The IRS recently announced the 2021 federal estate tax rate limits, which are $11.7 million for individuals and $23.4 million for married couples. This is increased from $11.58 million and $23.16 million respectively in 2020.
Under this new guidance, wealthy Americans will be able to leave up to $23.4 million to their heirs without being subject to federal estate tax rates, which top out at 40%. The federal gift tax exemption will remain at $15,000 annually, meaning gifts made up to that amount will not be taxed by the federal government.
Will There Be Changes Under the Biden Administration?
While estate tax rates have stayed fairly consistent over the past few years, estate planning attorneys across the country are being asked by their clients how the presidential election may affect future federal tax limits.
During the campaign season, the Biden/Harris team proposed reducing the estate tax exemption to $3.5 million for estates and $1 million for gifts. The ability to pass such measures, however, appears to be a long shot, considering the current makeup of the Senate. The Democratic party now holds a very slim majority and lowering the estate tax threshold is not particularly popular on the Republican side. It would be difficult, if not impossible, at this point to get a majority of Senators to agree to such legislation.
Complicating matters further is the coronavirus pandemic. It’s anticipated that Congress will spend the next few months working on financial relief packages for individuals and businesses impacted by COVID-19. As such, major overhauls to the estate tax are anticipated to take a backseat in 20201 in favor of more pressing matters.
However, when it comes to the whims of Congress, estate planning lawyers “never say never.” That’s why we are continuing to keep a watchful eye on Congress should support begin to emerge for estate tax reform in 2021 and beyond. For real-time updates, be sure to follow our estate planning blog, or subscribe to our newsletter. Finally, if you have specific questions about the federal estate tax or how to avoid “death taxes” on your estate when you are gone, please contact us at (615) 846–6201 to schedule an appointment.
Estate planning offers legal protection for families and individuals through all of life’s transitions. Wills, trusts, powers of attorney, and healthcare directives are the most common estate planning tools we use to help clients protect their wishes, safeguard their assets, and ensure provision and care for their loved ones following their death or incapacity.
What Does My Estate Plan Have to Do with My Divorce?
Your estate plan can be impacted greatly if it’s not updated after a divorce. For example, if your ex-spouse has been named as a beneficiary on your life insurance policy, they may still be able to collect the proceeds if you suddenly pass away without updating your documents. Your ex-spouse may also retain authority roles as your power of attorney or healthcare agent unless you revoke such power. As a single adult, you must also name the people you now want to act on your behalf or manage your affairs in an emergency once the role is no longer filled by your ex-spouse.
Won’t a Divorce Automatically Stop My Ex-Spouse from Having Such Power?
While this topic has been introduced in the Tennessee General Assembly, no laws have been passed yet to prevent it. Although a divorce decree will remove your ex-spouse from inheriting under your will or serving as Personal Representative/Executor, it does not remove them from serving under other documents like your power of attorney or healthcare directive. And it doesn’t remove them from inheriting anything they receive as a beneficiary outside of probate such as life insurance, bank accounts, retirement accounts, or trust funds. That is why you must update your documents after a divorce to be certain that your ex no longer has this power.
What Documents Should I Update?
During your divorce, the law prevents you from making many changes to your financial situation or medical insurance. Once the decree is signed though, you will want to review and update the following documents:
Will
Trust
Power of Attorney
Healthcare Directive
Beneficiary Designations on Life Insurance Policies
Beneficiary Designations on Retirement Plans
Beneficiaries on any accounts with Payable on Death Provisions
Getting Help
Tennessee has laws that dictate when documents can be updated or altered as you move through the divorce proceedings. It’s important to speak with an experienced Davidson County will and trust lawyer before you make any changes, as any unapproved transfers or changes to your documents could be considered fraudulent. If you need help getting started, we are here to assist you with your planning. Contact our office by calling (615) 846–6201 or click here to schedule an appointment.
A probate attorney in Nashville will make the process easier.
If you are dealing with an estate that has to go through the probate process in Tennessee, your smartest move is going to be to work with a probate lawyer in Nashville. There are cases where very simple estates will move through fairly easily, but there is still a matter of paperwork, accounting, etc. to consider; and a probate lawyer can save you an incredible amount of time and hassle.
