by April Harris Jackson | May 25, 2021 | Estate Plan
When a home is passed on to adult children after the death of a parent, there are three typical paths that beneficiaries can choose: move into the house, sell the house, or rent it out. If you and/or your siblings recently inherited a house and are uncertain about the best way to deal with the asset, a Nashville estate planning attorney can help you work through the following considerations relating to the property:
Option One: Move into the House
- If you decide to move into the house, you may have to anticipate an increase in property taxes as the current market value of the house will be reassessed
- You may want to conduct a home inspection to check if there are maintenance and safety issues that must be addressed immediately. You can also calculate the cost of renovation and repairs. The good news is that if you grew up in the home or talked with your parent(s) on a regular basis, then you probably already know of any maintenance “quirks” that your parent(s) dealt with when deciding whether you want to take them on as your own.
- There can be complications if you have siblings who are also co-owners. If you want to live in the home yourself, the other siblings will need to be compensated. You may do this through rental payments, buying out their share by mortgaging or refinancing the property, or by making the house part of your share of a larger total estate.
Financial and legal obligations of keeping the house
By moving into an inherited home, you are therefore accountable for the property maintenance and all its corresponding taxes and insurance payments. You are also responsible for any legal obligations arising from homeownership. Make sure these are responsibilities that you are prepared for.
Option 2: Selling the House
- Unsettled financial obligations can make selling the inherited house a bit problematic. You need to pay all the remaining debts out of the total sales of the property. And it gets more complicated in instances when the money owed on mortgages, taxes, judgments, and/or liens is higher than the price of the property itself.
- If the house you have inherited hasn’t been updated in a long time, major cleaning and minor renovations can potentially work to your advantage. On the flip side, renovations, in general, will cut into the profit you are expecting. Make sure you are focusing on changes that will give you the biggest bang for your buck.
- You only have to pay capital gains tax on any appreciation in the home’s market value from the time you inherit it up to the time you sell it.
- You also would need to consider the commission of the real estate agent should you need one.
Financial and legal obligations of selling the house
You may have to deal with a lot of challenges to get the house in a saleable condition, but once you sell the property, you are free from the responsibility of paying for its maintenance, taxes, insurance, and any other legal matters related to homeownership.
Option 3: Renting the House
- You can generate a passive income through rental payments for the house. The demand and rate will depend on the location and condition of the property.
- It pays to check on any relevant city ordinances or homeowner’s association rules on renting.
- You could consider hiring a professional property manager to handle the marketing, leasing, and managing of the house if you want to minimize hassles and costly problems.
- You have to provide precautionary measures and repairs for any damages found in the house you are offering for rent. Being a landlord entails a lot of liability.
- If you consider making the property a bed and breakfast or vacation rental, know that management and maintenance costs can go way up in this scenario. And, you also have to perform duties similar to a Hotel Manager should you really push through with this idea.
Financial and legal responsibilities of renting out the home
You are legally and financially responsible for the house as the homeowner. Furthermore, you now have the responsibilities of being a landlord and you should seriously consider the additional accountability of renting out the home.
Inheriting a house can either be a blessing or a burden depending on the way you will handle it. If you are still undecided, it is wise to weigh your options thoroughly by discussing it with an experienced attorney who can give you a balanced perspective on the matter. We encourage you to schedule an appointment today with our Nashville estate planning and probate attorney, April, at (615) 846–6201 so you can best understand how the inheritance will affect you or your family.
by April Harris Jackson | May 24, 2021 | Estate Plan
Now that vaccinations have started and “normal” life is within our grasp, many couples are starting to resume their wedding plans. Those who have postponed their big day or got engaged during the pandemic are once again starting to put deposits on venues, purchasing gowns, and even planning honeymoons. However, as a Nashville estate planning lawyer, I want everyone to know that estate planning and prenuptial agreements should be part of the process along with selecting flowers and all the “fun stuff.”
