If you’re closely related to someone who has recently passed away, it’s likely that you’ll be in line to inherit at least a part of their estate. It can be a complicated process, depending on the circumstances. To make this process easier for you, we’ve outlined some things you need to know as a potential inheritor of a Tennessee estate.
1. Take the time to grieve
If you’ve just lost a loved one, the first thing you need to do is take the time to grieve. This could be overwhelming, especially if you were close to the person who has passed away. You may not even know how to react if you’ve been left a large inheritance. Taking the time to grieve the death of a loved one is important, and you should not be pressured into making decisions. Also, don’t rush through any of the legal processes outlined in this article. There’s no need to hurry to open an estate, and you should make sure that you’re given enough time to make well-thought-out decisions and take care of things properly. All of the necessary information will be available to you once you are ready.
2. Take the time to understand the terms of the will
Another important thing to do is take the time to understand the terms of the will. If there was a will, then you’ll need to know who was named as the executor (aka personal representative) of the estate. You’ll also need to know whether there are any special provisions in the will, like leaving a specific piece of property to a specific person. You’ll want to know where the original will is being kept, as well as the executor’s contact information so you can stay informed about the progress of the estate.
Once the will is probated, there will be a record of it that you can access at any time. You’ll be able to see the contents of the will, as well as the names of everyone who was named as a beneficiary. This is something that you’ll need to keep in mind when communicating with the people who were named in the will.
3. Find out if there is any debt included with your share of the inheritance
Debt follows the person who incurred it, so a person’s debt usually belongs to their estate- not those inheriting from them. However, if your loved one left you anything with a debt tied to it, you may have to figure out how to resolve the debt before accepting the inheritance.
This includes things like car loans, mortgages, or other debts that your loved one may have had when they passed away. Even if you inherit something with debt tied to it, you do not have to inherit debt. You can choose not to accept the item or to sell it and take whatever it is worth after the debt is paid.
It’s important that you know if there is any debt included with your inheritance so that you can plan accordingly. It’s possible that you could get a loan to cover the cost of the debt and then pay it off gradually over time.
In my personal and professional opinion, it usually makes sense to take over a loan on something that will appreciate, such as real estate, but not on any depreciating assets like a vehicle. However, this is something that will have to be decided in consideration of your personal situation.
4. Find out what happens during the probate process
The probate process is the process of opening a probate estate, gathering all assets owned, and distributing the assets from the estate. During the probate process, the executor of the estate will file the will and any other documents that might be necessary with the court and has the responsibility of distributing the assets according to the terms of the will. These documents will become part of the public record. The executor of the estate will open an estate account with the court, and you can check in on it and see what progress is being made as the assets are distributed.
5. Check for Inherited IRA Rules and Taxes
If you inherit retirement accounts from a loved one, you will need to make a decision about how and when to cash out the account.
While spouses can easily “roll” retirement accounts to the surviving spouse, this is not an option for anyone else. As the non-spouse beneficiary of a retirement account, you have two options: (1) take all money out immediately or (2) you can “stretch” the distributions up to ten years.
Because most retirement accounts are “tax deferred” accounts, you will want to explore the tax consequences of any retirement investment accounts that you inherit. If your family member invested into a 401k, IRA, or similar type of account, they did not pay taxes when contributing to their retirement. That means that taxes must be paid when the money is taken out.
The financial institution will usually help you by holding an estimated tax payment but you will still want to make sure you are aware of what you will need to pay at tax time to account for those inheritances, no matter how you took the distribution.
6. Allow time for the Executor to carry out their duties
As soon as you’re named as a beneficiary to a will and the estate has been opened through probate, you can expect that the Executor will begin to take care of things, such as contacting creditors and making arrangements for the sale of any real estate. It’s important that you give them some time to do what they need to do. Expect that it will take about a year for the entire process to run its course. This is a rough estimate and will vary depending on how complicated the estate is, how many assets there are, if any estate tax is due, and whether there are any potential disputes. The Executor will keep you updated on progress and let you know when you can expect to receive the inheritance.
