How to distinguish assets belonging to a deceased person’s estate from those held by a corporation established by a relative in Virginia

Detailed Answer

Under Virginia law, a deceased person’s estate and a corporation are separate legal entities. The estate consists of assets the decedent owned at death, while a corporation holds assets in its own name. Properly identifying which assets belong to the estate and which belong to the corporation prevents probate delays and protects creditor and beneficiary rights.

1. Understanding Separate Legal Entities

Virginia Code §13.1-620 establishes that a corporation has a separate legal existence distinct from its shareholders or founders. A corporate charter, articles of incorporation and bylaws govern corporate assets, management and title to property. By contrast, the estate comprises all property the decedent owned solely or in specified joint ownership at death. See Virginia Code §64.2-100 for the definition of “estate.”

• Corporate Assets: Title, deeds, bank accounts and contracts held in the corporation’s name. Governed by Title 13.1 of the Virginia Code (§13.1-620).
• Estate Assets: Property held by the decedent at death, including real estate, personal property and financial accounts. Governed by Title 64.2 of the Virginia Code (§64.2-100).

2. Identifying Estate Assets

1. Review the Decedent’s Title and Deeds: Check land records and deeds to see if real estate is titled in the decedent’s name alone or jointly with right of survivorship.
2. Examine Bank and Investment Accounts: Look at statements and account agreements. Accounts in the decedent’s name, without corporate identifiers or an employer identification number (EIN), typically belong to the estate.
3. Prepare a Probate Inventory: Under Virginia Code §64.2-505, the personal representative must file an inventory listing all estate assets.

3. Identifying Corporate Assets

1. Inspect Corporate Records: Articles of incorporation, bylaws, shareholder ledgers and meeting minutes should list corporate holdings.
2. Check Title and Registration: Property owned by the corporation will bear the corporation’s legal name. Vehicles, real property and intellectual property should be registered accordingly.
3. Verify Tax and EIN Documentation: Corporations file annual reports and tax returns under their own EIN, not the decedent’s Social Security number.

4. Distinguishing Intermingled Assets

If the decedent and relative mixed funds or transferred assets without clear documentation, you may need to:

• Trace Transactions: Follow bank statements and ledgers to determine the source of funds.
• Review Transfer Instruments: Analyze deeds, bills of sale or corporate resolutions for transfers between the decedent and corporation.
• Consider Piercing the Corporate Veil: If the corporation acted as an alter ego of the decedent, a court may reclassify assets. Courts apply factors such as commingling of funds, undercapitalization and failure to observe corporate formalities.

Helpful Hints

• Gather Documents Early: Obtain deeds, bank statements, corporate minutes and tax returns before probate or asset disputes arise.
• Use Professional Assistance: A probate attorney or forensic accountant can help distinguish complex transactions.
• Keep Corporate Formalities: If you manage a family corporation, maintain separate bank accounts, records and meetings to avoid future confusion.
• File a Complete Inventory: Under Va. Code §64.2-505, missing an estate asset can delay distributions.
• Communicate with Beneficiaries: Clear communication about which assets belong to the estate versus the corporation can reduce conflicts.