3 Power of Attorney Mistakes and How to Avoid Them | Hermitage Estate Planning Lawyer

by April Harris Jackson | Jun 9, 2021 | Estate Plan

The power of attorney is one of the most important documents in your estate plan, but there are some common mistakes that could render it ineffective. Knowing how to spot these mistakes is key to make sure that you get the most out of your power of attorney and all the benefits it provides. Here are three of the most common mistakes that our Hermitage estate planning lawyer sees people make with their power of attorney documents and what you can do to avoid them:

1. Creating a Very Limited Power of Attorney

One common mistake is underestimating what you’ll need a power of attorney to actually do for you. Many people assume they’ll only need it so a loved one can help pay some bills or take care of complicated finances. But what happens if you become incapacitated and need nursing home care and your house needs to be sold to pay for that care? If your power of attorney does not provide for real estate property transactions, then your loved ones will have a very hard time getting things settled. You should make sure that your power of attorney covers the following items at a minimum:

• Real estate property
• Digital property
• Investments
• Tangible personal property
• Bank and financial accounts
• Taxes
• Business dealings
• Trusts and gifting powers

• Adding a Loved One as Joint-Owner on an Account

You might think you can use an easy loophole – adding a loved one to your bank account – to avoid having to create a power of attorney. Sure, your loved one will then have access to the account and will be able to pay bills and make transactions as needed, just as they could do with a power of attorney. But the issue is that once you make that loved one a joint owner on the account, that account effectively becomes their property. Using a power of attorney is a much cleaner way to let someone else handle your financial affairs.

• Not Using Your Power of Attorney

This may seem like a no-brainer, but there are plenty of people who make a power of attorney document and stick it in a safe or a desk drawer without ever telling anyone about it. Your banks and financial institutions will have no idea about it and could give some trouble to your loved ones when they present it – that is, assuming your loved ones even know where to find the document. The best way to avoid this is to send copies to your bank and other financial institutions where you do business and make sure your loved ones know where to find your documents if they ever need them.

If you have more questions about your power of attorney, or if you’d like to create a new power of attorney as part of your estate plan, please schedule an initial call with April to talk over your plan.

Nashville Estate Planning Attorney Explains 3 Things You Can Do When You Inherit Your Parent’s House

by April Harris Jackson | May 25, 2021 | Estate Plan

When a home is passed on to adult children after the death of a parent, there are three typical paths that beneficiaries can choose: move into the house, sell the house, or rent it out. If you and/or your siblings recently inherited a house and are uncertain about the best way to deal with the asset, a Nashville estate planning attorney can help you work through the following considerations relating to the property:

Option One: Move into the House

• If you decide to move into the house, you may have to anticipate an increase in property taxes as the current market value of the house will be reassessed
• You may want to conduct a home inspection to check if there are maintenance and safety issues that must be addressed immediately. You can also calculate the cost of renovation and repairs. The good news is that if you grew up in the home or talked with your parent(s) on a regular basis, then you probably already know of any maintenance “quirks” that your parent(s) dealt with when deciding whether you want to take them on as your own.
• There can be complications if you have siblings who are also co-owners. If you want to live in the home yourself, the other siblings will need to be compensated. You may do this through rental payments, buying out their share by mortgaging or refinancing the property, or by making the house part of your share of a larger total estate.

Financial and legal obligations of keeping the house

By moving into an inherited home, you are therefore accountable for the property maintenance and all its corresponding taxes and insurance payments. You are also responsible for any legal obligations arising from homeownership. Make sure these are responsibilities that you are prepared for.

Option 2: Selling the House

• Unsettled financial obligations can make selling the inherited house a bit problematic. You need to pay all the remaining debts out of the total sales of the property. And it gets more complicated in instances when the money owed on mortgages, taxes, judgments, and/or liens is higher than the price of the property itself. 
• If the house you have inherited hasn’t been updated in a long time, major cleaning and minor renovations can potentially work to your advantage. On the flip side, renovations, in general, will cut into the profit you are expecting. Make sure you are focusing on changes that will give you the biggest bang for your buck.
• You only have to pay capital gains tax on any appreciation in the home’s market value from the time you inherit it up to the time you sell it.
• You also would need to consider the commission of the real estate agent should you need one.

Financial and legal obligations of selling the house

You may have to deal with a lot of challenges to get the house in a saleable condition, but once you sell the property, you are free from the responsibility of paying for its maintenance, taxes, insurance, and any other legal matters related to homeownership. 

