The process of safeguarding and preserving the assets and wealth people work hard their entire lives to acquire must continue after they die. Estate administration involves the appointment of a representative with the authority to take control of and manage the deceased party’s assets, pay tax and other obligation, and distribute the remainder of the estate to heirs and beneficiaries according to the wishes of the deceased while complying with Virginia law.
At the Hampton Roads Law Offices of John W. Lee, P.C., experienced estate and trust administration attorneys provide knowledgeable and trusted representation and advice about Social Security, estate tax and other issues frequently associated with someone’s death.
In most cases estate administration consists solely of what happens through probate. However, it can also include trusts and distribution of other non-probate assets.
This process may fall to the executor of the estate or may be done by a trustee who was appointed by the decedent through a trust document.
This trustee has a very high duty to act in the interests of the beneficiaries. If the trustee behaves in a manner contrary to the interests of the beneficiaries, any beneficiary or legal representative of the beneficiary may file a petition with the Courts to ask for intervention.
Often the trustee has very clear direction for the distribution of the assets of an estate, but where this direction is lacking the trustee can petition a court to hear evidence as to the lack and to order a particular disposition. This allows any interested parties to present evidence as to what should happen with assets and the judge’s ruling will allow the trustee to move forward without concerns about their actions being questioned later. Under some circumstances, the Court may deem it necessary for the trustee to provide regular accountings to assure that the assets are being properly preserved and distributed.
Estate Administration Law
Control and authority over the assets owned by someone who has recently died stands in limbo until a court appoints a representative and gives that person the power and authority to manage the real and personal property of the deceased. The court process involving a last will and testament is referred to as probate. When a person dies without leaving a will, the process is referred to as an administration proceeding.
The provisions of a will include the designation of a person to act as the executor or representative. It is left to a judge in Chesapeake, Newport News or other circuit courts throughout Virginia to appoint someone to be the estate administrator when a person dies intestate or without leaving a will.
The absence of a last will and testament means the property making up the individual’s is distributed to surviving family members according to Virginia law instead of according to the wishes of the deceased as contained in a will. Powers normally granted to an estate representative through a will must be obtained from a judge in one of the circuit courts.
Holding Fiduciaries to a High Standard
Executors, administrators and trustees are fiduciaries. A fiduciary is someone entrusted with the duty to act on behalf of another party. Because of the high levels of trust and confidence people place in fiduciaries, the law in Newport News and throughout the commonwealth requires them to act in good faith and exclusively in the best interests of the party employing them.
Trustee disputes and other estate administration issues may arise related to a breach of fiduciary duties and require intervention by the court. Examples of situations arising with estate administration include:
- Mismanagement of trust or estate assets
- Improper asset transfers
- Self-dealing by trustees or administrators
- Conflicts of interest
Fiduciaries who fail to perform their duties as required by law could be held personally liable for any damages caused by it. For instance, payment of tax obligations is an important part of estate administration that could result in penalties and interest being assessed against the estate. If the additional costs were caused by a failure of a trustee or estate representative to perform the duties required of the position, a judge could make the fiduciary personally responsible for them.
Estate Administration Lawyers and Insurance Claims
An attorney skilled in estate administration can be of assistance in handling insurance claims following a person’s death. A life insurance policy is an agreement under which the insurance company agrees to pay a specified amount of money to a named beneficiary upon the death of the insured. Payments are usually not a part of the insured’s estate requiring a probate or administration proceeding as long as there is a beneficiary named in the policy to receive the insurance proceeds upon the death of the insured.
Complications requiring the assistance of an attorney may arise if the only beneficiary designated in the policy dies and a substitute was not named before the insured died. Another issue that arises with life insurance is when an insurance company refuses to pay the claim. Some of the common reasons used to decline payment might include the following:
Estate Administration Lawyers and Insurance Claims (cont.)
- Material misrepresentation
- Death caused by suicide
- Failure to pay premiums
- Activity causing death violates policy provisions
Life insurance policies may contain a clause giving the insurance company the right to decline payment for a death occurring within a specified period following issuance of the policy. An attorney with experience in estate administration has the knowledge and ability to pursue insurance claims in lawsuits and court proceedings on behalf of beneficiaries.
Retirement Accounts and Estate Administration
Retirement plans paying benefits upon a person’s death are similar to life insurance policies in making payment to a beneficiary designated by the deceased. When a beneficiary predeceases the account owner or the owner failed to designate a beneficiary, the benefits are normally paid to the deceased owner’s estate.
Benefits payable to an estate could result in additional tax obligations that must be taken into consideration by the person responsible for the administration of the estate. An estate and trust attorney can offer advice and assistance with retirement benefit issues as well as offer guidance about survivor benefits payable through Social Security.
Estate Administration and Trusts
A trust offers a method for people to transfer control over all or some of the real and personal property they own to a trustee who manages them according to the terms of the trust. Trusts can provide an alternative to probate because title to trust assets are held in the name of the trust and not in the name of the granter who is the person for whom the trust was created.
An irrevocable trust is one in which the grantor relinquishes all right to change, amend or terminate it without the consent of the beneficiary named in the trust document. Assets in an irrevocable trust are paid to the trust beneficiaries according to the terms of the trust instrument. They do not become part of the grantor’s estate for probate, estate administration or estate tax purposes.
Revocable trusts, in which a grantor retains the power to change or cancel them, are treated differently than irrevocable trusts in the event of the death of a grantor. Assets in revocable trusts are treated as part of a deceased grantor’s estate for tax purposes. The advice and guidance of a dedicated Hampton estate and trust administration attorney can be an invaluable resource for trustees and estate representatives.
Contact a Virginia Beach Estate Administration Lawyer Today
The attorneys at the Hampton Roads Law Offices of John W. Lee, P.C., offer innovative and insightful representation in trustee disputes and other estate and trust administration issues. They also provide superior estate planning assistance, including help with asset transfers that could eliminate the need for estate administration as to the transferred assets.
Find out more by calling (757) 896-0868 to schedule a free initial consultation.