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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 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 Jul 4 2016 5:25PM by Attorney, Jason A. Lee
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The 2016 Tennessee
legislature passed Public
Chapter 843 and it changed Will execution witness requirements for certain
Wills executed prior to July 1, 2016.
This statute was passed in order to address a problem that came up due
to recent Tennessee Court of Appeals decision.
The Tennessee Court of Appeals decision was In
Re: Estate of Bill Morris, 2015 WL 557970 (Tenn. Ct. App. 2015). I previously blogged on this
case here. In the Morris
case, the Tennessee Court of Appeals found that witness signatures on the
Affidavit attached to the Will are not the same as having the witnesses actually
sign the Will. As a result, the Court
found that a Will is not valid when the witnesses only sign the Affidavit
attached to the Will.
The Tennessee legislature
essentially reversed this case by amending T.C.A. § 32-1-104. This amendment provides that for any Wills
executed prior to July 1, 2016, a witness signature affixed to an Affidavit
which meets all of the requirements for witnesses under Tennessee law shall be
considered signatures to the Will.
However, this statutory change requires that the signatures are made at
the same time the Testator signs the Will and that the Affidavit contains
language meeting all of the requirements of T.C.A. § 32-1-104(a). As a result, T.C.A. § 32-1-104 now reads as
follows (the new section that is added is subpart (b)):
(a) The execution of a will, other than a holographic or nuncupative
will, must be by the signature of the testator and of at least two (2)
witnesses as follows:
(1) The testator shall signify to the attesting witnesses that the
instrument is the testator's will and either:
(A) The testator sign;
(B) Acknowledge the testator's signature already made; or
(C) At the testator's direction and in the testator's presence have
someone else sign the testator's name; and
(D) In any of the above cases the act must be done in the presence of two
(2) or more attesting witnesses.
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Posted on Sep 27 2015 2:43PM by Attorney, Jason A. Lee
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One way to contest a
will in Tennessee is to assert that the decedent had a “lack of testamentary
capacity”. Basically, this is an
assertion that the individual who executed the will was not actually competent
to execute the will. Tennessee has many
cases that discuss this claim in the context, most often, of a will contest
situation.
The Tennessee Court of Appeals has said the
following about what is required to establish “lack of testamentary capacity”
contest to a will:
The law requires
that the testator's mind, at the time the will is executed, must be
sufficiently sound to enable him or her to know and understand the force and
consequence of the act of making the will. American Trust &
Banking Co. v. Williams, 225 S.W.2d 79, 83 (1948). The testator must have
an intelligent consciousness of the nature and effect of the act, a knowledge
of the property possessed and an understanding of the disposition to be made.
Goodall v. Crawford, 611 S.W.2d 602, 604 (Tenn. App. 1981). While evidence
regarding factors such as physical weakness or disease, old age, blunt
perception or failing mind and memory is admissible on the issue of
testamentary capacity, it is not conclusive and the testator is not thereby
rendered incompetent if her mind is sufficiently sound to enable her to know
and understand what she is doing. American Trust, supra; 79 Am.Jur.2d Wills §
77 (1975).
If the individual who
executes a Will does not meet the above factors, then the Will can be attacked
under a theory of “lack of testamentary capacity”. Medical evidence and testimony is best to be
able to attack a Will under this theory.
If a doctor is willing to testify that the individual did not appreciate
what they were doing at the time of the Will, then that could form a strong
basis to defeat a Will. One thing you can do to prevent a Will contest over this issues is to have a doctor assess the individual around the time they do their Will to make sure they have the mental capacity to make a will.
If you are going
to pursue this kind of theory in Tennessee, then you need a competent Tennessee
litigation attorney who handles Will contest cases in a probate litigation
setting.
Follow me on Twitter at @jasonalee
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Posted on Mar 22 2015 3:01PM by Attorney, Jason A. Lee
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A recent Tennessee Court of Appeals’
decision of In re Estate of Bill
Morris, No. M2014-00874-COA-R3-CV, 2015 WL 557970 (Tenn. Ct. App. 2015) discussed the requirements
for witness signatures on a Tennessee will.
T.C.A. § 32-1-104 has very specific
requirements for the execution of a will under Tennessee law. These requirements are as follows:
The execution of a will, other than a holographic or nuncupative will,
must be by the signature of the testator and of at least two (2) witnesses as
follows:
(1) The testator shall signify to the attesting witnesses that the
instrument is the testator's will and either:
(A) The testator sign;
(B) Acknowledge the testator's signature already made; or
(C) At the testator's direction and in the testator's presence have
someone else sign the testator's name; and
(D) In any of the above cases the act must be done in the presence of two
(2) or more attesting witnesses.
(2) The attesting witnesses must sign:
(A) In the presence of the testator; and
(B) In the presence of each other.
In the Morris case, the witnesses
signed an affidavit attached to the will that attested the will but they did
not actually sign on the will document.
The question, therefore, in this case was whether this will complied
with Tennessee law and was a valid will to be admitted for purposes of
establishing the decedent’s wishes.
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Posted on Sep 14 2014 9:39PM by Attorney, Jason A. Lee
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One issue that comes up in Tennessee
estates on occasion is when beneficiaries or heirs believe a will has been concealed
or hidden by somebody. Sometimes there
are suspicions about a person hiding or even destroying a will that does not
benefit them. The question is then asked,
what can be done about this situation?
