google-site-verification=rRaIsFZseAetftfaJhpjqg4UPdvLlTkiEStOKrfSXkM
April Harris Jackson

Have questions?

Book your free initial call!

Who should I name as my financial power of attorney?

Who should I name as my financial power of attorney?

This month we will discuss the subject of powers of attorney. In week one, we will discuss how to name a financial power of attorney. This is also known as a durable power of attorney.

There are many things to consider when appointing a financial power of attorney (aka an attorney-in-fact). This is an important position. Whoever you appoint would have the ability to make decisions regarding how you manage your finances. While it may seem obvious, it’s important to focus on choosing someone who is organized, trustworthy, and financially responsible.

What powers does an agent have when they have a financial power of attorney?

As stated earlier, the agent with a financial power of attorney can handle your finances just as you can. An agent will have the ability to go to your bank and handle banking transactions. They can contact your investment account broker and manage those funds. They can handle your insurance and sell your house. Of course, you want your agent to only make financial transactions in your best interest while you are incapacitated.

Can things go horribly wrong? Yes! Your agent has the power to clean out all of your bank accounts and sell your home. Heck, if they wanted to, they could take your assets, move to Fiji, and set up a little beach bar! I want to reiterate: It’s important that you choose someone who would never even think of doing something like that. You need to choose someone who will only have your best interest at heart.

Who should be your financial power of attorney?

When considering who should serve as a financial power of attorney, a lot of people are compelled to choose someone close to them. A lot of times this will be a relative, such as your children or possibly a sibling, but it doesn’t have to be. The agent could also be a close friend or even a professional if that is who fits that role in your life. In our practice, we like to make sure that our client acknowledges this very important point: the person you name as your agent in a financial power of attorney will have the ability to handle your finances pretty much the same as you will.

Choose an agent who can communicate effectively

Not only do you need to trust your agent, but we also recommend that you find someone that other people trust! While this element is not completely necessary, it may be important to you that your agent be relied upon to communicate important information effectively with the people in your life.

For example, if one of your relatives says to your agent: “Hey, my Aunty saved a lot of money and invested it well, how much does she have now and what has the spent money been used for?”. Ideally, you would have an agent that relatives intuitively trust to spend your funds in your interest. However, it would be really awesome if your agent took the time out of their day to respond thoroughly to your relative’s questions.

woman wearing a bright yellow sweater holding a smart phone and looking down. The caption says "3 ways online banking simplifies transactions" 1. allow direct debit from accounts 2. set up automatic payments 3. the ability to use instant transfer methods
Choose an agent that is comfortable with online banking

Your agent should be good at bookkeeping

In a perfect world, your agent with financial powers of attorney would be held accountable for the transactions coming out of your assets. A good agent can effectively answer questions about spending and back it up with good bookkeeping!

An agent with power of attorney does not have to live in your state

As we mentioned before, the era of digital banking is here and it allows us the option to choose from a larger pool of agents, regardless of their location. Now, many people think that their agent under a power of attorney cannot be someone who lives out of state. And that is simply not true. Sometimes it helps to have somebody who lives in the state, but that is not a requirement in Tennessee. We do so many things by email and telephone, texting, and online business transactions that your financial power of attorney person, your agent, will likely be handling any business transactions online. 

Choose an agent who will outlive you

While this is not a requirement, it is a good idea to think about someone who will outlive you. Generally, when you are using your power of attorney, it’s when you’re incapacitated. While there are times when a durable power of attorney is used on a temporary basis, such as during a medical event, it is more likely going to be during a period when we are at the end of our lives and are experiencing some type of ongoing health condition that is not likely to improve. We recommend that you look for an agent who can help on a continuing basis. A well-suited agent allows everyone to relax and enjoy the time you have left on this earth.

Who should NOT be your durable power of attorney

Again, while it may seem obvious, it is important to reiterate that anyone who is untrustworthy, unlikeable, terrible with money, incapable of balancing a checkbook, or unable to effectively use online banking might not be the best choice for becoming an agent of financial power of attorney. The goal is to find someone who can keep good accounting records and knows exactly where your money went, down to every last penny! A good agent is someone who is willing to communicate with everyone without hesitation. The main point is that no one in your circle should be concerned that your agent is taking advantage of you if you are incapacitated.

Now, if you are not incapacitated, your agent should only be acting if you are telling them to do so. Even if you have your power of attorney take effect immediately, your agent can and should only act under your direction. If you find that the agent acts otherwise, there are legal actions you can take against them in court. 

