When it comes to estate planning, you’ve probably heard advice like, “You need a trust” or “Avoid probate at all costs.” While these ideas might hold true for some, not everyone needs a trust, and probate can sometimes be an appropriate step. Understanding these topics can help you make informed decisions for your family. Let’s break down why:
What Is a Trust?
A trust is a legal arrangement that allows you to transfer assets to a Trustee. This person manages the trust for those you want to benefit. One of the advantages is that it helps avoid probate—the court-supervised process of transfering your assets after death. Trusts can provide an additional level of privacy, speed up the transfer of assets, and offer protection for your loved ones in difficult times.
Disadvantages of a Trust
While trusts offer many benefits, they aren’t essential for everyone. For example:
Trusts Can Be Expensive Setting up a trust requires meeting with an attorney to prepare the trust documents and potentially hiring professionals to administer it, which can be costly. For some individuals, these expenses outweigh the potential benefits, particularly if there are simpler ways to achieve the same goals. For example, if your family is in agreement, the Court can waive the requirement of making your assets public.
Trusts Need Active Management Once a trust is created, it needs ongoing attention. You have to transfer assets into the trust, update it as your financial situation changes, and ensure that it remains aligned with your wishes. This level of involvement is unnecessary if simpler tools can efficiently achieve your goals.
How to Save Money on Your Estate Plan with a Will vs. Trust
You’ve probably heard that you want to avoid probate. But in many cases, it’s not as bad as you may think. In fact, sometimes it’s a good thing!
In Some States, Probate Is Streamlined Each state has its own process for probate. Some states, like California and Florida, are complex enough that having a trust is a good idea for most people. However, in Tennessee, probate can be relatively quick, inexpensive, and straightforward, making it less of a concern. Of course, it’s a good idea to listen to your attorney about what is best for your family.
It Provides Oversight Probate ensures that a court oversees the distribution of assets, which can be beneficial for resolving disputes or ensuring that creditors are paid. For families with potential disagreements, this legal oversight might prevent further conflicts.
Not All Assets Go Through Probate Assets such as life insurance policies, retirement accounts, and some jointly owned property pass directly to beneficiaries. If your estate consists of these types of assets, putting them in a trust may not make much sense. In fact, many people structure their estate planning so that nothing will go through probate and then use a will as a back-up plan. (Because you know we always want to have a back-up plan!)
Is a Trust Right for Me?
While it may not be for everyone, a trust may be a good choice if:
You have a large or complex estate.
You own property in multiple states (which could trigger probate in each state).
You want to maintain privacy regarding the distribution of your assets.
You have minor children or beneficiaries who require special care.
Depending on your situation, your attorney may even recommend using a trust as a part of your will, which can be less expensive and time-consuming than creating a stand-alone trust.
Estate planning is not one-size-fits-all, and the decision to create a trust should be tailored to your unique situation. Your estate planning attorney should be able to help you weigh the costs and benefits, address any “what ifs, and explain how the plan reflects your goals. Ultimately, the key is to create a plan that provides peace of mind for you and your loved ones, whatever form that may take.
If you have questions about trusts or other estate planning tools, reach out to our office. We’re here to help you navigate the process and make the best choices for your future.
This week we are going to talk about why you need a medical power of attorney, even if your spouse is available to make decisions for you.
In a medical emergency, there is an assumption that your spouse would be the health care agent, make health care decisions, and deal with the hospital and doctors on your behalf. However, what happens when a spouse is separated, no longer wants to be in contact, or doesn’t agree with your health care values?
If this happened to you, would you still want them to make decisions for you? Do you want your adult children to make medical decisions for you? What if your spouse and children disagree on what type of treatment(s) you should receive? When faced with an emergency, please consider having your medical Power of Attorney already in place.
What happens if you don’t have a Medical Power of Attorney?
There are many situations that can arise when you become incapacitated or have a healthcare emergency. Even if it seems unlikely that your spouse would be disinterested in your health, it’s important to remember that your spouse may have trouble thinking clearly in an emergency or may also be seeking medical care. A medical Power of Attorney with an agent that is capable of making medical decisions, even in an emergency, can lower the risk and confusion regarding your medical decisions.
What is a Medical Power of Attorney and why you need one.
A medical Power of Attorney, also known as a Durable Power of Attorney for Healthcare, is a document that allows you to appoint someone as an “agent” to make decisions about your health care. This agent will make decisions on your behalf if you become too ill or incapacitated. A medical Power of Attorney ensures that your wishes will be followed. We have an experienced estate planning and probate attorney here in Nashville who can help you customize these decisions and record how choices will be made.
Choose someone you trust to make medical decisions for you.
How to choose the best Agent for your situation
When you are choosing your medical agent for your Medical Power of Attorney, it is important that you choose someone you can trust to adhere to your preferences regarding your medical care. Discuss your wishes with your agent before they need to make any care decisions. Make sure that you have confidence that your Agent will make the right decisions about things you two have not discussed.
