JGB December 2023 Newsletter
Before diving into the newsletter, I wanted to share a bit about myself and how I found my way to this practice. I am Matthew Allocca, the newest associate attorney at Johnson, Gasink & Baxter, LLP. In 2015, I graduated from the University of Mary Washington, where I earned a degree in English Literature.
Immediately following my graduation, I began an internship in the library of the Virginia Supreme Court, where I was exposed to both library sciences and the legal practice. After a few weeks of flipping through old court briefs, I knew that I wanted to become a lawyer.
In 2020, after taking the LSAT, I was privileged enough to be admitted to the University of Richmond School of Law. Although COVID-19 did not produce the ideal first year and a half of law school, I learned much about the law and met some wonderful friends and faculty. I graduated from Richmond in May 2023 and received news about passing the bar exam in October 2023. Although I am a new attorney, my curriculum in law school focused on estate planning and taxation. So, it is an honor and privilege to be a part of this practice, and I am eager to engage with our community members and learn as much as I can.
Since joining JGB in August, I have learned that clients often have misconceptions about what spouses are entitled to at the passing of the first spouse. Usually, spouses believe they are always entitled to all the assets the decedent has left behind. While this can certainly be true, this is not always the case. This newsletter will help to dispel rumors, discuss what spouses are entitled to at the passing of the first spouse, and explain what documents can be drafted if the default rules of Virginia are not suitable for your ideal estate plan or wishes.
What are spouses entitled to?
While they are not always entitled to 100% of the decedent spouse’s estate, the surviving spouse is always entitled to some amount. The determination of what a spouse is entitled to rests on whether the decedent spouse died with or without a valid will or trust in place.
If the deceased spouse died intestate, meaning without a valid will or trust, the surviving spouse is entitled to a share of their estate through Virginia’s default laws of intestacy.
[1] If the deceased spouse died testate, meaning they died with a valid will or trust, but left few or no assets to the surviving spouse in their documents, the surviving spouse is entitled to an elective share.
Upon a valid, legal marriage, the default laws in Virginia dictate that the surviving spouse is entitled to either the full amount or one-third of the decedent’s estate. A surviving spouse is entitled to the full amount of the decedent’s estate if the decedent has no children outside of their marriage. Alternatively, the surviving spouse is entitled to one-third of the estate if there are children from outside of their marriage.
If a spouse dies testate but leaves the survivor an insufficient amount of assets, or no assets, then the surviving spouse may elect to take their elective share. Although testators may freely disinherit their children, Virginia does not allow one spouse to unilaterally disinherit the other spouse. Assets acquired during a marriage are considered marital assets, meaning that each spouse has at least partial ownership of that asset. As a result, leaving a surviving spouse with few or no marital assets would result in a deprivation of property.
To circumvent this, Virginia dictates that if a surviving spouse is unhappy with the amount left to them, they are entitled up to a maximum of one-third, or one-half, of the decedent’s augmented estate.[2] If the decedent dies with children from outside of the marriage, then the surviving spouse is entitled to up to one-third of the augmented estate. If the decedent dies with no children from outside of the marriage, then the surviving spouse is entitled to up to one-half.[3]
Can the elective share be waived?
In short, yes, the elective share may be waived via inaction by the surviving spouse. The elective share must be actively elected by the surviving spouse before six months have passed from the later of the two following events: (1) admission of the decedent’s will to probate, or (2) the qualification of an administrator on the decedent’s intestate estate. Therefore, if a spouse does not actively elect the elective share during the required time period, they have waived their right.
Some couples do not feel that Virginia’s default rules benefit their estate plan. One common scenario where Virginia’s default rules might not be the most efficient is when the married couple meets much later in life, and each spouse has built significant assets independent of the other. Another common scenario occurs when a marriage results in a blended family. In both scenarios, it can be beneficial to keep each spouse’s assets independent to ensure that the children of each spouse, or other descendants, receive adequate inheritance at the passing of the spouses.
