Estate Planning in Practice: Moving to a New State

by Jonathan A. Nelson

We live in a mobile society, and people change their state of residence for many reasons, including work, cost of living, family, and retirement.  When moving to a new state, do you need to do anything with your estate plan?

First, the good news: between the Full Faith and Credit clause of the U.S. Constitution and state statutes on the topic, as long as they were valid in your old state, the old will and most other documents will be recognized by the new state and given effect.

With that said, there are still aspects of the documents that are state-specific.  Some are purely procedural – a Texas will might include a direction that probate be an Independent Administration, but Virginia doesn’t have that process, so the instruction simply won’t have any effect.  Others are just questions of efficiency – for instance, a Maryland will may include a testamentary special needs trust with no ill effect in Maryland; if that will is probated in Virginia, the special needs trust will still work but could cost ten thousand dollars per year in administrative expenses which could have been avoided by having the special needs trust in its own standalone document. 

Some things can be more substantive.  As one example, Virginia permits gifts of tangible personal property in a list that isn’t executed with the same formalities as a will; however, that list isn’t itself a will, so a state other than Virginia may not recognize that list as binding.  Puerto Rico allows a successor guardian for an incapacitated adult to be nominated in a will, but in Virginia you would instead need a pre-death court order naming a standby guardian.  A gift under the Uniform Transfer to Minors Act may transfer to the child at a different age in the new state (although thanks to South Carolina’s passage of this Act three years ago, all U.S. states have at least some version of it).  Creditor claims can also be handled differently in the new state, and different provisions may be needed to keep sentimental assets from falling into creditors’ hands.

Another area that could cause difficulty are rights that supersede the estate plan documents.  A surviving spouse, for example, may have the right to make claims in the new state that disrupt what was previously a carefully balanced estate plan.  Or the new state might not extend the same rights to a nonmarital partner.  (As a practical matter, regardless of home state law I would tend to be overdescriptive in provisions involving a nonmarital partner: even traveling through a state that does not recognize the relationship may cause problems if, for example, a medical decision needed to be made after a car crash.)

Trusts can have significant value after interstate moves.  They retain much (but not all, particularly as to spousal rights) of the law of the old state, providing continuity and predictability.

When moving between states, I recommend consulting a lawyer in the new state.  He or she may advise that you do not need any changes to your documents, or may want to talk to your old estate planning attorney about differences, but either way can help fix potentially disruptive surprises before it is too late. 

It is also helpful to speak with your estate planning attorney about your documents and how you hold title if you own real estate in a different state from your residence: many of the same issues arise since that real estate would pass in an ancillary probate under that second state’s laws.

Virginia attorney Jonathan A. Nelson uses his extensive legal knowledge and trial experience to resolve conflicts, negotiate settlements, navigate compliance matters, and vigorously advocate in the courtroom in order to achieve the best possible outcomes for his clients. He practices in estate planning, probate, trust and estate administration, corporate law, and civil litigation related to these fields.

The attorneys of Smith Pugh & Nelson, PLC, offer the experienced counsel, personal attention, and customized legal services needed to address the many complex issues surrounding estate planning, probate, and trust administration. Contact us at (703) 777-6084 to schedule a consultation.

Trusts 101: Benefits of a Trust Before Death

by Jonathan A. Nelson

My previous post in the Trusts 101 series looked at benefits an estate planning trust provides in setting plans for after death, but there can be benefits before death and in certain circumstances it can be very helpful.  These include:

 1.       Incapacity Planning: To the extent assets have been transferred into the trust, a successor trustee is often able to manage finances more systematically and smoothly than someone using a power of attorney, as the trust covers contingencies the POA may not.  In the event of an unexpected incapacity, the authority and flexibility of a trust can be very helpful in both moving quickly and weathering the storm.

2.       Orderly Transitions:  With a gradually increasing incapacity, the trust can allow a cooperative and progressive transition using a co-trustee to make up for what the grantor can’t do at this moment, or anymore.  The trust and its separate recordkeeping also offer better protections against financial abuse, particularly in the event the incapacity interferes with the ability to see how the other person is assisting, versus a power of attorney.