Don’t wait to create your medical POA.
Conclusion: Why everyone needs a Medical Power of Attorney
It is important to think about what you would want in a medical emergency. Do you want your spouse to always make decisions for you?
Designate ONE person authorized to make decisions for you if you are unable to make or communicate your wishes. Even if you want your spouse to make those decisions, it’s always a good idea to have a “backup” person. This backup person can help out with decision-making in case your spouse is unavailable when someone needs to step in.
Whatever you decide, you should have a Medical Power of Attorney. Write your power of attorney in conjunction with your advanced directive (also known as a living will). All of these documents are an important part of a well-thought-out estate plan.
Do you have a plan for emergencies? Do you want help putting your values on paper? Take our Virtual Estate Planning Challenge! This 7-part Challenge helps you brainstorm the important stuff before creating your estate plan. We had a ton of fun making it and think you’ll really benefit from it too.
Last week we defined TennCare and how it applies to our clients. This week I want to go more in-depth with how TennCare serves Tennesseans with long-term care.
Many people believe that Medicare benefits will cover nursing home care once an individual is 65 or older, but this simply isn’t true. While Medicare covers the first 100 days, it doesn’t cover long-term assisted living. Read more about Medicare here.
“ Choices” is Tennessee’s Medicaid program for long-term care services and support
Back to TennCare/Medicaid…
My Mom doesn’t have long-term healthcare insurance. What are my options?
Payout of pocket until you run out of cash – This is an unrealistic option for most families. Nursing home care is expensive. Not a lot of people have an extra $7,000-$11,000 a month in their bank accounts.
Do a reverse mortgage on her home.
Qualify for the TennCare / Medicaid program called “CHOICES”.
As you can see, options 1 and 2 are very unpleasant and leave nothing left for a loved one’s legacy. However, option 3, CHOICES, is definitely something worth looking into.
What is CHOICES?
CHOICES is the category of TennCare that provides Long-Term Services and Supports (LTSS) such as nursing home care.
What is the process for getting qualified for CHOICES?
In order to be eligible to receive benefits from TennCare/Medicaid your loved one must first qualify within these three categories:
Medical eligibility
Income threshold
Asset threshold
Being medically and financially eligible is necessary for TennCare approval
How does someone become medically eligible for TennCare CHOICES?
The state of Tennessee will determine who is medically eligible to receive TennCare Long-Term Services and Support (LTSS) by using a pre-admission evaluation (PAE). This PAE is used to determine if the applicant can do basic life skills on their own without help. The PAE will also determine if the applicant is safe in their current environment.
The PAE is a strict evaluation and it is performed on a case-by-case basis. An applicant must receive a score of 9 or higher on a 26 point scale in order to be considered medically eligible for TennCare Long-Term Support Services.
For example, a caregiver or healthcare provider may be asked about a patient’s level of ability to do things and how much assistance is needed.
The following Activities of Daily Living (ADLs) are covered in the PAE evaluation:
Transfering
Mobility
Communication
Medication
Orientation
Eating
Behavior
If you or your loved one is unlikely to get to a nine or higher on the PAE, it is always appropriate to ask for a “safety determination” evaluation as an alternative route of becoming medically eligible for Choices.
How can someone become financially eligible to receive CHOICES?
You must be able to prove that the applicant has a low income and little assets. As of January 2022, an individual applying for TennCare CHOICES cannot have an income exceeding $2,523.00 per month. Additionally, the applicant cannot have more than $2,000 in assets. This includes any money in the bank and investment accounts but also requires consideration of retirement accounts, life insurance policies, real estate, artwork, jewelry, and any other valuables. When we talk about the assets for a couple of things get a little more complex. The most important thing is that both the applicant and their family are taken care of, both medically and financially.
My Mom is over the limits for income and assets? What do we do?
If the applicant is in excess of the amounts we can plan for that! We have a tool to help people who have excess income and assets yet need to qualify for TennCare/Medicaid called the “Care and Savings Assessment”. With this Care and Savings Assessment, we work to determine the best way to structure you or your loved one’s finances, either now or in the future. We plan so that our clients have the peace of mind knowing they can qualify for TennCare if and when they need it!
In conclusion
It is often helpful to have an attorney assess your financial situation and offer recommendations on how those finances may be restructured to qualify for TennCare Long-Term Services and Support (LTSS). As an experienced TennCare planning attorney, I can help you evaluate your risk and create a plan that takes care of everyone in the family.
Are you ready for help with TennCare planning? Contact us and we can discuss your plan. Next week we will go over some examples of how we restructure an individual’s finances to meet their needs for long-term care.
When one spouse wants to disinherit the other, but they are still married, it can be a complicated process. In most cases, disinheriting a spouse is only possible if you have a valid prenuptial agreement or if you are divorced.
