As Recently Amended, The Act Offers a Means to Streamline the Probate Process or Avoid it Entirely
Estate Planning attorneys, financial advisors and tax planners advise clients to take steps that will avoid probate, the court-supervised process of transferring ownership of a decedent’s solely owned property to heirs and beneficiaries. Probate in Virginia is estimated to cost 3-5% of the value of the probate estate.
A common option is to own everything in joint tenancy with right of survivorship so that ownership transfers 100% to the survivor. Another is to pass assets outside probate via beneficiary designation on retirement accounts and life insurance. Transfer on Death or Pay on Death designations accomplish a similar effect to transfer bank accounts to a designated new owner. Establishing a revocable living trust, and transferring all assets to the trust, is a time-tested way to avoid probate.
For those with little in the way of solely-owned assets, the law in Virginia has made it possible for small estates to be distributed without going through the formal probate process. Two years ago, the Virginia General Assembly amended the Small Estate Act, which provides streamlined procedures for the handling of smaller estates. Importantly, probate estates valued at $50,000 or less (not including real estate) may be able to be distributed without the appointment of an executor and without going through the formal probate process. The 2010 amendments defined a “small asset” as any asset, other than real estate, belonging to the decedent and valued at no more than $50,000. The heirs or beneficiaries must sign an affidavit identifying themselves and their relationship to the decedent. The affidavit can identify a “designated successor” to receive the asset from a bank or brokerage firm, for example, on behalf of the other heirs. If the small asset is worth $15,000 or less, no affidavit is required, as long as a few conditions are met.
In many cases, the Small Estate Act provides a more efficient mechanism for wrapping up the estate of a deceased person. Because certain assets, described above, pass outside of probate, determining the size of an estate under the Small Estates Act is not the same as a common sense understanding of the estate left by a decedent. For this reason, the Small Estate Act may be applicable in circumstances where the total estate is far more than $50,000. Heirs, beneficiaries, and executors are should consider, or ask for legal advice, whether the Small Estates Act procedures are applicable, because there is great potential for saving time and expense.