7. Communicate with the Executor
Keep in regular communication with the Executor of the estate. Ask if there is anything you need to do or can do to help. If you have questions, make sure that you ask the Executor and get the answers that you need to the point you understand. You can also ask to speak with the attorney for the estate. If you are having issues with the Executor getting back to you, or you suspect there are difficulties, it may be worth consulting a lawyer on your own.
8. Decide how you want to handle your share
Before you get a check, decide how you want to spend any money that you receive. Maybe you and your deceased loved one had already talked through what they hoped would happen with any funds they left you. Many people have a financial goal that their inheritance will help them reach, such as buying a house or investing in their own retirement. Some families use the money to take a trip together and make memories. Having a plan is the best way to make sure that your loved one’s legacy is honored.
9. Update your Plan
One of the most important things to consider is that receiving an inheritance could cause your own estate planning to need to be updated or revised. If you are currently the beneficiary of a trust or other estate planning document, you should contact your estate planning attorney to determine whether or not you need to make any updates.
If you are looking for a Middle Tennessee probate attorney or to create a Tennessee will, click here to schedule an initial call with us.
Probate is the name for the legal process of distributing assets after someone passes away. These assets can include bank accounts, real estate, vehicles, retirement accounts, life insurance, and financial investments. Before the assets can be distributed, however, they must first be gathered and used to pay creditors.
After that, the heirs can finally receive their distribution of the estate. However, even then, there are several factors that can still delay the distribution process. In our practice, it is common for probate to last about nine months. In more complex cases, probate can easily last several more months or even years. These delays ultimately mean less money and more headache for the surviving family.
Let’s go through the factors that cause delays in probate, and discuss what steps can be taken to minimize the delay.
1. Passing away without an Estate Plan
If you pass away without an estate plan, your loved ones will have to go to probate court. The court will appoint someone among them to be the “Personal Representative.” The Personal Representative will be responsible for contacting all of the financial institutions about your death. They will also be responsible for using your funds to pay creditors and ultimately make distributions to your heirs.
When there is no estate plan, the process for appointing a Personal Representative can be seriously delayed. The family will have to come to a consensus on who the Personal Representative will be before they present their choice to the court. Moreover, whoever is selected as Personal Representative is often not prepared for the role, as they had not been told to expect it. The process of going through all of your finances and contacting all of your financial institutions might be overwhelming for them, especially if they did not know your finances very well. Moreover, they will be responsible for mediating tension between the family, which is made even more difficult if members of the family do not think you explicitly wanted them to serve as Personal Representative.
Having an estate plan would minimize all of these consequences and delays. By having an estate plan, your family will already know who you want to represent your estate, which will make the process for appointing a representative much smoother. The person you select to represent your estate will also be better prepared for the role, as they are aware that they will one day need to fulfill the role.
The best way to minimize delays in probate is thus to have a clear estate plan in place, and to let your family and loved ones know about your intentions.
2. Family Tension
Even with an estate plan, family dynamics can still play a major role in probate. For example, if the only major asset that you have at the time of your death is your house, and one of your heirs would like to live in it while the other heirs would rather sell it and keep the sale value, tension will ensue and attorneys may need to get involved. All of this will ultimately lead to a delay of the probate process, and may ultimately divide the family in an irreparable way.
Feuds such as the one described happen even in the most loving of families. To avoid these feuds, it is important to not only have an estate plan, but to have one drafted by an experienced estate planning attorney. An experienced estate planning attorney will be familiar with cases such as the one described and will be able to help you think through exactly what you would want to happen if these cases occur. Your estate plan will thus be better able to help your family navigate your precise wishes for your assets, ultimately easing tension and expediting the probate process.
Hiring an estate planning attorney to draft your estate plan is one of the most important steps you can take to minimize probate delays.
