One category of assets that causes much confusion for clients in the context of dividing property and debts in a divorce action is retirement benefits.  The term “retirement benefits” includes defined contribution plans such as 401(k) plans and profit sharing plans, as well as defined benefit plans such as pensions. 

Section 20-107.3(G) of the Code of Virginia addresses how these benefits are to be divided: “Upon consideration of the factors set forth in subsection E, the court may direct payment of a percentage of the marital share of any pension, profit-sharing or deferred compensation plan or retirement benefits, whether vested or nonvested, which constitutes marital property and whether payable in a lump sum or over a period of time. The court may order direct payment of such percentage of the marital share by direct assignment to a party from the employer trustee, plan administrator or other holder of the benefits. However, the court shall only direct that payment be made as such benefits are payable. No such payment shall exceed 50 percent of the marital share of the cash benefits actually received by the party against whom such award is made. ‘Marital share’ means that portion of the total interest, the right to which was earned during the marriage and before the last separation of the parties, if at such time or thereafter at least one of the parties intended that the separation be permanent.”

But, not all retirement benefits are created equal.  For instance, although most types of retirement benefits are divided using a court Order called a Qualified Domestic Relations Order (“QDRO”), the content of those QDROs differs for defined contribution plans and for defined benefit plans when the owner of the retirement benefit is (or was) an employee of a private company.  On the other hand, the retirement benefits of federal employees are divided by a court Order called a Court Order Acceptable for Processing (“COAP”).  The retirement benefits of military personnel (retired or active duty) are divided by a different type of Order.  Over the course of the next few posts, I hope to shed some light on this very complicated area of divorce law.

Once you have decided that probate of the estate of a loved one is necessary, what do you do next? 

First, you must decide who will serve as executor (if the decedent has died with a will) or administrator (if the decedent has died without a will).  For guidance, you should first review the decedent’s will.  Most wills will include a provision which appoints a particular person or particular people as executor.  If the person who is appointed in the will does not wish to serve, there is the ability for someone else to serve as executor.  However, in most jurisdictions, you will need to have the person who was appointed sign a document indicating that he or she declines to serve.  If the decedent died without a will, you will need to consult the relevant sections of the Code of Virginia to determine who may serve as administrator.

Second, you will need to go to the probate (or wills and estates) department of the circuit court of the city or county in which the decedent was residing at the time of death to qualify as personal representative (the general term for an executor or an administrator).  Most probate departments require you to make an appointment, though you can usually get in fairly quickly.  When you attend this appointment, you will need to bring with you a list of the decedent’s assets, how they were titled, and their value as of the date of his or her death.  You will also need to bring sufficient funds with you to pay any probate tax and fees.

Once you qualify as personal representative, you should immediately begin the task of collecting the decedent’s assets and identifying the decedent’s debts.  As personal representative, you will be responsible for maintaining the decedent’s assets (with some exceptions) and paying the decedent’s debts (again, with some exceptions) until the estate is closed.  If you have any questions about how to do this, you should absolutely consult with an attorney working in the area of estate administration because, as personal representative, you could be held personally liable for any mistakes made in the administration of the estate. 

Probate is the process by which the assets of a person who has died (i.e., the “decedent”) are distributed to his or her heirs or beneficiaries and the debts of the decedent are satisfied by the decedent’s executor (if the decedent dies with a will) or the decedent’s administrator (if the decedent dies without a will).

Probate may be necessary if the decedent has died with a will (i.e., the decedent has died “testate”).  But, it may also be necessary if the decedent has died without a will (i.e., the decedent has died “intestate”).  How the decedent’s assets are held, the type of assets he or she had, and the value of his or her assets at the time of death will all impact whether probate is necessary.

If a loved one has passed away and you are unsure whether probate is necessary, you should consult with an attorney.  To get the most out of your meeting with the attorney, you should bring with you as much information you have regarding the decedent’s assets.

According to the US Census Bureau, the average age at first marriage for both men and women is at an all-time high.  Similarly, the number of individuals re-marrying, thereby creating blended families, is on the rise.  What does that mean for domestic attorneys?  We are seeing more and more individuals who seek, and/or would benefit from, a Prenuptial or Premarital Agreement. Whether or not a soon-to-be-married couple should sign a Premarital Agreement seems to be a topic of much debate, especially among those who are contemplating marriage.  Regardless of where you ultimately stand on this issue, you might want to consider the following: 

(1)        The older two people are at the time they marry, the more likely they will have been in the workforce for a substantial period of time and will have generated substantial assets.  This may mean that one, or both, soon-to-be spouses come into the marriage with separate assets to protect via a Premarital Agreement.

(2)        Those individuals who remarry after having children by a previous spouse may wish to segregate any assets they acquired prior to the second marriage to protect their children in the event of a divorce.  If a Premarital Agreement is not entered into and the second relationship ends in divorce, the children by the previous spouse may not receive the full benefit of those assets the individual had acquired prior to the second marriage.

In the end, the decision is one personal to each couple.  However, we’re always here to help you as you decide “To Prenup or Not to Prenup?”