How to Avoid Probate in Virginia

When a Virginian dies with assets such as a house, car, bank accounts and investments, these assets usually must go through probate before being distributed to heirs. The probate process ensures that assets are distributed according to the decedent’s wishes or applicable law, but can take over a year and incur fees. Virginia’s process can be particularly long and costly and includes an unusual probate tax. Fortunately, Virginia law offers several ways to avoid full probate. Using these strategies may help your heirs receive their inheritance more quickly and with fewer expenses.

Consider working with a financial advisor to help you make the most of your inheritance.

Virginia Estate Planning Basics

Like most states, Virginia doesn’t have estate or inheritance taxes. But assets left in a will usually must go through probate. In this process, the court appoints an executor, the will is proved valid, assets are inventoried, debts are paid, and taxes filed before the assets can finally get distributed.

In Virginia, real estate and estates with more than $50,000 in personal property generally require formal probate. Estates below $50,000 can use a streamlined process. Assets in trusts as well as non-probate assets like life insurance and 401(k)s with beneficiaries also avoid probate.

Reasons to Avoid Probate in Virginia

Time and money both provide reasons to avoid formal probate in Virginia. The court must confirm the will, creditors must be notified, assets managed and taxes filed. The executor must accurately inventory assets. While these tasks are being completed—which can take a year or more—family members may not be able to use estate assets to cover bills.

Another burden is Virginia’s rare probate tax of $1 per $1,000 of assets, which can mean thousands in extra costs. Furthermore, the entire probate process is public, which can open your estate to creditor claims. Probate also forces sales of some assets to raise cash for taxes. With all this in mind, in Virginia avoiding probate is a primary goal of estate planning.

Strategies for Avoiding Probate in Virginia

Probate in Virginia can take months and it can reduce the estate’s value through court fees and administrative costs. However, various strategies can help assets pass directly to heirs without going through probate.

File a Small Estate Affidavit

Heirs in Virginia can avoid probate entirely for estates under $50,000 by using a small estate affidavit. This legal form lets one heir collect assets by swearing they’re entitled to the assets.

To be suitable for this process, at least 60 days must have passed since the death. Also, there must be no probate application pending. The affidavit will list assets, heirs and the heir claiming them. The affidavit must be notarized, and all heirs have to agree in writing to using the affidavit, which may present a challenge if heirs are not in agreement.

Once it’s completed, however, financial institutions must immediately release assets such as bank accounts to the affidavit holder. In this way, using a small estate affidavit completely avoids probate delays and costs.

Establish a Living Trust

Living trusts also offer a way to avoid probate. To do this, as part of your estate plan you transfer assets to a trust you control. When you die, assets go directly to heirs per the trust terms, skipping probate.

Unlike when wills alone are used to distribute assets, trusts avoid public records. In Virginia, they ensure privacy and avoid probate delays and the probate tax. Trusts typically require $1,000 or more in legal fees to set up. You’ll still need a pour-over will to direct any remaining assets into the trust. Planning ahead is essential, because you have to transfer assets into the trust while alive.

For example, you place your home and investment accounts into a living trust. When you die, your daughter—named as successor trustee—distributes the assets within weeks, avoiding probate entirely.

Payable-on-Death and Transfer-on-Death Accounts

Payable-on-death (POD) and transfer-on-death (TOD) designations let you name beneficiaries on bank accounts, CDs and brokerage accounts. After your death, these assets pass directly to the named individuals, bypassing probate.

Joint Ownership with Rights of Survivorship

Assets held in joint tenancy with rights of survivorship automatically transfer to the surviving owner. This is common for married couples in Virginia and works for real estate, vehicles, and bank accounts. For example, if you jointly own your home with your spouse, your spouse becomes the sole legal owner without any court involvement when you die.

Transfer-on-Death Deeds

Virginia allows transfer-on-death deeds for real estate. You can record a deed naming a beneficiary, and the property will pass to them automatically upon your death. You retain full control of the property while alive.

For example, you record a TOD deed naming your niece as the beneficiary of your home. After your death, she becomes the new owner without going through the probate court.

Other Ways to Avoid Probate

Assets like life insurance policies, IRAs, and 401(k) plans pass outside probate when you name a beneficiary. These accounts transfer directly upon death, but it’s important to keep designations current.

Gifting assets during your lifetime reduces the size of your probate estate. While this can avoid probate, large gifts may have tax consequences or affect Medicaid eligibility for long-term care.

Bottom Line

Probate avoidance tools like small estate affidavits and living trusts can help Virginians inherit faster, with lower costs and more privacy. Small estates under $50,000 can use affidavits to collect assets out of probate. Larger estates can use living trusts to avoid probate and keep estates private. Each option has pros, cons and costs but can be helpful estate planning tools in many cases.

Estate Planning Tips

• A financial advisor can help coordinate your estate plan with your overall financial goals. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

• While Virginia has no estate or inheritance tax, a federal estate tax may apply. Learn about it with SmartAsset’s guide to the federal estate tax.

Photo credit: ©iStock.com/kate_sept2004, ©iStock.com/Liubomyr Vorona, ©iStock.com/aywan88