3. Financial Complications
If you keep your finances private, it will be difficult for your intended heirs to know what to expect after you pass away. They may not even know where you bank and what financial investments you have. The more difficult it is for them to know your finances, the more difficult it will be for them to notify your financial institutions of your death and gather accounts.
Furthermore, if you are in debt or are not paying your taxes, your Personal Representative will be responsible for using your assets to pay your creditors and the IRS. This can cause serious delays to the probate process, especially if the Personal Representative was unaware. Creditors will ensure they receive their payments by filing claims against the estate through probate court. These claims ultimately slow down the probate process as each claim requires a hearing before a judge.
To save your family time, headache, and grief after your death, it is important that you keep your finances in order. Pay off debt when you can, and keep a clear record of it. File your yearly taxes appropriately. Let your loved ones (especially your Personal Representative) know of your finances and how to contact each financial institution in case something happens.
Even in the best of cases, probate takes a while. To minimize delays, we recommend having an experienced estate planning attorney draft your estate plan, clearly telling your loved ones of your intentions, and keeping your finances in order as much as possible. Your loved ones will already be filled with grief after your death. The best gift you can give them is preparation.
Here at Graceful Aging Legal Services, we offer software that can help our clients keep their estate in order. Contact us at 615-846-6201 or hello@galsnashville.com if interested.
Becoming an executor can be both an honor and a daunting responsibility. When a loved one names you as the executor of their will, it signifies a deep trust in your ability to manage their estate after their passing. However, the role comes with numerous tasks and legal obligations that can be overwhelming, especially during a time of grief. This guide will walk you through the steps of serving as an executor, from initial family discussions to closing the probate estate, with a focus on Nashville, Tennessee.
Understanding Your Role as Executor
As an executor, your primary responsibility is to ensure that the deceased’s estate is managed and distributed according to their wishes as outlined in their will. This involves gathering assets, paying debts, and distributing the remaining estate to beneficiaries. It’s essential to approach this role with a clear understanding of the legal and financial responsibilities involved. Start by reviewing the will thoroughly to understand its directions and any potential complexities.
Communicating with Family Members
Before proceeding with any legal steps, it’s usually a good idea to communicate with family members and other beneficiaries. Discuss your role and ensure that everyone involved understands the process. This is also an opportunity to identify any potential disputes or misunderstandings. I once worked with a person whose mother had nominated two adult children to serve as co-executors in her will. The parent knew that the children did not get along, but was hoping that they would be able to work together through probate. As you can imagine, this did not go over well. In the event that your family is in disagreement over who should serve, it may be beneficial to discuss alternatives with a probate attorney before speaking with your family.
Finding a Probate Attorney
Navigating probate law can be complex, especially if you are unfamiliar with the legal system. Hiring a knowledgeable probate attorney in Nashville, Tennessee, can be invaluable. Look for an attorney with experience in estate planning and probate, someone who communicates clearly and understands the specifics of Tennessee law. A good attorney will guide you through the process, help you complete necessary paperwork, and represent you in court if needed. Hiring an experienced attorney will save you time and money when it comes to knowing how to proceed with probate.
Handling Court Paperwork and Letters Testamentary
One of the first legal steps as an executor is to file the will with the probate court clerk and obtain letters testamentary. These documents officially recognize you as the executor and grant you the authority to manage the estate. The Tennessee probate process involves submitting the will, the death certificate, and other required forms to the court. Some Tennessee probate courts require a hearing in front of the Judge to open a probate estate and others do not. Your attorney can assist with these filings and any court appearances to ensure accuracy and compliance with Tennessee probate law.
Gathering and Managing Assets
Once you have been granted letters testamentary, your next task is to gather the deceased’s assets. This includes accessing bank accounts, selling vehicles, and managing any other personal property. Keep detailed records of all assets and transactions, as you will need to provide an accounting to the court and/or the beneficiaries.
