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April Harris Jackson

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Which of my assets pass through probate?

Which of my assets pass through probate?

Probate is the legal process of transferring some of a deceased person’s assets to their heirs. Once you or someone you love passes away, there may be questions about what specific assets and property within an estate actually have to go through probate court, and which assets pass directly to beneficiaries. The short answer is that only assets that a person owned that were in their own name, alone, must go through probate. 

The Probate Estate

Assets that go through probate make up what’s called the “probate estate.” For example, an individually owned bank account with no named beneficiary or a car titled only in an individual person’s name will pass through probate. 

All other assets pass to the named beneficiaries without going through the probate court. 

So, what are some specific things that do not pass through probate? 

Here are a few examples:

Property held in joint tenancy with a right of survivorship

Any assets or real property held in joint tenancy (with a right of survivorship specified in the deed) by the deceased and one or more other people doesn’t need to go through probate. When one owner dies, the survivor(s) automatically owns the property. 

Property held in tenancy by the entirety

If the deceased individual owned real estate with their spouse in tenancy by the entirety, the surviving spouse is automatically the sole owner when the other spouse passes away.

Payable-on-death bank accounts

A payable-on-death bank account is an account that passes to the beneficiary at the death of the account holder, therefore it does not pass through probate. Check with your bank to see whether your bank account(s) have payable-on-death beneficiaries. 

Assets registered in transfer-on-death form

Tennessee residents can name transfer-on-death beneficiaries for securities. Assets registered in the transfer-on-death form pass directly to the named beneficiary without needing to go through probate.

Life insurance proceeds

When life insurance policies or annuities specify a beneficiary, the proceeds do not go through probate.

Retirement accounts

The funds in retirement accounts do not go through probate if the account holder designated a beneficiary.

Trust assets

Assets held inside a Trust by a Trustee do not go through probate.

probate court setting with paper, law book, and gavel. Not all assets pass through probate.
Probate doesn’t have to be complicated

Learn how to prepare for and navigate probate

Overall, knowing which your assets must pass through probate, and which do not pass through probate, can save you a lot of unnecessary stress and confusion. Designating probate vs. non-probate assets is an important part of your overall estate plan strategy. It is important to take the time to talk to an attorney in order to identify your assets, decide who your beneficiaries should be, and determine what the best method is for those beneficiaries to receive their share. 

Attorney April Harris Jackson sits outdoors on a sunny day with an orange in her hand. The text says "virtual estate plan challenge" "Click here to start your journey"

We invite you to participate in our “Estate Planning Challenge,” which is a daily email campaign where you can identify all of the people, assets, and decision-makers that you will need to consider before meeting with an attorney to further discuss your estate plan.

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! 

What Happens if Someone Dies Without a Will?

What Happens if Someone Dies Without a Will?

Introduction to Tennessee’s Intestacy Law

Dying without a will, is unfortunately very common. If you die without a will, your property will likely go through a court process called probate and will ultimately be distributed according to Tennessee’s intestacy law. Here are some common events that may happen if you die intestate:

  1. Your immediate next of kin, whoever they are, will likely inherit your property first. If you die intestate, everything goes to your next of kin. Your next of kin are the people who have the closest relation to you. Your children are first in line, along with your spouse if you are married at the time of your death. Otherwise, it’s your closest relatives. For example, say you die intestate without a spouse, children, or parents. Your next of kin could be your much younger half-sister or a cousin you’ve never met. Whoever fits the “closest living relative(s)” criteria will inherit everything after the estate pays your debts and taxes.
     
  2. That son- or daughter-in-law you don’t like will get your property before that niece or nephew you do like. Marital property owned by your children is governed by the laws of the states they live in, not you. If they live in a communal property state, they’re sharing the inheritance, 50/50. While the laws are different in every state, property acquired during marriage by either spouse may be marital property, especially if used for the benefit of both spouses. 
     
  3. A little bit of money up for grabs can have a cooling effect on interfamilial relationships. In a perfect world, family members would all get along, never be jealous, and always do right by each other. This isn’t a perfect world. Intestacy law doesn’t take into account the relationships the deceased had with anyone or what the deceased orally promised to someone. Even if widowed Uncle Bob told you he wanted you to have his ’65 Thunderbird, without a will, the car is going to his son…who doesn’t even have a driver’s license. When families start fighting over estates, lawyers get a lot of money and the family gets a lot of heartache, so it’s best to put your wishes in writing so everyone knows what is expected in advance and the Court has authority to enforce your wishes.

If you’ve recently lost a loved one who did not have a will and you have questions about the administration of their estate, you should speak to a probate attorney for guidance.  If you need assistance, we invite you to contact us to schedule a consultation.

How to Avoid the Need for a Probate Lawyer in Nashville

close up of letter tiles that spell out the word "probate"
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.