Articles Posted in Trusts

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.

I often hear from clients serious concerns about what to do with their home in their estate plan. Often at the top of their list is the desire to preserve a residence for one or more of their adult children.

In Tennessee, if you leave your home in your will to your children, they will own the property as tenants-in-common. In that case, nothing prohibits one of them from requiring the home to be sold, even if the others do not agree, and even if one of them lives there at the time. (see previous post on “partition actions” here)

There are reasonable options for addressing this worry in your Last Will and Testament.

June 15 was World Elder Abuse and Awareness Day, a yearly recognition begun in 2006 to call attention to the growing problem of fraud, abuse, neglect, and exploitation directed at elders. An estimated 5 million older Americans every year are victims, according to the Department of Health and Human Service’s National Center on Elder Abuse.

Seniors are especially susceptible to scam artists. But sometimes unscrupulous family members or associates can also be guilty of exploitation, fraud, or abuse.

There are several steps you can take now to protect your loved ones and yourself from falling prey to scams and other exploitation in senior years. A Tennessee estate planning attorney can help you with many of these defensive steps.

If you are a resident of Tennessee, the amount of state tax your estate will owe, as of January 1, 2016 is: zero. Tennessee’s inheritance tax (known in most states as an “estate tax”) phased out permanently at the start of 2016, which means for anyone who passed away on or after January 1, 2016, no estate tax will be due to the state of Tennessee.

This change is the result of a law passed by the Tennessee legislature in 2012 that gradually increased the inheritance tax exemption (the maximum amount of a taxable estate subject to the tax) until the 2016 repeal of the tax altogether, leaving only 14 states and the District of Columbia with estate taxes still on the books.

What a difference 4 years makes! In 2012, a $2 million Tennessee estate could expect to pay more than $80,000 in state taxes (between 5.5% and 9.5% of the taxable estate above a $1 million state exemption). In 2016, that same estate owes no state taxes in Tennessee.

No one wants to think about leaving their loved ones behind when they pass away. However, making sure that you have a will that details all your wishes about how you want things handled after you are gone will help you make sure that your loved one are cared for even when you cannot be there. It will help protect the things and people you care about and help them to have the future that you want for them. Here are some important factors to consider when it comes to the writing of your will. If you have questions or concerns about your will and need help having one drafted, then you should speak to one of our estate planning lawyers with the Higgins Firm. We will help answer any questions you may have and help you create a plan that is right for you.

• Having a will does not mean all your assets are covered

Any assets where a beneficiary is designated such as IRA 401k plans and life insurance will go directly to the beneficiaries. Also, any assets that you have in joint tenancy with survivorship will go directly to the people who have the survivorship rights after you die. Any accounts that are pay on death or transfer to death will also go to any beneficiaries when you die. If you have a trust with any assets these will be handled without probate. It is important to review your beneficiaries when you make any changes to your will so that you make sure your assets are divided exactly how you want them to be.

This is a difficult question to answer for many people. Often, it is because people do not know the difference between the two or what is involved in each. It is important to choose the one that is best for your needs so that your loved ones and family members will be protected and taken care of after you pass away. Here are some things we consider with our clients when helping them decide between a living trust or a last will. If you have any more questions about a living trust or a will, you should speak to one of our lawyers with the Higgins Firm. We will go through each option with you and help you with the planning of your estate.

First, it is important to know what a will and living trust mean. A will is a written document that is signed and witnessed that describes how you wish for your property to be divided after you die. It is revocable and can be amended or changed at any point during your lifetime. Finally, it allows you to appoint guardians for your young children. A living trust can provide life-time and after death management of your property. It is a legal written document that places your assets into a trust for your lifetime and then is transferred to a certain beneficiary or beneficiaries when you die. This person is known as a “successor trustee.”

Preparation is the main ingredient in the recipe for success in life. Whether it is packing for a vacation, planning a schedule, or even studying notes before a big presentation, preparation is critical in so many areas. Similarly, it is important to be prepared in estate planning. There are a number of issues that can arise with estate planning. It is critical to avoid some of the common pitfalls that many people may not even think about. Contact a Tennessee estate planning attorney with any questions that you have.

Get Your Estate Planning Documents in Line

One of the more obvious pitfalls to avoid is to actually have estate planning documents in line. Although you may have intentions of putting together an estate plan, it is important to begin now. It is always better to have an estate plan in place years early rather than being one day too late. It is also important to coordinate all of the legal documents including: wills; any asset ownership forms; trusts; and medical directives. This can keep things organized in order to eliminate any potential headaches for family members in the future.