All marriages celebrate the joining of two lives together, a union of family and finances. And while estate planning is not exactly romantic, it can create a feeling of being protected even if the worst happens. Likewise, creating a prenup before the marriage can offer each partner security and confidence that all of their bases are covered as they enter into the union. Essentially, it sets forth how all property, assets, childcare, and spousal support would work IF the marriage did not survive. The prenup’s contents depend on the unique needs of each couple and the document is designed to protect each partner if the marriage were ending, whether through death or divorce.
Couples are encouraged to create an estate plan together, but each partner will need their own lawyer when creating a prenuptial agreement. The reason is simple; the prenup is meant to protect each partner separate from the other. It is also vital to select an attorney in the state where the couple plans to reside, as there may be different laws regarding support after a marriage ends.
A Nashville estate planning lawyer will be quick to point out that a prenuptial agreement is often a process that keeps marriages from ending in divorce, or protects the family after the death of one partner. Starting the marriage on a strong financial foundation can bind couples closer together. It gives them an open and honest place to discuss financial plans, ideas on fidelity, wishes for the future, and how each views the marriage before entering the contract.
If you or a loved one is getting married, please consider an estate plan and prenuptial agreement as part of the wedding plans. That way, as you walk down the aisle, you know that no matter what, your future is protected. Speak with our estate planning lawyer, April, by scheduling an initial call.
by April Harris Jackson | May 18, 2021 | Estate Plan
Have you ever wondered what is the worst that can happen if you become incapacitated or pass away without an estate plan in place?
If you have, you’re not alone. This is actually a common question that I receive as a Middle Tennessee estate lawyer, especially from those in close-knit families who believe that their kids (or other loved ones) will peacefully sort everything out when they pass away without needing any additional legal documents or guardrails in place.
Failing to Plan Makes Life Harder for The People You Love
The truth of the matter is that without a plan (or even the wrong plan) you make things much harder for the people you care about, even if everything goes as smoothly as possible and everyone gets along. Managing your affairs will also become much more costly and more time-consuming than they need to be if something happens.
You May Not Like The “Default Plan” The State of Tennessee Already Has for You
Remember, you are not obligated to create an estate plan; the state of Tennessee already has a plan that your loved ones will be forced to follow in the event you do nothing. The only way to override the state’s plan is to legally create one of your own.
What If You Are Incapacitated?
If a crisis happens during your lifetime and you don’t have a plan, you run the risk of losing flexibility and you may even lose control. Even if your loved ones want to help if you become incapacitated, they could be barred from getting involved with your affairs because of HIPAA laws or other privacy policies. If that happens, all decisions about your care and your future will be made by people who don’t know you or what is important to you.
Make Planning a Priority to Protect Your Family, Your Wishes, and Your Assets
The bottom line is that an estate plan is a roadmap that’s designed to make life as easy and hassle-free as possible for yourself and your loved ones in the event of illness, incapacity, or death. It’s one of the most loving gifts you can give. If this article has caused you to rethink your current plan for your affairs, we are here to help you. Simply contact our Middle Tennessee law office at (615) 846–6201 to schedule a consultation.
by April Harris Jackson | May 10, 2021 | Estate Plan
When was the last time you took a look at your Last Will and Testament? If it was five years ago or more, then you should consider dusting it off and reading through to make sure it’s up to date.
Remember, a lot can change in five years: the birth of new family members, marriages and divorces, or even significant changes in your finances are just some of the reasons you should revisit your Last Will and Testament, as well as the rest of your estate planning documents like your Power of Attorney and Advance Directive. If you notice your Last Will and Testament is out of date and you intend to revoke it, you should have a replacement ready to go.
If you want to revoke your Last Will and Testament due to changes in your family’s situation, you should speak with an experienced Davidson County Will lawyer. A Will lawyer can help you figure out the best way to change your estate plan, which will probably involve rewriting your Will, Power of Attorney, and healthcare documents.
Taking a look at your Last Will and Testament, as well as your other estate planning documents, at least every five years is a good habit to ensure your wishes are known to your family and you have the proper planning in place. If you believe you may have a problem with certain family members once you’ve changed your estate plan, you may want to seek the advice of an experienced Davidson County Will Lawyer to talk about your options.
