I.    How to Get Your Probate In Motion
                                  Message from Dick Mayberry
This outline provides...
e. For honor organ donation instructions see Va. Code § 32.1-290.
           f. Close family member advances funds and be ...
to conserve fees. Reflect in the engagement letter what duties are the personal representative’s
and what probate counsel’...
d. Determine whether any out of state assets
8. Family
            a. Have client draw a family tree in order to identify ...
(ii)     Call probate clerk and schedule appointment to probate will and appoint
exactor. As stated, also it is a good pra...
B..    Maintain And Preserve Estate Assets
1. The personal representative’s is responsible to preserve the assets of the e...
b. The personal representative’s should provide for security, interior and lawn
           maintenance and essential repai...
6. Brokerage accounts
           a. The personal representative’s standard of care with investments is the Prudent
       ...
(iv) Self-proving will eliminates the need for witnesses to personally appear before
    the court at the time of probate ...
C..      Identification and Valuations Of Estate Assets For Reporting To Commissioner Of
Accounts

The inventory is a publ...
relative designated as a plaintiff and the court directs that the funds recovered in such action be
paid to the personal r...
17. Is there a timeframe for approval by commissioner? At least 21 days after filing must pass
before a Commissioner of Ac...
e. Life insurance payable directly to a beneficiary or an entity other than the estate
 or the estate’s personal represent...
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How To Probate In Virginia 2009

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Practice guide on how to get your probate in motion in the Commonwealth of Virginia

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How To Probate In Virginia 2009

  1. 1. I. How to Get Your Probate In Motion Message from Dick Mayberry This outline provides general information for both lawyers and consumers on the Virginia probate process. I drafted this material for the continuing education of lawyers, financial advisors and accounts. The outline is made publically with the expectation and hope that it may aid others with understanding the rigorous and challenging legal process of probate. 1 A. Start By Setting Up An Appointment With Estate Counsel 1. The checklist identifies matters counsel must consider and discuss with the client as well as probate steps to be undertaken by the personal representative, and tone. a. Respect grieving the loss of a loved one [I find conference over 2 hours usually become unproductive. I schedule multiple appoints and set agenda for each conference.] b. Is there a need for an autopsy? See Va. Code § 32.1-285 c. Provide for estate liquidity to pay burial and payment reasonable funeral expenses d. Personal representative coordinate and pay funeral and memorial 1 Prepared and presented by Richard Mayberry, Esquire, Trusts, Estates and Elder Law, 2010 Corporate Ridge, Suite 700, McLean, VA 22102 Tel. (703)714-1554, mayberry@mayberrylawfirm.com, www.MayberryLawFirm.com for a seminar entitled “The Probate Process From Start to Finish” sponsored by the National Business Institute in 2008. For probate forms, go to www.courts.state.va.us/forms/circuit/fiduciary.html. The VBA Estate and Trust Administration Handbook and the Commissioner of Accounts Manual, Copyright © 2005 Virginia Law Foundation, are tremendous aids in probating an estate, and were helpful in preparation. Both are available to Virginia lawyers for purchase from the Virginia Bar Foundation, go to www.Vacle.org.org, in hard copy or electronic files and periodically updated. Disclaimer and Fair Use by the Reader. This material is not meant to be an all inclusive study of the legal topic it addresses, practices vary geographically, in application, varied facts may lead to different conclusions and the law and practice change on an ongoing basis without this memo being necessarily updated. The materials cannot be relied upon in lieu of capable legal advice and fair use of the materials is to provide general knowledge for the public. -1-
