|
Posted on Dec 9 2018 2:37PM by Attorney, Jason A. Lee
|
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.
|
Continue
Reading
|
|
|
|
|
|
|
|
Posted on Jan 13 2018 4:41PM by Attorney, Jason A. Lee
|
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.
|
Continue
Reading
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
Posted on May 10 2016 1:10PM by Attorney, Jason A. Lee
|
Sometimes, two
individuals who own a bank account as joint tenants with right of survivorship
or tenants by the entirety, die at the same time. In this situation, the question is, what
happens to the money in those accounts?
Normally, joint tenant accounts with Right of Survivorship immediately
pass to the surviving individual on the account. However, if there is a simultaneous death, the
ownership of these accounts is often an unresolved issue. Thankfully, Tennessee adopted the Uniform
Simultaneous Death Act long ago. TCA
§ 31-3-104 provides as follows:
Where there is no
sufficient evidence that two (2) joint tenants or tenants by the entirety have
died otherwise than simultaneously, the property so held shall be distributed
one-half ( ½ ) as if one had survived and one-half ( ½ ) as if the other had
survived. If there are more than two (2) joint tenants and all of them have so
died, the property thus distributed shall be in the proportion that one bears
to the whole number of joint tenants.
As a result, if two or
more individuals own an account as joint tenants or tenants by the entirety,
then the account is split among the estates of the individuals who died
simultaneously. As a result, usually
this means that their portion of the account would pass pursuant to the provisions
in their will because the asset would then become part of the estate (since it
no longer passed pursuant to the right of survivorship).
Follow me on Twitter at @jasonalee for updates from the Tennessee Wills and Estates blog.
|
Continue
Reading
|
|
|
|
|
|
|
|
Posted on Jul 5 2015 3:36PM by Attorney, Jason A. Lee
|
I am often asked to become involved in Tennessee
probate estates as the attorney for the
beneficiaries of the estate. Often
this is done to make sure the estate is running appropriately and sometimes
this is done because my clients simply do not trust the executor or
administrator of the estate (both are good
reasons to hire an attorney to represent the beneficiaries). When I am involved in this role for an estate,
the most common question I get from my clients is about the timing of when the estate
assets will be distributed to the heirs or beneficiaries of the estate.
Often I cannot answer this question to my client’s
satisfaction because if I am not the attorney for the estate, it is hard for me
to control how promptly and efficiently the estate is handled. However, Tennessee law is clear that once an
estate is open longer than eighteen (18) months, T.C.A.
§ 30-2-710
provides that a beneficiary or heir of the estate can file a petition in the
Court where the estate is pending to compel payment from the estate to the beneficiaries. T.C.A.
§ 30-2-710
provides as follows:
(a) Any distributee or legatee of the estate may, after the expiration of
eighteen (18) months from the grant of letters, apply to the probate or
chancery court of the county in which administration was taken out, to compel
the payment of the distributee's or legatee's distributive share or legacy.
(b) The application shall be by petition or bill, shall set forth the
claim of the applicant as legatee or distributee, shall allege that the assets
of the estate are more than sufficient to pay the debts, charges, and other
claims, if any, entitled to priority, and be verified, by affidavit.
(c) The proceedings under the application shall be conducted as other
equitable actions, and heard and determined summarily as soon as practicable.
It is required that the petition must set
forth specific allegations that there is money that can be distributed after
the debts and claims against the estate are paid. This petition must be supported by an
affidavit. If the beneficiary or heir
does not know this to be true, then they may not be successful in filing such a
petition. Regardless, this petition is a
tool to get this process st...
|
Continue
Reading
|
|
|
|
|
|
|
|
Posted on May 17 2015 6:34PM by Attorney, Jason A. Lee
|
I
get a lot of interesting questions when I tell people that I practice Probate
law in Tennessee. One of the things that
is most confusing to people is how to know when an actual estate needs to be
opened for their loved one. As a general
rule, Tennessee probate estates only need to be opened when there are
probate assets. Probate assets include bank accounts that are
not joint and do not have any “pay on death” or “transfer on death”
designations. Other probate assets
include real estate when there is no joint, right of survivorship,
co-owner. Probate assets can also
include life insurance policies and retirement accounts that do not have a
beneficiary or that list the estate as the beneficiary. These are the most common probate assets that
can require an estate to be opened in Tennessee.