If you would like to learn more about revoking your existing Last Will and Testament, or if you’d like to review your existing estate plan, please schedule an initial call with April Jackson.
by April Harris Jackson | Apr 30, 2021 | Estate Plan
Trusts are an excellent tool for estate planning and asset protection purposes. The most common type of trust is a Revocable Living Trust, which holds your assets and helps avoid the probate process when you pass away. However, Revocable Living Trusts do not help much when it comes to asset protection planning.
What Can I Do with a Revocable Living Trust?
A Revocable Living Trust is an essential tool for avoiding probate. If you own enough assets to qualify for a full probate proceeding when you pass away, then you will most likely benefit from a Revocable Living Trust. Assets placed in the trust, such as a home and financial accounts, can pass to your beneficiaries without going through the probate process. This saves your loved ones time and money and provides a level of privacy for your personal affairs. A successor trustee of your choosing can also manage any finances you place in your Revocable Living Trust if you ever become incapacitated, or even if you just do not care to handle your own financial affairs anymore.
Will a Revocable Living Trust Protect My Assets?
Revocable Living Trusts do not protect assets from financial predators. If you owe money to creditors, then those creditors may take assets from your trust, even though the trust is technically the legal owner of the assets. Your Revocable Living Trust is not suitable for asset protection purposes because you are still considered the owner of the assets if you are the trustee because you have complete control over the trust. There are no restrictions on how you can spend the assets in the Revocable Living Trust, and you can revoke the trust at any time. Revoking the trust means the assets will revert to your direct ownership, putting them back under your control. In addition, all assets in the Revocable Living Trust are reported to the IRS for tax purposes under your Social Security number, meaning there is even less separation between you as an individual and the Revocable Living Trust. This is different from Irrevocable Trusts, which have their own tax identification numbers.
If you are interested in learning more about how certain Irrevocable Trusts can be used for asset protection purposes, or if you’d like to learn more about estate planning with a Revocable Living Trust, simply set up a consultation with a our Nashville trust attorney to talk about how we can help.
by April Harris Jackson | Apr 27, 2021 | Estate Plan
It is well known that probate in Tennessee can be costly and has the potential to be very time-consuming. Many look for loopholes in the system as an attempt to shorten or eliminate the probate process. Some believe that adding their child’s name to their bank accounts or even placing their child’s name on their property deed can help speed the process along. While this strategy might give your child quicker access to money and could potentially help transfer ownership of your property faster after you pass, as a Davidson County estate planning lawyer, I warn that it is likely to cause headaches in the long run. Here are just a few things to consider before taking this action.
- Your Child Has a Say in Important Decisions
By adding your child’s name to your deed, you have named them as a joint owner of the property. This creates a need for both parties to be in agreement regarding the sale or refinance of said property while you are still alive. The potential for intense family conflict exists if you and your child are not on the same page.
2. Sharing Creditors
Before deciding to add your child to your assets as joint owner, you must have a comprehensive understanding of your child’s credit situation. If they are in financial trouble, you could be at risk if you add them to your accounts. That’s because when you share ownership of assets, your child’s creditors could come after your assets for payment. Or, if your child is sued or gets a divorce, half of your assets could be up for the taking!
3. Your final wishes may not be honored.
Having your child named as joint owner of your assets makes them the sole owner when you pass. Regardless of any verbal agreement with your child as to how you want your assets distributed, they will have complete authority over such decisions. This could be a problem if you have other children or you have specific wishes about how you want your assets split up when you are gone. Legally, your child who becomes the sole owner of your property does not have to share a penny with anyone else.
