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.

Changes In Virginia Spousal Inheritance Rights

On March 1, 2016, Governor McAuliffe signed into law a significant amendment of Virginia’s “Elective Share” rules.

An “Elective Share” is an amount a surviving spouse can elect to receive instead of the amount provided under the deceased spouse’s estate plan. For many years, the Elective Share has caused problems when individuals wanted to limit the inheritance of their spouse or place restrictions on their spouse’s use of the inheritance. Frequently, improper attempts at restricting the surviving spouse’s share left the deceased spouse’s estate subject to litigation and kept assets tied up in probate. Even when assets are designated to pass outside of probate, they must be accounted for in what is known as the “Augmented Estate” in order to determine the surviving spouse’s Elective Share.

A brief look at the old rule is critical to understanding the importance of the recent changes. Formerly, a surviving spouse was entitled to an Elective Share equal to a third of the deceased spouse’s Augmented Estate (if the deceased spouse had children) or half of the deceased spouse’s Augmented Estate (if the deceased spouse died intestate). The Augmented Estate includes almost all of the assets that the deceased spouse had an interest in at death, not only those assets passing by probate. This led to considerable problems in administering estates, because valuing partial interests and locating non-probate transfers creates a great deal of work and controversy. Elective share claims often would pull into court trusts that were created in order to maintain privacy and avoid probate, thus defeating one purpose of creating the trust. Non-probate transfers such as payable on death accounts or trusts have become more common and the need to reform the Elective Share rules has become more and more pressing.

The new rules provide clearer standards for determining the value of assets in the Augmented Estate and modify the surviving spouse’s interest based on the length of the marriage. An important aspect of the recent changes is that trusts can be used more effectively to prevent a spendthrift spouse from squandering their inheritance. Also, the old rule’s strict one half and one third entitlements (described above) are gone. Replacing the old standard is a fifty-percent elective share that fully vests upon 15 years of marriage. Prior to fifteen years of marriage the surviving spouse’s elective share vests in percentages from 3% (during the first year of marriage) to 92% (during the fourteenth year of marriage). The applicable percentage is multiplied by the 50% to determine the surviving spouse’s share of the Augmented Estate. Anyone concerned with either leaving the minimum necessary amount to their spouse or protecting their spouse from squandering their inheritance should have their estate plan reviewed.

These changes have a multitude of applications to our clients and may require changes to your current estate planning, long-term care, or estate administration goals. Fortunately, these changes are only effective for the estates of individuals passing on or after January 1, 2017, which allows an opportunity to plan ahead of their implementation. The elder law attorneys at The Estate Planning & Elder Law Firm, P.C. are available to review and discuss changes that may be needed as a result of this important change in Virginia trust and estate law.


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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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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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