In conclusion

A power of attorney is a useful tool for organizing the “adulting” part of your life, especially in incapacitation. A financial power of attorney should be someone that you absolutely trust; someone who will not give pause to others in your life. Someone who is financially responsible and organized, and someone who is familiar with handling online transactions. It does not matter if your agent lives in your state. In short, find an agent you believe will always have your best interest at heart.

There are many types of powers of attorney. Many powers of attorney are used when creating a well-thought-out estate plan. Do you think you could use a durable power of attorney in Nashville? Schedule an initial call to see if we can help you with your situation.

How does someone get an inheritance from a trust?

How does someone get an inheritance from a trust?

What is a trust?

Trusts are a legal tool that can be used for many purposes including estate planning, asset protection, and income tax minimization. Trusts are a way of managing property with the intention of protecting it so that it can be passed on via inheritance to future generations.

Trusts establish a fiduciary relationship that allows a third party to hold a person’s assets on behalf of that person’s beneficiary or beneficiaries. The person establishing the trust and designating the beneficiaries is known as the “settlor” or “trustor,” and the third party who holds the assets on behalf of the beneficiaries is the “trustee.” 

Why do people create trusts?

Why do people create trusts in the first place? How do you know if you need a trust? First, people create trusts to control and protect their assets, especially for after they pass away. Trusts provide legal protection for the trustor’s real and personal property, and can also provide protection from creditors. Second, people create trusts because they are concerned about their money being spent on someone other than who it was intended for. Trusts are established to make sure that the trustor’s assets are distributed according to their wishes. If you have significant assets, especially a significant amount of real estate assets, or you have very specific wishes about how and when you want your assets distributed after you pass away, a trust might be for you. The best thing to do is talk to your attorney, who will help you determine whether a trust is the best way to protect your assets.

A beneficiary cannot just “take” an inheritance out of a trust

Since the purpose of a trust is to protect your assets, beneficiaries cannot just take their inheritance out of the trust as they please. The trustee must follow the terms of the trust established by the trustor.   

Minors & age clauses within trusts

People under the age of 18 legally cannot control their own money. A trust may be established for a minor beneficiary in order for them to have financial resources during their minority, but these resources are managed by the trustee according to the terms established by the trustor. For example, a trustor may include that their beneficiary receives a regular allowance from the trust.  

However, turning 18 does not necessarily mean that the beneficiary will automatically have unlimited access to the trust. Many trustors include payout clauses that extend the trust for a certain amount of time after the beneficiary turns 18. The policy behind this is that, while an 18-year-old may legally be able to control money and property and enter into contracts, the late teenage and early adult years are still a very developmental stage of life. An 18-year-old very well may not have the maturity and money management skills required to handle a significant amount of assets. Age clauses allow for the beneficiary to continue receiving periodic funds from the trust, but provide another level of protection of the trustor’s assets until the beneficiary reaches an age of presumed maturity, usually when the beneficiary reaches their mid-20s. 

Trusts for beneficiaries with special needs

These types of trusts are intended to provide for individuals with special needs while also allowing them to retain government benefits like social security or Medicaid. The Trustee will distribute funds from the trust as needed, or on a regular schedule, to take care of the special needs beneficiary’s living expenses and health care needs. 

pile of papers that belong to a family estate plan with a trust and inheritance. there is a close up of a hand holding a pen, glasses, and a calculator
Do you have assets that need to be directed to a beneficiary in a specific manner?

The terms for receiving an inheritance are set when the trust is created

Overall, money moves from a trust only according to the terms set forth at the creation of the trust. This may mean a periodic payment to the beneficiary distributed by the trustee, lump-sum payment to the beneficiary at a certain age, or both. Assets cannot be removed from the trust unless the terms provide for it. To obtain assets from the trust that are not provided for within the terms of the trust, you likely will have to go to court. 

In conclusion

When it comes to estate planning, there are many ways that you can distribute your assets according to your wishes. One of the most popular ways is to create a trust.

There are many types of trusts out there. A trust can be either revocable or irrevocable and it can have unique clauses for receiving an inheritance. Trusts are in many ways the opposite of a will. A will is used to distribute property after someone dies, while a trust is set up while someone is alive and involves giving up control over the assets.

Not sure if a trust is right for you? Discuss your financial and family situation with a qualified attorney first.

How do I protect my Kid’s inheritance if they divorce?

How do I protect my Kid’s inheritance if they divorce?