How can JGB help?
JGB can assist you and your loved ones by creating and executing various documents to ensure that your assets pass to your loved ones in a manner that reflects your wishes while being as efficient as possible. There are a variety of ways that testators can ensure that their assets are transferred in whole to the surviving spouse. JGB can prepare reciprocal will plans or joint revocable trusts, which allow your surviving spouse to receive as much of your estate as you desire. JGB can also assist by drafting documents that ensure that each spouse’s assets remain independent. Common ways to ensure that assets remain independent are by executing premarital or postmarital agreements or by creating married-separate revocable living trusts.
JGB offers will plans and joint revocable trusts, which are effective tools for ensuring that your spouse is left with all your assets upon your death. Will plans are commonly used reciprocally between spouses, dictating that upon the death of the testator, the decedent’s estate is to be directed to the surviving spouse. A joint trust is one document created by both spouses that features the hallmark benefits of owning a trust such as efficiency in the distribution of assets, privacy in the distribution of the assets, and tax efficiency. The joint revocable trust recognizes all the assets as being shared, and it leaves the survivor all assets upon the death of the first spouse unless otherwise stated.
JGB can assist you by creating premarital and postmarital agreements. Marital agreements are made between prospective spouses in contemplation of their marriage or upon contemplation of separation. Through these agreements, the parties can decide, among other things, the rights and obligations of the spouses. Commonly, marital agreements dictate the division of assets upon death, or divorce, or which property is to be considered marital property.
JGB offers married-separate revocable living trusts that help cover many of the bases that clients are looking for. Being a revocable living trust, the documents allow the grantor to pass their assets in a private, efficient, and cost-effective manner while reserving the right to make changes to their documents during their lifetime. By placing assets in individual trusts, the spouses are ensuring that the property is not commingled. Commingling assets causes confusion regarding the ownership interest of those assets, which can negatively impact your estate planning objectives.
If you require assistance with your estate planning, or if you are unsure that your current estate planning documents fit your needs, please contact JGB to speak with an attorney to learn more.
[1] To die intestate means to die without a valid will or trust. Virginia’s default laws dictate that assets pass per stirpes, meaning “by branch.” When someone dies intestate, the state looks to their spouse, then to the descendants of the deceased, then to parents, siblings, etc. This causes assets to flow down the family tree.
[2] The augmented estate is statutorily determined and is calculated by adding together all
of the assets that the decedent spouse has and taking from it any amounts used to pay final expenses, secured debt, funeral arrangements, etc.
[3] The elective share is calculated via a statutory provision where the percentage of the share grows in proportion to the number of years the couple were married. For instance, if the couple was married for one year, but fewer than two years, the surviving spouse is entitled to 6% of the one-third or one-half share, depending on whether the decedent had children from outside the marriage.
TrustGuard™ 2024
TrustGuard™ enrollment for 2024 is now open. TrustGuard™ is a JGB proprietary, process-driven program designed for our clients who are serious about protecting their investment in their Trust-based Estate Plan with an annual review.
A subscription to TrustGuard™ includes: an annual review of your estate plan and trust funding assistance for the enrollment year, any required changes to your plan, access to our exclusive TrustGuard™ quarterly newsletter, and an invitation to our annual TrustGuard™ appreciation event. Clients who are eligible for TrustGuard™ are those who are renewing their TrustGuard™ membership and new clients who executed their trust documents in 2023.
Enrollment for the 2024 TrustGuard™ period ends on February 28, 2024. JGB clients who do not re-enroll during the enrollment period will not have another opportunity to become members of TrustGuard™.
Participation in TrustGuard™ is entirely voluntary. The TrustGuard™ enrollment subscription is billed at an annual flat rate. Clients who pay their enrollment in full prior to February 1, 2024 will receive a $100 discount off of the price of full enrollment. A separate email will be sent with an enrollment form to all eligible TrustGuard™ clients.