Your attorney will help you know what assets are in the probate estate and what passes outside of probate. In most cases, anything with a beneficiary designation or joint owner – like a life insurance policy or retirement account- is a non-probate asset. Real estate, such as the home, is typically not part of the probate estate unless specifically mentioned in the will.
Managing Debts and Expenses
As executor, you are responsible for settling the deceased’s debts and expenses. This includes paying funeral costs, storage or mailing fees, attorney fees, court costs, and any valid bills. It’s important to prioritize these payments and ensure that all debts are settled before distributing the estate to beneficiaries. Collecting the deceased’s mail can help you identify any outstanding bills or subscriptions that need to be addressed.
Keep in mind that you are not required to pay debts out of your own money in most Tennessee cases. Your probate attorney will help you determine which expenses should be paid out of the estate and how to handle any bills sent by creditors.
Handling Taxes
Another critical aspect of managing an estate is handling taxes. You will need to file the deceased’s final income tax return and ensure that any taxes owed are paid. While most estates do not owe federal estate taxes, it’s essential to verify this based on the estate’s value and current tax laws. Consulting with a tax professional can provide clarity and ensure compliance with tax obligations.
Distributing the Estate to Beneficiaries
Once all debts and taxes have been settled, you can distribute the remaining estate to the beneficiaries as directed by the will. This step requires careful documentation and communication with all parties involved. Ensure that each beneficiary receives their entitled share and keep records of these distributions for court reporting purposes.
Closing the Probate Estate
The final step in your role as executor is to work with your attorney to close the probate estate. This often involves submitting a final accounting to the court, detailing all transactions, including costs and beneficiary distributions. Ultimately, you should have an estate account balance with zero dollars. Once the court approves this accounting or the beneficiaries waive the filing of an accounting, you can formally close the estate, completing your duties as executor.
Need guidance on managing a loved one’s estate? Schedule a free initial call with our team at Graceful Aging Legal Services to discuss your specific needs and how we can assist you through the probate process.
Serving as an executor is a significant responsibility that requires organization, communication, and attention to detail. By understanding your role, seeking professional guidance, and following the legal steps outlined in this guide, you can honor your loved one’s wishes and navigate the probate process with confidence. Remember, you are not alone—resources and support are available to help you through this journey.
Last week we looked at red flags you should pay attention to with regards to caregivers and professionals in your network. This week we’ll look at how to prevent abusive caregiver situations and how to deal with abuse once it has occurred. Below are some actions you can take to guard against people in your network taking advantage of you.
Things you can do now:
Take advantage of your free yearly credit report.
You can get a free credit report from each of the three credit reporting agencies (Experian, TransUnion and Equifax). Hot tip! Space them out! Sign up to get one every four months. This will make it easier to discover any irregular activity fairly quickly.
Ask your banker if they have completed the “BankSafe” program from AARP.
BankSafe is a training platform designed to help financial professionals identify and stop suspected exploitations from caregivers. Ask your bank if they have participated in this training. If your bank has not had this training, encourage them to do so! Or consider moving funds to a bank or credit union that has already participated.
Budget for paid assistance.
Remember that as much as family and friends may want to help, sometimes they can’t. It’s important to make sure that you are able to afford assistance for things like traveling to appointments, grocery shopping, laundry, nutritious meals, cleaning, and other personal help you may need if you were injured or developed a medical condition. Endeavor to have enough of your retirement savings to ensure you can afford a positive work environment for your future caregivers.
Create a Durable Power of Attorney
Create a Durable Power of Attorney.
This Power of Attorney allows someone you trust to monitor and manage your finances, if needed. This could be a family member or close friend. With access to bank accounts and credit card statements, they should be able to notice quickly if your spending habits change or if there is fraudulent activity on your account and they’ll be able to file a claim to protect your money!
Things to keep in mind for later:
Listen to your loved ones.
