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Trust and Estates Attorneys

Marshalling Property in Virginia Probate Cases

Locating property for individuals depends on the information provided about the deceased individual. In many cases, it may involve searching for real property. It could also involve contacting any bank where an individual may have been known to bank or invest. Sometimes, after an executor is appointed, they are able to review the decedent’s mail to determine if there are bank statements coming in or go through the decedent’s personal files to see what records the individual had.

It is beneficial to have an experienced probate lawyer to relieve some of these difficult responsibilities, as an attorney can help reduce unwanted frustration associated with marshalling property.

Possession of Property

Assets that are marshalled are not necessarily all physically collected, but sometimes those assets are just retitled into the name of the estate, and any income accrued is reported under the estate tax identification number rather than the individual’s personal income tax return.

For example, if an individual had an investment account with the financial institution, taking into account the economy, the market, and the decedent’s investments, it may not be prudent to move those assets immediately after the death of the individual. Rather, that account may just be retitled to reflect that it is now the estate of the decedent and that the income or the tax identification number provided is not the social security number of the individual, rather, but the tax identification number of the estate or the trust, whatever the case may be.

Unclaimed Property

Unclaimed property is generally a property the decedent had during their lifetime they somehow did not realize they had or they somehow abandoned. Commonly, unclaimed property is deposited for utilities or life insurance policies that were cashed but not entirely collected, or bank accounts that were just abandoned for a period of time.

Depending on the estate or the jurisdiction, after those accounts have been deemed to be abandoned, they’re usually turned over to the estate’s unclaimed property department and it’s possible to claim those assets if an executor is appointed, then they may be able to collect those assets on behalf of the estate.

Misconceptions About Marshalling Property

One of the more common misconceptions is how property passes at death. Property will pass four ways when somebody passes away.

  • The first is by beneficiary designation. If an individual had a life insurance policy that named a specific beneficiary, then those proceeds would pass directly to that individual.
  • The second way that assets pass is based on titling. If an individual owned an asset as a joint tenant with right of survivorship with somebody else, then that asset would pass as an operation of law as well. For example, if a husband and wife owned a bank account jointly and the husband passed away, the asset would pass, in theory, automatically to the wife.
  • The third way is by a trust. Any assets that have been pre-funded into a trust passed pursuant to the terms of the trust provision.
  • The last way assets pass is through the probate process, and the remaining assets, then, are the assets that are the decedent’s sole name at the date of death.

A common misunderstanding is that although an executor is obligated to marshal the assets, they may  not control how the asset is distributed. They may be able to value those assets but they are not given the control of them.

Complexity of Marshalling Property

Marshalling property in Virginia is one of the important fiduciary obligations of the personal representative. It can take some time to be able to marshal all of the assets thoroughly. Sometimes, individuals like heirs or beneficiaries, think that once appointed, the Commonwealth of Virginia provides a list of assets that the individual owned and that is not the case. The executor has to search for those assets and review the decedent’s prior income tax returns and personal files to determine where a decedent had assets. It can be paperwork-intensive and it can also be time-consuming.

One of the other things important to know is that an executor cannot assign his  or her ability to collect assets. Although an attorney can assist, an attorney can never go to a bank and request with his/her own signature to close or to move assets. The executor must either assign authority to move assets or be present with the attorney so that instruction is given to move or collect assets.

Companies and Financial Institutions

Companies and financial institutions each have their own estate or legal department that help to deal with these issues of marshalling property in Virginia probate cases and they vary greatly. Because companies and financial institutions usually operate in more than one state or jurisdiction, they are not often familiar with the requirements of every state or every jurisdiction. It is common for each company and financial institution to have their own requirements and have their own individual process for marshalling assets.