  2. 2. e. For honor organ donation instructions see Va. Code § 32.1-290. f. Close family member advances funds and be reimbursed g. Obtain 15+ death certificates h. Place obituary in newspaper i. Call and notify family members 2. Search safe deposit box for will. a. Surviving joint tenant may access box. b. Responsible family member may access the box after death for the purpose of locating the will for delivery to the Clerk. Va Code § 6.1-332.1 c. After qualification, personal representative has authority and duty to inventory, remove, and secure assets in box. d. No safe deposit box? Check Clerk’s office, Va Code as some file wills for protection under ‎ ‎ 64.1-56 [usually bad idea], or drafting attorney or named § corporate fiduciary. 3. Request will from holder a. Occasionally, an adult child or a 3rd party declines to provide will b. Compel production in court in circuit court if a person in possession of the will refuses production [concealment or destruction of a will is a crime] c. Securing assets before qualification, Va Code ‎ ‎64.1-136 § (i) The personal representative named in the will has the power to preserve the estate from waste. (ii) Secure home and its contents (iii) Secure jewelry, collectables and works of art; (iv) Terminate all home deliveries; (v) Direct the post office to withhold delivery of mail; (vi) Contact P& C insurer to continue adequate liability and loss insurance coverage (vii) Remove perishables (viii) Tend to care of pets and plants. 4. Engagement letter presented disclosing fees and scope of counsel’s duties. Practice Tip. Many clients wish to handle administration themselves under guidance of counsel -2-
  3. 3. to conserve fees. Reflect in the engagement letter what duties are the personal representative’s and what probate counsel’s duties are. With smaller estates, this works efficiently. Larger, more complex estates require more hands on by the probate counsel in advising the personal representative. Reasonable attorney fees are payable either hourly or as a percentage [a graduated scale up to 5% depending upon responsibilities assumed by probate counsel] of estate inventory filed with the Commissioner of Accounts. 5. Review with family members the steps in probate, timeframes and fiduciary responsibility of personal representative. Practice Tip Provide handout with overview of probate process and timeframes 6. Explain to personal representative the fiduciary’s overriding duty to act in a manner consistent with the directions of the will and not in conflict with the terms of the will or with the interests of the beneficiaries. Clare v. Grasty, 213 Va. 165, 169, 191 S.E.2d 184, 187 (1972). a. That responsibilities run to the Commissioner of Accounts, the estate’s beneficiaries, and creditors. b. The scope of duties to 1. care and management of the estate 2. ascertain and pay valid estate debts 3. determine proper beneficiaries under will or intestate to receive distributions 4. report to the court for its administration 5. Promptly open an Estate Bank Account All receipt and disbursements should be reflected on the bank account statement of the estate. 6. Determine if estate liquid which control ‎ rder of payment of debts to be o followed and personal representative’s personal liability to estate creditors 7. Collect Asset Information from client a. List of all assets in which the decedent had any interest b. Practice Tip. Email client your law firm’s probate organizer or planner to complete and bring to first appointment. c. Documentation showing title to show ownership, beneficiaries, and asset valuation; e.g. deeds, title to autos, bank statements, brokerage statements beneficiary designations. -3-
  4. 4. d. Determine whether any out of state assets 8. Family a. Have client draw a family tree in order to identify heirs at law b. Identify the names, dates of birth, addresses, and kinship of all heirs and beneficiaries. c. Social security number of deceased and personal representative’s 9. Follow-Up Actions By Counsel a. Review of will and interview client to determine (i) Validity of will (ii) testamentary capacity at the time of execution of the document (iii) intent evidenced on the face of the document (iv) conform to formality requirements of ‎ a Code §‎64.1-49 V (v) Self-proving will eliminates the need for witnesses to personally appear before the court at the time of probate and practical problems in locating witnesses Va Code§‎64.1-87.1 and 64.1-87.2 (vi) Holographic will require client to identify two disinterested witnesses to authenticate the handwriting of will maker. Practice Tip use written deposition of witnesses (vii) Practice Tip Review problems in advance with Clerk b. Determine if surety bond required to protect estate assets and recommend bonding company c. Deciding whether to probate or not. d. Obtain taxpayer identification number or TIN- (i) Internet-go to the IRS website at www.irs.gov/businesses and business tax account. Click on employer id numbers. (ii) Download form SS-4 from www.irs.gov and fax 631-447-89600 to IRS (iii) Call IRS 1-800-829-4933 e. Obtain court authority for personal representative to act letters of qualification (i) Determine duties of personal representative’s and respective duties of probate counsel -4-
  5. 5. (ii) Call probate clerk and schedule appointment to probate will and appoint exactor. As stated, also it is a good practice to review problems in advance with Clerk. -5-
