Our Tennessee Estate Planning Attorney Frequently Asked Questions

One reason many people put off writing a will and planning their estates is that they have many questions about the process. We have heard all of these questions and provide answers to many of them in our Frequently Asked Questions. If your question is not answered here, feel free to call us directly.

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  • Is a Living Trust Better Than a Will?

    As an estate planning and wealth preservation attorney, I am routinely confronted with the question … “is a living trust better than a Will?”

    The answer is always the same.

    “It depends.”

    Estate planning is not a one size fits all approach and what is the correct planning strategy for one family, may not be right for another family. For some families, a Last Will and Testament may be the appropriate strategy, and yet for other families, a Living Trust may be the appropriate strategy.

    A Last Will and Testament, typically, will assure the following:

    • Your wishes will be followed in the event of your death.
    • Your loved ones will receive their inheritance.
    • The person or persons you named as executor, will be in charge of settling your final affairs after your death.

    For some families, this is all that they would want for their families after their death. However, a Last Will and Testament WILL NOT:

    • Avoid Probate
    • Keep Your Family’s Financial Affairs Private
    • Result in a Quick and Simple Estate Settlement Process
    • Protect Your Children’s Inheritance from Divorcing Spouses, Creditors, Lawsuits, and Other Predators
    • Ensure That Your Retirement Accounts Pass to Your Children in the Most Tax Efficient Manner Possible
    • Preserve the FULL Step in Tax Basis for Your Surviving Spouse

    For some families this may not be important to them, and a Last Will and Testament may be all that they need.

    However, for other families, this may be extremely important to them and they would want their loved ones to experience all of the above, and even more, if necessary.

    There are many different types of Living Trusts and Living Trusts can be designed in a number of different ways. Living Trusts can be designed to ensure the following:

    • Avoid Probate
    • Keep Your Family’s Financial Affairs Private
    • Result in a Quick and Simple Estate Settlement Process
    • Limit Estate Settlement Costs and Attorney Fees
    • Protect Your Children’s Inheritance from Divorcing Spouses, Creditors, Lawsuits, and Other Predators
    • Ensure that Your Retirement Accounts Pass to Your Children in the Most Tax Efficient Manner Possible
    • Preserve the FULL Step Up in Tax Basis for Your Surviving Spouse
    • Asset Protection for Your Surviving Spouse
    • Ensure That Your Children Do Not Lose Their Inheritance As a Result of a Remarriage by a Surviving Spouse
    • Protect and Preserve Your Assets in the Event of Long Term Care Expenses
    • Protect and Preserve Your Income in the Event of Long Term Care Expenses
    • Protect Your Retirement Account for Your Children and Other Loved Ones From Their Creditors, Divorcing Spouses, Lawsuits, and Other Predators
    • Protect Your Estate and Ensure Access in the Event of Your Incapacity
    • Ensure Property Remains in Your Estate and the Family Bloodline for Multiple Generations

     

    The above reasons could be many reasons why a family may prefer a living trust legal strategy as opposed to a last will and testament legal strategy. However, you will never know which strategy is appropriate for you and your family until you speak about your specific situation with a knowledgeable and experienced estate planning and wealth preservation attorney.

    If you have more questions about which strategy is better for you, a will or a trust, and how to plan your estate in a manner where you can truly leave a legacy for your family, please contact your Nashville, Tennessee Estate Planning Attorney, Dan Perry, by calling our office at (615) 472-2482 so that we can assist you and your family with developing the perfect estate planning strategy to assist you now and in the future.

  • Why Can't I Just Use Beneficiary Designations?

    I recently had a family come into my office and say to me during our meeting together … “why can’t we just use beneficiary designations.” That’s a great question! What are beneficiary designations.

    A beneficiary designation is a designation that you will put on a financial account which will direct the account to transfer to that named individual upon death. The main benefit of beneficiary designations is that they occur immediately after death upon the presentment of a valid death certificate to the financial institution. This means that they do not become part of your probate estate and are transferred outside of probate.