As a parent, you want your child to lead a happy and fulfilling life and have healthy marriages of their own. However, it is hard to ignore the possibility of divorce. No matter how much you may love your child’s spouse, your interest is always in protecting your child. So when estate planning, how can you ensure that your child’s inheritance will not be split with their spouse in a divorce? 

Division of property in a divorce will depend upon whether the property is considered “separate property” or “marital property”. 

What is the difference between separate and marital property? Separate property is the property that belonged to an individual before marriage. This can include monetary assets, cars, real estate, and sometimes even pets. Marital property, on the other hand, is the property that was acquired or shared during the marriage. So what happens if your child puts their inheritance into a joint bank account? To answer this, we need to discuss how Tennessee law views inheritance.

How does Tennessee view “inherited” property in a divorce?

In Tennessee, inherited money or property is generally considered to be separate property. This means that whether your child inherits before or during their marriage, the court will treat the inheritance as exclusively belonging to your child. They are not obligated to share it with their spouse.  However, have you ever heard a long-married couple say “what’s mine is yours, what’s yours is mine?”  Many couples treat property this way, which can work well unless the couple decides to separate. This brings me to a very important point:

If your child puts an inheritance into a joint banking account shared with their spouse, it would become marital property subject to division at divorce.

How can you ensure that your child’s inheritance will be divorce-proof, no matter how your child handles the inheritance? 

One way to ensure the safety of your child’s inheritance is to set up a Family Trust. In general, a family trust is an estate planning tool that protects your family and your assets. A family trust is a three-party relationship between you (the Grantor), your child (the Beneficiary), and the person in charge of maintaining and distributing the assets in the trust (the Trustee). Through a Family Trust, you will be able to determine how and when your assets will be distributed by the Trustee to your Beneficiaries after your death. 

In the divorce context, a Family Trust is a great option because the property is held by the Trustee. This means that on paper, the property from the Trustee will not technically belong to your child. So in the event of a divorce, a court will not consider the assets from the trust for division. Family Trusts are generally flexible and easy to set up, and they are even cost-effective. Of course, if a Family Trust is not right for you, your estate planning attorney will be able to provide alternate options to achieve the same goal! 

close up of estate planning documents that have a family trust
Do you need a family trust to protect your children’s inheritance?

Of course, nobody wants to believe that their child’s marriage will end in divorce. However, estate planning is all about considering life’s “what if” questions.  In the end, setting up a trust for your family will allow you and your child the confidence that their inheritance is safe. 

To learn more about trusts and other estate planning tools that Elder Law Attorneys in Tennessee use, follow us on Facebook or Instagram!

My spouse and I are separated. How do I disinherit my spouse?

My spouse and I are separated. How do I disinherit my spouse?

When one spouse wants to disinherit the other, but they are still married, it can be a complicated process. In most cases, disinheriting a spouse is only possible if you have a valid prenuptial agreement or if you are divorced. 

Let’s illustrate this with an example: 

Jack and Jill have been married for five years, and have one child together. Their house was purchased by Jill before they were married, and Jack’s name was never added to the deed. 

Jill recently discovered that Jack is cheating on her with the Instacart shopper. She and Jack are now separated and have started the divorce process, but she wants to make sure that if she dies before the divorce is final that Jack won’t get anything from her. 

What can Jill do? 

Jill can disinherit her spouse after the divorce

Unfortunately, Jill cannot disinherit Jack until she files for divorce. Tennessee law does not allow you to disinherit your spouse- even if you write a will that says that! My advice is to get divorced as quickly as possible. Unless divorced, Jack is entitled to his share. 

The good news is that once divorce papers have been filed, there will be an automatic injunction that specifies that the pair no longer have spousal rights on the property through marriage. This is primarily to protect things like bank accounts, real estate, relationships with the children, and health insurance coverage. However, all that does is prevent money from being spent by either spouse outside of regular expenses. Jill won’t be able to do anything, like estate planning, until after the divorce has been settled or through special permission from a judge. 

In the meantime, there are still a few steps Jill can take:

Utilize her prenuptial agreement

Jack and Jill signed a prenuptial agreement prior to their marriage. In it, they waived the right to inherit from each other. All Jill needs to do now is to rewrite her will to specifically omit Jack.

Divide assets into separate trusts

Jill can establish a trust under her name and place the house in it. Since Jack’s name isn’t on the deed or on the trust, he has no right to the house if Jill were to pass before the divorce is finalized. 

