The Purpose of Wills and Trusts

in West Virginia

Although many elements of estate planning are optional, a Last Will and Testament represents the bare minimum. If a person passes away without ever establishing this legal document, they will have died “intestate.” If this occurs, then the Probate Court of West Virginia will follow a predetermined formula called “intestate succession” to determine who should receive the assets – and in what order.

Here is a brief summary of this process according to the Monongalia County Clerk:

If there is a surviving spouse with no stepchildren and no children from previous marriages, the spouse receives everything.
If there is not a surviving spouse, the estate passes down in the following order of priority:
1. Children
2. Grandchildren
3. Parents
4. Siblings
5. Grandparents
6. Any other relatives

A valid will avoids the process of intestate succession by allowing the testator to provide clear directives for how their estate should be passed on.

Powers of Attorney Explained

Powers of attorney allow individuals to pass decision-making authority to others under certain circumstances. These powers may be granted until revoked, under a “durable” power of attorney, or they may be limited to a particular time range, specified in the power of attorney document. Similarly, powers of attorney may be broad, granting the individual designated as the “agent” substantial latitude to act on behalf of the “principal” in a wide array of personal and financial matters, or they may be more narrowly defined, tightly delimiting the agent’s purview.

One of the most common uses of a power of attorney is to name an agent to make healthcare or end-of-life decisions on behalf of the principal in the event of the latter’s incapacitation through illness or accident. For example, an individual may be placed in a medically induced coma after a car accident. If this individual has medical and financial powers of attorney in place designating their spouse as their agent, the spouse can step in and make both financial decisions and medical choices, on the principal’s behalf. Individuals can work with estate planning lawyers to ensure that these estate planning tools provide adequate decision-making power to their chosen representatives.

Tax Planning

Estate planning presents a range of tax advantages that contribute to the effective preservation and transfer of wealth. Through strategic planning, individuals can minimize estate taxes by employing various tools like trusts, annual gift exclusions, and charitable contributions. The establishment of trusts, such as the irrevocable life insurance trust (ILIT) or charitable remainder trust (CRT), facilitates a reduction in taxable assets while providing for beneficiaries or supporting charitable causes. Utilizing relevant federal and state exemptions ensures that a significant portion of the estate remains shielded from taxes. Additionally, thoughtful consideration of stepped-up basis provisions and the incorporation of family limited partnerships can further optimize the tax implications. In essence, estate planning empowers individuals to actively steer their financial legacies, capitalizing on available tax benefits to augment the inheritance passed on to beneficiaries.

Incapacity Planning

Trusts and powers of attorney may both have substantial implications for incapacity planning. While a financial power of attorney may be useful to busy individuals in excellent health who simply wish to entrust day-to-day financial management to an experienced advisor, this type of power of attorney can also help to ensure that the principal’s, banking, and other financial matters continue to run smoothly in the event of illness or accident. A medical power of attorney can be even more important in helping individuals to prepare for the eventuality that at some point they may be unable to advocate for themselves and make their own medical decisions. Naming a trusted friend or family member ahead of time to make those decisions when necessary can provide the principal with peace of mind in the present, and prevent confusion for healthcare providers and loved ones in the future.

For many West Virginians, trusts may have a different role to play in incapacity planning. While naming family members or favorite not-for-profit organizations as beneficiaries of a trust is common, naming oneself as a beneficiary is also an option. Establishing and funding a trust to provide for long-term care during the trustor’s lifetime, and naming a trustee to manage the trust’s assets and distribute them to additional beneficiaries after the trustor’s death, can be one way for an individual to prepare financially for the care they may need in their later years. This method can also help to ensure that continuity in the management of assets will be maintained even once the trustor is no longer able to oversee those assets themselves, while also providing for a seamless transfer of their financial legacy to beneficiaries that may avoid the probate process.

Speak With a West Virginia Estate Planning Lawyer Today

There are many estate planning options available for West Virginia residents, and each individual may require a slightly different plan based on their unique situation. While an online article may provide a basic overview of estate planning in West Virginia, a more personalized approach can guide estate planners toward the optimal combination of estate planning documents to suit their individual circumstances. To discuss estate planning choices in more detail, consider booking a consultation with Zeni Law today.