    So, this begs the question, why can’t I just use beneficiary designations to dispose of my estate? Well, there are a number of reasons.

    First, you cannot dispose of your tangible personal property by beneficiary designations. Your tangible personal property are probate assets and must be distributed to your heirs via the probate court system.

    Second, your real estate, although transfers to your heirs at law immediately after death, can be brought into your probate estate under a number of circumstances.

    Finally, if the beneficiary listed on your beneficiary designation is either a minor (under the age of 18), incompetent or incapacitated, or deceased, then the beneficiary cannot inherit directly. This means that a court proceeding must be initiated to oversee the acceptance of their inheritance that occurred via beneficiary designations. In these instances, a desire to avoid probate can result in probate occurring due to not being careful in a family’s planning.

    However, even more importantly, simply naming beneficiary designations on your financial accounts can be one of the worst estate planning mistakes that you can make. Most importantly, naming a beneficiary on your financial account can result in your loved ones’ inheritance being subject to divorcing spouses, creditor claims, lawsuits, and other predators. This is something that many families fail to consider and to plan in a manner that will truly protect their loved ones, children, and grandchildren for years to come.

    If you have more questions about beneficiary designations and how to plan your estate in a manner where you can truly leave a legacy for your family, please contact your Nashville, Tennessee Estate Planning Attorney, Dan Perry, by calling our office at (615) 472-2482 so that we can assist you and your family with developing the perfect estate planning strategy to assist you now and in the future.

  • What is Probate?

    There is a lot of confusion regarding this topic, not to mention many misconceptions about probate. 

    In its simplest form, probate is a court supervised process of settling the final affairs of person after death. This includes the paying of all valid debts, the paying of all taxes, that satisfying of all claims, and distributing what is left to the surviving family members. This occurs whether or not there is a Will or not (although, the process will differ between the two).

    Probate is a public court proceeding where all of the assets and debts of a person are made public record that anyone can view at any time. It is also a process, if there are any disputes among your heirs, will get resolved in open court. 

    Probate involves a process that will last anywhere from four months to two years or longer to complete. It must take four months at a minimum in order to put all known creditors on notice of the proceeding and give the creditors a reasonable opportunity to file their claims against the estate.

    If there are any taxes due, those taxes must be paid. If the person who died was on Medicaid, then Medicaid Liens must be resolved. This is where the assets are used to repay Medicaid for every penny that was paid out on the person’s behalf in the form of Medicaid benefits during their lifetime.

    The costs of administration have to be paid. This includes the costs of the attorney, the court courts, the administration fees, the executor and fiduciary fees, and any other miscellaneous fees. It is not unheard of to have $30,000 or more in fees that must be paid out of the estate in the form of costs to settle a probate estate.

    Once all creditors have been put on notice, have had an opportunity to file their claim, their claims have been resolved, all taxes and Medicaid liens have been paid, and all costs of administration have been paid (attorney fees, court costs, executor and fiduciary fees, etc.), then whatever is left is distributed to the family members.

    However, at any time in the two-year period from when the estate was opened, it can be contested by an heir.

    What is probate? It is a court process that families go through when a family member dies. As you can tell, it is typically not a positive process.

    If you have experienced the death of a loved one, please contact your Nashville, Tennessee Probate Attorney, Dan Perry, by calling our office at (615) 472-2482 so that we can listen to you and assist your family through the legal process during this difficult time.

  • Should You Go Through Probate?

    Here is a question that I hear a lot … Should I Go Through Probate?

    The real question is, should your family or would your family want to, go through Probate?

    Quite simply, Probate is a court process of administering your estate, paying your creditors, paying your taxes, and distributing what is left to your surviving family members after death. In my experience, no one wants to go through probate, but it is something that families feel they must endure after the death of a loved one.

