Home

Non-Probate Assets in Tennessee

Posted on Oct 12 2017 11:57AM by Attorney, Jason A. Lee

There is often confusion on what type of assets are not considered probate assets in Tennessee.  These types of assets do not require formal estate administration, most of the time.  When you are responsible for handling an estate or are appointed as an executor, you need to determine what assets are required to be brought through the Tennessee probate process and what assets are not required to be brought into Probate.  Planning ahead on this issue is also important for individuals so they can have a streamlined post death estate administration process. 

 

Non-Probate assets in Tennessee include the following:

 

1.          401k plan, IRA plan or other type of retirement plan that has the designation of a specific beneficiary (except where the beneficiary is the person’s estate).

 

2.          Bank accounts, real estate, automobiles or other assets that are titled in the name of the deceased individual and another individual as joint tenants or tenants by the entirety with right of survivorship.  These assets pass immediately upon death to the other individual because they are jointly owned.

 

3.          Assets that are titled in the decedent's name with a "transfer on death" or "pay on death" designation to a specific beneficiary.  This is often done for bank accounts in one person’s name so the money is immediately transferred at the time of death.

 

4.          Life insurance policies that have a specific beneficiary designated other than the estate of the deceased individual.

 

This determination should be made soon after a person dies by the individuals responsible to handle their estate.  This will allow that responsible person to know whether a Will needs to be probated under Tennessee law.


Continue Reading  
TAGS: Executor/Executrix, Probate Assets, Tennessee Probate Law Comments [0]
  
 

Impact of Divorce on Terms in a Will that Benefit the Former Spouse in Tennessee

Posted on Aug 27 2017 11:56AM by Attorney, Jason A. Lee

When a Will is executed by someone, and then they are later divorced, the divorce revokes any benefits that were going to go to the former spouse under the Will.  This revocation is automatic and by statute that was passed by the Tennessee legislature.  T.C.A. § 32-1-202(a) provides as follows:

 

(a) If after executing a will the testator is divorced or the testator's marriage annulled, the divorce or annulment revokes any disposition or appointment of property made by the will to the former spouse, any provision conferring a general or special power of appointment on the former spouse, and any nomination of the former spouse as executor, trustee, conservator or guardian, unless the will expressly provides otherwise.

 

When individuals remarry after their divorce, the provisions that were revoked by T.C.A. § 32-1-202, are automatically revived by the subsequent remarriage.  Additionally, under T.C.A. § 32-1-202(d) a formal separation (by court order or otherwise) does not terminate the status as husband and wife and is not considered a divorce for purposes of this section.  In other words, a formal legal separation does nothing to the terms of a Will that benefit a spouse.  Only a final divorce changes the terms of the Will.  This section provides:

 

(d) For purposes of this section, divorce or annulment means any divorce or annulment that would exclude the spouse as a surviving spouse within the meaning of § 31-1-102(b). A decree of separation that does not terminate the status of husband and wife is not a divorce for purposes of this section.

 

This statute needs to be considered anytime there is an individual who dies who has been divorced when they still have any provision for their ex-spouse in their will.  It is important to note that under Tennessee law there is not an automatic revocation of a life insurance policy that benefits your spouse after a divorce.  The Tennessee Supreme Court has ruled on this issue previously.  I have blogged on this topic and

Continue Reading  
TAGS: Life Insurance, Wills, Divorce/Annulment Comments [0]
  
 

Can You Have a Handwritten Will in Tennessee – and Should You?

Posted on Jul 30 2017 3:20PM by Attorney, Jason A. Lee

Some people decide to do Wills that are written in their own handwriting (handwritten Wills).  It is my advice that this is a very poor decision and you should always consult a Tennessee Wills attorney to help you make sure that this very important document is done correctly.  Even though that is my best advice, I know some people will ignore this advice.  As a result, I will answer the question.  Yes, you can have a handwritten Will but it is a very bad idea.  A handwritten will is called a holographic Will.  A holographic will must be done in the handwriting of the testator. 