Rewrite her will

Jill can rewrite her will so that Jack only gets what he is entitled to by law, called his elective share. In Tennessee, spouses are entitled to a homestead allowance, a year of support, and elective share. The elective share amount depends on how long you are married. 

Hire a family law attorney

 The divorce will go much quicker with the help of a family law attorney. 

Jill can get a jump start on planning her estate.

Finally, if Jill is preparing for a divorce, she can take advantage of all the legal documents at her fingertips and get a head start on creating the estate plan she desires. Once her divorce decree is finalized, she can meet with her lawyer and sign the document to make it valid. 

Are you getting a divorce and want to start over with your own will and estate plan in Tennessee? Are you looking for a referral to a family law attorney? Let us know! We are happy to help you make plans for your new life. Not sure where to start? Give us a call. We offer a complimentary 15-minute call to see if we are the right fit for you and your situation. You can schedule your call by clicking here

Marriage myth-busting: I don’t need a Will. My spouse will get everything when I die.

Marriage myth-busting: I don’t need a Will. My spouse will get everything when I die.

Many people think that if they are married, their spouse will automatically inherit everything when they pass and so they don’t need a will. While there are some situations where a spouse does inherit everything, it is not the default under Tennessee law. In Tennessee, if you are married and have children, your spouse will share your probate estate with your children. I call this the S.A.K.S. method (Spouse and Kids Share). In other words, your spouse does not inherit everything automatically. 

To clarify:

If you die without a will, Tennessee law dictates that the spouse and children split the estate. 

However, I believe that everyone should create their own plan for distributing their assets after death, even if the state has an understandable default on how to do this. Here’s why: 

Having a Will can make it easier for your family to go through probate. 

Having a Last Will and Testament can be an important way to reduce any burden on your family after your death. In your Will, you decide not only who will inherit your estate but also key decisions like who will serve as Personal Representative (also known as the Executor) and whether you want to require or waive documents that are required by statutes. Having a Will is your chance to have a  say in the probate of your estate before you die. The process can be much less complicated for your beneficiaries as well because you may decide to be even more specific about some of the more difficult decisions that need to be made.

It is much easier on your family if you have an estate plan in place. A last will and testament will provide instructions on how to designate and divide assets between family members and friends. If you die intestate (without a will), then the state’s inheritance laws will determine who gets what.

Preparing an estate plan will cover situations that may arise after your passing

Have you considered what might happen if your spouse remarries? Are you aware that a future spouse can take an interest in a portion of your estate? Would you want part of your assets to go to a new spouse or to any children that they may have with that spouse? Do you have family or children that should benefit instead? There are many other factors to consider, but it’s important to discuss these things with your attorney when you create your estate plan. 

image of a happy couple with the wife nestled under her husbands arm

A Will provides security for your spouse

If you are more concerned about your spouse inheriting from you than your children, you can plan for that too! The general rule in Tennessee is that the spouse would get no less than a third of the estate. 

For example, if you are splitting the estate with two or more children, the spouse would get a third. If there is only one child, the spouse would get half. 

What if you want to provide more? With a Will, you can designate that your spouse gets everything or only leave certain things to your children.  Many spouses write “I love you” wills, where they inherit first from each other, and then their children only inherit when the second parent dies. 

Use a Will to protect spousal inheritance from changes in family dynamics

Another consideration in making a Will is your family dynamic. Do you have children from different relationships throughout your life? Do you have concerns about how your children from those relationships will get along with your current spouse when it comes to your estate?  It is important to consider how you want inheritances to be split. Your Will can dictate how your assets will be handled! You can also designate your preference for the guardian of any minor children in the event that both you and the other parent die. 

Additionally, a Will provides provisions such as the appropriate age at which your children should take over responsibility for managing any inheritance. One primary concern many parents have is whether young adults will be mature enough to make sound judgments concerning any money they inherit. Your Will can establish a certain age at which young adults gain control of their inheritance, to ensure that it isn’t squandered when you would prefer it be used towards education or sound investments. 

In short, your Last Will and Testament should be drafted so that your wishes regarding your family are honored. 

Middle-aged couple walking together hand in hand through a park. They are smiling. They look like a cute couple.

