and Amendment Provisions
        5.706 Trustee Provisions
        5.707 Spendthrift Provision
        5.708 Survivorship Provision
        5.709 Rule Against Perpetuities Clause
        5.710 Savings Clauses
        5.711 Division, Consolidation, and Termination of Trust
        5.712 Governing Law
        5.713 Execution Provisions
        5.714 Amendment to the Trust
        5.715 Joint Revocable Trusts

5.8 REASONS FOR USING A REVOCABLE TRUST
        5.801 Management
        5.802 Probate Avoidance
        5.803 Privacy
        5.804 Challenges
        5.805 Disability Protection
        5.806 Expenses
        5.807 Contractual Benefits
        5.808 Flexibility
        5.809 Choice of Law and Situs

5.9 LIVING TRUST AS A WILL SUBSTITUTE
        5.901 Contrast to the Law of Wills
        5.902 State Law Discrepancies Between Wills and Trusts
        5.903 Review of Virginia Statutes
        5.904 Federal Tax Law Discrepancies Between Probate
        and Non-Probate Estates

5.10 GENERAL CONSIDERATIONS IN DRAFTING AN
IRREVOCABLE TRUST
        5.1001 Introduction
        5.1002 Powers and Rights That the Grantor Should Not Have
        5.1003 Powers and Rights that Beneficiaries May Safely Hold
        5.1004 General Gift Tax Issues
        5.1005 State Income Taxation of Multi-Jurisdictional Trusts
        5.1006 Rule Against Perpetuities
        5.1007 Coordination with the Grantor’s Estate
        5.1008 Self-Settled Spendthrift Trusts
        5.1009 Intentionally Defective Grantor Trusts

5.11 ESTATE, GIFT AND GST TAXES
        5.1101 Overview
        5.1102 Key Provisions of the Tax Cuts and Jobs Act
        5.1103 Portability

5.12 IRREVOCABLE LIFE INSURANCE TRUST
        5.1201 Reasons for Using an Irrevocable Life Insurance Trust
        5.1202 Drafting Considerations for the Irrevocable Life
        Insurance Trust
        5.1203 Crummey Rights of Withdrawal
        5.1204 Family Trust Provisions
        5.1205 Single Trust (Pot Trust) for Descendants
        5.1206 Separate Trusts for Descendants
        5.1207 Contingent Marital Trust
        5.1208 Default Remainder Beneficiaries
        5.1209 Divorce and Remarriage
        5.1210 Adopted Persons
        5.1211 Insurance Policies
        5.1212 Maximum Duration of Trusts
        5.1213 Spendthrift Trust
        5.1214 Payments to Minors
        5.1215 Irrevocability
        5.1216 Trustee Provisions
        5.1217 Survivorship Provision
        5.1218 Savings Clauses
        5.1219 Choice of Law and Situs
        5.1220 Trust Advisor
        5.1221 Dealings with the Insured’s Estate

5.13 CHARITABLE REMAINDER TRUST
        5.1301 Generally
        5.1302 Statutory Requirements
        5.1303 Governing Instrument Requirements of CRTs
        5.1304 Funding CRTs
        5.1305 Trustees of CRTs
        5.1306 Noncharitable Beneficiaries

5.14 DECANTING TRUST ASSETS
        5.1401 Statutory Authority
        5.1402 Decanting Power
        5.1403 Procedure
        5.1404 Other Decanting Rules

5.15 CREATION OF TRUST BY CONSERVATOR OF ESTATE
OF INCAPACITATED PERSON

5.16 MODERN TRUST STRUCTURE AND GOVERNANCE
        5.1601 Entrusting Non-Trustees with Trustee
        Responsibilities
        5.1602 Co-trustees and “Delegated” or “Directed” Trustees
        5.1603 Trust Director Liability
        5.1604 Directed Trusts
        5.1605 Modern Trust Design