If you have a caregiver that is not in your family, do yourself a favor and trust a loved one’s opinion if they sense unsettling behavior from that caregiver. Sometimes others are able to see things that we are too close to observe.
Don’t become too reliant on one person.
You can have a housekeeper come every other week to clean the surfaces, a home health nurse to check on your health, and a food delivery service to prepare your meals or deliver groceries. Surround yourself with people who like their jobs.
Let family and friends know you welcome their visits and calls.
Tell them what has been going on in your life and find out what is going on with them. Maybe a few favorite snacks in the cupboard will even bring the grandkids by.
Let family and friends know you welcome their visits
Don’t give up your routines.
Self-care is so important, we all know that! If you feel yourself falling into a slump, get outdoors, go to the store, call a friend or ask someone for help. You deserve to be loved and to love yourself. No matter what anyone says, you are the conductor of your life.
“Stranger danger” isn’t just for children.
As adults we get comfortable interacting with all kinds of people, but remember that not everyone has your best interest in mind. Beware of helpful people who appear out of nowhere! Trust your instincts and listen to your inner-voice.
Don’t keep secrets.
If anyone tells you to keep a secret from your friends or family, something is very wrong. Red alert!
Report anyone who threatens to physically harm you.
Call the police and tell your trusted loved ones. There are no second chances when it comes to your personal safety.
Practice being assertive with others
Remember that “no” is a complete sentence.
If you are a people pleaser, practice different ways of saying “no” so you’ll be more comfortable in situations where you need to say it.
This week we are going to talk about why you need a medical power of attorney, even if your spouse is available to make decisions for you.
In a medical emergency, there is an assumption that your spouse would be the health care agent, make health care decisions, and deal with the hospital and doctors on your behalf. However, what happens when a spouse is separated, no longer wants to be in contact, or doesn’t agree with your health care values?
If this happened to you, would you still want them to make decisions for you? Do you want your adult children to make medical decisions for you? What if your spouse and children disagree on what type of treatment(s) you should receive? When faced with an emergency, please consider having your medical Power of Attorney already in place.
What happens if you don’t have a Medical Power of Attorney?
There are many situations that can arise when you become incapacitated or have a healthcare emergency. Even if it seems unlikely that your spouse would be disinterested in your health, it’s important to remember that your spouse may have trouble thinking clearly in an emergency or may also be seeking medical care. A medical Power of Attorney with an agent that is capable of making medical decisions, even in an emergency, can lower the risk and confusion regarding your medical decisions.
What is a Medical Power of Attorney and why you need one.
A medical Power of Attorney, also known as a Durable Power of Attorney for Healthcare, is a document that allows you to appoint someone as an “agent” to make decisions about your health care. This agent will make decisions on your behalf if you become too ill or incapacitated. A medical Power of Attorney ensures that your wishes will be followed. We have an experienced estate planning and probate attorney here in Nashville who can help you customize these decisions and record how choices will be made.
Choose someone you trust to make medical decisions for you.
How to choose the best Agent for your situation
When you are choosing your medical agent for your Medical Power of Attorney, it is important that you choose someone you can trust to adhere to your preferences regarding your medical care. Discuss your wishes with your agent before they need to make any care decisions. Make sure that you have confidence that your Agent will make the right decisions about things you two have not discussed.
Don’t wait to create your medical POA.
Conclusion: Why everyone needs a Medical Power of Attorney
It is important to think about what you would want in a medical emergency. Do you want your spouse to always make decisions for you?
Designate ONE person authorized to make decisions for you if you are unable to make or communicate your wishes. Even if you want your spouse to make those decisions, it’s always a good idea to have a “backup” person. This backup person can help out with decision-making in case your spouse is unavailable when someone needs to step in.
Whatever you decide, you should have a Medical Power of Attorney. Write your power of attorney in conjunction with your advanced directive (also known as a living will). All of these documents are an important part of a well-thought-out estate plan.