3.       Complex Family Dynamics: Every family is different, and sometimes peace is best kept by addressing natural points of discord.  These may include children from separate relationships, spouses with different life expectancies, and interaction with extended family; or, before the grantor’s death, accounting for a loved one who is disabled, struggles with addictions, has litigious tendencies, or is manipulative (or vulnerable) where money is concerned.  For all of these, building provisions into the trust now can give the grantor peace of mind and free those relationships from being dominated by money concerns.

4.       Management of Business or Investment Property: There is significant overlap with post-death benefits of having a transition plan in place for a business or investment, but you can find improved ability to retain talent or attract investors when you have such a plan.

5.       Early Involvement of Professional Management: For some people, the amount of work or the needs of their survivors will push them toward having professional or corporate trustees after death. Where those trustees are already involved before death (such as if a grantor steps down as trustee or passes along the management of assets), it can make the transition smoother.

6.       Segregated Assets for Particular Purposes:  Not all estate plans call for a single trust to do everything.  Whether there are guarantees in a premarital agreement or legal or moral obligations from a prior marriage, a standalone trust or a subtrust with distinct assets can be a convenient way to earmark assets and provide specific instructions to a future trustee.

7.       Balanced Interests of Beneficiaries: Similarly, not all needs of future beneficiaries are known at the time a trust is set up, and sometimes the level of control provided by a trust can be useful in establishing a balance in access between current family members and a subsequent spouse, or account for significant lifetime transfers to be accounted for as between children.

8.       Some Protections against Creditors (Including Future Creditors of Beneficiaries): While true creditor protection trusts are set up very differently from most estate planning trusts, there is still an element of protection the trust can provide, including against predatory “inheritance advance” lenders.

Next in this series: When Would a Trust be Unnecessary or Counterproductive?

Virginia attorney Jonathan A. Nelson uses his extensive legal knowledge and trial experience to resolve conflicts, negotiate settlements, navigate compliance matters, and vigorously advocate in the courtroom in order to achieve the best possible outcomes for his clients. He practices in estate planning, probate, trust and estate administration, corporate law, and civil litigation related to these fields.

The attorneys of Smith Pugh & Nelson, PLC, offer the experienced counsel, personal attention, and customized legal services needed to address the many complex issues surrounding estate planning, probate, and trust administration. Contact us at (703) 777-6084 to schedule a consultation.

LAW UPDATE: Virginia Legislature Kills Electronic Estate Plan Documents (Again)

by Jonathan A. Nelson

With the Virginia legislature past the halfway point for its 2025 legislative session, I see that this year’s iteration of electronic estate plan documents has died in committee.  While variations on this theme are introduced every year (and while I don’t usually wade publicly into politics), there are a few good reasons to avoid electronic estate plan documents, even if you do live somewhere that has authorized them.

Since the 1677 Statute of Frauds in England, there has been a high level of formality required for fiduciary documents.  The documents set forth a person’s instructions in circumstances where they cannot personally attend to them (whether a will, which only takes effect after the death of the testator, or a power of attorney, which is utilized while the principal is physically absent).  By the end of the 1800s, formality reached a high-water mark where documents were thrown out for small failures, such as a witness leaving the room then coming back or a testator signing a sealed envelope containing a will but not the will itself.  Over time since then, the pendulum has swung in the opposite direction, with courts approving for probate notes by the attorney that the testator had never seen, a digital page from an electronic notetaking program, and (in one Australian case) an unsent text message.

In Virginia, there is a statute setting out the required formalities (Va. Code § 64.2-403), but also a “savings statute” (Va. Code § 64.2-404) allowing a judge to find that a document was intended as a will notwithstanding failing certain formalities.  The statute nonetheless makes clear that the one unwaivable formality is the testator’s signature; the case law requires that the document itself be intended as a will, and merely expressing intent to make a gift in a future will is insufficient.

The debate on level of formality is often cast as finding the balance between allowing a person to freely express their wishes and making sure they are in fact firm intentions and not just passing thoughts.  There is a third part to the equation often left out, however: the people implementing the documents.  An executor must swear that the document presented is, to the best of his knowledge, the last will of the deceased; he is then charged with administering the estate in accordance with those instructions.  On either count, he is at some risk if he has sworn that oath and begun paying creditors or making distributions and then someone shows up later with a text message.  This risk is present for physical documents with signatures, too, but at a much lower threshold since a testator would tend to keep important documents where they can be found.  There are implementation problems even for a document like a power of attorney – an agent presenting an original physical copy (say, at a bank) is helpful authentication that the power has not been revoked, but an electronic copy cannot be pulled back in the same way.