APPENDICES TO CHAPTER 5

APPENDIX 5-1: STATUTORY FRAMEWORK OF AUTHORITIES
FOR TRUSTS

APPENDIX 5-2: NON-TAX TRUST WITH TRUST FOR CHILDREN

APPENDIX 5-3: TAX TRUST WITH QTIP OR GENERAL POWER
OF APPOINTMENT MARITAL TRUST

APPENDIX 5-4: TAX TRUST WITH GST PROVISIONS

APPENDIX 5-5: AMENDMENT TO TRUST AGREEMENT

APPENDIX 5-6: LIFE INSURANCE TRUST

APPENDIX 5-7: GRANDCHILD’S TRUST

APPENDIX 5-8: I.R.C. § 2503(C) TRUST

APPENDIX 5-9: INITIAL “PERPETUAL” WITHDRAWAL RIGHT
NOTIFICATION LETTER

APPENDIX 5-10: ANNUAL WITHDRAWAL RIGHT NOTIFICATION
LETTER

APPENDIX 5-11: CRUMMEY TRUST FOR THE BENEFIT OF A
CHILD OF THE GRANTOR

APPENDIX 5-12: ANNUAL WITHDRAWAL RIGHT
TRUSTEE/GUARDIAN NOTIFICATION LETTER FOR
CRUMMEY TRUST FOR THE BENEFIT OF A CHILD
OF THE GRANTOR

APPENDIX 5-13: ANNUAL WITHDRAWAL RIGHT DONEE
NOTIFICATION LETTER FOR CRUMMEY TRUST FOR
THE BENEFIT OF A CHILD OF THE GRANTOR

APPENDIX 5-14: GENERAL DIAGRAM

APPENDIX 5-15: SAMPLE NONRECIPROCAL TRUST FORMS

APPENDIX 5-15A: SAMPLE NONRECIPROCAL TRUST CREATED
FOR SOLE LIFETIME BENEFIT OF DONEE SPOUSE

APPENDIX 5-15B: SAMPLE NONRECIPROCAL TRUST CREATED
FOR JOINT LIFETIME BENEFIT OF DONEE SPOUSE
AND DESCENDANTS; DONEE SPOUSE HAS LIFETIME
LIMITED POWER TO APPOINT

APPENDIX 5-16: MISCELLANEOUS TRUST PROVISIONS


CHAPTER 6: TAX PLANNING

6.1 OVERVIEW OF THE UNIFIED TRANSFER TAX SYSTEM
        6.101 The Tax Cuts and Jobs Act of 2017 Tax Act
        6.102 Federal Estate Tax
        6.103 Federal Gift Tax
        6.104 Generation-Skipping Transfer Tax
        6.105 Unified Credit Against Federal Estate and Gift Tax
        6.106 Virginia Estate Tax

6.2 DETERMINING PROPERTY SUBJECT TO ESTATE TAX
        6.201 Property Owned at Death
        6.202 Other Property Included in the Gross Estate
        6.203 Valuation of Property Included in the Gross Estate

6.3 ESTATE TAX MARITAL DEDUCTION
        6.301 Background
        6.302 Requirements for the Marital Deduction
        6.303 General Power of Appointment Trust
        6.304 Estate Trust
        6.305 QTIP Trust
        6.306 Optimum Use of the Marital Deduction

6.4 SELECTING AND FUNDING MARITAL DEDUCTION
FORMULAS
        6.401 General Purpose of Formula
        6.402 Types of Formulas

6.5 OTHER DEDUCTIONS FROM THE GROSS ESTATE
        6.501 Charitable Deductions
        6.502 Funeral Expenses, Costs of Administration, and
        Claims Against the Estate
        6.503 Qualified Conservation Easements

6.6 TAXATION OF GIFTS
        6.601 Definition of Taxable Gift
        6.602 Concept of Completed Gifts
        6.603 Gifts Made Within Three Years of Death
        6.604 Gifts Made More Than Three Years Before Death
        6.605 Gift Tax Annual Exclusion
        6.606 Gift Tax Marital Deduction
        6.607 Valuation of Gifts
        6.608 Income Tax Considerations
        6.609 Benefits of Lifetime Transfers