A Will can safeguard your beneficiaries if they become disabled

Are any of your assets expected to go to a loved one who has a chronic medical condition?  If so, you’ll want to consider that an inheritance could disqualify them from any means-tested government benefits that they may receive or be entitled to, which could be devastating if they are counting on that benefit. The most common examples of this are Supplemental Security Income (SSI) and TennCare (Medicaid).  You’ll want to have a contingency plan in your estate plan to make sure that their benefits are secure and not at risk of being cut off due to an inheritance. You don’t want their government assistance to decrease just because you died! You definitely need a plan for that. Make sure to work with a qualified estate planning attorney so you can refrain from making errors with your family’s benefits. 

If you want control over who can access your digital assets, you must make a Will

Many digital assets are governed by terms and conditions which are unlikely to specify who will take over your accounts when you die. Some providers, such as Facebook, permit you to designate someone as a “legacy contact.” However, not all companies are robust enough to provide this type of service. A Will protects your digital assets from falling into the wrong hands or being lost in digital space with no one able to claim them. Check out our blog post about how to create or change your Facebook “legacy contact” here

In conclusion

These are just a few of the things that you’ll want to consider when making an estate plan. I want to encourage you to have a long discussion with your spouse about how your assets should be split when one of you dies. There shouldn’t be any surprises! I cannot stress the importance of knowing each other’s values and putting them in writing. It is crucial to have the outcome you desire. A failure to plan can end up in expensive court litigation. This is why we encourage everyone to speak with an experienced estate planning attorney about how they and their spouse can protect each other through proactive planning. 

Are you ready to make your Will? Schedule a free initial call and make your plan with the Team at GALS! 

Will TennCare take my house? A Primer on Estate Recovery

a house with a for sale sign in front of it. Tennessee will go through tenncare estate recovery to be reimbursed for long-term care.
TennCare will use estate recovery on TennCare payments for long-term care.

Long-term medical care is expensive – but where does the money come from?

This week I want to talk about TennCare Estate Recovery. Over the last few blog posts, we have gone over the benefits available to those who qualify medically and financially for TennCare Choices, Tennessee’s long-term care Medicaid program. We have also discussed how we can help our clients adjust their finances so that they can qualify. This week we want to discuss how TennCare recoups the cost of providing long-term care services.

TennCare rules can be confusing

A long time ago, my friend told me that her grandmother had to give away her house because she could not afford to pay for medical care and needed to qualify for Medicaid. This is really unfortunate! Her grandmother clearly didn’t understand the rules of Medicaid. Unfortunately, people like my friend’s grandmother get bad information about Medicaid, the services that are available, and the requirements to become eligible. I wish I could have told my friend’s Grandmother that she could have kept her house. This leads me to my main point…

TennCare will not take your house while you are living in it. 

However, TennCare estate recovery allows TennCare to get reimbursed for any funds that they spent on behalf of someone after that person dies. In other words, the state will eventually try to get reimbursed for the money they spent on your long-term care.

According to current TennCare rules, a single person can own a house that is worth up to $603,000, or land with a house worth over $603,000, without any concern about being ineligible for TennCare due to their home.  However, you will want to talk to your attorney and financial advisor about how you may be able to continue to pay the costs of maintaining a home if you are in skilled nursing care. 

How and when does TennCare get reimbursed for your long-term care?

For most of us, TennCare is not going to take your home even if you are living in a facility. Concern about your real estate should arise if you were hoping to pass your real estate to your family when you die. While TennCare will not try to get repaid for their expenditures during your lifetime, they will seek reimbursement after you pass away. 

For example…

Roberta has a home worth $250,000 and no other assets. She was in a skilled nursing facility for two years and received TennCare services for which they paid $125,000. After Roberta passes away, her estate will be expected to pay $125,000 back to TennCare before the family receives any money. Since there is a house worth $250,000, the family would be expected to sell that house and give half the proceeds to the state. This process is called estate recovery.

living room of someone who is in long-term care. The family wants to keep the house. They need a lawyer to help them with probate
Work with a probate attorney to resolve an estate recovery claim.

Is there any way we can keep the house in the family?

Estate recovery is something that TennCare takes seriously, and will go to great lengths to make sure that they are properly reimbursed. However, they will not take your home while you are living in it.

I want to be clear: A loved one receiving TennCare benefits while alive does not mean that Tennessee will later attempt to collect the money from YOU. The debt is not yours. If you have a loved one who passes away while on TennCare, your probate attorney will work with you to resolve that estate recovery claim so that TennCare can get reimbursed for any funds they spent on behalf of the deceased.

You can find more information through the Estate Recovery division here.

If you have a family member that was on TennCare or needs to get on TennCare, contact us at 615-846-6201. We’re here to help!