 

There are three different types of Wills under Tennessee law that are allowed.

 

(1) Normal Will with execution completed pursuant to T.C.A. § 32-1-104.

(2) Holographic Will pursuant to T.C.A. § 32-1-105 (in handwriting of the testator)

(3) Noncupative Will pursuant to T.C.A. § 32-1-106 (will completed while in imminent peril of death)

 

Under Tennessee law a handwritten or holographic Will must comply with the specific requirements found in T.C.A. § 32-1-105 which provides as follows:

 

Continue Reading  
TAGS: Holographic Will, Wills, Witnesses to will, Will Contest, Tennessee Probate Law Comments [0]
  
 

Should You Add Your Children to Your Financial Accounts When You Need Financial Assistance Later in Life?

Posted on Jun 25 2017 3:38PM by Attorney, Jason A. Lee

A significant number of older individuals in Tennessee add one or more of their children to their bank accounts to help them manage their finances.  They often do this as joint owners with right of survivorship in order to have them help to pay the bills and to take care of other matters late in life.  This can be an option that sounds very appealing.  However, doing this is a major problem and can cause devastating financial consequences that are completely unintended.   

 

When someone adds another person as a joint owner on the account, any judgments that the other person obtains against them, could lead to collection efforts against your bank account.  Once the other person is an owner, they are an owner of your account for all purposes.  For instance, if one of your children gets into a serious car accident and severely injures or kills someone else, but they have insufficient insurance coverage to pay for the damages, then the injured party could obtain a judgment against them.  They could then execute against your account to pay the judgment.

 

Also, when an individual is added to an account as an owner with right of survivorship, then upon the elderly individuals passing, the entire account passes to the other owner pursuant to the right of survivorship terms.  This can cause an unequal distribution of assets among children.  For instance, even if the Will clearly states that everything should be split between your children equally, this money in the account passes outside of that requirement.  This may not be intended and can cause real problems between family members after their loved one dies. 

 

Additionally, the bank account will be considered part of your child’s assets for purposes of bankruptcy.  If they need to declare bankruptcy, your account could become an asset of the bankruptcy process and you could lose everything.  As a result, there is a tremendous risk in adding even responsible and financially stable individuals as owners of your account.  I recommend against doing this in almost all circumstances because the downside consequences can be so devastating. 

 

There are other options available to you like completing a

Continue Reading  
TAGS: Creditor claims, Power of Attorney, Probate Assets, Tennessee Probate Law Comments [0]
  
 

Tennessee Supreme Court Finds That Joint Tenancy With Right of Survivorship is Destroyed by Quitclaim Deed of One Party to Deed

Posted on Apr 30 2017 2:00PM by Attorney, Jason A. Lee

The Tennessee Supreme Court recently decided an important case on an issue that had not yet been decided in Tennessee. The case of Darryl F. Bryant, Sr. v. Darryl F. Bryant, Jr., No. M2014-02379-SC-R11-CV, 2017 WL 1404388 (Tenn. 2017) decided a key issue pertaining to Joint Tenancy with Right of Survivorship. In this case, the owner (Ms. Bryant) of the property in question issued a deed conveying the property to herself and her son as Joint Tenants with Right of Survivorship. This occurred in 2009. Interestingly, a little bit more than one year later on September 2, 2010, the original owner, Ms. Bryant, executed another Quitclaim Deed on the same property. This Quitclaim Deed purported to convey the property to her grandson, Darryl F. Bryant, Jr.  She deeded all of her interests in the property to this grandson in this deed.

 

Ms. Bryant died in November of 2013 and then a dispute arose between Ms. Bryant’s son, Darryl F. Bryant, Sr. and grandson, Darryl F. Bryant, Jr. The legal issue that governed this situation is whether Joint Tenancy with the Right of Survivorship can be terminated by one party. In other words, Ms. Bryant deeded the property as a Joint Tenancy with Right of Survivorship to herself and her son. She then later deeded her interest in the property to her grandson (essentially her ½ interest in the Joint Tenancy with Right of Survivorship). The question, therefore, was whether the second deed terminated the Right of Survivorship in the first deed, unilaterally, without permission or input by the co-owner, Darryl Bryant, Sr.  If it did not, then Darryl F. Bryant Sr. would own the property outright due to Ms. Bryan’s death.