6.7 GENERATION-SKIPPING TRANSFER TAX
        6.701 In General
        6.702 Definitions
        6.703 Tax Base
        6.704 Gift-Splitting
        6.705 Reverse QTIP Election
        6.706 Separate Share Rules
        6.707 Tax Rates and Effective Dates
        6.708 Generation-Skipping Transfer Tax Planning
        Principles
        6.709 Postmortem Generation-Skipping Transfer Tax
        Planning

6.8 SPECIAL VALUATION RULES
        6.801 In General
        6.802 I.R.C. § 2702: Special Valuation Rules for Transfers
        of Interests in Trusts
        6.803 Private Remainder Trusts (GRATs and GRUTs)
        6.804 Personal Residence Trusts
        6.805 Proposed Treasury Regulations Affecting Valuation
        of Transferred Interests in Family-Owned Businesses
        and Partnerships

6.9 CONSISTENCY IN BASIS REPORTING
        6.901 Legislation
        6.902 Proposed Treasury Regulations
        6.903 Time for Filing
        6.904 Form 8971 and Instructions
        6.905 Fiduciary Duties
    
6.10 DISCLAIMERS
        6.1001 In General
        6.1002 What May Be Disclaimed?
        6.1003 Use of Disclaimers in Postmortem Estate Planning
        6.1004 Use of Disclaimers in Inter Vivos Estate Planning
        6.1005 Effect of State Law
        6.1006 Requirements of a Qualified Disclaimer
        6.1007 Writing Requirement
        6.1008 Delivery Requirement
        6.1009 Timing Requirement
        6.1010 Timing Requirement for QTIP Trusts
        6.1011 Timing Requirement for Joint Property
        6.1012 Disclaimant Must Not Have Accepted Any Benefits
        of the Disclaimed Property
        6.1013 Disclaimed Property Must Pass Without Direction
        by the Disclaimant
        6.1014 Disclaimer of Less Than an Entire Interest
        6.1015 Disclaimers That Reduce the Disclaimant’s Estate
        6.1016 Disclaimers That Increase the Marital Deduction
        6.1017 Disclaimers by a Fiduciary
        6.1018 Disclaimers Under the Generation-Skipping
        Transfer Tax
        6.1019 Drafting a Disclaimer Trust

6.11 SAVING TAXES WITH CHARITABLE GIFTS
        6.1101 Applicable Internal Revenue Code Sections
        6.1102 Income Tax Charitable Deduction
        6.1103 Estate and Gift Tax Rules
        6.1104 Valuation Tables
        6.1105 Methods of Giving and Tax Consequences
        6.1106 Bargain Sales
        6.1107 Bequests and Other Testamentary Transfers
        6.1108 Charitable Remainder Trusts
        6.1109 Pooled Income Funds
        6.1110 Charitable Gift Annuities
        6.1111 Remainder Interests in Personal Residences
        and Farms
        6.1112 Charitable Lead Trusts
        6.1113 Techniques for Special Assets
        6.1114 Private Foundations
        6.1115 Techniques for Special Situations


CHAPTER 7: PLANNING FOR CLOSELY HELD BUSINESSES

7.1 INTRODUCTION
        7.101 Importance of Estate Planning
        7.102 Lifetime Versus Postmortem Estate Planning

7.2 SELECTING A FORM OF OWNERSHIP
        7.201 In General
        7.202 Goals

7.3 SHAREHOLDER AGREEMENTS
        7.301 Purpose
        7.302 Types of Shareholder Agreements

7.4 VALUATION OF INTERESTS FOR ESTATE TAX PURPOSES
        7.401 In General
        7.402 Criteria for Valuation
        7.403 Tangible and Intangible Assets
        7.404 Making the Price Binding for Tax Purposes
        7.405 Selecting the Method of Determining the Price
        7.406 Paying the Purchase Price
        7.407 Disadvantages of Buy-Sell Agreements