  6. 6. B.. Maintain And Preserve Estate Assets 1. The personal representative’s is responsible to preserve the assets of the estate for the payment of creditors’ claims and for distribution to the beneficiaries. 2. Identification of the assets and estate ownership is a critical undertaking by the personal representative’s, usually completed in different stages of the probate and can cause frustration to the personal representative’s for a variety of reasons, including bad records by the descendent. The first step in preserving an estate is to determine what assets are owned by the estate property. The personal representative’s can start listing assets for the inventory at this stage. In most instances, the personal representative’s does not have control to convey or distribute property prior to qualification by the probate court. The court grants personal representative powers to act on behalf of estate. 3. Real property – the big Inventory Management Problem2 a. Vacant residence creates the problems of theft and fire. Same with vacation homes. The personal representative’s should talk with the P&C insurer to continue coverage for the estate. 2 The VBA Estate and Trusts Administration Handbook states“(a)ccordingly, the (executor) must determine the nature of the decedent’s ownership interest in real property by answering these questions: a. How is title held? b. Did the decedent own the real estate in fee simple? c. Who are the other co-tenants, if any, and what are their interests? d. Does the will give the (executor) the power of sale over the real estate? e. If the (executor) has a power of sale, he or she must determine the best method for handling the sale. The (executor) should, if practicable, obtain the beneficiaries’ approval for the sale of real estate. f. Whether or not the (executor) has a power of sale over real property, he or she must take steps to maintain the property. With respect to any mortgages on the property for which the decedent is liable, the (executor) must: g. Identify the mortgage holder and inform the holder directly of a change of address; h. Determine whether there is any mortgage insurance payable upon the death of the decedent; and i. Make arrangements to pay monthly mortgage payments. The (executor) should decide whether to discontinue or transfer utilities and advise the utility companies accordingly. In addition, he or she should maintain adequate insurance on the property until the designated beneficiary assumes control of it.” -6-
  7. 7. b. The personal representative’s should provide for security, interior and lawn maintenance and essential repair. Security starts with changing the locks to the exterior doors. c. The personal representative will coordinate closely with building management with condominiums as the concerns differ from a stand alone house. d. The will or statute must specifically empower the personal representative’s to exercise control over real property, or there is none. If the personal representative’s is without control, undertake close coordinating with the devisees of the property. e. The deceased may have owned multiple appreciated properties. Family members in the interview will inform you that the mortgage was paid by other than the decedent. The personal representative’s may have to trace the source of funds used for the purchase of the property or pay the mortgage to verify the estate does not have an ownership interest or claim in the property. 4. Tangible personal property a. Practice Tip. I find it prudent to in most cases to promptly inventory the personal property. This guards the estate against disappearance of rings and specific items by one family member. The risk is a dispute over nonvaluable property because of sentimental reasons or the transfer of valuable property, like art and coin collections. b. Normally the family member who is point of contact with probate counsel knows what personalty the estate owns. This comes up because most personal property does not have title showing ownership. c. Estate personal property must be secured. Valuable property should be removed and safely stored. Some items like jewelry can be kept in the safe deposit box. Contact insurer to determine which assets at time of death were insured, such as jewelry, and make the estate the insured. 5. Bank accounts a. Promptly open estate bank account to simplify management and reporting. Deposit all income in this account and cut all disbursements from this account. Consolidate numerous bank accounts into the Estate Account. b. For distributions the personal representative’s should maintain receipts, vouchers and canceled checks. -7-