Do your estate in advance to avoid probate
The best way to avoid the need for a probate lawyer in Nashville is to make sure that your estate planning has been done in advance. This means that you’ve set up wills, trusts, and any other applicable legal documents so that those you leave behind won’t have to deal with taking the entire estate through the court system. Trusts, such as a revocable living trust, are one of the most common tools for avoiding probate, but there are some other possible options. I’ve outlined them for you below:
Having a Will does not guarantee you will not go to probate
Some people think that having a Will (also known as a last will and testament) means that your estate will bypass the process. However, any reputable probate lawyer in Nashville will tell you that this isn’t the case. Having a Will is certainly still important, as it provides important directions for the passing of your estate, but it doesn’t get your heirs off the hook when it comes to probate.
Small estates may be able to avoid probate
If the estate is truly a “small” one, then you may be able to avoid probate. This can happen in cases where the only thing left behind is personal property. In these situations, there is no true estate to be inherited. The laws regarding the allowable value of an estate to be considered in this group do change, so it might be helpful to at least chat with a probate lawyer to see if the estate qualifies. If so, the heir may be able to create an affidavit that will work instead of going through probate. There are also some simplified court procedures available to heirs of these very small estates.
*If you are needing to transfer the property and assets of a small estate, we want you to check out our Tennessee Transfer Toolkit. It’s the perfect guide for transferring Tennessee estates that don’t need probate.
Payable-on-death-accounts can be transferred without going through probate
Many banks and other financial institutions allow for accounts to be transferred after death without going through probate. It’s a good idea to discuss your inheritance plan with a Nashville probate lawyer or estate planning attorney to ensure that this is a good option for you. This kind of planning has to be done in advance and should take your entire estate plan into account.
These are just a couple of tools available to those who want to avoid the eventual need for a probate lawyer. If they have not been put into place, or you’re not sure if these rules apply to you, we invite you to schedule a free call with us to see how we can help.
At the end of 2020, Congress approved new stimulus payments for most Americans. Stimulus payments by direct deposit are already going out. The Treasury Department is sending others by check or debit cards in the mail. Under President Biden, we may see more stimulus payments coming as well.
With that in mind, let’s consider those who may have limited income and receive means-tested assistance, such as TennCare or Supplemental Security Income (SSI). Those individuals or their loved ones may be concerned that the additional funds contributed to their bank account may disqualify them from benefits. However, the Social Security Administration has clearly said that stimulus payments do not count as income for means-tested assistance- at least not in the year it is received. For those receiving TennCare, you have twelve months to spend your stimulus payment.
If you care for someone in a facility, the facility may try to claim the stimulus payment on behalf of the patient. This is especially true if the facility is the Representative Payee for the patient’s Social Security check. However, the stimulus payment belongs to the patient, not the facility. It is not part of the patient liability payment for TennCare.
While a facility may request payment for debts owed before a patient received TennCare, they cannot hold stimulus payments hostage. A patient or their legal representative may agree to have the funds held in a patient trust account at the facility.
No matter who holds a stimulus payment, it must be used for the benefit of the recipient. If you care for someone who received one, consider what these funds might be used for to improve their quality of life for the year ahead.
If you have any questions about a nursing home trying to keep your loved one’s stimulus payment, book a call with us now.
Here at GALS Nashville, we try to make things as easy as possible. This is why we enjoy using a remote notary for our clients. It is really easy to immediately get some documents notarized and filed with the clerk’s office. So basically, one smooth action that doesn’t take very much time. And you do not need to print anything either!
How do you notarize documents remotely?
In order to notarize my documents remotely, you must prepare the documents, then sign them electronically, and then notarize them electronically. Once complete you can upload your notarized documents to whoever is needing them. Typically we upload them to the clerk’s website. It is a pretty seamless process, and I am hoping more clients choose to go this way in the future. This process will save you so much time since there’s no coming to the office or finding a bank or UPS store to get your documents notarized.
Remote notarization is secure
All of the security protocols are within the software. I use a software called SIGNiX that’s based out of Chattanooga. They use knowledge-based authentication (KBA), which is required under regulations controlling remote notaries in the state of Tennessee.
Information you must provide in order to use a remote notary application:
Date of Birth
Social Security Number
Some Information from your credit history
Photo ID
What equipment do you need in order to use a remote notary application?
A phone or computer with a webcam
The simplicity of the process makes notarizing documents go so much smoother. It’s amazing how easy it is!
So, if you have something that you need notarized, feel free to contact our office. If you’re a current client and you know you have something that needs to be notarized, feel free to ask us about that. We will probably be approaching you about it anyways.
I hope that more people will start to use remote notary applications in the future. If you have any questions or just want to know more, you can schedule a complimentary call with us here!