    During the probate court process your family member will interact with lawyers, with judges, with clerks, spend quite a bit of time, and spend quite a bit of money to settle your final affairs after your death. How long and how much? In many cases its several months to several years to complete and tens of thousands of dollars in financial costs.

    I am yet to experience what is called “an easy probate.” It is a process that usually frustrates families regarding the delays, the costs, and just the overall process involved. Even when the estate is very simple, the family members will have to hire a lawyer, confirm the executor, open the probate estate with the court, and detail all the assets and debts of the estate. Even when it is a very simple estate, it will still last a minimum of four months.

    So, should you go through probate? I say no.

    If you feel you want to make things easy and simple on your family when you pass away or in the event of your incapacity, please contact your Nashville, Tennessee Estate Planning Attorney, Dan Perry, by calling our office at (615) 472-2482 so that we can discuss the right strategy for you and your family.

  • Why Do I Need an Estate Plan?

    The question is a simple one … Why Do I Need an Estate Plan?

     

    Every person, regardless of wealth, is in need of an estate plan. If you do not have an estate plan, then your assets will pass to your loved ones not in accordance with your wishes, but in accordance with what the state law says.

     

    Every day I hear people tell me … “Dan, I have a simple case. I do not think I even need an estate plan.”

    How is your estate simple? Let me share with you some of the questions I may ask someone who asks me this question:

    1.Do You Children From a Prior Marriage?

    2.Are Your Children in Healthy Marriages?

    3.Do You Have a Plan to Ensure That Your Assets Pass Smoothly and Intact to Your Children After You Die?

    4.Do You Have a Plan to Ensure That Your Children’s Inheritance Are Not Lost Due to Divorcing Spouses, Creditors, Lawsuits, and Other Predators?

    5.Are Your Retirement Accounts Set Up to Pass To Your Children in a Tax Efficient Manner?

    6.How Do You Plan on Paying for Long-Term Medical Care?

    7.Will You Be Paying for Your Elderly Parents Long-Term Medical Care?

    8.What Will Happen if One of Your Children Predeceases You or is Incompetent/Disabled at the Time of Your Death?

    9.Do You Want to Leave Behind a Legacy and Something More than Just Money?

    10.Is Your Spouse Prepared for the Tax Burden When He or She Sells Your Home After You Die?

    11.What is Your Plan Should One of You Become Disabled in Life?

    12.Who Will Your Surviving Spouse Call When The Unthinkable Occurs?

     

    I could go on, and on, and on. Every time I ask these questions and similar questions families quickly realize that everyone needs an estate plan, and there is no such thing as a “simple estate.” Every family’s situation is unique and should be given the same level of care and attention that you would want a surgeon to give to a family member during surgery.

    Before you write off whether or not you need an estate plan, just remember, everyone needs an estate plan.

    If you feel you want to make things easy and simple on your family when you pass away or in the event of your incapacity, please contact your Nashville, Tennessee Estate Planning Attorney, Dan Perry, by calling our office at (615) 472-2482 so that we can discuss the right strategy for you and your family.

  • What Happens If I Do Not Transfer My Assets to My Revocable Living Trust?

    The biggest failure when it comes to estate planning and living trust planning is a failure to fund assets into your revocable living trust. The result is very simple, if the assets are not in your revocable living trust and still titled in your name at death, those assets will go through probate. Let’s look at an example.

    John established his Family Revocable Living Trust about five years before his death. John owned a home in Tennessee and another home in Alabama. John owned some investment accounts, retirement accounts, bank accounts, and CDs. All of John’s financial accounts were titled in the name of the trust along with naming the trust as the beneficiary. Also, John’s home in Tennessee was titled in the name of the Trust.

    Unfortunately, John did not title his home in Alabama into the name of the trust.

    The result of this mistake was that John’s children, the beneficiaries of this revocable living trust, had to hire an attorney in Alabama and proceed with an ancillary probate proceeding in order to transfer ownership from John to his children. If John had titled the Alabama property in the name of his trust, this never would have been necessary. This would have saved the family time and money.