  8. 8. 6. Brokerage accounts a. The personal representative’s standard of care with investments is the Prudent Investor Act, requiring application of the “prudent investor” standard. Va. Code § 26-45.3 et seq. b. The personal representative should review all estate investments for suitability. Depending of the size and nature of the investment as well as the timeframe of the probate, a written investment plan should be prepared by a financial advisor. We have seen cases, for example, in which the decedent was a (successful) stock speculator. The personal representative's duty is to preserve the accounts; there may be a need for rebalancing in line with the new investment objective. c. The financial advisor will transfer all stocks, bonds, and other securities in the decedent’s name alone into the name of the estate. d. The personal representative does not have control over joint bank or brokerage accounts with right of survivorship because the asset transfers by operation of law. e. Bank or brokerage accounts designated POD, “payable on death” or TOD ,“transfer on death” also convey by operation of law. 7. Life insurance. The personal representative ascertains which polices were in effect at decedent’s death and the designed beneficiary for each. If the estate is designed, the personal representative will contact the insurer to file a claim for the insurance proceeds. 8. The personal representative should hold or take control over decedent’s mail to ensure bills are timely paid. 9. As part of recordkeeping for accounts, the personal representative must keep accurate records of all estate transactions. As stated previously, the personal representative must maintain the checking account and other accounts in a manner that will facilitate the preparation of an inventory and accounting for by the Commissioner of Accounts. 10. Follow-Up Actions By Counsel a. Review of will and interview client to determine Validity of will (i) testamentary capacity at the time of execution of the document (ii) mental intent evidenced on the face of the document (iii)conform to formality requirements of ‎ a Code §‎ 64.1-49 V -8-
  9. 9. (iv) Self-proving will eliminates the need for witnesses to personally appear before the court at the time of probate and practical problems in locating witnesses Va Code§‎64.1-87.1 and 64.1-87.2 (v) Holographic will require client to identify two disinterested witnesses to authenticate the handwriting of will maker. Practice Tip use written deposition of witnesses (vi) Practice Tip Review problems in advance with Clerk b. Determine if surety bond required to protect estate assets and recommend bonding company c. Deciding whether to probate. d. Obtain taxpayer identification number or TIN- (i) Internet-go to the IRS website at www.irs.gov/businesses and business tax account. Click on employer id numbers. (ii) Download form SS-4 from www.irs.gov and fax 631-447-89600 to IRS (iii)Under the fax-TIN program, you can receive EIN by fax within 4 business days. (iv) Practice Tip counsel apply for an EIN on behalf of their client and request that the EIN be faxed to their client on the same day. (v) Call IRS 1-800-829-4933 e. Obtain authority for personal representative’s to act letters of qualification f. Determine duties of personal representative’s and respective duties of probate counsel g. Call probate clerk and schedule appointment. As stated, also it is a good practice to review problems in advance with Clerk -9-
  10. 10. C.. Identification and Valuations Of Estate Assets For Reporting To Commissioner Of Accounts The inventory is a public record that identifies and values you’re the assets of the decedent at date of death. The accounting discloses showing the assets’ subsequent liquidation or distribution. 1. After qualification by the Probate Court, the personal representative is responsible to report an inventory of assets and periodic accounting of disbursements to the Commissioner of Accounts. Va. Code 26-8. 2. Purpose of inventory. The purpose of the inventory is to identify estate assets which the personal representative is responsible to preserve for the beneficiaries and creditors, and avoid waste. 3. Distributions of inventoried assets are disclosed in accountings to the Commissioner of Accounts. 4. The personal representative’s duty as to the inventoried assets is discharged by a final accounting of the transfer or sale of all the assets. Disbursements are prudent generally when the accounting shows conversion to cash, payment of creditors, or distribution to the beneficiaries. 5. Personal representative or probate counsel or together handle preparation of inventory and accounting. 6. Statutory requirements-a walk through ‎ ‎26-12 et seq. of the Virginia Code a checklist of § action items.‎ 7. Obtain fiduciary form and instructions CC-1670. The most current form [enabled with fill and print] can be downloaded from www.courts.state.Va.us/forms/circuit/fiduciary.html. Hard copy of the form is typically provided the clerk of the probate court granting administration. 8. Decide who files? The personal representative [or trustee of a testamentary trust embedded within a will without inventory waiver where the trustee qualifies] shall file an inventory within four [4] months after the date of the order qualifying the person as pr. 9. Look for exceptions-an inventory shall not be required of a personal representative who qualifies for the sole purpose of bringing a wrongful death action unless there is no surviving - 10 -
