ElderLaw News-The Estate Planning & Elder Law Firm, P.C. — MD, VA, DC
ElderLaw News
ElderLaw News is a weekly e-newsletter that brings you reports of legal developments and other trends of vital interest to seniors and their advocates. This newsletter is brought to you by The Estate Planning & Elder Law Firm, P.C., William S. Fralin, Esq., President., William S. Fralin, Esq., President.

Preserving Your Real Property Tax Exemption When Creating Your Estate Plan

Many of our clients are aware that the Commonwealth of Virginia provides exemptions from taxation of property for persons aged sixty-five and older or who are permanently and totally disabled, subject to local income and financial worth limitations.

These exemptions become very important as a result of an individual's fixed financial position. A recent opinion issued by Kenneth T. Cuccinelli, II, former Attorney General for the Commonwealth of Virginia, presents issues related to two common estate planning strategies – placement of real property into a trust and a life estate.

Pursuant to the exemption, the real property must be "owned by" a person who occupies the property as his or her sole dwelling and otherwise meets the age or disability and financial requirements. A basic principal in trust law establishes the fact that a trustee holds legal title to the assets of a trust. When real property is placed into a trust, the title to the property is transferred to the trustee, resulting in a disqualification for the tax exemption. On the other hand, a life estate in real property grants a life tenant the exclusive right to use and possess the real property for an indefinite period, which terminates upon death of the life tenant. With this right, the life tenant is liable for the responsibilities associated with property ownership, including real property taxes. Courts have determined that the life tenant has sufficient control over the property to classify the life tenant as the "owner" for tax purposes. As a result, the tax exemption extends to a life tenant meeting the requirements of the exemption.

Trusts and life estate are only two tools in an estate planner's handbag. While trusts can serve as a very important tool in minimizing the probate estate of an individual, you and your attorney should discuss the importance of the tax exemption and other possible solutions to meet your estate planning goals.

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The Estate Planning & Elder Law Firm, P.C.

The Estate Planning & Elder Law Firm, P.C. is an elder law firm. We represent older persons, disabled persons, their families, and their advocates. The practice of elder law includes estate planning, estate and trust administration, powers of attorney, advance medical directives, titling of assets and designations of beneficiaries, guardianships, conservatorships, and public entitlements such as Medicaid, Medicare, Social Security, and SSI, disability planning, income tax planning and preparation, care management, and fiduciary services. For more information about The Estate Planning & Elder Law Firm, P.C., please visit our website at http://www.chroniccareadvocacy.com.

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The Estate Planning & Elder Law Firm, P.C. encourages you to share this newsletter with anyone who is interested in issues pertaining to the elderly, the disabled and their advocates. The information in this newsletter may be copied and distributed, without charge and without permission, but with appropriate citation to The Estate Planning & Elder Law Firm, P.C. If you are interested in a free subscription to the Elder Law News, then please e-mail us at office@chroniccareadvocacy.com, telephone us at (703) 243-3200, or fax us at 703-841-9102.

This newsletter is not intended as a substitute for legal counsel. While every precaution has been taken to make this newsletter accurate, we assume no responsibility for errors, omissions, or damages resulting from the use of the information in this newsletter. The Estate Planning & Elder Law Firm, P.C. thanks the law firm of Hook Law Center for their input to this newsletter.

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