    When you establish a revocable living trust, make sure that your assets are titled into your living trust correctly.

    If you feel you want to make things easy and simple on your family when you pass away or in the event of your incapacity, please contact your Nashville, Tennessee Estate Planning Attorney, Dan Perry, by calling our office at (615) 472-2482 so that we can discuss whether a Revocable Living Trust would be the right strategy for you and your family.

  • What is a Revocable Living Trust?

    The easiest way to describe a revocable living trust is to tell you a story about John and Jane Doe.

    John and Jane Doe came into the office about a year ago and were interested in avoiding what Jane went through with her mother’s estate. As it turned out, Jane’s mother had a Will that left everything she owned to Jane and her two brothers equally and named Jane as the executor. Jane told us that it took 2 and ½ years and cost the family $30,000 in legal fees before the estate was completely settled. In addition, the process of going through probate resulted in making her two brothers impossible to deal with as they wanted their inheritance.

    As John and Jane did not want their children to go through this, we recommended John and Jane set up the John and Jane Doe Revocable Living Trust. What this trust would say is that everything they own at their death would pass to their children in equal portions. However, the difference is that the trust would direct where their assets would go after their deaths, not their Will. What this means is that there would be no probate administration and their children would receive their inheritance immediately, as opposed to several months and years later. In addition, it would save their children tens of thousands of dollars in financial costs when it came time to settle the estate.

    This is a Revocable Living Trust. It is an arrangement that you set up during your lifetime, where you continue to stay in control of all of your assets, of all of your property, just like you always have during your lifetime. When the first spouse dies, the survivor stays in complete control. There is no interruption, there is no probate, everything just continues. When the second spouse dies, everything is distributed immediately to the named beneficiaries (perhaps children or other heirs) without a probate administration.

    Due to the ease of settlement and the savings this provides to the family, we have found that this is the preferable way for many families to set up their estate planning for their family.

    In addition to saving the family tens of thousands of dollars, as well as significant time delay through probate, a revocable living trust can be designed to provide asset protection for the surviving spouse, provide tax savings for the surviving spouse, protect the children’s inheritance from divorce claims, creditor claims, lawsuits, and other predators, and can even be designed to leave a true legacy behind for your children, grandchildren, and future generations. 

    Finally, a revocable living trust also provides protection in the event of incapacity. There are several times where I have seen a power of attorney not be honored by a financial institution for a number of reasons. However, I am yet to see a Trust not be honored by a financial institution. In the event of your incapacity, the successor trustee takes over and can begin making decisions on your behalf, even if the power of attorney is determined by the legal department at a financial institution to be invalid.

    If you feel you want to make things easy and simple on your family when you pass away or in the event of your incapacity, please contact your Nashville, Tennessee Estate Planning Attorney, Dan Perry, by calling our office at (615) 472-2482 so that we can discuss whether a Revocable Living Trust would be the right strategy for you and your family.

  • What is a Last Will and Testament?

    A Last Will and Testament (commonly referred to as a Will) is a legal document that states where you want your property to go and who you want to be in charge of settling your affairs after your death. 

    There are many requirements to having a valid Will in Tennessee. You must follow the legal formalities. This means that your Will must be validly signed in the presence of two independent witnesses. These are witnesses who are not inheriting from your estate in the Will. In addition, the witnesses must sign an affidavit that they witnessed your signature. You must also have legal capacity to sign your Will. This means you can’t be incompetent, suffering from dementia, or some other medical issues that prevents you from understanding what you are signing.

    Now, you may be thinking, “can’t I just write my Will myself?”Why, yes you can. In Tennessee, this is called a holographic Will. A Holographic Will is not required to be witnessed. However, keep in mind that after you die, when your Will is presented to the Probate Court, the Judge will require a family member or family members to appear to testify that this was your handwriting. Although, I will always caution writing your own Will as it can be easier to contest and can lead to issues when it comes time to probate that Will.

