Private Client Services Update – 2010 Virginia Legislative Update
By William L. Holt, Estate, Trust & Wealth Transfer
The 2010 regular session of the Virginia General Assembly resulted in several important changes to trusts and estates law, which will become effective July 1, 2010. Below are some of the more notable changes.
Estate Tax Repeal – “Patch” for Formula Clauses in Estate Planning Documents
In what remains the hottest topic in trust and estate law in 2010, the continued inaction of Congress has left us with no federal estate tax currently. As a result, Virginia has adopted legislation to provide a “patch” for estate planning documents executed prior to January 1, 2010, which may be affected by the estate tax repeal. Many existing wills and trusts make dispositions based on formulas tied to the formerly applicable federal estate tax exemption amount. However, in a world with no estate tax, these types of formulas can produce unintended results in many cases. This bill is intended to address the above situation and provide relief for documents executed prior to the estate tax repeal. For decedents dying after December 31, 2009, and before January 1, 2011, this bill provides for such formulas to be construed to refer to the federal estate tax law and exemption amounts applicable as of December 31, 2009. The bill contains an emergency clause and its provisions will be effective retroactively to December 31, 2009. Note: This bill only applies to documents executed prior to January 1, 2010.
Uniform Power of Attorney Act Passed
As discussed in depth in our newsletter earlier this month, the Uniform Power of Attorney Act (UPOAA) was recently passed in Virginia. The UPOAA provides many default rules for Power of Attorney documents that can be modified if the principal desires. Some of the more notable provisions of the UPOAA include:
i) a Power of Attorney will be durable unless drafted to expire upon a specified date or event;
ii) a new Power of Attorney must specifically revoke a former Power of Attorney; otherwise the former Power of Attorney and the new Power of Attorney will both remain effective;
iii) if a principal names multiple agents in a Power of Attorney, the agents may act independently of one another unless the Power of Attorney specifically provides that the agents must act jointly;
iv) an agent under a Power of Attorney now has the duty to attempt to preserve the principal’s estate and estate plan.
Also, the UPOAA includes a laundry list of grants of specific authority that can be incorporated into a Power of Attorney by reference to the Code section listing the powers. However, other powers of the agent must be added to the Power of Attorney by specific mention in the document, including gifting, revising inter vivos trusts, changing beneficiary designations, delegating authority and transferring property into the name of the agent. The UPOAA also addresses creation and use, good faith reliance, limitations of agent’s powers, refusal to recognize, judicial review, notification of resignation, and other matters.
Small Estate Act Revised
The revised Small Estate Act allows a person holding a small asset (less than $50,000) belonging to a decedent to pay or deliver the asset directly to a designated successor if the successor presents an affidavit stating that certain other conditions have been met. If the asset’s value is less than $15,000, no affidavit is required. A designated successor who receives an asset has a fiduciary duty to the other successors to safeguard the asset and to pay or deliver it to the other successors as required by law. This Act also provides that a person holding a small asset may pay or deliver up to $3,500 of the asset for the handling of the funeral of the decedent. Any person making a payment or distribution pursuant to the Act is discharged and released to the same extent as if that person dealt with the personal representative of the decedent.
A change to the general Fiduciaries title of the Virginia Code provides that any trustee appointed under a will probated on or after July 1, 2010, is no longer required to file an inventory or annual accountings with the Commissioner of Accounts so long as the trustee obtains the written consent of all adult beneficiaries with a current right to income or principal distributions from the trust, and files such consents with the Commissioner of Accounts.
William L. Holt is an attorney at Kaufman & Canoles where his practice focuses on estate planning, business law, and real estate matters. He is a member of the firm’s Private Client Services Group and the Real Estate Strategies Group. Will is a graduate of the College of William & Mary’s Marshall-Wythe School of Law. He works in the firm’s Williamsburg office and can be reached at 757-259-3885 or email@example.com.
The contents of this publication are intended for general information only and should not be construed as legal advice or a legal opinion on specific facts and circumstances. Copyright 2023.