This week we will discuss when a power of attorney can expire. A power of attorney is a legal document that allows someone else to make decisions on your behalf. It is created for a specific purpose such as financial or health care decisions. If the power of attorney expires, it no longer gives that person the authority to make decisions on your behalf.
When you die
A durable power of attorney for finances automatically expires when you die. Once your attorney in fact gets the news of your passing, they no longer have the ability to carry out any actions on your behalf.
For a healthcare power of attorney, the same conditions apply. However, there is one caveat. The healthcare power of attorney will typically allow your healthcare agent to handle the disposition of your body, make the funeral and burial arrangements, or order an autopsy if warranted. Additionally, the agent can order medical records after your passing if needed for some legal reason. Other than that, the general rule is that all powers of attorney pass away when you do.
A power of attorney can expire if the original purpose no longer exists.
A power of attorney can expire if the original purpose no longer exists. For example, if you created a power of attorney to manage your finances, but you no longer need help with those decisions, the document may expire. Please note that you cannot revoke powers of attorney if you are incapacitated.
It is important to document the original purpose of the power of attorney and keep track of changes to your situation. You should update your powers of attorney when changes occur. This helps to ensure it’s still possible to use a power of attorney should the need arise.
If you revoke it
Unless you’re incapacitated, you can revoke a power of attorney. Revoking the power of attorney removes authority from the person you appointed. This is not something we’d necessarily recommend doing without good reason, but it’s possible. We strongly suggest that you name someone who is trustworthy so that you don’t have to revoke it.
However, if you want to revoke a power of attorney, do it in writing. Include the name of the person who is having their authority revoked. We recommend speaking with an attorney if you have to revoke a power of attorney.
Limited powers of attorney
A limited power of attorney is a document that allows someone to make decisions on behalf of another person. This happens when someone cannot be present to carry out decisions for themselves. A Limited Power of Attorney allows someone else to act as your proxy. For example, military families give powers of attorney that expire to a friend or spouse while they deploy.
How often should you renew a power of attorney?
Most powers of attorney are meant to last forever. However, you might need to create a new one to replace an old one. For example, a bank may be hesitant to honor a power of attorney that you signed 20 years ago. They may want you to have it updated. You may also want to update a power of attorney if you move to a new state.
If you have questions or need to get a power of attorney in Nashville, consider scheduling an initial call. This 15-minute call is free and allows us to see if we can help you with your situation.
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.
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.
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.
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.
The funds in retirement accounts do not go through probate if the account holder designated a beneficiary.
Assets held inside a Trust by a Trustee do not go through probate.
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.
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.
At some point, everybody thinks about creating a Last Will and Testament. However, many never do. Having a conversation about what will happen to your belongings after your death- and then seeing it on paper- is a daunting task.
So, what happens if you never do it? We’ll give you our best lawyer answer- it depends! When a person dies without a will, they die “intestate.” Every state has different intestacy laws that dictate who will inherit a person’s property when they die intestate. So who inherits your things depends largely on what state you live in, and your family composition. Below we detail what will happen to your estate if you die intestate in Tennessee.
What happens when you die intestate in Tennessee?
Are you married with or without children?
Let’s start with the simplest scenario: if you are married with no children, your spouse will inherit your entire probate estate. However, this will change if you do have children. If you are survived by your spouse and one child, each will inherit one-half of your estate. Additionally, if you are survived by your spouse and more than one child, your spouse will inherit one-third of your estate, with the remainder split evenly among your surviving children.
Let’s say you die without a will in Tennessee while unmarried or widowed with children…
If you do not have a spouse or are widowed, your estate passes to your children. All of your biological and/or legally adopted children inherit equally. In some cases, children are able to prove their parentage by DNA testing after a parent has passed in order to claim part of the estate. All children will inherit equally, so it is important to inform your family of all children who may have a right to inherit from you.
What happens in the tragic case of a child dying before a parent? If your child gave you grandchildren before they passed, then their share of inheritance will pass to those grandchildren. Otherwise, their share will be split among your other children.
Or you die while unmarried without children…
Let’s say you are not married and you have no children, but your parents survived you. Your parents will inherit your entire estate. If neither of your parents survived you, your estate would then pass to any siblings you may have.
I don’t have any close heirs. Who gets my assets if I die intestate?
But wait: I am not married, I have no children, I survived my parents, and I have no siblings. What now? In this case, a probate attorney may need to do what is called an “heir search” which is basically creating a family tree to find your closest relative(s). Your closest blood relatives will receive your estate. In the event that they cannot be found or do not respond to the attorney, your estate may be deposited with the Probate Clerk’s office and ultimately turned over to unclaimed property.
Create a will if you want control over who inherits your estate
Of course, the easiest way to avoid confusion and know for certain where each piece of your estate will end up is to create a valid estate plan including a Last Will and Testament. Thinking about what will happen after death is a daunting task, but in the end, it will save your surviving family more money and stress.
Do you want to get a head start on your Will or need to update your Will? Take our Virtual Estate Plan Challenge! We created this 7-email series to help our Clients and guests organize their thoughts about their wishes for their estate. You can use this information later on when you create your documents. Give it a try!
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.
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.
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.