Tennessee law clearly provides that
destroying or concealing a will to prevent probate is against the law. Specifically, T.C.A.
§ 39-14-131 provides that it is a felony to do this in Tennessee. The entire statute is as follows:
Any person who
destroys or conceals the last will and testament of a testator, or any codicil
thereto, with intent to prevent the probate thereof or defraud any devisee or
legatee, commits a Class E felony.
As a result, what can you do if you are in
this situation? My recommendation is for
you to hire an attorney in your area to send a letter to the suspected
individual. This letter should demand
that a copy of the will be produced. It
should cite to this statute that makes it clear that it is illegal to hide or
destroy a will. Often this alone will
cause the individual to produce the appropriate will as is required under
Tennessee law. Obviously, if this is
unsuccessful then authorities may need to get involved to deal with this
situation.
Follow me on Twitter at @jasonalee for updates from the Tennessee Wills and Estates blog.
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Posted on Aug 24 2014 9:59PM by Attorney, Jason A. Lee
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A lot of people do
not completely understand the different positions that are often identified in
a Tennessee will. One such position that
is identified in many wills is the position of a trustee. Often wills provide for assets to be paid to
certain individuals including minor children.
This often occurs when people designate a minor child as a direct
beneficiary in a will (such as to a son or daughter). Or money or property can be left to adult
children but if those adult children are deceased when the person who wrote the
will dies, then potentially their minor children (grandchildren) could obtain
assets (this is often done when there is a per stirpes designation in
a will).
For this reason, it
is almost always important to name a trustee in your will even if a trustee is
unlikely to ever actually be needed. The
trustee is the person who would hold the money or assets on behalf of the minor
individual until the time the assets are distributed to the beneficiary at the
appropriate time. This is a very
important position. Essentially this is
the individual who makes all decisions about when the minor children can have
access to any of the money left to them in trust. Oftentimes, a minor child will still need
money to be used for their benefit like to buy them clothing, school supplies,
a car or to pay for their education. This
should be an individual that you absolutely trust.
Often in wills a
trust that is established for minor children or minor grandchildren will
terminate at a certain age. Many people
provide that the trust will terminate once that person reaches 25 or 30 years
old. I recommend that you do not allow
the trust to terminate at 18 years of age because in my opinion 18 year olds
should not be getting a large chunk of money.
It is best to keep the trust active for an extended period of time
beyond age 18 so the money is not squandered.
When the child reaches a more advanced age, they are more lik...
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Posted on Jun 29 2014 10:06PM by Attorney, Jason A. Lee
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A troubling amount of elderly individuals in
Tennessee add one or more of their children to their bank accounts as joint
owners with right of survivorship in order to have them assist in paying bills
and taking care of other matters late in life.
This is certainly a tempting option because it can be a simple way to allow
someone to help an elderly individual late in life so their financial matters
are taken care of by someone. However doing this is fraught with danger.
When an individual is added to a bank
account with right of survivorship, then upon the elderly individuals passing, the
entire account passes to them 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).
Another major problem is if the “co-owner”
on your account obtains a judgment against them by a creditor then the creditor
can often collect against your account.
This is a significant risk. For
instance, if one of your children gets into an automobile accident and
unfortunately severely injures someone but they have insufficient insurance
coverage to pay for the damages, then the injured party could obtain a judgment
against them and execute against your account to pay the judgment.
Additionally, the account will be
considered part of your child’s assets for purposes of bankruptcy or other
purposes. As a result, there is a
tremendous risk in adding even responsible, financially stable individuals as
owners of your bank account. I recommend
doing this in almost all circumstances because the downside consequences are so
significant. There are other options
like having a properly
completed Power of Attorney completed that will allow your children to
assist you with your finances later in life.
Also, if you are trying to avoid probate for those accounts, then you
can list them as a P...
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Posted on May 11 2014 10:28PM by Attorney, Jason A. Lee
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The short answer to this questions is
simply yes, you can have a handwritten Will in Tennessee. That is as long as it complies with the
requirements for a holographic Will under Tennessee law. The requirements for a holographic Will are
found in T.C.A.
§ 32-1-105 which states,
No witness to a
holographic will is necessary, but the signature and all its material
provisions must be in the handwriting of the testator and the testator's
handwriting must be proved by two (2) witnesses.
Therefore, if someone is going to have a
handwritten Will in Tennessee, the important or “material” provisions in the Will
must be entirely in the testator’s handwriting.
Additionally, the individual who made the Will must actually sign the
Will. Ultimately, the handwriting of
the person who made the Will must be proved in Court by two witnesses. If all these requirements are met, then a
handwritten Will can be deemed valid in Tennessee.
Now I need to get on my soapbox. Just because you can do your own handwritten
will does not mean that this should be done.
I do not recommend that anyone prepare their own handwritten Will. There are simply too many mistakes that can
happen in this process. There are many
unintended consequences when people try to “save money” and do their own
handwritten Will. Tennessee law is
filled with examples of significant mistakes that were unintentionally made by people
who try to draft their own wills. Unfortunately,
at the point these mistakes are discovered, it is too late to correct the mistakes. As a result, I recommend that everybody in
Tennessee should have a Will done by a competent Tennessee Wills attorney. It is not that...
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