    Finally, the person you put in charge of settling your affairs when you die, referred to as your executor, has a legal duty to make sure your valid debts are paid, that your property is distributed to those persons stated in your Will, and to admit the Will to probate court for proper administration. A common misconception is that not every estate goes through probate. The proper statement is that not all assets go through probate. However, every Will must be presented to the Probate Court by your executor. Whether you have assets that will go through probate is a different question.

    If you feel it is time get your Will completed and your estate planning strategy in place, please contact your Nashville, Tennessee Estate Planning Attorney, Dan Perry, by calling our office at (615) 472-2482!

  • How Do I Contest a Will in Tennessee?

    I was speaking with a client recently who informed me that after his mother died, the family went down to Florida to clean out the house, put it up for sale, and close her accounts. He also told me that they were going to speak with a local attorney regarding the probate and estate settlement process. When he arrived in Florida, the family discovered that the house had already been cleaned out, was already listed for sale, and the bank accounts were empty. It turned out that a nephew who lived in Oregon, moved to Florida to live with their grandmother a few years ago. During two short years, most of her money was gone, the Last Will and Testament had been changed leaving everything to this nephew from Oregon, and all the remaining accounts had his name as a joint owner.

    The family asked, how can we contest a Will?

    Although I am not licensed nor any type of expert on Florida law, let me explain how you contest a Will in Tennessee.

    In order to contest a Will, the person who wishes to contest the Will must be entitled to a share of the estate if the Will is set aside. Also, there are only three grounds to validly contest a Will in Tennessee. These are improper execution, lack of capacity, and undue influence. Improper execution is exactly as it sounds. This means that the legal requirements to have a valid Will were not followed, i.e., there were no witnesses. Lack of capacity means that the person signing the Will was mentally incompetent at the time of signing. Undue influence means that someone else was exerting control over the person and unduly influenced them to change their Will.

    Finally, and most importantly, in order to bring a Will contest, you must file your action in the appropriate court no later than two years after the date that the Will was first admitted to probate. This is referred to as a Statute of Limitations. If you file more than two years later, the case will be dismissed.

    If you think you have a case to contest a Will, please contact your Nashville, Tennessee Estate and Probate Litigation Attorney, Dan Perry, by calling our office at (615) 472-2482!

  • Can I Protect My Children's Inheritance From Divorce Claims? - Nashville Tennessee Estate Planning Attorney

    In the course of my practice as an estate planning attorney, this topic will sometimes come up. Occasionally, I will have clients that do not trust their daughter-in-law or son-in-law and want to protect their children's inheritance from divorce claims. Unfortunately, without proper planning, this can result in the adult child losing a portion or all of their inheritance due to a divorce claim from a former spouse.

    In Tennessee, when two parties get divorced, their assets are subject to what is called "equitable division of marital property." Also, equitable does not necessarily mean equal. For example, let's say John and Jane got married, and 10 years later, Jane filed for divorce. Further, let's say John received an inheritance from his mother in the amount of $150,000, and prior to the divorce, John deposited that into a bank account. A divorce court may rule that this is subject to equitable division in divorce, and court could rule that 70% (or even higher) goes to Jane! I am sure that John's mother would be devestated to know that the money she saved her whole life went to her son John's ex-wife.

    However, there is a legal strategy that you can pursue to protect your children's inheritance from divorce claims. This is commonly referred to as a Children's Inheritance Trust. It is a way for your adult children to keep their inheritance separate, and thereby, protect the inheritance from future divorce claims (in addition to creditor claims, lawsuits, predators, and themselves!)

    If you have questions about how you can protect your children's inheritance from divorce claims, I encourage you to download my free report on protecting your estate and your children's inheritance from divorce, creditors, predators, and other lawsuits. 

    If you need to speak with us today regarding these concerns, please contact our office, we are always here to help!

    Daniel A. Perry

    (615) 472-2482

    [email protected]