7.5 USE OF THE I.R.C. § 303 REDEMPTION
        7.501 In General
        7.502 Qualifying Under I.R.C. § 303
        7.503 Unreasonable Accumulation of Surplus
        7.504 Using I.R.C. § 303 Even if Liquidity Is Not Needed

7.6 ELECTION TO DEFER PAYMENT OF ESTATE TAX
        7.601 Introduction
        7.602 General Rules
        7.603 Pitfalls of Using Election

7.7 ESTATE TAX DEDUCTION FOR QUALIFIED FAMILYOWNED
BUSINESSES

7.8 DISPOSITION OF BUSINESS INTEREST BEFORE DEATH
        7.801 In General
        7.802 Outright Sale for Cash
        7.803 Installment Sale
        7.804 Tax-Free Merger
        7.805 Transfer on a “Discounted” Basis

7.9 ESTATE FREEZES

7.10 NON-TAX CONSIDERATIONS OF BUSINESS SUCCESSION
PLANNING
        7.1001 Family Businesses Are Different
        7.1002 Role of Family Members
        7.1003 Overcoming Obstacles to Planning
        7.1004 Formulating the Plan
        7.1005 Fair Versus Equal Distribution
        7.1006 Cash Flow
        7.1007 Control
        7.1008 Equity Ownership
        7.1009 Employment
        7.1010 Retention Versus Sale of Business

APPENDIX 7-1: SHAREHOLDER AGREEMENT DRAFTING
QUESTIONNAIRE

APPENDIX 7-2: SHAREHOLDER AGREEMENT

APPENDIX 7-3: BUSINESS SUCCESSION PLANNING
QUESTIONNAIRE RELATING TO THE BUSINESS, ITS
OPERATIONS, MANAGEMENT, AND OWNERSHIP
STRUCTURE

APPENDIX 7-4: BUSINESS SUCCESSION PLANNING
QUESTIONNAIRE RELATING TO NON-BUSINESS ASSETS


CHAPTER 8: POWERS OF ATTORNEY, MINOR BENEFICIARIES,
AND ANCILLARY PROBATE


8.1 POWERS OF ATTORNEY
        8.101 In General
        8.102 General Versus Limited Powers of Attorney
        8.103 Capacity to Execute Power of Attorney; Breach of
        Duty; Presumption of Fraud; Actual Possession of
        Instrument
        8.104 The “Durable” Language
        8.105 Contingent or “Springing” Powers of Attorney Versus
        Delivery in Escrow
        8.106 Ending the Power of Attorney
        8.107 Relationship Between Other Fiduciaries and Agent
        Under Durable Power of Attorney
        8.108 Suggested Provisions of a Power of Attorney
        8.109 The Gifting Power of Attorney
        8.110 Health Care Decisions

8.2 MINOR CHILDREN
        8.201 Introduction
        8.202 Choosing a Guardian
        8.203 Property Transfers to Minors
        8.204 Tax-Advantaged Transfers to Minors

8.3 ASSETS OWNED IN OTHER JURISDICTIONS
        8.301 Introduction
        8.302 Domicile and Actual Residency
        8.303 Ancillary Administration

APPENDIX 8-1: MEMORANDUM OF UNDERSTANDING
ACCOMPANYING POWER OF ATTORNEY

APPENDIX 8-2: MEMORANDUM OF ESCROW DELIVERY OF
POWER OF ATTORNEY; AUTHORIZATION FOR RELEASE
OF CONFIDENTIAL AND PROTECTED HEALTH
INFORMATION

