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Posted on Dec 9 2018 2:37PM by Attorney, Jason A. Lee
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The IRS
recently announced the new cost of living adjustments to the annual limits on
retirement contributions for 2019. These are the limits that outline the amount
of money you can contribute to certain tax benefited retirement plans. This can and should affect how you formulate
your Tennessee estate and retirement planning.
A really good strategy for long term estate planning is to make sure a
significant portion of your assets are in these tax advantaged accounts.
The new 2019 annual limits for contributions
to a 401(k), 403(b), most 457 plans and the federal government Thrift Savings Plan
increases for 2019 to $19,000.00. This is
the first change we have had in a few years and it is certainly good news for
retirement savers. The annual catchup contribution
allowance for these plans, available to those over 50, stands at $6,000.00 for
2019. As a result, someone over the age of 50 can
contribute $25,000.00 annually to their 401k starting in 2019.
The limit for contributions to an IRA (Roth
or normal IRA) also went up in 2019. It is
now a limit of $6,000.00. 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 2019. The phase-out now begins at $193,000.00 for
married couples filing jointly and $122,000.00 for singles and heads of
household. Once you hit these levels, the
ability to contribute begins to phase out until it is eliminated on a gradual
scale.
It is important to work to update your
beneficiary designations on your retirement and other accounts while you review
if any of the above changes can affect you.
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 the beneficiary, then this
money will pass through your estate in the probate process. This will certainly extend the time it will
take to get to the proper beneficiaries.
Sometimes this is necessary or preferred, but it is really important to
make an informed decision on this issue.
Many times, the beneficiary designations do not match the terms in the Will
- and this is usually unintended. Life
circumstances also change and this is an important thing to remember so your
beneficiary designations match your intentions that are expressed in your Will.
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Posted on Mar 11 2018 1:56PM by Attorney, Jason A. Lee
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Tennessee law provides the authority to
execute a "Living Will" according to the "Tennessee Right to
Natural Death Act" which has been law since the mid-1980’s. A Living Will allows you to make decisions
related to end of life issues like the decision to not be kept alive by
artificial means if you have a terminal condition and there is no expectation
of recovery. T.C.A.
§ 32-11-102
provides the legislative intent for a “Living Will” as follows:
(a) The general
assembly declares it to be the law of the state of Tennessee that every person
has the fundamental and inherent right to die naturally with as much dignity as
circumstances permit and to accept, refuse, withdraw from, or otherwise control
decisions relating to the rendering of the person's own medical care,
specifically including palliative care and the use of extraordinary procedures
and treatment. The general assembly further declares that it is in the public interest
to facilitate recovery of organs and/or tissues for transplantation and to
provide mechanisms for individuals to express their desire to donate their
organs and/or tissues.
(b) The general
assembly does further empower the exercise of this right by written
declaration, called a “living will,” as provided in this chapter.
T.C.A.
§ 32-11-105
provides a specific form for a Living Will in Tennessee. This statute provides a form that is
acceptable under Tennessee law for a Living Will and many individuals in
Tennessee have executed this document to remove these decisions from their
loved ones. Decisions about letting a person die naturally can be some of the
hardest decisions a family member will ever need to make about a loved
one. But this decision is also very
important.
T.C.A. § 32-11-104 also provides
specific requirements for the execution of a living will. An executed living will can be signed by
"any competent adult person" according to T.C.A. § 32-11-104. The declaration must be in writing and signed
by the principal and is valid if it is attested by a notary public with no
witnesses or by two witnesses without an attestation of a notary
public. If the witness method is used
then at least one of the witnesses must not be related to the individual
exec...
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Posted on Jan 13 2018 4:41PM by Attorney, Jason A. Lee
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A frequent question
that is raised following someone death is how someone can get access to their
safety deposit box post death in Tennessee.
This includes questions about who is entitled to this access the box in
this circumstance. This issues usually
comes to a head when family members are trying to locate a will that cannot be
found or to determine if there are any valuables in the box. The Tennessee legislature adopted a statute
to address this specific situation.
T.C.A. § 45-2-905 is the statute that addresses access
to a safety deposit box after someone’s death but it has several other
provisions related to safety deposit boxes that I will not address here. The key portion for our purpose is found in
subsection (c) as follows:
(c) Upon the death of the sole or last surviving lessee of a safe deposit
box, access is authorized as follows:
(1) The duly qualified executor or administrator of the lessee may have
access to and remove contents from the safe deposit box, without inventory
unless an inventory is required by the lessor or by court order;
(2) In order to search for and remove any written instrument purporting
to be the lessee's last will and testament, or any writing relating to a burial
plot or burial instructions, or any writing purporting to be an insurance
policy on the life of the lessee, a lessor shall permit a person named in a
court order for that purpose, or if no order has been served upon the lessor,
the lessee's spouse, parent, adult sibling or adult descendant, or a person
named as executor in a copy of the lessee's purported will provided to the
lessor, or any person with a right of access to the safe deposit box
immediately prior to the death of the lessee, to open the safe deposit box with
an officer or employee of the lessor and remove the documents. A record of
items removed from the box by the person authorized entry shall be made by the
lessor and the other person. If a purported will is found that does not name as
executor the person conducting the will search with the lessor's
representative, the lessor may make a copy thereof and mail or deliver it to
the executor named therein, or to the court having jurisdiction of the
decedent's estate according to the decedent's domicile as declared in the
instrument; and
(3) If an executor or administrator of the lessee's estate has not
requested access to the contents within sixty (60) days following the lessee's
death, the lessor may then permit access by the surviving spouse or any
next-of-kin of the lessee for the purposes of inventory and the removal of
contents. Prior to removal, an officer or employee of the lessor and the
surviving spouse or next-of-kin of the lessee shall inventory the contents of
the box and prepare a record thereof to be retained by the lessor.
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Posted on Nov 26 2017 3:06PM by Attorney, Jason A. Lee
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The IRS
recently announced the new cost of living adjustments to the annual limits on
retirement contributions for 2018.
These are the limits that identify the amount of money you can
contribute to certain tax benefited retirement plans. This can and should affect how you formulate
your estate and retirement planning in Tennessee. A really good strategy for long term estate
planning is to make sure a significant portion of your assets are in these tax
advantaged accounts.
The new 2018 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 $18,500.00. This is the first change in several years and
it welcome news for retirement savers. The
annual catchup contribution allowance for these plans, available to those over
50, stands at $6,000.00 for 2018. As a result, someone over the age of 50 can
contribute $24,500.00 annually to their 401k starting in 2018.
The limit for contributions to an IRA (Roth
or normal IRA) is unchanged for 2018. 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 2018.
The phase-out now begins at $189,000.00 for married couples filing
jointly and $120,000.00 for singles and heads of household. Once you hit these levels, the ability to contribute
begins to phase out until it is eliminated.
You need to work to update your beneficiary designations
on your retirement and other accounts while you review if any of the above
changes can affect you. 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. This will
certainly extend the time it will take to get to the proper beneficiaries. Many times, the beneficiary designations do
not match the terms in the Will - and this is usually unintended. Life circumstances also 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
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Posted on Oct 12 2017 11:57AM by Attorney, Jason A. Lee
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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.
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Posted on Aug 27 2017 11:56AM by Attorney, Jason A. Lee
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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
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Posted on Jul 30 2017 3:20PM by Attorney, Jason A. Lee
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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:
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Posted on Jun 25 2017 3:38PM by Attorney, Jason A. Lee
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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
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Posted on Apr 30 2017 2:00PM by Attorney, Jason A. Lee
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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...
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Posted on Mar 5 2017 8:00PM by Attorney, Jason A. Lee
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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.
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