 

The Tennessee Supreme Court analyzed several prior Tennessee opinions as well as other states’ assessment of this issue.  Ultimately, the Tennessee Supreme Court found that “joint tenancy with an express right of survivorship may be severed by the unilateral action of one of the joint tenants and that doing so converts the estate into a tenancy in common and destroys the survivorship interests of the original joint tenants.” (Bryant Sr. at p. 15).  In other words, the conveyance by one of the joint tenancy owners, who owns the property with a right of survivorship, essentially converts the holding of the property to tenancy in common when they deed their interest to another party. That is exactly what occurred in this case. The Court then considered this specific case and found that when Ms. Bryant conveyed her interest in the property to the grandson, it severed her joint tenancy with right of survivorship with her son. At that point, the son and grandson became tenant in common owners and the right of survivorship was destroyed at that time.

 

This case can certainly have implications in estates and real estate transactions. It is an important principle that will apply to all real estate transactions and estates in Tennessee. The fact there is a right of survivorship at the time of an original deed does not mean the right of survivorship can never be modified, as is shown in this case. This is true even without the approval of all of the owners of the pr...

Continue Reading  
TAGS: Real Estate, Tennessee Probate Law Comments [0]
  
 

2017 Limits for Federal Estate and Gift Tax Exemptions; Tennessee Inheritance Tax Abolished since 2016

Posted on Mar 5 2017 8:00PM by Attorney, Jason A. Lee

The IRS has introduced new cost of living adjustments to the federal estate and gift tax exemption someone can use over their lifetime.  The new federal estate and gift tax exemption will be $5.49 million dollars in 2017.  This is an increase from the prior exemption of $5.45 million for 2016.  As a result, an additional $40,000.00 can be passed on by gift or in your estate, tax free starting in 2017. 

 

Unfortunately, the annual tax free gift exclusion amount stays at the same level at a total of $14,000.00 (this amount has been in place since 2013).  This is the annual dollar amount of gifts that can be given to an individual without counting toward the lifetime consolidated exemption of $5.49 million for 2017.  As a result, each year you can give up to $14,000.00 to an individual using the annual gift tax exclusion (in fact a married couple can each give the $14,000.00 – totaling $28,000.00 for each calendar year).  These gifts will not count towards your lifetime exemption amount for the Federal Estate tax.

 

Estate taxes are becoming less relevant to the majority of Americans due to the “permanent” fix that was provided by the federal government a few years ago.  The estate tax simply does not impact the vast majority of people.  Additionally, the Tennessee inheritance tax is now abolished in Tennessee for any person who dies in 2016 or later.  It simply does not exist any longer.  So there are no separate considerations needed to handle any Tennessee inheritance tax.

 

Follow me on Twitter at @jasonalee for updates from the Tennessee Wills and Estates blog.
Continue Reading  
TAGS: Tennessee Inheritance Tax, Federal Estate Tax Comments [0]
  
 

Can an Appointed Executor Contest the Will They Offered For Probate in Tennessee?

Posted on Feb 4 2017 12:23PM by Attorney, Jason A. Lee

A really interesting question was addressed by the Tennessee Court of Appeals recently on whether an executor who submitted a Will for probate and was appointed as executor can subsequently contest the terms of the Will.  The Tennessee Court of Appeals in the case of In Re: Estate of Ellra Donald Bostic, No. E2016-00553-COA-R3-CV, 2016 WL 7105213 (Tenn. Ct. App. 2016) dealt with the specific question of whether an appointed executor can contest the Will that is being probated. 