  11. 11. relative designated as a plaintiff and the court directs that the funds recovered in such action be paid to the personal representative for distribution according to law. 10. The clerk may waive inventory for estate under $15,000, unless the personal representative has power of sale over of the deceased’s realty. Va. Code § 26-12.3 11. Where to file inventory? The inventory is filed with the Commissioner of Accounts located in the jurisdiction of residency of the deceased. Property located out of the commonwealth may be subject to an ancillary probate in the other state but the Virginia inventory generally is not filed. Va. Code § 26-12.2. Upon receiving the inventory, the Commissioner shall, under the provisions of Va. Code § 26-14, inspect it, see that it is in proper form, and file it within 10 days after it is approved. 12. What is the filing fee? The fee is graduated, and for all estates having assets in excess of $200,000 the fee is $150. Check for local customers and refer to uniform fee schedule guidelines for Commissioner of Accounts (Judicial Council of Virginia 1996) 13. What assets do you inventory? The inventory includes the deceased personal estate under the personal representative’s supervision and control, the decedent's interest in any multiple party accounts in any financial institution, all real estate over which the personal representative has the power of sale and any other real estate that is an asset of the decedent's estate, whether or not situated in the Commonwealth. 14. Penalties. Failure to timely file an inventory can lead in extreme cases to a fine or contempt. 15. What is your continuing obligation? Assets discovered or received by a fiduciary after filing an inventory shall be disclosed within 4 months of discovery by filing an amended inventory showing all assets of the estate or trust or an additional inventory showing only the after- discovered assets or, with the permission of the Commissioner of Accounts, by showing the after-discovered assets on the estate's next regular accounting. VA Code §26-12. 16. Who do you serve inventory? The personal representative serves an inventory or amended inventory by first class mail and certificated [showing names, addresses] in writing to the surviving spouse of the decedent, if any; all heirs at law of the decedent, whether or not there is a will; all living and ascertained beneficiaries under the will of the decedent and all living and ascertained beneficiaries under any will of the decedent previously probated in the same court. See Va Code § 26.12.4 - 11 -
  12. 12. 17. Is there a timeframe for approval by commissioner? At least 21 days after filing must pass before a Commissioner of Accounts shall approve any personal representative's inventory. 18. Estate assets must be valued at fair market. Value for disclosure in the inventory Use estimated value as of the date of death of decedent. Prior to filing the inventory, true valuations may not be known and the inventory should be amended appropriately thereafter. 19. Assets listed in inventory a. Real Property Use tax assessment for non-estate taxable estate. Taxable estates require valuations by appraisal. (i) Real property subject to power of sale. (ii) The inventory includes any interest in real estate located in Virginia in which the decedent had an interest at the time of his or her death and over which the personal representative has a power of sale.[and all property outside of the Commonwealth irrespective of personal representative’s powers] (iii)Express grant in the will of the powers enumerated in Va. Code § 64.1-57, or by order of the court pursuant to Va. Code § 64.1-57.1. (iv) This lists real property owned by the decedent which is specifically devised to a beneficiary. (v) Non-Virginia real property. Real Property List real estate not located in Virginia in which the decedent had an interest, including real estate located outside the state. b. Personal property. All personal property in which the decedent had an interest that did not pass by survivorship or by terms of a written document to another party upon the decedent’s death. Assets included in this category are accounts at financial institutions and banks in decedent’s name. c. Multiple-party accounts. Joint with right of survivorship or payable on death are valued and disclosed for banks and credit unions but not brokerage accounts. In certain circumstance, creditors can attach deceased survivorship interest in a bank account. d. Brokerage Assets jointly titled with right of survivorship are excluded from inventory - 12 -
  13. 13. e. Life insurance payable directly to a beneficiary or an entity other than the estate or the estate’s personal representative. Request Form 712 death proceeds payable from insurance company, as well as identification of designed beneficiaries f. Tangible personal property; and interests in partnerships or in a sole proprietorship. - 13 -

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