A
lot of family members who do not receive anything from an estate can be very
confused by these rules. They are often
upset because they never see a will or any probate filings. What I tell them is that if all of the assets
are disposed of by other methods (joint ownership of
real property, beneficiary designations on accounts or joint ownership of
accounts)
then they may never see the will or any details concerning what happened to the
assets. There is no central database
that allows people to find this information out simply by searching (however,
when an estate is opened, it is public record).
Banks, life insurance companies and mutual fund companies will simply
quietly disperse the funds to the beneficiaries pursuant to the wishes of the
decedent assuming the information they are provided matches their records and
policies.
All
of this being said, this does not mean that on occasion, sometimes people
manipulate the system and get access to accounts and assets improperly. If you suspect this, often the only thing you
can do is to try to force the issue by opening an estate and have an
administrator appointed (or be the executor) so that you can investigate and
determine if things were handled correctly.
This costs money but I would highly recommend you hire an attorney to
assist wit...
|
Continue
Reading
|
|
|
|
|
|
|
|
Posted on Jul 6 2014 9:40PM by Attorney, Jason A. Lee
|
The Tennessee Legislature in the 2014
legislative session passed Public Chapter 829
which raised the amount eligible for the small estate process in Tennessee from
$25,000.00 to $50,000.00. This statute
went into effect immediately upon signing on April 29, 2014. This bill also made other various technical
changes to probate law but the most important change for most people was the
change to the small estate monetary amount.
As a result, a Tennessee small estate can
now be opened under T.C.A. §
30-4-101 et al as long as the estate totals $50,000.00 or less. “The Small
Estates Act” of Tennessee was passed in 1972 and has provided a way for
individuals to pursue an easier, shorter and more efficient probate estate when
the amount of value in the estate is minimal.
Prior to this new statute small estates could only be opened up when the
value of the property of decedent did not exceed $25,000.00. I still recommend that you have an attorney involved
to assist you with the small estate process although the attorney fees for a
small estate should be much less than for a full probate estate in Tennessee.
Follow me on Twitter at @jasonalee for updates from the Tennessee Wills and Estates blog.
|
Continue
Reading
|
|
|
|
|
|
|
|
Posted on Jun 8 2014 9:31PM by Attorney, Jason A. Lee
|
Bank accounts with a ”right of
survivorship”, “pay on death” or “transfer on death” designation are generally not
part of your probate estate in Tennessee.
These accounts pass pursuant to the specific contract terms for the
account. This is very important to
remember when constructing a comprehensive estate plan. Sometimes people add one or two of their children
to their bank accounts late in life in order to help with paying the
bills. This can have a very significant
unintended consequence. If the children were
actually added as joint owners on the account with right of survivorship, then
the money in that account will pass directly to them upon death. It will not pass pursuant to the terms in
your will. This could certainly conflict
with your intentions to split things equally among your children.
As a result, when planning how your
assets will be distributed to your heirs or children, it is important to keep
this information in mind. If you desire
to have your assets split equally among your children, for instance, then make
sure the bank accounts do not unintentionally pass a significant amount of
money to one of your children simply because they have been added to the
account. People sometimes have their will drafted
correctly where it shows all of their assets should be split equally among
their children. However, they do not
take into consideration how their bank accounts are listed or owned. This can cause an unintentionally uneven
distribution of assets after your death (this can also happen with 401k assets
and Life
Insurance policies). This is why it
is important to have a comprehensive discussion with a Tennessee
estate planning attorney about your assets and how you want your assets to
be passed to your loved ones upon your death.
Follow me on Twitter at @jasonalee for updates from the Tennessee Wills and Estates blog.
|
Continue
Reading
|
|
|
|
|
|
|
|
|