Let’s illustrate this with an example:
Jack and Jill have been married for five years, and have one child together. Their house was purchased by Jill before they were married, and Jack’s name was never added to the deed.
Jill recently discovered that Jack is cheating on her with the Instacart shopper. She and Jack are now separated and have started the divorce process, but she wants to make sure that if she dies before the divorce is final that Jack won’t get anything from her.
What can Jill do?
Jill can disinherit her spouse after the divorce
Unfortunately, Jill cannot disinherit Jack until she files for divorce. Tennessee law does not allow you to disinherit your spouse- even if you write a will that says that! My advice is to get divorced as quickly as possible. Unless divorced, Jack is entitled to his share.
The good news is that once divorce papers have been filed, there will be an automatic injunction that specifies that the pair no longer have spousal rights on the property through marriage. This is primarily to protect things like bank accounts, real estate, relationships with the children, and health insurance coverage. However, all that does is prevent money from being spent by either spouse outside of regular expenses. Jill won’t be able to do anything, like estate planning, until after the divorce has been settled or through special permission from a judge.
In the meantime, there are still a few steps Jill can take:
Utilize her prenuptial agreement
Jack and Jill signed a prenuptial agreement prior to their marriage. In it, they waived the right to inherit from each other. All Jill needs to do now is to rewrite her will to specifically omit Jack.
Divide assets into separate trusts
Jill can establish a trust under her name and place the house in it. Since Jack’s name isn’t on the deed or on the trust, he has no right to the house if Jill were to pass before the divorce is finalized.
Rewrite her will
Jill can rewrite her will so that Jack only gets what he is entitled to by law, called his elective share. In Tennessee, spouses are entitled to a homestead allowance, a year of support, and elective share. The elective share amount depends on how long you are married.
Hire a family law attorney
The divorce will go much quicker with the help of a family law attorney.
Jill can get a jump start on planning her estate.
Finally, if Jill is preparing for a divorce, she can take advantage of all the legal documents at her fingertips and get a head start on creating the estate plan she desires. Once her divorce decree is finalized, she can meet with her lawyer and sign the document to make it valid.
Are you getting a divorce and want to start over with your own will and estate plan in Tennessee? Are you looking for a referral to a family law attorney? Let us know! We are happy to help you make plans for your new life. Not sure where to start? Give us a call. We offer a complimentary 15-minute call to see if we are the right fit for you and your situation. You can schedule your call by clicking here.
A Davidson County will and trust lawyer’s job is to make sure that you have all of your ducks in a row so that if you become incapacitated or die, your loved ones will know how to manage your estate and follow your wishes. Laws in Tennessee vary from those found around the country, which is why you want to work with an attorney who is skilled in understanding your specific needs. One area that should be considered is your service providers.
Make a list of your service providers and put it in your estate plan
“Service providers” covers a wide range of individuals involved in your life. Should you be unable to communicate with them, you want to ensure that your trustee, executor, conservator, or other responsible person is able to communicate with them on your behalf. Having them all listed in one place will make this job much more manageable.
Household Providers
This list should include all of the people or companies that you deal with when it comes to the maintenance of your home. In some cases, your home will need to continue to function in your absence, and your representative will need to be able to contact these people to make sure things keep running smoothly. In other cases, whether you are deceased or incapacitated, there are certain services that you may no longer need, and the person in charge needs to be able to contact the service providers and cancel with them.
Some examples of household providers that you will want to list might include:
Computer support
Food or water delivery
Gardening
Pet care
Housekeepers
Heating/Cooling system maintenance
Heating oil delivery
House sitters
Pest control
Pool or spa maintenance
Utilities
Vehicle maintenance
Basically, anything that you have performed on a regular basis should be noted, along with contact and payment information.
Medical Service Providers
You should also provide your representative with contacts for your medical service providers. This information could be very valuable should you need medical attention but be unable to reach out to these providers on your own. Additionally, if you have standing appointments with these providers, it will be helpful to have them canceled so you don’t accrue charges for services you’re not using.
Some of the medical service providers you may want to include on your list are:
Chiropractor
Counselor
Dentist
Massage therapist
Ophthalmologist
Physical therapist
Primary care physician
Psychiatrist
Specialists
Personal Service Providers
There are other types of regular services that you may use, and you’ll want to include these as well for the same reasons already mentioned. Some personal service providers to keep in mind for inclusion:
Childcare provider
Hairdresser
Home care provider
Meal preparation
Transportation
Tutors
Additional Information
Along with the contact information for these service providers, it’s a good idea to make notes about when they are expected, and you may even want to include service agreements and contracts. For example, if you have a standing arrangement to have your sprinkler system blown out each fall, make a note of that.
Your estate planning attorney may not include all of this information directly in your estate plan, but they will want to be able to assist your family with where it can be located when the need arises.
If you are seeking estate planning services, please book a call with our office here .
