Our Estate Planning Frequently Asked Questions

When is the best time to make an estate plan? How can I leave money for my grandchildren’s education? What can I do now to avoid my assets going into probate? We answer these and many more questions on our frequently asked questions page.

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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.

  • 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!

  • 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]

  • What is Crisis Medicaid Planning? - Nashville Tennessee Estate Planning Attorney

    This is a concept that is referred to a situation where a person is preparing to go into a nursing home. With the rising medical costs, nursing homes charge anywhere, on average between $5,000 and $9,000 (or higher) per month. Therefore, with the average stay in a nursing home of 3.5 years, it's easy to see how a person's life savings can be completely eaten away by nursing home costs. However, for people who plan at least five years in advance, it is possible to protect nearly all of your assets from long term nursing home costs eating away your life savings.

    Sometimes, unfortunately, people do not plan five years in advance. This is referred to as a crisis Medicaid planning situation. In these situations, your options are limited. However, there are strategies that you can pursue to protect 1/2 of the assets that you own on the date that you enter the nursing home (leaving assets for your surviving children when you pass away).

    If you have questions regarding Medicaid planning or crisis Medicaid planning, I encourage you to download my free report on Avoiding Nursing Home Poverty. Please fill out the contact form to the left of your screen to download this free report. If you have questions about Medicaid planning, please contact our office, as always, we are here to help!

    Daniel A. Perry

    (615) 472-2482

    [email protected]

  • What Taxes Will My Children Have to Pay When I Die? - Nashville Tennessee Estate Planning Attorney

    This is a very common question that I answer nearly everyday. However, there are several different taxes and multiple tax issues that could affect your family at your death. The first and most common type of tax is commonly referred to as the death tax. In Tennessee, the death tax (referred to as the Tennessee Inheritance Tax) was repealed on January 1, 2016, therefore, there is no death tax in Tennessee. However, there is still a federal death tax (referred to as the Unified Federal Estate and Gift Tax). This is a tax that the IRS levies on the transfer of wealth from one generation to the next. The IRS levies a tax on the transfer of an estate that exceeds $5.65 million on the date of death (including all assets, non-probate assets, and life insurance). If your estate exceeds $5.65 million on the date of death for 2017, the IRS has a top tax rate of 40%. However, there is an unlimited marital exemption from the federal estate tax. This means that you can leave an unlimited amount of money to a surviving spouse free from the estate tax (so long as the surviving spouse is a United States citizen). Therefore, this leaves the $5.65 million exemption wasted. However, within nine (9) months of the date of death, the surviving spouse can file an estate tax return (even if no estate tax is due) and elect portability. This has the effect of transfering the unused $5.65 million estate tax exemption to the surviving spouse, thereby creating a $11.3 million exemption from the federal estate tax for the surviving spouse.

    There is also capital gains taxes that may impact your estate. The capital gains tax is a tax that is levied on the gain earned on an appreciating asset upon its sale. For example, if you buy 100 shares of Microsoft stock in 1990 for $20,000 and you sell the stock in 2020 for $40,000, you will owe capital gains tax on the $20,000 gain. However, when assets transfer to the next generation, the surviving heirs recieve a step up in tax basis. What this means is that the value of the asset that he or she inherited is given the value that the asset is worth on the day that your loved one inherited. For example, let's say instead of selling the Microsoft stock it passed to your child on your death in 2020. The stock would have a tax basis of $40,000 for your surviving child. Therefore, if your child later sold the Microsoft stock for $45,000, he or she would only owe capital gains tax on the $5,000 gain as opposed to the $20,000 gain.

    There can also be income taxes that may be due from your final income tax return that would need to be filed, an estate income tax return may need to be filed and taxes owed, and there could be property taxes, or hall tax liabilities that may due depending upon your situation.

    If you have concerns about taxes and what you can do now to limit the taxes that your children will have to pay at your death, please contact us at the number below. We are always here to help!

    P.S., please contact us with the contact form on the left part of your screen to receive an immediate answer or download my free report on how taxes can impact your estate planning strategy. We look forward to hearing from you!

    Daniel A. Perry

    (615) 472-2482

    [email protected]

  • What Should You Ask The Estate Planning Attorney During Your First Meeting? | Nashville, Tennessee Estate Planning Attorney

    As an attorney, but more importantly as a business owner, I feel we have a moral obligation to the community to educate the fellow members of the community so that they can become as informed as possible when it comes to making the correct decisions when purchasing a product or service. Therefore, I have decided to provide the following list on important questions every Tennessee resident should ask an Estate Planning Attorney when they meet with him or her regarding their estate planning during the first meeting.

    1. How Many Areas of Law Do You Practice In?

    It is important to know the answer to this question. Estate and Probate laws are complex. You select the lawyer that constantly keeps themselves up to date on all the               various estate planning and tax law changes that occur in this complex field. Choosing the lawyer that practices in 5, 6, 7, or 8 or more different practice areas may not           be the best lawyer to plan the estate for your family.

    2. How Much Does It Cost?

    After the first meeting, the lawyer should be able to answer this question in a direct fashion. You should never pick an attorney or law firm to handle any legal matter             that is anything other than completely crystal clear about the financial arrangements involved.

    3. How Many Other Families Have You Helped Similar To Our Situation?

    You should always pick an attorney and law firm that has client testimonials from many of their previous satisfied clients.

    4. How Many Lawyers Are In Your Firm?

    This is an important question. It is always a good idea to work with the law firm that has several other estate planning lawyers, practicing in multiple states, as those                attorneys can bounce ideas off of one another when it comes to specific estate planning situations.

    5. Are You Published on Estate Planning Topics and/or Provide Any Presentations on Estate Planning Throughout the Year?

    You should never work with an attorney that isn't well versed in the various estate, probate, and tax laws that affect your estate planning. A good way to ensure that               you work with an extremely knowledgeable and experienced estate planning attorney, is to seek out their published work on estate planning and/or attend any                       presntation that he or she may be giving on estate planning.

    If you have questions about estate planning, please feel free to call or e-mail us with your question. As always, we are here to help!

     

    Daniel A. Perry

    (615) 472-2482

    [email protected]