The good news is that there are safer and more efficient ways to help your children avoid probate without encountering some of the drawbacks and problems detailed above. Consider talking to a Davidson County estate planning attorney before taking the step of adding your child’s name to your assets. We can help you get started. Contact us at (615) 846–6201 to set up a consultation with April.
by April Harris Jackson | Apr 23, 2021 | Estate Plan
If you plan on leaving money to minor children in your Last Will and Testament, you’ll have an important issue to consider: Who will be in charge of managing the inheritance and keeping the child’s money safe from being lost or squandered if the parents pass away?
Estate planning is often easier for married couples in this situation. One spouse leaves everything to the other spouse, and the surviving parent will take care of the children. But what happens if something happens to both parents, either at the same time or within a short span of time?
Unfortunately, a Nashville Will lawyer can tell you that there is no easy answer. Young beneficiaries usually require someone else to be named to manage their inheritance because they are legally unable (as in the case of a minor) or too immature to manage the inheritance themselves.
Parents often will ask the people named as guardians to also take responsibility for their children’s money and property. However, if you do not name anyone to manage finances for your children, the probate court will do it for you by appointing someone – perhaps a complete stranger – to serve as the children’s financial guardian. The financial guardian selected by the probate court must report frequently and has limited authority to make decisions.
It’s also important to note that, unless otherwise noted, children who are 18 or older will have complete control of the property and money left to them. That being said, you should consider raising the age at which your child gains financial responsibility to age 25 or older. This reduces the risk of your child’s inheritance being mismanaged or lost.
A Revocable Living Trust is often the best way to manage your children’s inheritance so that they do not receive a lump sum of money before they are mature enough to handle it. A Revocable Living Trust allows you to raise the age or layout key milestones in which the children receive their money. It also allows you to specify a trustee who oversees the distribution of funds to your children according to your wishes for their future and how their inheritance is to be spent.
If you have any questions about naming a person to manage a minor child’s finances, or if you are interested in learning more about setting up a Revocable Living Trust, please give our law firm a call at (615) 846–6201 to set up a consultation with our Nashville will lawyer.
by April Harris Jackson | Apr 12, 2021 | Elder Law
National Healthcare Decisions Day is on April 16th, and it’s an important reminder for every adult to begin having conversations with loved ones about their most private wishes for medical and end-of-life care.
Far too many people assume that their families would make the choices they would want in an emergency. Yet every day we hear stories of adult children, siblings, or other relatives battling during a healthcare crisis over “what their loved one would have wanted” in that situation.
Incapacity Can Happen at Any Age
The coronavirus pandemic has been a reminder to all of us that illness and even incapacity can happen at any age. Over the past year, many adults, for the first time ever, expressed their thoughts about being placed on a ventilator and/or receiving experimental medication should they become seriously ill with COVID-19.
But planning must go beyond an initial discussion. You must also clearly and legally document your preferences, as well as choose an “Agent” whom you trust to make such decisions if you are unable to speak for yourself.
Documenting Your Wishes Takes Pressure Off of Loved Ones
Remember, emotions can run high during a healthcare crisis, and it might be hard for your loved ones to stop life support, for example, when they desperately want you around. Having your wishes spelled out in writing helps provide guidance during a stressful time and makes these types of decisions easier for your loved ones, especially in cases when other family members don’t agree.
How to Start “Tough Conversations” About Medical Care
In honor of National Healthcare Decisions Day, set aside time this month to have conversations with loved ones about your personal preferences for medical or long-term care. Here are some important issues to consider:
- Whom do you trust to make medical decisions on your behalf?
- How do you feel about feeding tubes, life support, and other artificial life-saving devices?
- Is there any type of medical care you would NEVER want?
- If you were permanently disabled or incapacitated, what would contribute or take away from your quality of life?
- What are your thoughts on nursing home vs. in-home healthcare?
- How would you like your family to pay for the care you may need if co-pays become excessive or insurance does not cover your treatment?
We love The Conversation Project for guides to help families have these hard, but important, conversations.
A Final Consideration About Your Choice of Healthcare Agent
One final point to consider when documenting your wishes and choosing a healthcare agent that will ultimately carry them out is that the person you nominate should want to have this responsibility. There are people who do not want or cannot handle making medical decisions– even for their own spouse.