Option 3: Renting the House

• You can generate a passive income through rental payments for the house. The demand and rate will depend on the location and condition of the property.
• It pays to check on any relevant city ordinances or homeowner’s association rules on renting.
• You could consider hiring a professional property manager to handle the marketing, leasing, and managing of the house if you want to minimize hassles and costly problems.
• You have to provide precautionary measures and repairs for any damages found in the house you are offering for rent. Being a landlord entails a lot of liability.
• If you consider making the property a bed and breakfast or vacation rental, know that management and maintenance costs can go way up in this scenario. And, you also have to perform duties similar to a Hotel Manager should you really push through with this idea.

Financial and legal responsibilities of renting out the home

You are legally and financially responsible for the house as the homeowner. Furthermore, you now have the responsibilities of being a landlord and you should seriously consider the additional accountability of renting out the home.

Inheriting a house can either be a blessing or a burden depending on the way you will handle it. If you are still undecided, it is wise to weigh your options thoroughly by discussing it with an experienced attorney who can give you a balanced perspective on the matter. We encourage you to schedule an appointment today with our Nashville estate planning and probate attorney, April, at (615) 846–6201 so you can best understand how the inheritance will affect you or your family.

It’s Been Five Years: Do You Know What’s in Your Last Will and Testament? | Davidson County Will Lawyer

by April Harris Jackson | May 10, 2021 | Estate Plan

When was the last time you took a look at your Last Will and Testament? If it was five years ago or more, then you should consider dusting it off and reading through to make sure it’s up to date.

Remember, a lot can change in five years: the birth of new family members, marriages and divorces, or even significant changes in your finances are just some of the reasons you should revisit your Last Will and Testament, as well as the rest of your estate planning documents like your Power of Attorney and Advance Directive. If you notice your Last Will and Testament is out of date and you intend to revoke it, you should have a replacement ready to go.

If you want to revoke your Last Will and Testament due to changes in your family’s situation, you should speak with an experienced Davidson County Will lawyer. A Will lawyer can help you figure out the best way to change your estate plan, which will probably involve rewriting your Will, Power of Attorney, and healthcare documents.

Taking a look at your Last Will and Testament, as well as your other estate planning documents, at least every five years is a good habit to ensure your wishes are known to your family and you have the proper planning in place. If you believe you may have a problem with certain family members once you’ve changed your estate plan, you may want to seek the advice of an experienced Davidson County Will Lawyer to talk about your options.

If you would like to learn more about revoking your existing Last Will and Testament, or if you’d like to review your existing estate plan, please schedule an initial call with April Jackson.

Middle Tennessee Estate Planning Lawyer: How to Plan When You are Chronically Ill

by April Harris Jackson | Apr 8, 2021 | Estate Plan

More than half of Americans now have at least one chronic health condition, mental health concern, or substance abuse issue. That is a staggering statistic that our Middle Tennessee estate planning lawyer who works with sick and disabled clients confronts every day.

There are varying definitions of what it means to be “chronically ill.” One definition is having a disease that a person will live with for many years. These types of illnesses include diabetes, cardiovascular disease, lupus, multiple sclerosis, hepatitis c, and asthma. Alternatively, some define chronic illness as an inability to perform at least two activities of daily living such as eating, toileting, transferring, bathing, and dressing. Or, the patient may require constant supervision by someone else for health or safety issues.

Regardless of how “chronic illness” is defined, every adult living with a long-term diagnosis should have a few basic legal documents in place to ensure that their wishes are honored and that they are legally and financially positioned to receive the best care possible in the least restrictive environment as possible.

For example, an experienced Middle Tennessee estate planning lawyer can help create legal documents such as Powers of Attorney or Healthcare Directives that appoint someone you trust to pay your bills, access bank accounts, and make medical decisions for you if you are incapacitated or otherwise unable.

Additionally, a Middle Tennessee estate planning lawyer can help you utilize tools such as trusts to protect hard-earned assets from nursing homes, creditors, or predators.  A living trust also offers control, as you can set rules and parameters as to how your assets are to be used and managed by a trustee who is overseeing your affairs. A trust can also help pass down your assets outside of probate, which can be a long and expensive process that most Tennessee residents would prefer to avoid.

The bottom line is this: Do not assume that because you are suffering from a chronic illness that it is too late to take steps to better your financial situation or safeguard your family.  Even if you (or a loved one) are currently in a nursing home, there may still be options!  The first step is to simply contact our office. We will schedule a planning session with you and walk through all of the avenues of protection that could work best for your family.