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.
As far as we know, we only live once – and we never know when it’s going to end. It’s important to plan so you can prepare.
You can start 2024 off strong by getting your affairs in order.
1. Create an Estate Plan
First, decide whether you want a will, a trust, or both. Some people opt for a will and a living trust, but it’s up to you what you choose. If you want an attorney to talk over your options, we’d be happy to do that!
You can also decide whether you want a durable power of attorney for finances (in case you’re not able to make financial decisions).
2. Plan for Your Healthcare
You can also consider whether you want to create an advance directive for your care. Most advance directives have a living will and durable power of attorney for healthcare.
The living will tells doctors what kind of care you wish to accept or reject when it comes to emergency treatment, and durable power of attorney lists the person you trust for your care should you become unable to communicate.
3. Organize Your Important Documents
Once you’ve prepared all of your important papers, organize them and put them all in one place.
Here are some examples of papers that you should keep together.
Personal Information
Personal info is needed for identification purposes and is best kept together so your family can be prepared when they need it.
Social security number
Date and place of birth
Names and addresses of spouse and children
Location of important legal certificates (birth/death, marriage/divorce, citizenship, adoption)
Employers and dates of employment
Education and military records
Names and phone numbers of religious contacts
Group memberships, awards
Names and numbers of close friends, relatives, doctors, lawyers, advisors
Health Information
Emergencies happen – and when you’re not prepared, your family has to scramble to find what your medications are, etc. Keep them all in the same place and be sure that your loved ones know where to look.
List of any ongoing conditions and treating doctors’ names
Current prescriptions (keep this list up-to-date)
Durable power of attorney for healthcare
Advance directive
Health insurance info, policy and phone number
Financial Information
Your finances will help family members better understand what financial resources they can draw from to help you with your care, should you need it.
Sources of income/assets
Social security benefits information
Insurance info (car, home, life, long-term care) with policies and phone numbers
Bank and account information
Investment income
Copy of the most recent income tax return
Location of most up-to-date will with original signatures
Liabilities, including what’s owned and when payment is due
Mortgages/debts, how and when they’re paid
Original deed of trust for home
Car title and registration
Credit and debit card numbers and names
Safe deposit box and key number
If you’re looking for a place to keep all of these, let us know. We’re happy to offer LawSafe memberships for a reasonable rate to help keep track of all the not-so-little things that your loved ones may need if there is an emergency or end-of-life event.
4. Talk with Your Loved Ones
Once you have everything in one place, tell your loved one where to find your information. Be sure to also tell your loved ones about your plans – you don’t want your family to find out after the fact that you’ve selected someone they don’t know as your Personal Representative!
You can also let your doctor know about advance care plans, and, if applicable, give your doctor permission to discuss your care with your family.
5. Review Plans Regularly and Update
Once you’ve done all the hard work (it takes time getting all that paperwork together), be sure to review your plans annually. If you’ve had a major change happen, you should consider revisiting your plans as well, to make any necessary updates.
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It takes time to get your affairs in order, but it is such a relief to your loved ones when they don’t have to worry about what your wishes are. In fact, this could be your masterpiece! If you’d like to get updates like this one on a regular basis, sign up for our newsletter!
When it comes to estate planning, you’ve probably heard advice like, “You need a trust” or “Avoid probate at all costs.” While these ideas might hold true for some, not everyone needs a trust, and probate can sometimes be an appropriate step. Understanding these topics can help you make informed decisions for your family. Let’s break down why:
What Is a Trust?
A trust is a legal arrangement that allows you to transfer assets to a Trustee. This person manages the trust for those you want to benefit. One of the advantages is that it helps avoid probate—the court-supervised process of transfering your assets after death. Trusts can provide an additional level of privacy, speed up the transfer of assets, and offer protection for your loved ones in difficult times.
Disadvantages of a Trust
While trusts offer many benefits, they aren’t essential for everyone. For example:
Trusts Can Be Expensive Setting up a trust requires meeting with an attorney to prepare the trust documents and potentially hiring professionals to administer it, which can be costly. For some individuals, these expenses outweigh the potential benefits, particularly if there are simpler ways to achieve the same goals. For example, if your family is in agreement, the Court can waive the requirement of making your assets public.
Trusts Need Active Management Once a trust is created, it needs ongoing attention. You have to transfer assets into the trust, update it as your financial situation changes, and ensure that it remains aligned with your wishes. This level of involvement is unnecessary if simpler tools can efficiently achieve your goals.
How to Save Money on Your Estate Plan with a Will vs. Trust
You’ve probably heard that you want to avoid probate. But in many cases, it’s not as bad as you may think. In fact, sometimes it’s a good thing!