APPENDIX 8-3: DURABLE GENERAL POWER OF ATTORNEY

APPENDIX 8-4: DURABLE SPECIAL POWER OF ATTORNEY
GRANTING AUTHORITY TO AGENT TO MAKE GIFTS

APPENDIX 8-5: ADVANCE MEDICAL DIRECTIVE
APPOINTMENT OF AGENT FOR HEALTH CARE
DECISIONS APPOINTMENT OF PERSONAL
REPRESENTATIVE TO OBTAIN HEALTH CARE
INFORMATION APPOINTMENT OF AGENT TO MAKE
ANATOMICAL GIFTS

APPENDIX 8-6: DURABLE LIMITED POWER OF ATTORNEY FOR
TAX MATTERS

APPENDIX 8-7: DESIGNATION OF INDIVIDUAL TO MAKE
ARRANGEMENTS FOR FUNERAL AND DISPOSITION OF
REMAINS

APPENDIX 8-8: GENERAL DURABLE POWER OF ATTORNEY—
ALTERNATIVE FORM

APPENDIX 8-9: AGENT’S CERTIFICATION AS TO VALIDITY OF
POWER OF ATTORNEY AND AGENT’S AUTHORITY

APPENDIX 8-10: REVOCATION OF POWER OF ATTORNEY

APPENDIX 8-11: POWER OF ATTORNEY FOR MINOR
CHILD’S CARE

APPENDIX 8-12: CONSENT FOR MEDICAL TREATMENT OF
MINOR CHILD


CHAPTER 9: CHOOSING FIDUCIARIES

9.1 FIDUCIARIES GENERALLY
        9.101 Introduction
        9.102 Types of Fiduciaries
        9.103 Personal Representatives
        9.104 Testamentary Trustees and Trustees of Inter Vivos
        Trusts to Which a Devise or Bequest Is Made
        9.105 Guardians of Person and Estate of Minor Children
        9.106 Agents or Attorneys-in-Fact and Trustees of Inter
        Vivos Trusts to Which No Testamentary Transfer
        Is Made
    
9.2 STANDARDS OF JUDGMENT, DUTIES, AND
OBLIGATIONS
        9.201 Standards of Judgment for Fiduciaries Generally
        9.202 Specific Duties and Obligations

9.3 FIDUCIARY CHOICES AVAILABLE
        9.301 Individual
        9.302 Corporation
        9.303 Co-Fiduciaries
    
9.4 CONSIDERATIONS IN SELECTING PERSONAL
REPRESENTATIVES AND TRUSTEES
        9.401 Professional Versus Non-Professional Fiduciary
        9.402 Individual Versus Corporate Fiduciary
        9.403 Trustees of QDOTS
        9.404 Ethical Considerations: The Attorney-Draftsman
        as Fiduciary
        9.405 Tax Considerations
        9.406 Compliance with Uniform Trust Code Requirements
        and Powers
    
9.5 CONSIDERATIONS IN SELECTING GUARDIANS OF
MINOR CHILDREN
        9.501 In General
        9.502 Guardian as Trustee

9.6 CONSIDERATIONS IN SELECTING AGENT UNDER
POWER OF ATTORNEY
        9.601 In General
        9.602 Tax Consequences to Agent
        9.603 Conflicts of Interest

9.7 SELECTING AGENTS UNDER HEALTH CARE POWERS
OF ATTORNEY AND ADVANCE MEDICAL DIRECTIVES

9.8 SELECTION AND APPOINTMENT OF SUCCESSOR
FIDUCIARIES

9.9 COMPENSATION OF FIDUCIARIES
        9.901 Court-Supervised Fiduciaries
        9.902 Under Governing Instrument
        9.903 Timing of Payment of Commission
        9.904 Forfeiture of Commission
        9.905 Compensation of Fiduciary Serving Both as
        Executor and as Trustee
        9.906 Attorney Fees and Other Expenses
    
APPENDIX 9-1: ATTORNEY/FIDUCIARY DISCLOSURE AND
CLIENT CONSENT


CHAPTER 10: TRANSFERRING ASSETS OUTSIDE OF PROBATE

10.1 INTRODUCTION

10.2 NATURE OF NONPROBATE ASSETS
        10.201 Distinction Between Probate and Nonprobate Assets
        10.202 Common Examples of Nonprobate Assets
        10.203 Advantages of Nonprobate Assets
        10.204 Disadvantages of Nonprobate Assets

