Legal Question in Wills and Trusts in Virginia

Re: Avoiding Virginia Probate

You are wise to think about ways for your heirs to avoid costly and time-consuming probate. It is said that the average time it takes for an estate to go through probate is a year and a half to two years. You are correct regarding assets like life insurance that has a designated beneficiary. And asset that has a designated beneficiary avoids probate automatically. Jointly held assets also avoid probate--at least upon the death of the first person.

However, titling assets in joint tenancy can raise other problems. For example, I often hear about a parent titling their real estate in joint tenancy with their son or daughter. This not only has gift tax implications, but it opens up the real property to attack from the son or daughter's creditors or to a bankruptcy trustee. This is also true when parents put the kids on their bank accounts and other assets.

The other problem with joint tenancy is that the heir loses out on the "step-up in basis" that he or she would get if the property was inherited versus gifted during their lifetime. The son or daughter would have to pay capital gains tax on the property once it is sold, and this can be a huge tax bite.

The best way to avoid probate on real property is to set up a revocable living trust. All property that is funded into the trust passes directly to the heirs and avoids the delay, time and publicity (since the will is published in the courthouse for all to see) of probate. You would still have full control over the real property and other assets--the exact same control that you have now. A revocable living trust can also be amended or revoked at any time.

See an attorney who specializes in estate planning for more info on this.