 

The Court noted that the legal doctrine that applies is “estoppel”.  The reason is because “executors, as fiduciaries, owe a duty of undivided loyalty to the Estate and must deal with the beneficiaries in the utmost good faith.” In re: Estate of Wallace, 829 S.W.2d 696, 705 (Tenn. Ct. App. 1992).  The named executor in a Will has “the duty to both offer the Will for probate and defend the Will against any challenges to its validity” citing Love v. Cave, 622 S.W.2d 52, 57 (Tenn. Ct. App. 1981).  The Court cited the most persuasive treatise on Wills and Probate issues, Pritchard on Wills, which states that “if the executor had knowledge of defects in the Will but nevertheless proceeded to probate it then the executor is estopped from contesting the Will.”  Bostic at 4 (citing Pritchard on Wills § 364).  

 

However, the Tennessee Court of Appeals has also held that an executor is not estopped from challenging a Will after presenting it to probate when “the executor offered the will for probate in good faith and without knowledge of the defects in its execution.”  Bostic at 4 (citing McClure v. Wade, 235 S.W.2d 835, 838 (Tenn. Ct. App. 1950).  When this situation occurs, the executor must resign from her position, and the “trial court should appoint an administrator of pendente lite to take charge of the estate and represent it during the pendency of the probate proceedings”.  Bostic at 4.  The trial court must make a determination as to whether the executor is estopped from challenging a Will based on whether they knew of the defects of the Will at the time the executor was appointed.  This is the initial threshold inquiry and once the Court makes that decision then the Court can determine whether the estoppel doctrine applies. Bostic at 4, 5.  In this particular case (Bostic case), the Court found that the trial court did not perform the proper analysis and, in fact, shifted the burden on this issue inappropriately and therefore the was remanded to the trial court to make a determination based on the Court of Appeals s...

Continue Reading  
TAGS: Executor/Executrix, Will Contest, Tennessee Probate Law Comments [0]
  
 

2017 IRS Contribution Limits for 401k, 403(b) and IRA Retirement Accounts

Posted on Jan 2 2017 1:23PM by Attorney, Jason A. Lee

The IRS recently announced the new cost of living adjustments to the annual limits on retirement contributions for 2017.  These limits reflect the amount of money you are able to contribute to certain tax benefited retirement plans.  This can and should affect how you formulate your estate and retirement planning in Tennessee.

 

The new 2016 annual limits for contributions to a 401(k), 403(b), most 457 plans and the federal government Thrift Savings Plan remains the same as the prior year at $18,000.00.  This number has not changed over the past few years.  The annual catchup contribution allowance for these plans, available to those over 50, stands at $6,000.00 for 2017.   As a result, someone over the age of 50 can contribute $24,000.00 annually to their 401k.

 

The limit for contributions to an IRA (Roth or normal IRA) is also unchanged for 2017.  It remains at $5,500.00.  For those who take advantage of the Roth IRA, the AGI (Adjusted Gross Income) phase-out level for the ability to contribute was adjusted up for 2017.  The phase-out now begins at $186,000.00 for married couples filing jointly and $118,000.00 for singles and heads of household.  Once you hit these levels, the ability to contribute begins to phase out – and it is eventually completely eliminated.

 

I highly recommend that you work to update your beneficiary designations on your retirement and other accounts.  In Tennessee, if you have a proper beneficiary designation, these assets can pass outside of probate.  If you do not have any designation or if you name your estate as the beneficiary, then this money will pass through your estate in the probate process.  Many times the beneficiary designations do not math the Will and that is usually unintended.  Life circumstances change and this is an important thing to remember so your beneficiary designations match your intentions that are expressed in your Will.

 

Follow me on Twitter at @jasonalee
Continue Reading  
TAGS: Retirement plans - 401k etc., Tennessee Probate Law Comments [0]
  
 

When is a Surviving Spouse Required to Make Election to Obtain Elective Share Against the Estate in Tennessee?