10.3 ESTATE PLAN INTEGRATION
        10.301 Will
        10.302 Tax Planning
        10.303 Asset-by-Asset Review
        10.304 Information-Gathering

10.4 JOINTLY OWNED PROPERTY
        10.401 Introduction
        10.402 Types of Joint Ownership
        10.403 How Created
        10.404 Multiple-Party Depository Accounts
        10.405 Advantages of Joint Ownership
        10.406 Federal Estate and Gift Tax
        10.407 Income Tax
        10.408 Estate Plan Coordination

10.5 POD AND TOD ACCOUNTS
        10.501 Payable on Death Accounts
        10.502 Transfer on Death Accounts
        10.503 Reasons to Use

10.6 LIFE INSURANCE
        10.601 Introduction
        10.602 Types of Insurance
        10.603 Reasons to Use
        10.604 Taxation
        10.605 Estate Plan Coordination

10.7 QUALIFIED PLAN AND IRA RETIREMENT BENEFITS
        10.701 Introduction
        10.702 Types of Plans
        10.703 Plan Distributions
        10.704 Taxation
        10.705 Naming a Beneficiary

10.8 POWERS OF APPOINTMENT
        10.801 Introduction
        10.802 Reasons to Use Powers of Appointment
        10.803 Federal Estate and Gift Tax

10.9 AUGMENTED ESTATE
        10.901 Statutory Summary
        10.902 Planning

10.10 UNIFORM REAL PROPERTY TRANSFER ON DEATH ACT
        10.1001 In General
        10.1002 Requirements for a Transfer on Death Deed
        10.1003 Revocation
        10.1004 Notice, Delivery, Acceptance, or Consideration
        Not Required
        10.1005 Effect of Deed During Transferor’s Life
        10.1006 Effect of Deed at Transferor’s Death
        10.1007 If Transferor Is a Joint Owner
        10.1008 No Covenant or Warranty of Title
        10.1009 Disclaimer
        10.1010 Liability for Creditor Claims and Statutory
        Allowances
        10.1011 Federal Electronic Signatures in Global and
        National Commerce Act

10.11 DESIGNATION OF BENEFICIARY ON MOTOR VEHICLE
CERTIFICATE OF TITLE

APPENDIX 10-1: REVOCABLE TRANSFER ON DEATH DEED
PURSUANT TO SECTION 64.2-635 OF THE VIRGINIA
CODE

APPENDIX 10-2: REVOCATION OF TRANSFER ON DEATH
DEED PURSUANT TO SECTION 64.2-636 OF THE
VIRGINIA CODE


CHAPTER 11: EXECUTION AND SAFEKEEPING OF
DOCUMENTS


11.1 OVERVIEW

11.2 REVIEW OF DOCUMENTS BEFORE EXECUTION
        11.201 By Client
        11.202 By Corporate or Professional Fiduciary
        11.203 By Attorney

11.3 LEGAL REQUIREMENTS FOR EXECUTION OF A WILL
        11.301 Legal Capacity of the Testator
        11.302 Statutory Requirements for Execution of Will

11.4 PROOF OF EXECUTION OF WILLS
        11.401 In General
        11.402 Self-Proving Wills
        11.403 Persons in Military Service
        11.404 Holographic Wills
        11.405 International Wills

11.5 DOCUMENT EXECUTION CEREMONY
        11.501 In General
        11.502 Place of Execution
        11.503 Redetermination of Legal Capacity
        11.504 Execution Procedure

11.6 EXECUTION OF OTHER ESTATE PLANNING
DOCUMENTS
        11.601 Trusts
        11.602 Powers of Attorney
        11.603 Advance Medical Directives
        11.604 Anatomical Gift Forms

