What is a Will and when is it effective?
A Will is a document that is only effective after death. Some folks mistakenly believe that their Executor is empowered during life to handle their financial affairs. A durable financial power of attorney is the document that empowers an agent to make financial decisions for the principal or the person who signed the document. These are common questions about Wills and Trusts.
Why do I need a Will?
You need a Will so that your family, friends or other beneficiaries will know how you want your personal and real property distributed. In this context, “personal property” is money, collections, furniture, vehicles, essentially anything other than real property.
What will happen if I die without a Will?
If you die without executing a will, Tennessee law will govern how your property is distributed.
- If you are married and without children at your death, your estate will pass entirely to your surviving spouse.
- If you are married and have children, your estate will pass to your children and your surviving spouse. Your spouse will receive one-third of your estate or a child’s share, whichever is more.
- If you are unmarried but have children, your estate will pass entirely to your children.
- If you are unmarried and without children, your estate will pass to your parents if they survive you, otherwise to your brothers and sisters or their descendants.
- Ultimately, if no family member is ascertained, the estate will pass to the State of Tennessee.
My father was recently diagnosed with dementia, is it too late for him to sign a power of attorney or Will?
The answer depends on your father’s level of capacity. If he is in the early to mid-stage of dementia, he may very well have capacity to sign a will. In order to make a Will, he must have “testamentary capacity”. A person has testamentary capacity if:
- He knows his immediate family.
- He knows the nature and extent of his estate.
- He intends to make a Will.
What Should Be Included In a Will?
Generally, your will should:
- Contain a list of your immediate family with names, current city and state of residence.
- Even if a child has predeceased you, that child needs to be listed and a statement as to whether or not that child had “issue”. “Issue” means those people you legally adopted or who are your biological children. Issue goes beyond that first level of family and includes those in the entire blood line.
- Most wills refer to “my issue, per stirpes.” This means that if you outlive one of your children, then that child’s share will be distributed to his bloodline. For example: Sally signs a will leaving all of her estate “to my three children, Amy, Molly and John Jones or to the issue of a predeceased beneficiary, per stirpes.” Unfortunately, John predeceases his mother, Sally, and he leaves his wife and two surviving children. When Sally dies, her daughters will each receive a one-third share, and John’s two children will receive a one-sixth share because John’s children are dividing John’s one-third share equally. It should be noted that John’s wife is not his issue; therefore, she does not receive anything under Sally’s Will. Of course, Sally may decide to leave something to John’s widow, but as a general rule, most clients like to only name beneficiaries who are related by blood or adoption.
- Appoint a Trustee if applicable.
- Appoint an Executor and then appoint a backup or Successor Executor.
- Provide for how you want your real and personal property to be distributed.
- Nominate a guardian for your minor or disabled children to ensure their well-being.
- Include a trust for minor children or grandchildren.
- Include a special needs trust for a disabled child, spouse or other disabled beneficiary.
- Include provisions regarding bond, inventory, reports and settlements.
- Include signatures of the “Testatrix or Testator” and two unrelated witnesses;
- Include an Affidavit of Attestation. This is a separate document from the Will which makes the will “self-proving”. By having this document attached to the Will, we are able to avoid a hearing in probate court, and calling the witnesses to your Will to testify that they witnessed you signing the Will, and you were of sound mind, etc.
Is a Handwritten Will Legal?
Yes. A handwritten will can be admitted to probate in Tennessee, provided that the document is entirely in your own handwriting and is signed by you. This is known as a “Holographic Will.” Following your death, the authenticity of your handwriting must be proven by two (2) individuals. This means that a court hearing must be held, and two people who are familiar with your handwriting must testify that the handwriting and signature on the Will appears to be yours.
A will is a very technical document. While a handwritten will may work for you, there is a high likelihood that it may not work well for you. It is strongly recommended that a will be prepared by an attorney who has experience in this area of law. If your will is invalidated at your death for whatever reason, Tennessee law will govern how your property is distributed as if you had died without a will.
There are several common Trusts utilized in estate planning and long-term care planning. A trust is a written document in which the person establishing the Trust, the “Grantor” or the “Trustor” describes how he wants assets to be held for the benefit of another person, the “beneficiary”. The person who administers the Trust is the “Trustee”.
Do I need a Trust?
Whether or not you need a Trust depends on your unique situation. A Trust is used to hold assets for the benefit of another person. If a Trust is contained in your Will, it is called “testamentary” Trust. There are several different types of trusts. You may need a trust to ease the management of money for a child who wastes money, fights an addiction or for minor children or grandchildren. If there is no Trust for a beneficiary under the age of 18, then the court will require the family to establish a guardianship in order for a trustworthy person to handle the funds.
If you name someone in your Will who is disabled, such as a spouse, child or grandchild, then your will should contain a Special Needs Trust to protect the disabled person from losing her public benefits such as Supplemental Security Income (SSI), Medicaid, TennCare, CHOICES, or benefits from the Department of Intellectual and Developmental Disabilities. The Special Needs Trust also protects a disabled beneficiary in the event she may eventually need a means-tested government benefit.
Living Revocable Trusts
A living revocable trust is a tool used to avoid probate after you pass away. If you establish a living revocable trust, you will need to transfer all of your assets to the trust now and in the future.
There are many “trust mills” advertising that a living revocable trust will save taxes, insure privacy, and prevent disgruntled family members from contesting. Buyer Beware! The client may receive a beautiful binder with a trust and other documents that look quite official. However, those documents frequently do not reflect the client’s testamentary wishes, and many times, the company does not follow through with the client to insure that assets are properly transferred to the trust.
While a trust may discourage a person from contesting, your privacy is not guaranteed. A disgruntled family member may contest a trust by filing a court action after you pass away.
Tennessee is a probate friendly state. Clients need to discuss the pros and cons of a living trust with an attorney who is familiar with Tennessee probate and trust law as well as your personal family and financial situation.
Special Needs Trusts
Please click here for information on Special Needs Trusts.