Posted on Nov 13 2016 8:25PM by Attorney, Jason A. Lee

A surviving spouse has the ability to obtain an elective share (see prior post describing the details of an elective share under Tennessee law) of a decedent's property by filing a notice with the court.  The surviving spouse is required to file a petition for an elective share within nine months after the date of the death of their spouse.  T.C.A. § 31-4-102(a)(1) provides as follows:

 

(a)(1) The surviving spouse may elect to take the spouse's elective share in decedent's property by filing in the court and mailing or delivering to the personal representative, if any, a petition for the elective share within nine (9) months after the date of death.

 

Additionally, an extension of the 9-month time period is allowed if there is litigation pending about the title of certain property such that an elective share determination could not be made with sufficient information.  If this type of litigation is going on, then the surviving spouse has an additional year from the date of the probate of the will within which to make the election.  T.C.A. § 31-4-102(a)(2) provides as follows:

 

(2) When the title of the surviving spouse to property devised or bequeathed by the will is involved in litigation pending so that an election to take the elective share cannot be advisedly made, the survivor shall have an additional year from the date of the probate of the will within which to elect; provided, that the court may upon a proper showing further extend the time to meet the exigency of litigation, not concluded, and, that application for allowance of additional time, in either case, be made to the court, for record of its action thereon.

 

The surviving spouse may also withdraw a request for elective share at any time before the entry of a final determination by the court. (See

Continue Reading  
TAGS: Probate Process, Statute of Limitations, Elective Share, Tennessee Probate Law Comments [0]
  
 

Inventory Requirement Under Tennessee Probate Law

Posted on Oct 2 2016 6:33PM by Attorney, Jason A. Lee

Tennessee law requires the personal representative of the estate to file a complete inventory of the probate estate within sixty days after being appointed as the personal representative for the estate.  This is a very important responsibility of the person who is appointed by the Court to administer the estate.  T.C.A. § 30-2-301(a) provides as follows:

 

(a) The personal representative, within sixty (60) days after entering on the administration of a testate or intestate estate, shall make a complete and accurate inventory of the probate estate of the deceased, and return the inventory to the clerk of the court exercising probate jurisdiction in the county of the estate, and verify it by the personal representative's oath before the clerk or before any person authorized by law to administer oaths in such cases whether within or without the borders of the state of Tennessee. When the will of the deceased excuses the requirement for making and filing an inventory of the estate, or when excused by all of the residuary distributees or legatees, no inventory shall be required of a solvent estate, unless demanded by any residuary distributee or legatee of the estate.

 

This inventory must be filed under oath with the clerk of the court.  There are some circumstances where no inventory is required, like T.C.A. § 30-2-301, provides that no inventory is required when the will of the deceased specifically excuses the requirement for the filing of an inventory. 

 

In the alternative, when all of the residuary distributees or legatees (commonly referred to as heirs) of an estate agree to waive the requirements of the completion of an inventory, then the inventory requirement can be waived by the probate Court.  Otherwise, the inventory is an important component of the probate of an estate under Tennessee law and must be filed with the court within 60 days.  Often the inventory provides the heirs with the ability to make sure that all appropriate assets of the estate are properly included in the estate.

 

Follow me on Twitter at
Continue Reading  
TAGS: Probate Process, Probate Assets, Tennessee Probate Law Comments [0]
  
 
Next Page
Author

Jason A. Lee is a Member of Burrow Lee, PLLC. Contact Jason at 615-540-1004 or jlee@burrowlee.com for an initial consultation on wills estate planning and probate issues.

Search
Enter keywords:
Subscribe   RSS Feed
Add this blog to your feeds or subscribe by email using the form below
Copyright © 2017, Jason A. Lee. All Rights Reserved
Tennessee Wills and Estates Blog
Jason A. Lee, Member of Burrow Lee, PLLC
611 Commerce Street, Suite 2603
Nashville, TN 37203
Phone: 615-540-1004
E-mail: jlee@burrowlee.com

PRIVACY POLICY | DISCLAIMER