In Some States, Probate Is Streamlined Each state has its own process for probate. Some states, like California and Florida, are complex enough that having a trust is a good idea for most people. However, in Tennessee, probate can be relatively quick, inexpensive, and straightforward, making it less of a concern. Of course, it’s a good idea to listen to your attorney about what is best for your family.
It Provides Oversight Probate ensures that a court oversees the distribution of assets, which can be beneficial for resolving disputes or ensuring that creditors are paid. For families with potential disagreements, this legal oversight might prevent further conflicts.
Not All Assets Go Through Probate Assets such as life insurance policies, retirement accounts, and some jointly owned property pass directly to beneficiaries. If your estate consists of these types of assets, putting them in a trust may not make much sense. In fact, many people structure their estate planning so that nothing will go through probate and then use a will as a back-up plan. (Because you know we always want to have a back-up plan!)
Is a Trust Right for Me?
While it may not be for everyone, a trust may be a good choice if:
You have a large or complex estate.
You own property in multiple states (which could trigger probate in each state).
You want to maintain privacy regarding the distribution of your assets.
You have minor children or beneficiaries who require special care.
Depending on your situation, your attorney may even recommend using a trust as a part of your will, which can be less expensive and time-consuming than creating a stand-alone trust.
Estate planning is not one-size-fits-all, and the decision to create a trust should be tailored to your unique situation. Your estate planning attorney should be able to help you weigh the costs and benefits, address any “what ifs, and explain how the plan reflects your goals. Ultimately, the key is to create a plan that provides peace of mind for you and your loved ones, whatever form that may take.
If you have questions about trusts or other estate planning tools, reach out to our office. We’re here to help you navigate the process and make the best choices for your future.
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.
Hey there, Nashville and Middle Tennessee! Estate planning might sound like a snooze-fest, but it’s super important for everyone, no matter your background or family situation. The LGBTQIA+ community has faced some unique challenges over the years, and there’s a lot we can learn from their experiences about protecting our loved ones and making sure our wishes are honored. Let’s dive into some valuable lessons that can help all of us.
Lesson 1: The Importance of Legal Documentation
The LGBTQIA+ community has had to fight hard to make sure their chosen families are recognized legally. Without the right legal documents, like wills, trusts, and advance directives, partners and chosen family members often couldn’t make medical decisions or inherit property. This highlights how important it is for everyone to have these documents in place! It’s all about making sure your wishes are clear and legally binding, so your loved ones are protected and have access to you when it’s most important.
Lesson 2: Understanding Intestacy Laws in Tennessee
Intestacy laws decide how your stuff gets distributed if you pass away without a will. In most states, these laws favor relatives by blood and marriage, causing a lot of heartache and disputes when those avenues aren’t available. That’s why it’s crucial for everyone to understand how Tennessee’s intestacy laws work and to take steps to create a valid will. This way, your assets go to the people you choose, not just your blood relatives.
Lesson 3: The Role of Advance Directives in Medical Decision-Making
One major lesson from the LGBTQIA+ community is the importance of advance directives for medical emergencies. Without a healthcare power of attorney or living will, medical professionals might turn to biological family members who might not know your wishes (or just not want to follow them). By creating these documents, you can make sure your trusted person makes decisions for you, ensuring your wishes are followed and your MVPs are involved in your care.
Lesson 4: Protecting Shared Assets and Property
For most couples, shared assets and property are a big part of their lives. Without proper estate planning, these assets can be at risk. This is a lesson for everyone in Middle Tennessee: make a comprehensive estate plan that includes wills, trusts, and property agreements. This helps protect your shared assets and ensures they go to the right people, avoiding legal disputes.
Lesson 5: Marriage Equality and Estate Planning
The legal recognition of same-sex marriages has been a huge win, giving all couples the same rights as heterosexual couples. But marriage equality alone doesn’t cover everything that your family may need. All married couples in Nashville and Middle Tennessee need detailed estate plans that reflect their unique needs. This includes updating beneficiary designations, creating wills and trusts, and setting up advance directives to outline and protect your wishes.
Lesson 6: Proactive Estate Planning for Legal Protection
The ongoing fight for LGBTQIA+ rights shows us that legal protections can change with political and social climates. This is a reminder for everyone in Nashville and Middle Tennessee to be proactive about estate planning. Stay informed about legal developments and work with knowledgeable professionals to create estate plans that offer peace of mind and security. Estate planning isn’t just about legalities; it’s about making sure your loved ones are cared for and your wishes are respected.
Conclusion
The LGBTQIA+ community’s history offers valuable lessons in estate planning for everyone in Nashville and Middle Tennessee. As we reflect on these lessons, take a moment to talk about your estate plan with your family. If you need to update your plan or start from scratch, give us a call! We’re here to help you protect your loved ones and build a secure future.
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.
