Wednesday, January 23, 2013

Virginia's Statutory Allowances: Family Allowance, Exempt Property Allowance and Homestead Allowance

Under Virginia's probate laws, there are some allowances provided for by statute that benefit the surviving spouse, and the minor children, of the decedent.  These allowances are also called exemptions because they have priority over the debts of the decedent (at least unsecured debts) and are therefore exempt from the reach of creditors. There are three statutory allowances: the family allowance, the exempt property allowance and the homestead allowance.

Though this is a somewhat oversimplified explanation, these allowances generally were enacted to provide the surviving spouse and the minor children with funds for living expenses during the period right after the decedent's death, and some of the tangible property (like furniture and furnishings) belonging to the decedent. 

I find that many people do not know these statutory allowances exist.  They are very high priority claims in the pecking order of claims against a Virginia estate, coming behind only the costs of administration.  But, keep in mind that the lien of secured creditors (like a mortgage) are still valid.

The family allowance can be up to $18,000,and can be paid as a lump sum or monthly (the monthly payment for the full $18,000 allowance would be $1500 per month for one year).  The statute does provide some discretion to the personal representative (executor or administrator) to reduce the amount of the family allowance, if the surviving spouse otherwise has sufficient assets and does not have a need for the full amount of, or even any part of, the family allowance.  This obviously can lead to some conflict between the surviving spouse and the personal representative.   Ultimately, if no agreement can be reached, the court will make a ruling.   Practically speaking, these disputes rarely go to court because the amount of money involved in the dispute is not enough to warrant litigating.

The exempt property allowance entitles the spouse (and minor children ) to pick up to $15,000 worth of tangible personal property, including automobiles , in satisfaction of the exempt property allowance. 

The homestead allowance is a $15,000 payment to the surviving spouse and minor children.   If there are no minor children, the full $15,000 can be paid to the surviving spouse.

All of these allowances are in addition to what the surviving spouse and minor children may receive from the estate.  However, if the surviving spouse takes the homestead allowance, he or she cannot then claim the elective share of the augmented estate (which has been discussed in previous posts).

To be entitled to these allowances, the surviving spouse (and minor children, if any) must file a written claim for them or appear in person in the court where the estate is being administered within one year of the decedent's death. 

There can be other issues relating to these Virginia statutory allowances and their payment, particularly when the estate has limited assets or is insolvent, but they are beyond the scope of this post.   The point is, if you are a surviving spouse or are the personal representative of an estate who has been presented with these claims, you need to proceed carefully and in accordance with the statutes to make sure that these allowances are handled properly.

Please feel free to give me a call or send me an email if you have any questions.