Many grandparents wish to leave a legacy behind for their grandchildren; however, they may run into some issues if those children are underage. A Nashville Wills and Trusts lawyer can help you determine what the best options are for leaving assets to underage beneficiaries, whether those assets are held in a Will or Trust, financial accounts, or as part of a life insurance benefit.
Underage Beneficiaries in a Will or Trust
As a Nashville Will and Trust lawyer, I always ask my clients if any of their beneficiaries are underage, or even if they would like to keep younger beneficiaries from accessing their full inheritance until they’ve reached a certain age, which is usually 25 or even 30. If the children are underage, an adult guardian must be named since minors are not allowed to own property. If a significant amount of property is left to the minor, a Trust is usually a good idea to manage the property until the child comes of age. In fact, Trusts can be used to ensure the minor only receives their full inheritance once they reach a certain age or milestone, such as graduating from college, while at the same time providing assets to make sure the child can achieve that milestone. I can speak with you about leaving an inheritance to an underage child and will help you choose the best option for administering the distributions.
Underage Beneficiaries of Financial Accounts
Many people choose to make beneficiary designations directly on their financial accounts, such as savings accounts, annuities, and retirement plans. Nashville Wills and Trusts lawyers urge their clients to carefully examine the details surrounding these beneficiary designations, as minor beneficiaries often cannot directly inherit assets after your passing. It is important to consult with a Nashville Wills and Trusts lawyer to determine the best way for your underage beneficiaries to receive the inheritance you leave for them at a time when they can make informed financial decisions on their own. Directing the assets to Trust is often the best bet in these situations, but consulting with an attorney will give you a much better idea of how this should be done.
Underage Beneficiaries on Life Insurance
Many parents and grandparents name their children or grandchildren as beneficiaries on their life insurance policies. As with the cases above though, an adult guardian or a Trust must be named in order to hold the life insurance proceeds until the minors come of age. It is generally not advised to name minors as beneficiaries to life insurance policies, as courts will often appoint an adult to look after the proceeds until the child comes of age – and that adult may not be someone you would have wanted to be appointed to such a role. Speaking with a Nashville Wills and Trusts lawyer may help you determine the best way to handle your life insurance beneficiary designations.
If you have any questions about the best ways to leave an inheritance to underage beneficiaries, please contact us at 615-846-6201 to set up a consultation.
There are a lot of different estate planning and asset protection planning trusts out there: revocable living trusts, Medicaid asset protection trusts, and life insurance trusts are just a few of them. One type of trust that Davidson County trust lawyer find to be useful, though sometimes only in narrow circumstances, is a Tennessee Investment Services Trust, also known as a TIST.
What is a TIST? A TIST is a self-settled trust that can be used to protect financial assets, real estate, personal property, and business assets from future creditors. Like most other trusts, once these assets are transferred into a self-settled trust, they’re legally owned by the trust and not by you. A TIST is an irrevocable trust, which is the key feature in making sure that future creditors cannot reach the assets that are in the trust.
What are the limitations of a Tennessee Investment Services Trust? There are a few limitations to these types of trusts. The biggest limitation is the fact that they cannot protect assets from past creditors, so any debts incurred before the trust is created are still liable to be paid out from trust assets. These types of self-settled trusts are also not allowed in a number of states, as many lawmakers were worried that these trusts could be used to wrongfully avoid creditors. Tennessee allows these trusts to be established whether or not you live within the state.
How do I create a Tennessee Investment Services Trust? If you want to create a TIST to avoid future creditors, your first step should be to speak with a Davidson County trust lawyer who has experience with drafting this kind of self-settled trust. Once you’ve chosen an attorney to create your trust, you’ll have to provide the following information:
The creditors from whom you want to protect your assets. Many people choose self-settled trusts if they worry about possible accidents or injuries, work in high-risk professions with liabilities, or own a business.
The trustee of the trust. You cannot choose yourself as the trustee of your own self-settled TIST, since that defeats the purpose of the assets no longer being in your control. You’ll need to choose someone you trust or a corporate trustee who can fulfill those duties.
The assets that will go into the trust. Typically, people will put financial assets and real estate property into their self-settled trust, but everyone’s individual situation is different. You should bring a list of all your assets when you meet with your attorney so you can better determine what assets will go into the trust.
If you’d like to learn more about self-settled trusts, including Tennessee Investment Services Trusts and how one can fit into your estate plan, or if you currently have a self-settled trust and would like to have it reviewed by our experienced Davidson County trust lawyer, please contact us at (615) 846-6201 to set up a consultation.
Estate planning offers legal protection for families and individuals through all of life’s transitions. Wills, trusts, powers of attorney, and healthcare directives are the most common estate planning tools we use to help clients protect their wishes, safeguard their assets, and ensure provision and care for their loved ones following their death or incapacity.
What Does My Estate Plan Have to Do with My Divorce?
Your estate plan can be impacted greatly if it’s not updated after a divorce. For example, if your ex-spouse has been named as a beneficiary on your life insurance policy, they may still be able to collect the proceeds if you suddenly pass away without updating your documents. Your ex-spouse may also retain authority roles as your power of attorney or healthcare agent unless you revoke such power. As a single adult, you must also name the people you now want to act on your behalf or manage your affairs in an emergency once the role is no longer filled by your ex-spouse.
Won’t a Divorce Automatically Stop My Ex-Spouse from Having Such Power?
While this topic has been introduced in the Tennessee General Assembly, no laws have been passed yet to prevent it. Although a divorce decree will remove your ex-spouse from inheriting under your will or serving as Personal Representative/Executor, it does not remove them from serving under other documents like your power of attorney or healthcare directive. And it doesn’t remove them from inheriting anything they receive as a beneficiary outside of probate such as life insurance, bank accounts, retirement accounts, or trust funds. That is why you must update your documents after a divorce to be certain that your ex no longer has this power.
What Documents Should I Update?
During your divorce, the law prevents you from making many changes to your financial situation or medical insurance. Once the decree is signed though, you will want to review and update the following documents:
Power of Attorney
Beneficiary Designations on Life Insurance Policies
Beneficiary Designations on Retirement Plans
Beneficiaries on any accounts with Payable on Death Provisions
Tennessee has laws that dictate when documents can be updated or altered as you move through the divorce proceedings. It’s important to speak with an experienced Davidson County will and trust lawyer before you make any changes, as any unapproved transfers or changes to your documents could be considered fraudulent. If you need help getting started, we are here to assist you with your planning. Contact our office by calling (615) 846–6201 or click here to schedule an appointment.
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