11.7 SAFEKEEPING OF DOCUMENTS
        11.701 In General
        11.702 Originals of Documents
        11.703 Copies of Documents
        11.704 Documentation of Location of Originals and Copies
        11.705 Disposition of Prior Documents

APPENDIX 11-1: SAMPLE LETTER SENDING NON-TAX
DOCUMENT DRAFTS TO CLIENTS

APPENDIX 11-2: SAMPLE LETTER SENDING TAX-ORIENTED
DOCUMENT DRAFTS TO CLIENTS

APPENDIX 11-3: SAMPLE LETTER TO CORPORATE OR OTHER
PROFESSIONAL FIDUCIARY SENDING DOCUMENT
DRAFTS FOR REVIEW

APPENDIX 11-4: SIGNING FOR TESTATOR FORM

APPENDIX 11-5: PROCEDURE FOR NOTARIES IN THE USE
OF SELF-PROVING CERTIFICATES

APPENDIX 11-6: SELF-PROVING CERTIFICATE WITH
TESTATOR AND WITNESS SIGNATURES

APPENDIX 11-7: SELF-PROVING CERTIFICATE WITHOUT
TESTATOR AND WITNESS SIGNATURES

APPENDIX 11-8: LEGAL ETHICS OPINION 1283

APPENDIX 11-9: CLIENT DOCUMENT EXECUTION
MEMORANDUM

APPENDIX 11-10: LOG FOR ORIGINAL CLIENT DOCUMENTS
RETAINED BY LAW FIRM

APPENDIX 11-11: SAMPLE LETTER TO PRIOR ATTORNEY
OR CORPORATE FIDUCIARY REQUESTING RETURN
OF PRIOR ORIGINALS TO CLIENT


CHAPTER 12: TERMINATING THE REPRESENTATION

12.1 OVERVIEW

12.2 COMPLETION OF WORK

12.3 IMPORTANCE OF TERMINATING THE REPRESENTATION

12.4 HOW TO TERMINATE THE REPRESENTATION
        12.401 Termination at Completion
        12.402 Termination of an Incomplete Matter

12.5 RETRIEVAL SYSTEM
        12.501 Importance of Access to Closed Files
        12.502 Importance of Being Able to Contact Clients
        in the Future

12.6 ETHICAL ISSUES REGARDING CONTACTING
FORMER CLIENTS
        12.601 Solicitation
        12.602 Affirmative Duty to Contact Former Clients

12.7 ETHICAL ISSUES REGARDING CLOSED ESTATE
PLANNING FILES

APPENDIX 12-1: LEGAL ETHICS OPINIONS 312, 973, 1519,
AND 1305

APPENDIX 12-2: SAMPLE LETTER TERMINATING
REPRESENTATION WITH ESTATE PLANNING
CLIENT UPON COMPLETION

APPENDIX 12-3: SAMPLE LETTER TO CORPORATE OR
OTHER PROFESSIONAL FIDUCIARY SENDING
EXECUTED DOCUMENTS FOR SAFEKEEPING

APPENDIX 12-4: SAMPLE FIRST LETTER TO CLIENT
WHO FAILS TO RE-CONTACT ATTORNEY

APPENDIX 12-5: SAMPLE LETTER TERMINATING
RELATIONSHIP WITH CLIENT WHO FAILS
TO RE-CONTACT ATTORNEY

TABLE OF AUTHORITIES

INDEX


Authors

EDITOR:

 

Marie McKenney Tavernini

 

AUTHORS:

 

Farhad Aghdami

 

Michael H. Barker

 

Kevin G. Bender

 

H. Kay Cross

 

Aejaz A. Dar

 

Suzanne W. Doggett

 

Mary D. Ellis

 

Andrew H. Hook

 

Lauren A. Jenkins

 

Michele A. W. McKinnon

 

Nathan R. Olansen

 

Victoria J. Roberson

 

William I. “Bill” Sanderson

 

Thomas D. Yates

 

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