Most Spread Misconceptions About Estate Planning
The next beliefs are the most spread misconceptions about estate planning among Americans prior to speaking with attorneys knowledgeable about Tennessee probate law at Mckoon, Williams, Atchley & Stulce, PLLC.
My Children will be Happy to Inherit my House
Maybe yes, maybe no. Adult children are not as nostalgic about your house they grew up in as parents like to think. Most likely, the value of the house lies in your own interest and memories. Depending on the language in your will, the house may “go down like a rock” to the beneficiaries, that, after a restricted time when the estate can pay the bills, will after that use their own cash for maintenance, taxes, and insurance on the home. This is much more bothersome if a minor inherits an interest in real estate.
Only Wealthy People Need Trusts
Although rich people may use trusts more often than others, it doesn’t mean the trust is useless for you. A trust can provide the following benefits for individuals of any means:
- Asset management during one’s lifetime, not only after death
- Better management by successors in case of disability
- Protection to beneficiaries (e.g. children, and so on) from their creditors, predators, or their own possible poor decision-making
- Providing assets protection to a spouse that receives long-term care Medicaid
- Enhancing the quality of life for people with disabilities
- Providing for a surviving spouse while protecting assets of the children, particularly in a blended family members case
- Personal privacy
- Quicker sequence and also management after death
- Reduced cost of administration after death
- Not only children, but even a pet can get care after the owner’s death
For sure, there is no solution that will fit all situations. For that reason, there is a number of different trusts depending on your needs such as living Trusts, insurance Trusts, personal residence Trusts,
special needs trusts, and even dynasty trusts. To understand which one will work the best for you, contact our estate planning attorneys for a consultation.
I Don’t Want to Leave any kind of Assets to My Spouse
It is technically true that you can compose a will and disinherit your spouse. Nevertheless, you cannot efficiently disinherit your spouse without your partner’s approval.
You and your spouse can agree to disinherit each other by signing a prenuptial agreement or a post-nuptial marriage agreement which should be done in writing. If there are any kind of modifications or revocations after signing these documents, they should additionally be written in. The agreements don’t stop each spouse from leaving an inheritance to the other; instead, they prevent the disinherited spouse from making inheritance as well as other insurance claims and allocations that Tennessee law permits a surviving spouse to make. On the other hand, federal law requires your partner to consent if you do not call him or her as the 100% beneficiary of certain retirement plans.
Power of Attorney (POA) is Only About Tax Planning Gifting.
If authorized in the POA, the Agent might make gifts of the Principal’s (the individual who signed the POA) property. Many POAs reduce the gift amount to the “annual exclusion amount,” which is the maximum worth of gifts (currently $15,000) a person can offer every year to another person without reporting the gift to the IRS.
Tennessee law does not permit gifting if the POA doesn’t contain gifting authority. Gifting authority is restricted to the annual exclusion amount unless other limitations are offered. Although annual exclusion limits may cover most gifting circumstances, they nearly never ever cover gifting that may be necessary for asset protection objectives if long-term care is required.
For instance, if an elderly partner is not able to live safely in the house, nursing home care might be needed. If Medicaid care will cover just a part o the expenses, some of the spouses’ assets can be protected for use by the partner who stays at home. But moving assets from the sick partner’s name to the well spouse’s name is a gift. If the combined value of these gifts is higher than $15,000, and also the ill partner is incapable of making the gifts himself, after that a POA’s gifting authority that is restricted to the annual exclusion amount is insufficient and Court consent will be essential to make the gifts.
To gift, the gift giver should be competent, have provided adequate lawful authority in the POA, or the Court should authorize the gits.
Special Needs Children Must Be Disinherited to Protect their Benefits.
Disinheriting a child (or grandchild) with special needs is not required to protect his/her accessibility to needs-based benefits. Nor is it required (or sensible!) to rely on another beneficiary to “make right decisions” and use part of a now-larger inheritance to care for a disinherited child with special needs. Even if this person plans to do the best, unpredicted events can upend the most effective laid plans and leave the child with special needs without the anticipated additional help.
With correct planning, an inheritance can be left for the benefit of a recipient with unique needs in a manner that will improve the beneficiary’s lifestyle and provide enrichment that would certainly otherwise be limited or unavailable if the individual relies on federal government benefits alone.
Estate planning is a very complicated field. It requires knowledge of both federal and Tennessee laws, experience and ability to predict possible circumstances or consequences that may involve you and your closest people. Start thinking about your and your family’s future today – contact our attorneys to develop a strategy that will accomplish your estate planning goals.