A living trust is an estate planning tool that can simplify the passing on of your assets to your family. Each state tends to have its own rules as to how you can set up your own living trust as a resident. So if you live in Virginia, our detailed guide will go over whether or not a living trust is right for your situation, how you can create one and the costs and taxes associated with doing so. While it’s possible to set up a living trust and plan your estate yourself, it’s a good idea to work with an estate planning attorney and a financial advisor to get your finances and affairs in order.
How to Create a Living Trust in Virginia
There is a six-step process for making a living trust in Virginia:
In its simplest form, a living trust is a legal arrangement that allows someone to hold their assets and property in a single place while they’re still alive. You may sometimes hear a living trust referred to as an “inter vivos” trust, which is Latin for “between the living.” A typical living trust might include things like:
Living trusts come in “revocable” and “irrevocable” variations. The most common choice is the revocable living trust, as it allows the owner to add and remove property whenever necessary. On the other hand, an irrevocable living trust makes property and assets within it unmovable. To alter these contents, you must get the permission of each person named in the trust.How Much Does It Cost to Create a Living Trust in Virginia?
There is no one-size-fits-all answer to the question of how much it’ll run you to create a living trust. Of course, getting an estate planning lawyer specializing in estate planning won’t come cheap. Charges vary from lawyer to lawyer based on their fees, as well as the complexity of your overall estate. In the end, expect to pay $1,000 or more.
If you decide to go the DIY route, your costs will likely fall to around $200 to $500, depending on which online program you prefer. Taking such an important process into your own hands has inherent dangers as well, so make sure you’re okay with these risks and prepared to educate yourself on the ins and outs of trusts.Why Get a Living Trust in Virginia?
The main benefit of a living trust is that it essentially allows your family members to skip the long and arduous probate process when you die. For context, probate is a legal procedure that confirms information within a will. This often involves a deep dive into your finances, which can end up turning personal matters into public record.
The Uniform Probate Code was created to help simplify the aforementioned process, but Virginia has not adopted it. As such, Virginia residents may be better off creating a trust rather than leaving their estate to the mercy of the probate system.
Trusts have other benefits as well. Let’s say you want to leave a valuable item or a sum money to a family member who’s currently a minor. Unlike a will, a living trust lets you keep the control of the property in the hands of a trustee until the heir is of age.Who Should Get a Living Trust in Virginia?
While living trusts are commonly thought of as tools for the rich, they can be valuable additions even for estates of a moderate size. However, if your estate is worth less than $50,000, you might be able to skip the trust and just create a will. That’s because Virginia law employs a simplified probate process for any estates below that limit. A simplified probate process will be relatively painless for your heirs, so unless there are special circumstances at play, you might be better off just creating a will.
Don’t forget to take into account the cons of living trusts before you begin making one. For starters, there’s the cost of creating one these are legal instruments and thus best created with the help of an attorney, which won’t be cheap. You should also note that there’s a significant window of time where living trusts can be legally challenged by those involved.Living Trusts vs. Wills
Just because you have a living trust in place doesn’t mean a will isn’t necessary. More specifically, a will can cover any property that’s not considered to be part of your trust. A will has a number of other features, allowing you to:
Here’s a breakdown of what a will and a living trust can help you do:Living Trusts vs. Wills Situation Living Trusts Wills Names a property beneficiary Yes Yes Allows revisions to be made Depends on type Yes Avoids probate court Yes No Requires a notary Yes No Names guardians for children No Yes Names an executor No Yes Requires witnesses No Yes Living Trusts and Taxes in Virginia
As of 2019, Virginia does not impose an estate tax or an inheritance tax on its residents. Therefore, the creation a living trust in Virginia is unlikely to affect your financial and tax situations at all. In fact, a living trust almost never influences taxes, even in states that have an inheritance or estate tax.
The federal government does institute its own estate tax, though. The limit rose in 2019, so now only estates worth more than $11.4 million must file an estate tax return.Bottom Line
Without the presence of the Uniform Probate Code in its state laws, Virginia residents may find it worthwhile to get a living trust rather than subject their estate to probate. While this can be a complicated process and likely calls for the involvement of an estate planning attorney, it’s still a good idea for estates larger than $50,000.Tips for Planning Your Estate
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