Remember, if the time comes that the healthcare directive needs to be used, it is going to be a very stressful and emotional time for this person. Are they up for the job? Do they want the job? Take the time to have an additional conversation with whomever you are considering ensuring that they can, and are willing to, make the decisions that you would want in a crisis situation.
by April Harris Jackson | Apr 8, 2021 | Estate Plan
More than half of Americans now have at least one chronic health condition, mental health concern, or substance abuse issue. That is a staggering statistic that our Middle Tennessee estate planning lawyer who works with sick and disabled clients confronts every day.
There are varying definitions of what it means to be “chronically ill.” One definition is having a disease that a person will live with for many years. These types of illnesses include diabetes, cardiovascular disease, lupus, multiple sclerosis, hepatitis c, and asthma. Alternatively, some define chronic illness as an inability to perform at least two activities of daily living such as eating, toileting, transferring, bathing, and dressing. Or, the patient may require constant supervision by someone else for health or safety issues.
Regardless of how “chronic illness” is defined, every adult living with a long-term diagnosis should have a few basic legal documents in place to ensure that their wishes are honored and that they are legally and financially positioned to receive the best care possible in the least restrictive environment as possible.
For example, an experienced Middle Tennessee estate planning lawyer can help create legal documents such as Powers of Attorney or Healthcare Directives that appoint someone you trust to pay your bills, access bank accounts, and make medical decisions for you if you are incapacitated or otherwise unable.
Additionally, a Middle Tennessee estate planning lawyer can help you utilize tools such as trusts to protect hard-earned assets from nursing homes, creditors, or predators. A living trust also offers control, as you can set rules and parameters as to how your assets are to be used and managed by a trustee who is overseeing your affairs. A trust can also help pass down your assets outside of probate, which can be a long and expensive process that most Tennessee residents would prefer to avoid.
The bottom line is this: Do not assume that because you are suffering from a chronic illness that it is too late to take steps to better your financial situation or safeguard your family. Even if you (or a loved one) are currently in a nursing home, there may still be options! The first step is to simply contact our office. We will schedule a planning session with you and walk through all of the avenues of protection that could work best for your family.
by April Harris Jackson | Mar 31, 2021 | Estate Plan
The IRS recently announced the 2021 federal estate tax rate limits, which are $11.7 million for individuals and $23.4 million for married couples. This is increased from $11.58 million and $23.16 million respectively in 2020.
Under this new guidance, wealthy Americans will be able to leave up to $23.4 million to their heirs without being subject to federal estate tax rates, which top out at 40%. The federal gift tax exemption will remain at $15,000 annually, meaning gifts made up to that amount will not be taxed by the federal government.
Will There Be Changes Under the Biden Administration?
While estate tax rates have stayed fairly consistent over the past few years, estate planning attorneys across the country are being asked by their clients how the presidential election may affect future federal tax limits.
During the campaign season, the Biden/Harris team proposed reducing the estate tax exemption to $3.5 million for estates and $1 million for gifts. The ability to pass such measures, however, appears to be a long shot, considering the current makeup of the Senate. The Democratic party now holds a very slim majority and lowering the estate tax threshold is not particularly popular on the Republican side. It would be difficult, if not impossible, at this point to get a majority of Senators to agree to such legislation.
Complicating matters further is the coronavirus pandemic. It’s anticipated that Congress will spend the next few months working on financial relief packages for individuals and businesses impacted by COVID-19. As such, major overhauls to the estate tax are anticipated to take a backseat in 20201 in favor of more pressing matters.
However, when it comes to the whims of Congress, estate planning lawyers “never say never.” That’s why we are continuing to keep a watchful eye on Congress should support begin to emerge for estate tax reform in 2021 and beyond. For real-time updates, be sure to follow our estate planning blog, or subscribe to our newsletter. Finally, if you have specific questions about the federal estate tax or how to avoid “death taxes” on your estate when you are gone, please contact us at (615) 846–6201 to schedule an appointment.
