Articles Posted in Estate Planning

A General Durable Power of Attorney is one of four basic estate planning documents I recommend for every client, along with a Last Will and Testament, a Living Will, and a Health Care Power of Attorney. They often ask, “Why do I need a Power of Attorney (POA)? I have all my faculties and am perfectly capable of taking care of my own affairs.” The answer is: that’s exactly the best time to execute one.

Through a General Power of Attorney, you authorize one or more individuals to step into your shoes and take action on your behalf, in your place, as your agent, or “attorney-in-fact.” What can an attorney-in-fact do for you? Just about anything that you can do for yourself. And while you may have no need for that kind of help, that can change in a tragic heartbeat. Now, while you are capable of making an important decision with a clear head, and have the time to do so, is when you should take care of this life planning tool.

You should name at least one person to serve as your agent, and one alternate, to serve in case your first choice is unable to serve. Who should it be? If you are married, it makes good sense to name your spouse. For an alternate, you might name one of your adult children. It could also be a close friend who knows you and your affairs well. The most important characteristic about an attorney-in-fact is that you must have complete trust in them to use this authorization wisely and honorably in their best interest. Someone who is good with money,  is organized and keeps good records, lives near by or can be near by quickly, and with whom you have a very strong relationship, is the best kind of individual to name.

Procrastination is one of the biggest hurdles we all face in getting our estate planning done. Most Tennesseans know they need a will and other coordinated documents in place. We intend to get to it at some point, but feel too busy, or lack the pressing motivation, to contact an attorney and complete this essential life step. Some people even mistakenly believe they have no need for a will, maybe because they don’t own much, or because their “kids will get it anyway.”

If any of that sounds like you, this post is written with you in mind. Here are six (6) important reasons why you need a will (and 2 reasons why you shouldn’t wait).

  1. Be in control of naming your heirs. Without a will, state law determines which of your family members will receive your property. A recent probate client was left administering an estate to which the rightful heirs under Tennessee law were more than 25 cousins and 2nd cousins, many of whom did not even know the decedent. If you want your property to be chopped into dozens of shares and distributed to people you don’t know or maybe don’t like, then be sure not to have a will in place!

A Revocable Living Trust is a common and popular tool of estate planning. As opposed to trusts that are created in a will and take effect after a person’s death, a living trust is created by a person (called the Grantor) during their life. The trust can own any of their assets; it names a trustee to handle the trust (including often themselves), as well as subsequent trustees to manage the estate if they are unable. The trustee is typically granted broad discretion to use trust assets for the benefit of the Grantor.

Then, after the Grantor passes away, the trust names a trustee to handle the assets according to the terms of the trust, which then function in a similar manner as a will. Living trusts are popular because, ideally, they allow loved ones to avoid the probate process, in which the administration of an estate is overseen by a court. In some cases, it can be time consuming, sometimes costly, and cannot be kept private.

Here is one significant challenge with a living trust. Any assets that are owned by a person individually and not owned by their trust are part of the individual’s estate, and not part of the trust estate when a person dies. Steps must be taken to place assets in the trust. If sufficient assets are owned by the deceased individual and not the trust, then probate may still have to be opened to handle the estate, and the primary purpose of establishing the trust would be undermined.

Most estate planning clients are either retired, elderly folks who are thinking about how to best leave their assets to their adult children and grandchildren, or are middle aged married couples making sure they have the right plan in place in case they pass away unexpectedly and leave minor children behind. Naming a guardian for the children and a trustee to administer a trust allows them to make those decisions, instead of a judge.

The age group least likely to have a will or estate plan in place? Millennials. And that makes sense. After all, young people have on average longer to live, may not yet have children, and fewer assets to worry about distributing. In fact, though, millennials need a regularly reviewed estate plan just as much if not more than those in other age groups. That’s because millennials are more likely than older generations to have unconventional family situations. They are more likely, for example, to be in committed relationships, including parenting relationships, without the legal protections afforded to married couples.

Under Tennessee law, if you pass away without a will, your individually held assets do not pass to your significant other unless you are married.

We were all shocked and saddened when film star Debbie Reynolds passed away just one day after her daughter, actress Carrie Fisher. Not only is it an extremely emotional time for the family, dealing with two deaths at the same time can complicate inheritance questions. For example, what if Ms. Fisher’s will left half of her estate to her mother, Ms. Reynolds, and the other half to her daughter, Billie Lourd. Since her mother died the next day, who should receive her share of Ms. Fisher’s estate? Should the mother’s will determine where it goes? Or should Ms. Fisher’s will? What if neither of them left a will?

