By, Sam Petto, Elder & Disability Law Clinic Student, Spring 2022
The Virginia probate process, or the court-supervised process of determining whether a decedent left a valid will, conducting an accounting of the decedent’s estate, and distributing the decedent’s assets to beneficiaries, has a reputation for creating hassle and costing time and money. Fortunately, Virginia offers shortcuts for “small estates” that make it easier for survivors to transfer property.
Under Virginia law, a “small estate” is an estate with assets belonging to the decedent, or presently distributable to them, that have a value at death of $50,000 or less. Typical assets include checking accounts, savings accounts, brokerage accounts, deposits, tax refunds, overpayments, and items of tangible personal property, but not real property and assets that pass automatically, like life insurance policies, bank accounts with payable-on-death (POD) designations, and assets held in joint tenancy.
Transferring “Small Estate” Property with an Affidavit
Virginia Code § 64.2-601 allows individuals to collect and distribute assets from the small estate using a Small Estate Affidavit and avoid the formal probate process. The affidavit allows an individual, usually an heir-at-law or a beneficiary named in a will, to become a “Designated Successor,” or individual designated to receive payment or delivery of assets on behalf of all other successors.
Among other things, the Small Estate Affidavit must state that the value of the decedent’s estate is $50,000 or less; that no person has or plans to qualify as personal representative of the estate; that if the decedent had a will, the will has been probated at the Circuit Court; and that at least 60 days have passed since the decedent’s death. It must also include the names and addresses of all heirs-at-law and beneficiaries, their signatures, and their selection of one or more people to act as the “Designated Successor” that shall receive assets on behalf of others. Notably, the “Designated Successor” is a fiduciary with a legal obligation to safeguard assets, pay the decedent’s debts, and distribute any remainder to heirs or beneficiaries.
To illustrate, suppose that Dad died without a will and left behind three adult children. The only assets in his estate at death were a checking account worth $7,000 and a savings account worth $33,000. Because the combined estate was worth $50,000 or less at death, a Virginia Small Estate Affidavit, signed by each living child, will allow someone to be designated to receive the funds from the accounts and distribute them to the children without going through the formal probate process.
Transferring “Small Assets” without an Affidavit
There is another option for transferring smaller assets. While the Small Estate Affidavit considers the total value of the estate, Virginia Code § 64.2-602 looks at the value of each asset within the estate individually. If an asset is worth $25,000 or less, an heir may access it without completing a Small Estate Affidavit so long as at least 60 days have passed since the decedent’s death, and no application for the appointment of a personal representative is pending or has been granted. The person who receives the asset is a fiduciary with a legal obligation to safeguard it, pay the decedent’s debts, and distribute any remainder to heirs or beneficiaries.
To illustrate, suppose that Dad died without a will and left behind three adult children. The only assets in his estate at death were a checking account worth $10,000, a savings account worth $20,000, and a brokerage account worth $23,000. Because the combined estate is worth more than $50,000, a Virginia Small Estate Affidavit cannot be used to avoid the formal probate process. An institution holding these funds may still turn them over to an heir without an affidavit, however, because each account, individually, was worth $25,000 or less at death.
While this appears a quick and effective process, it is important to note that VA Code § 64.2-602 is permissive while VA Code § 64.2-601 is mandatory. Any person or institution having possession of a small asset of the decedent’s valued at less than $25,000 may turn it over to anyone claiming a right to it without an affidavit, but they are not required to. In practice, many will show reluctance and decline to turn over such assets, rendering other alternatives, such as the Small Estate Affidavit or formal probate process, more effective.