Mistakes to Avoid When Creating a Virginia Estate Plan

Estate planning plays a crucial role in financial planning. Virginia estate plan allows one to safeguard their family’s interests and make them financially self-reliant in the event of death or incapacitation. However, a survey has revealed that only 42% of American adults have prepared their estate plans. Estate planning law firm Virginia Beach emphasizes the need to have an estate plan to prevent one’s assets from falling into the wrong hands. Moreover, in the absence of a clear estate plan, the family members are more likely to fight over the deceased’s assets.

Estate planning is a complex task that requires the gathering of documents, creating inventories of the assets, accessing the worth of the assets, drafting the provisions, and assigning executors. A simple mistake can lead to complications in the future. Thus, one must seek help from a professional attorney when drafting an estate plan.

In this blog, we have listed a few mistakes people should avoid when creating a Virginia Estate Plan.

Mistake #1 Not having all the required documents

Estate planning is beyond writing a will or trust. To create a robust estate plan, one must have a durable power of attorney, healthcare directive, trust, and much more. The documents one may need to produce for the estate planning depend upon the person’s situation and requirement. Estate planning lawyers review the case and study the particular situation before recommending documents that one would need to collect before preparing an estate plan.

Mistake #2 Naming the wrong executor

In any will and trust, the role of an executor is very crucial. The executor named in the estate plan is responsible for managing and distributing the assets after your demise. Some people choose their partner, children, or other family members as executors, while others prefer naming someone outside the family as executor. The Virginia Code § 64.2-1426 allows one to choose a company authorized to do business in Virginia as an executor and serve as a representative of their assets. When creating an estate plan, one must be careful when naming an executor. One should not take this decision in a hurry.

Mistake #3 Failing to update the estate plan regularly

If you think your task ends after creating an estate plan, you are wrong. From your internal family situations to changes in tax laws, many factors can influence your estate plan. Thus, one must keep their estate plan updated. Your estate plan must reflect the major event in your life like marriage, divorce, birth, or change in wealth.

Mistake #4 Failing to fund a revocable trust

With a revocable trust, one can adequately manage their estate and assets after their death or incapacitation. Besides this, an adequately funded revocable trust helps one avoid the probate process. Virginia Code § 64.2-624 states that with a transfer of the deed, a person’s estate can automatically pass on the trust after their death.

Mistake #5 Not seeking help from Estate Planning Attorney Virginia Beach

The internet has made resources for estate planning readily available. There are plenty of websites and apps offering estate planning solutions to people. However, most of these websites adopt a one-size-fits-all solution. Your estate plan should address your concerns and reflect your circumstances. Thus, it’s always a good idea to hire a professional estate planning attorney virginia beach.…

HOW TO OBTAIN TAX EXEMPT STATUS FOR YOUR NONPROFIT CORPORATION?

Why Seek Tax-Exempt Status: Advantages

a. Individual and Gift and Estate Tax Deduction One of the biggest advantages of being an organization is the organization may receive contributions that also benefit the donor. A donor who contributes may be entitled to an income tax deduction, a gift and estate tax deduction, or both. There are limitations to the amount a donor can claim as an income tax deduction in any given year.

b. Grants from Private Foundations Many tax-exempt organizations receive grants from a type of organization called a private foundation. Private foundations usually distribute funds only to tax-exempt organizations that qualify as a “public charity.” (Private foundation status and public charity status are discussed below.)

c. No Tax on Net Revenue A big advantage shared by tax-exempt organizations is that no federal income tax is collected on their net revenues. The federal tax-exempt status also is necessary for certain state tax benefits. However, a federal tax may be imposed on the net income of the exempt organization other than “exempt function” income. Exempt function income is income earned from activities consistent with the organization’s charitable purposes. Other types of federal excise and penalty taxes may also be imposed on exempt organizations.

d. Other Advantages  Employees of an organization may take advantage of special rules providing favourable tax treatment for contributions to retirement plans. Organizations are exempt from federal unemployment tax (FUTA).  Exempt organizations qualify for a preferred second or third-class mailing rate. The act prohibits certain gambling businesses, for example, bingo games, lotteries, or similar games of chance.

Restrictions on Tax-Exempt Organisations: Disadvantages

An organization must be formed for some charitable purpose. In fact, tax-exempt organizations are often referred to as “charitable” organizations. The term “charitable” includes” “relief of the poor and distressed or of the underprivileged; the advancement of religion; the advancement of education or science; erection or maintenance of public buildings, monuments, or works; lessening of the burdens of government; and the promotion of social welfare by organizations designed to accomplish any of the above purposes.” These are described in more detail below.

 A charitable organization must serve a public rather than a private interest. The organization must establish that it is not organized or operated for private interests such as designated individuals, the creator of his/her family, shareholders of the organization or persons controlled, directly or indirectly, by such private interests.

  • Relief of Poverty “Charitable” includes “relief for the poor and distressed or the underprivileged.” Such organizations might:  help poor persons find employment;  provide employment assistance for the elderly;  promote the rights of public housing tenants; or provide other social services like low-income housing, meals-on-wheels, or health services.
  • Advancement of Religion “Advancement of religion” includes: constructing or maintaining a church building, monument or burial grounds,  peripheral services like providing music, distributing religious literature and maintaining missions.
  •  Advancement of Educational Services. Advancement of education includes:  establishing or maintaining nonprofit educational institutions;  financing scholarships and other types of student assistance;  establishing or maintaining libraries and museums;  disseminating information in publications, seminars, and lectures; or producing arts performances such as theatre, opera or dance.
  • Lessening the Burden of Government. Organizations which lessen the burden of government may:  provide legal service and training to guardian’s ad litem;  represent neglected or abused children in court;  work to preserve a public park or lake;  assist in operating a mass transit system;  maintain a volunteer fire department;  conserve natural resources; or  encourage plantings of trees on public lands.
  • Community Beautification and Maintenance. Organizations formed to beautify and maintain the community may:  preserve a lake as a public recreational facility;  promote city beautification projects; or  educate the public about advantages of street planning. vi. Promotion of Health. Examples include establishing hospitals or homes for the aged, and advancing medical knowledge through research.
  • Promotion of Social Welfare. This is the most indefinite category of charitable purposes. Many types of activities are allowed. They include activities which:  lessen neighborhood tensions;  eliminate prejudice and discrimination;  defend human and civil rights; or  combat community deterioration and juvenile delinquency.