Northern Virginia Law Blog

When Virginia residents think about their mortality, they often want to make sure that their assets can be disbursed according to their wishes. They also frequently want to pass on the vast majority of their assets to their heirs, rather than seeing a large portion consumed by estate taxes. In addition, many people prefer the flexibility, control and privacy provided by trusts, rather than simply passing assets on in a will. Trusts can have important benefits from the moment they are created, so many people prefer to create living trusts, rather than testamentary trusts that come into existence only after their death.

Unlike assets that pass through a will, trust assets pass on to their beneficiaries without going through the probate process. This can help to protect those funds from dubious challenges while also keeping the process out of public view. There are other benefits of trusts, however. They provide a strong mechanism for passing assets to minor children, but they also provide additional protection for adults. Trust protectors are one enhancement that people can use when creating a trust to provide additional protection for those assets in case of lawsuits, creditor issues or divorce.

For many people in Virginia, their retirement funds are an important part of their estate plans. After the original owner of a retirement account passes away, the remainder of the fund generally passes directly to a named beneficiary without going through the probate process. Rather than taking everything in the account at one time, named beneficiaries have, in the past, been able to stretch out the payments from the retirement funds over their own lifetimes. They have been required to take only the minimum necessary distributions, allowing the account to continue to grow while deferring taxation until their own retirement.

However, under the Setting Every Community Up for Retirement Enhancement Act, or the SECURE Act, which went into effect on Jan. 1, 2020, the ability of beneficiaries to stretch out payments over their own lifetimes has been limited. In many cases, beneficiaries must take the full distribution of the account within 10 years after the death of the plan participant. The new restrictions do not apply to all beneficiaries. Surviving spouses named as beneficiaries can still stretch out their payments over their lifetime or roll over their inherited benefits.

If you were extra generous over the holidays and had to skip a credit card payment, you may feel terrible. On the other hand, you may be going through a slowdown at work that has caused your paycheck to be temporarily smaller until the warm weather returns. While these and other scenarios may set you behind on your bills and debts, they may not be adequate reasons to file for bankruptcy.

Bankruptcy is a form of debt relief that can truly benefit someone who is struggling with insurmountable debt or is facing other ramifications of unpaid debt. However, it is not appropriate in every case. In fact, filing for bankruptcy unnecessarily may be a waste of time and money.

Medical debt is often cited as a reason why people in Virginia and other states file for bankruptcy. While it might not be possible to predict when a health issue will arise, it may be possible to manage medical debt. Ideally, individuals will take time to read and understand their health insurance policies. In some cases, it will be necessary to obtain approval before seeing a specialist or having a procedure done.

Failing to get that approval may mean that a patient is responsible for paying for a procedure or to see a specialist. Prior to paying a medical bill, it is important to review it to ensure that the invoice is accurate. Otherwise, a person could pay for services that were never rendered. If a claim is submitted to the insurance company with the wrong medical code, that claim could be denied.