As much as electronic indications of agreement or consent are useful for internet commerce and everything from youth sports leagues to land transactions, some documents are so important that the formalities of using paper are still very helpful, and at the top of my list are wills and powers of attorney.

Virginia attorney Jonathan A. Nelson uses his extensive legal knowledge and trial experience to resolve conflicts, negotiate settlements, navigate compliance matters, and vigorously advocate in the courtroom in order to achieve the best possible outcomes for his clients. He practices in estate planning, probate, trust and estate administration, corporate law, and civil litigation related to these fields.

The attorneys of Smith Pugh & Nelson, PLC, offer the experienced counsel, personal attention, and customized legal services needed to address the many complex issues surrounding estate planning, probate, and trust administration. Contact us at (703) 777-6084 to schedule a consultation.

Lessons from Litigation (and LAW UPDATE): How to Prove a Deceased Person’s Claim

by Jonathan A. Nelson

The Virginia Supreme Court this month issued an opinion in Bon Secours-DePaul Medical Center, Inc. v. Rogakos-Russell, addressing Virginia’s rules on testimony with a deceased party, commonly called the “Dead Man Statute.”

 The Dead Man Statute has two basic components:

(1)      where there is a claim “by or against” a deceased person or his estate (and also for certain other unavailable persons), there must be disinterested corroboration of the basic elements of the claim; so, for instance, a child could not claim an oral contract with a deceased parent to be paid at $200 an hour from the Estate for lifetime personal care unless there was some outside confirmation of the agreement;

(2)       however, statements by the deceased person which would otherwise be hearsay may generally be admitted as evidence.

The two components have a recognized side effect: the hearsay statement allowable under the second part of the statute must be corroborated in accordance with the first part before it can be used by the interested party.

While the statute is often used defensively by an estate to require disinterested corroboration before acknowledging a claim, in the Bon Secours-DePaul case, the estate of a Greek Orthodox priest brought a wrongful death claim against a hospital, and the only direct evidence of the cause of eventual death was the decedent’s own oral statements that he fell after leaning on a stretcher bed whose wheels should have been locked.

Testimony that the decedent made these statements was introduced by several family members, another priest, and a doctor.  The Court found that the statements were sufficiently corroborated because the priest and the doctor were disinterested in the result, and further that the statements did not make the decedent a ‘witness’ requiring additional corroboration in their own right – he is a ‘hearsay declarant’ about whom the witnesses testified, and, having passed on to the next life, he has no remaining interest in the affairs of this life.

There is one important question which the Court declined to rule on in this case: whether the Dead Man Statute’s corroboration is even required where the hearsay is offered in favor of the deceased party rather than by its opponent.  However, because the Court ruled (and this is consistent with centuries of law) that the decedent is not a party, it seems to me a fair inference that the decedent’s survivors will still need corroboration – the decedent is not strictly on their side, either.  In fact, it is not always clear which side the decedent would be on. Consider an example where someone’s will has been probated and then a second will is introduced. Testimony of the decedent’s hearsay statements about which of the two documents is consistent with his wishes would likely be introduced by  both sides; it would create a rather uneven playing field if only the party who lost the race to the probate office had to corroborate the decedent’s statements.

The Dead Man Statute can be technical to apply.  If you are looking at litigation by or against an estate, including cases not directly related to probate issues, seek advice from counsel experienced in its use.

Virginia attorney Jonathan A. Nelson uses his extensive legal knowledge and trial experience to resolve conflicts, negotiate settlements, navigate compliance matters, and vigorously advocate in the courtroom in order to achieve the best possible outcomes for his clients. He practices in estate planning, probate, trust and estate administration, corporate law, and civil litigation related to these fields.

The attorneys of Smith Pugh & Nelson, PLC, offer the experienced counsel, personal attention, and customized legal services needed to address the many complex issues surrounding estate planning, probate, and trust administration. Contact us at (703) 777-6084 to schedule a consultation.