This situation is not as uncommon as you might expect. Simultaneous or near-simultaneous deaths of family members can accompany any serious accident or natural disaster, and should be addressed during the will or trust planning process. Fortunately, the law in most states deals with this issue by requiring that an heir survive a decedent by so many days to be eligible for an inheritance. But a different provision in a will or trust would take priority over that rule.

In Tennessee, as in many states, unless a will, trust, or relevant contract specifies otherwise, an heir who dies within 120 hours of the decedent is deemed to have died first, for purposes of determining inheritance (See Tennessee’s Uniform Simultaneous Death Act).  In other words, for example, if Tennessee law applied, since Debbie Reynolds passed away less than 120 hours after her daughter, the mother’s estate would not include any inheritance from the daughter. Instead, Carrie Fisher’s will or trust would determine who receives her mother’s share of her estate.

It’s January! New Year’s resolutions are in full swing. We are collectively hitting the gym and committed to our diets (for now).

Here is another resolution you might want to consider: let 2017 be the year you (finally) get your estate plan in order. Most of my will clients tell me they have been intending to prepare their estate plan for months, even years. It’s just not the kind of thing that we often have time to put on the front burner.

In fact, surveys consistently show that more than half of American adults do not have a will or other estate plan in place. This is true even though statistics show approximately 100% of American adults will one day pass away.

Are you one of the 55% of American adults who do not have a Last Will and Testament in place? Or did you prepare yours years ago and need to revisit your estate plan? If so, the holidays can be a great time to get your affairs in order.

The end of the year can be a time of reflection, an opportunity to spend quality time with family and those closest to us. The holidays also inspire us to think clearly about our priorities, what is truly most important in life. It can be the perfect time to contemplate some of the central questions that a proper estate plan raises.

Who would you want to make health care decisions for you, or handle your finances, if you suddenly were in a situation that you could not handle them yourself? Who do you trust to be in charge of paying your debts and distributing the assets in your estate after you pass away? Who should take control of your online or social media accounts?

A Last Will and Testament is, of course, important to make sure that after you pass away your assets are distributed according to your wishes. But an important and often overlooked element of a proper estate plan is identifying those assets in the first place. When it comes to intellectual property – copyrights, trademarks, patents, trade secrets – knowing just what you own and the best way to protect those assets for your heirs requires an extra level of planning.

Here in Nashville (Music City, U.S.A.), clients have often written and/or recorded songs. Maybe they have value now, or maybe they could have value in the future. Either way, protecting that asset is an important consideration.

One of the most important steps is to be aware of which, if any, rights associated with your copyright may have been transferred to another individual or company, and which have been fully retained. A copyright is not like other property you may own, like your furniture, the contents of your bank account, or your home. A copyright is in fact a collection of rights – including the right to copy, perform publicly, and license – subject to certain deadlines, and provisions of federal law. Even if you have transferred certain rights related to your copyright ownership, you may have retained others.

Clients with a Last Will and Testament have often specified that their assets are to be distributed equally between their heirs, only to learn after a thorough estate planning review, that their even-handed intentions would not be carried out as they wish. Your Will may claim that property is to be divided equally, but if a life insurance policy, or your IRA, does not account for your youngest child, for example, or you have added one child as a joint owner to help out with your bank account, but not the others, your will does not undo those transfers and even out your childrens’ inheritance.

A comprehensive estate planning review is a necessary step toward protecting our loved ones after we pass away according to our wishes. As the scenario above indicates, this review requires more than simply preparing a will (or living trust), though that is of course an essential component of any estate plan.

An estate planning attorney can assist you in thinking through all of your assets and can advise regarding the best way to make sure that your goals are met, your wishes carried out.

Family estate plans are changing because families are changing. While many estate plans remain focused on providing for a spouse and children after passing away, more and more address complex considerations because of a blended family.

What if you have one child of your own from a previous marriage, and two children with your spouse, while your spouse has 1 child from a previous marriage. How should you care not only for your own children from a previous marriage, but also for your spouse’s children from their previous marriage or relationship?

This kind of planning requires open and frank discussion between spouses, and sometimes the adult children as well, so they are prepared for and understand your wishes. It also requires you to think through some difficult scenarios to make sure your estate plan prepares well for several contingencies. If you pass away before your spouse, how can you be sure your surviving spouse will provide for your own children? If your spouse passes away before you, to what extent should you care for their children? Do you anticipate conflict between your children over your respective estates?