Do you have a plan for emergencies? Do you want help putting your values on paper? Take our Virtual Estate Planning Challenge! This 7-part Challenge helps you brainstorm the important stuff before creating your estate plan. We had a ton of fun making it and think you’ll really benefit from it too.
Last week we defined TennCare and how it applies to our clients. This week I want to go more in-depth with how TennCare serves Tennesseans with long-term care.
Many people believe that Medicare benefits will cover nursing home care once an individual is 65 or older, but this simply isn’t true. While Medicare covers the first 100 days, it doesn’t cover long-term assisted living. Read more about Medicare here.
“ Choices” is Tennessee’s Medicaid program for long-term care services and support
Back to TennCare/Medicaid…
My Mom doesn’t have long-term healthcare insurance. What are my options?
Payout of pocket until you run out of cash – This is an unrealistic option for most families. Nursing home care is expensive. Not a lot of people have an extra $7,000-$11,000 a month in their bank accounts.
Do a reverse mortgage on her home.
Qualify for the TennCare / Medicaid program called “CHOICES”.
As you can see, options 1 and 2 are very unpleasant and leave nothing left for a loved one’s legacy. However, option 3, CHOICES, is definitely something worth looking into.
What is CHOICES?
CHOICES is the category of TennCare that provides Long-Term Services and Supports (LTSS) such as nursing home care.
What is the process for getting qualified for CHOICES?
In order to be eligible to receive benefits from TennCare/Medicaid your loved one must first qualify within these three categories:
Medical eligibility
Income threshold
Asset threshold
Being medically and financially eligible is necessary for TennCare approval
How does someone become medically eligible for TennCare CHOICES?
The state of Tennessee will determine who is medically eligible to receive TennCare Long-Term Services and Support (LTSS) by using a pre-admission evaluation (PAE). This PAE is used to determine if the applicant can do basic life skills on their own without help. The PAE will also determine if the applicant is safe in their current environment.
The PAE is a strict evaluation and it is performed on a case-by-case basis. An applicant must receive a score of 9 or higher on a 26 point scale in order to be considered medically eligible for TennCare Long-Term Support Services.
For example, a caregiver or healthcare provider may be asked about a patient’s level of ability to do things and how much assistance is needed.
The following Activities of Daily Living (ADLs) are covered in the PAE evaluation:
Transfering
Mobility
Communication
Medication
Orientation
Eating
Behavior
If you or your loved one is unlikely to get to a nine or higher on the PAE, it is always appropriate to ask for a “safety determination” evaluation as an alternative route of becoming medically eligible for Choices.
How can someone become financially eligible to receive CHOICES?
You must be able to prove that the applicant has a low income and little assets. As of January 2022, an individual applying for TennCare CHOICES cannot have an income exceeding $2,523.00 per month. Additionally, the applicant cannot have more than $2,000 in assets. This includes any money in the bank and investment accounts but also requires consideration of retirement accounts, life insurance policies, real estate, artwork, jewelry, and any other valuables. When we talk about the assets for a couple of things get a little more complex. The most important thing is that both the applicant and their family are taken care of, both medically and financially.
My Mom is over the limits for income and assets? What do we do?
If the applicant is in excess of the amounts we can plan for that! We have a tool to help people who have excess income and assets yet need to qualify for TennCare/Medicaid called the “Care and Savings Assessment”. With this Care and Savings Assessment, we work to determine the best way to structure you or your loved one’s finances, either now or in the future. We plan so that our clients have the peace of mind knowing they can qualify for TennCare if and when they need it!
In conclusion
It is often helpful to have an attorney assess your financial situation and offer recommendations on how those finances may be restructured to qualify for TennCare Long-Term Services and Support (LTSS). As an experienced TennCare planning attorney, I can help you evaluate your risk and create a plan that takes care of everyone in the family.
Are you ready for help with TennCare planning? Contact us and we can discuss your plan. Next week we will go over some examples of how we restructure an individual’s finances to meet their needs for long-term care.