Trusts 101: Why Use a Trust?

by Jonathan A. Nelson

Revocable living trusts are the most used trusts in our practice.  They are powerful and useful estate planning tools, but they aren’t right for everyone, and I don’t try to oversell them.  Trusts often require considerable customization by the attorney to meet the individual’s needs and circumstances, time and perseverance on the client’s part to fund the trust properly (if I prepare your trust, I provide you with some instructions for this), and a higher commitment for the Trustees to maintaining the assets and documents versus other types of estate planning.  Further, the documents are considerably longer (one local firm’s stock trust is 1.5 times as long as The Lion, the Witch, and the Wardrobe; mine are significantly shorter, but are still a lot of reading) and they require more work just to understand what is required by the document.

 Given the effort and cost involved, clients sometimes wonder what advantages a trust has over just having a will.  Bear in mind that with a will, a probate estate is opened with the court, and the executor’s three jobs, roughly speaking, are to gather the assets, pay the creditors, and distribute to beneficiaries.  For what happens to your estate plan after you pass away, a trust allows key differences, including:

1.       Probate Avoidance: Assets pass outside of probate, saving time and costs, including state and local probate taxes.  The Trustee still has an obligation to account for the assets, but instead of reporting to a court-appointed Commissioner of Accounts, the Trustee only needs to satisfy the beneficiaries that the accounting is sufficient.

2.       Unified Planning: A trust can unify and distribute all assets, versus the more splintered usage of beneficiary designations on death, reducing the chance of accidental inequity, unintended consequences (such as what happens if the only named beneficiary on the form has passed), and potential for abuse.  There are also better options to prioritize gifts in a different order than the law sets for estates, in the event there are unsatisfied creditor claims.

3.       Investment Goals: Trusts allow continuity and direction for labor intensive or time sensitive holdings, such as rental properties or small businesses, and allow the appropriate person to become (or remain) the manager, rather than throwing in all of the beneficiaries as partners.  In many instances, this is very helpful in avoiding liquidation of investments at a suboptimal time.

4.       Tailored Distributions: In most cases, distributions from a trust can be designed with more detail, more structured timeframes, and more flexibility for future contingencies than wills allow.  A distribution under a will is almost always the asset or cash being given to a beneficiary as soon as probate is complete, with no strings or oversight; a trust can change any aspect of that distribution, in many variations, including: 

a. A trustee can manage assets and expenses in the short or long term for a beneficiary who still needs to mature or has limitations.  This includes minors, special needs beneficiaries, or beneficiaries with substance abuse issues, but is sometimes used just to stretch out distributions over some years. That might be done to minimize tax liability, protect heirs from creditors, or even allow a  beneficiary to gain experience in financial management progressively before receiving the bulk of their inheritance.

b. The assets can be held for a specific amount of time and the income paid annually to a beneficiary, while the principle is held for or distributed to another person (for instance, a second spouse who is a lifetime income beneficiary before the principle passes to the prior children).  Alternatively, income and principle could be used for particular contingencies (such as care and veterinary costs during the life of a pet).

c. Gifts can be made contingent on future events (such as a child’s successful graduation from college) or future needs (like down payment for a beneficiary’s first home or a reserve fund for a parent’s elder care).

5.       Creditor Protection: The anticipated benefit under a will can be attached by a beneficiary’s creditor, included in the beneficiary’s divorce proceeding, or even contracted away inadvisedly by the beneficiary himself; a trust can provide protection against any of these.

6.       Charitable Giving: Some giving strategies, particularly ones that seek tax advantages by blending giving with gifts to beneficiaries, require using a trust to lock the plan into place.

7.       Reduced Taxes: Using a trust can provide exemptions or strategic timing of transfers or values used, thus reducing Federal and state tax obligations while ensuring the assets still serve their intended purposes.

Whether you are planning, administering, or benefiting from a trust, an experienced estate planning attorney can ensure you understand the outcomes, obligations, and processes involved.

Next time in Trusts 101: Benefits of a Trust Before Death

Virginia attorney Jonathan A. Nelson uses his extensive legal knowledge and trial experience to resolve conflicts, negotiate settlements, navigate compliance matters, and vigorously advocate in the courtroom in order to achieve the best possible outcomes for his clients. He practices in estate planning, probate, trust and estate administration, corporate law, and civil litigation related to these fields.

The attorneys of Smith Pugh & Nelson, PLC, offer the experienced counsel, personal attention, and customized legal services needed to address the many complex issues surrounding estate planning, probate, and trust administration. Contact us at (703) 777-6084 to schedule a consultation.