Virginia's Recent Revision and Recodification of Title 64.1: Making an Estate Planning Attorney's Life Easier?

Earlier this year, the General Assembly passed, and Gov. McDonnell signed into law, an act to revise and recodify Title 64.1 of the Virginia Code. This act became effective on October 1. On that date, much of the existing law involving wills, estates, trusts, fiduciaries, and guardians was shifted to a brand-new Title 64.2. Other changes occurred as well, but the large-scale renumbering of Code provisions has probably received the most attention from practitioners. Non-practitioners, on the other hand, will probably be unaware of any changes at all (unless they've been spending a lot of time around estate planning attorneys, others who frequently work with the relevant Code sections or those people with trouble sleeping at night that use the code as a sleep aid).

The basis for the recent round of changes can be found in § 30-152 of the Virginia Code, which provides that the Code shall be revised on an ongoing basis, one title at a time. In 2009, the Virginia Code Commission voted to revise Title 64.1, Wills and Decedent's Estates, which had last been revised in 1968. In addressing this Title, the Commission sought to simplify the law in this area by bringing together related provisions from different Titles into a more logical arrangement.

The result of the Commission's work is new Title 64.2, which has incorporated all or portions of the existing laws from the following titles/sections:

• Title 26 (Fiduciaries Generally)
• Title 31 (Guardian and Ward)
• Title 64.1 (Wills and Decedent's Estates)
• Portions of Title 37.2 (Behavioral Health and Developmental Sciences)
• Portions of Title 55 (Property and Conveyances)

In turn, these laws have been reorganized within Title 64.2 into five subtitles, as follows:

• Subtitle I (General Provisions)
• Subtitle II (Wills and Decedent's Estates)
• Subtitle III (Trusts)
• Subtitle IV (Fiduciaries and Guardians)
• Subtitle V (Provisions Applicable to Probate and Non-probate Transfers)

In addition to this reorganization, many laws have been revised in order to make terminology clearer, more modern, and more consistent between provisions. There have also been some substantive changes to the law, though these seem to be minor in nature. For instance, § 64.2-102 and 64.2-103 now provide that a paternity judgment from any competent court is sufficient evidence of paternity; previously, only a paternity judgment from a Virginia court was accorded this status.

In the short term, such a large-scale change to the law creates extra inconvenience for attorneys. Attorneys impacted by the change will have to set out to memorize a a whole new set of Code numbers for frequently used provisions. In the long term, though, hopefully these changes will lead to increased efficiency, with more of the relevant law residing in one place within the Code.

Basics of Estate Planning: Ancillary Probate

Last month's newsletter discussed the important distinction between probate and non-probate assets. Probate assets, as the name implies, are assets of the estate that are distributed through a probate proceeding, either according to a valid will, or, in cases where a will fails or is nonexistent, according to the state's rules governing intestacy.

Probate normally occurs within the decedent's state of domicile i.e. the state where the decedent lived before the decedent died. The existence of out-of-state assets, however, can add extra wrinkles to this process. Generally, a state has no jurisdiction over specific property located in another state; instead, the laws of the state where the property is located will control what happens to that property after the owner's death. In some cases, this situation will require an additional probate proceeding to be opened in another state, for the limited purpose of distributing an asset located there. These proceedings are referred to as "ancillary probate.ⁱ"

Ancillary probate can usually be avoided with out-of-state personal property, so long as the personal representative can gain possession and control of the asset without any court involvement. On the other hand, if the property in question consists of real estate, ancillary probate will often be necessary.ⁱⁱ If the decedent has a will, it will be admitted into probate in the other state, subject to its laws concerning the admissibility of wills. The personal representative may need to qualify herself in the other state as well, especially if she plans to seek court approval to sell real estate located there. If there is no will, then out-of-state property will pass according to that state's intestacy rules which may vary from state-to-state.

As you may have guessed, it is generally preferable to avoid ancillary probate whenever possible. Ancillary probate has significant drawbacks for an estate. First, it increases the costs of administering the estate, through additional court fees, and possibly additional attorney, accountant, appraiser and other professional's fees. Second, the need for additional court proceedings in other states may cause the administration of an estate to take substantially longer than originally expected, which can lead to increased costs and additional strain on loved ones. Finally, if for some reason your will fails to satisfy the requirements of the other state, your out-of-state property will be distributed according to that state's intestacy rules, despite the fact that your will was valid under the laws of your domicile state.

In short, if you have acquired significant out-of-state property-especially real estate-you should consider consulting with an estate planning attorney, who can assist you in developing a plan to avoid ancillary probate, or to minimize the potential disruption from such a proceeding.

Estate of the Month: Alex Karras Reminds Us That Estate Planning is About More Than Just a Will

Regular readers of this newsletter will know that I often turn to former NFL football players for examples of what to do (and what not to do) with regard to estate planning. In keeping with this theme, this month's Estate of the Month focuses on Alex Karras, who died on October 10 at the age of 77.

Karras played defensive tackle for the Detroit Lions from 1958-1970 (though he missed one year in that span due to a gambling-related suspension). Nicknamed "The Mad Duck," he went to four Pro Bowls during his career, and earned a spot on the NFL 1960's All-Decade Team. After leaving football at the age of 35, Karras enjoyed a successful second career as an actor. His character's line in Blazing Saddles is one of the great comedic lines of all time when his character said "Mongo only pawn in game of life." I think we all feel that way sometimes. Many people may also remember him more clearly as adoptive father George Papadopolis from the TV sitcom Webster, which he and his wife produced and co-starred in together.

While he had a long and successful life after football, Karras eventually struggled with health problems that are all too familiar to former football players. He suffered from dementia during the last several years of his life. He was a class member in the numerous NFL concussion law suits currently working through the court system. May's Estate of the Month addressed the complications that arise when an estate's personal representative must handle a lawsuit (or potential legal claim) on behalf of the deceased plaintiff. Karras' case can also highlight a more fundamental issue: the need for an up-to-date Advanced Medical Directive (AMD) and Durable Power of Attorney (DPOA).

The technical details of the AMD and DPOA have been covered in previous newsletters, but it's worthwhile here to reemphasize their important role in a complete estate plan. While a will comes into effect after death, AMD and DPOA come into effect while you are still alive, and unable to make decisions for yourself, or to communicate those decisions to others. See also the importance of an AMD in the November 2010 Estate of the Month - Sparky Anderson

Mental incapacity is not just a problem for former football players; for instance, one in eight older Americans suffer from Alzheimer's disease, according to figures from the Alzheimer's Association. Even young, healthy people can suddenly become incapacitated due to injuries from automobile collisions or other accidents. If the unthinkable happens and you find yourself in this condition, even temporarily, an AMD and DPOA will allow you to specify who makes decisions regarding your health care and finances, respectively, and ensure that your chosen agent acts in accordance with the desires and conditions stated in those documents.

Fortunately, at this point there is no indication that Karras was mistreated in any way. It is very possible that he had made appropriate arrangements for his worsening condition. Nonetheless, his story provides an example of how proper estate planning involves not just a will, but also other important documents such as an AMD and DPOA, in order to ensure that your personal wishes are respected when you cannot stand up for them yourself.

ⁱAncillary Probate is a general term. Other states can use different terms for ancillary probate. For example, if an estate needs to open ancillary probate in the District of Columbia it is called a Foreign Estate Proceeding.

ⁱⁱIn Virginia, real property is said to "drop like a rock" and the ownership of realty in Virginia transfers to the heirs upon the death of the non-domiciled property owner, such that ancillary probate can sometimes be avoided via the filing of an affidavit and other supporting documents to transfer title to the heirs.