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How Should you Respond to a Request to Waive Bond, Inventory and Accounting in a Tennessee Estate?

Posted on Jan 25 2015 12:20PM by Attorney, Jason A. Lee

Sometimes when a Tennessee probate estate is opened up, the attorney handling the estate will provide a request to the beneficiaries to waive bond, inventory and accounting [“Bond” is basically an insurance bond to protect the assets of the estate if there is a failure by the executor.  “Inventory and Accounting” are required reports to beneficiaries and the court on the financial status of the estate].  This may be unnecessary in some circumstances if it is actually already waived in the will by the decedent.  However, sometimes wills do not include this language.  Or, many individuals die intestate (without a will).  I often get asked by beneficiaries who receive a request to waive bond, inventory and accounting as to whether they should agree to this request.  When I personally handle estates as the estate attorney I also send out these same letters to beneficiaries on many occasions. 

 

The short answer on how to handle this situation (and the advice I give to others) is that if the individual is a family member and you trust them to handle the estate appropriately, then I do not see any issue with waiving bond, inventory and accounting.  This is especially true with smaller estates.  However, if there is an estate of a significant size and you have any issues of doubt, hesitation or trust concerning the individual who will be handling the estate, then I suggest that you not waive bond, inventory or accounting.  Refusing to waive these items can force the executor to be more accountable for their actions in the estate (by requiring them to provide financial updates under the statute).

 

There is no perfect answer to this question but certainly if you do not trust the individual who will be handling the estate, then I recommend you not agree to waive bond, inventory or accounting.  Further, if the individual is someone who is not a family member and it is a sizeable estate, you also need to think long and hard about whether it is appropriate to waive bond, inventory or accounting.  Keep in mind however, that when you do not waive these items, it does increase the cost of estate administration (the insurance bond costs money and the inventory and accounting increase the paperwork and fees of the attorney handling the estate).  Also, if you do not feel comfortable waiving the bond, inventory or accounting, then I would also recommend that you hire an attorney to represent you as a beneficiary in the estate.  This gives you more of a voice in the estate administration process and also provides you with someone who can give you counsel on what is occurring in the estate.

 

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Tennessee and Federal Estate Tax Exemptions Raised Today for 2015.

Posted on Jan 1 2015 11:13AM by Attorney, Jason A. Lee

Today the Tennessee Inheritance Tax exemption (for 2015) is raised to $5,000,000.00.  Next year the Tennessee Inheritance Tax will be abolished.  Starting January 1, 2016 (for those who die on or after that date) there will no longer be any Tennessee Inheritance Tax obligations.  The Federal Estate Tax exemption (for 2015) was raised to $5,430,000.00 today.  It is indexed to inflation and should go up each year.  As a result, these taxes rarely come into play when dealing with estate planning in Tennessee unless you have a very large estate.  Happy New Year!

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IRS Recently Announced 2015 Limits for Estate and Gift Tax Exemptions

Posted on Dec 6 2014 3:59PM by Attorney, Jason A. Lee

The IRS recently introduced certain cost of living adjustments to the consolidated federal estate and gift tax exemption.  The new federal estate and gift tax exemption will be $5.43 million dollars in 2015.  This is an increase from the prior exemption of $5.34 million for 2014.  This is therefore an increase of $90,000.00 that can be passed on by gift or in your estate, tax free starting in 2015. 

 

Unfortunately, the annual tax free gift exclusion amount stays at the same level at a total of $14,000.00.  This is the annual amount of gifts that can be given to an individual without counting toward the lifetime consolidated exemption of $5.43 million for 2015.  As a result, each year you can give up to $14,000.00 to an individual under the annual gift tax exclusion without it counting towards your lifetime exemption amount.

 

As I have stated before, estate taxes are becoming less relevant due to the “permanent” fix that was provided by the federal government a few years ago.  Additionally, the Tennessee inheritance tax exemption will be $5,000,000.00 in 2015 and it is abolished starting in 2016. 

 

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Statute of Limitations to Contest a Tennessee Probated Will is 2 Years From Date of Order Probating Will

Posted on Nov 20 2014 3:23PM by Attorney, Jason A. Lee

In Tennessee we have a two year statute of limitations to set aside the probate of a will.  This two year statute of limitations is calculated from the date the order is entered admitting the will to probate.  If you wait beyond this time period, you likely will not be able to contest a probated will (there are exceptions for minors or those that are adjudicated incompetent).  T.C.A. § 32-4-108 provides as follows:

 

All actions or proceedings to set aside the probate of any will, or petitions to certify a will for an issue of devisavit vel non, must be brought within two (2) years from entry of the order admitting the will to probate, or be forever barred, saving, however, to persons under the age of eighteen (18) years or adjudicated incompetent, at the time the cause of action accrues, the rights conferred by § 28-1-106.

 

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TAGS: Statute of Limitations, Minor Children, Tennessee Probate Law Comments [0]
  
 

I Am a Beneficiary In a Tennessee Estate, Do I Need an Attorney?

Posted on Nov 9 2014 7:56PM by Attorney, Jason A. Lee

The answer to this question is not easy.  It really depends on the circumstances of your situation.  If there is a good trustworthy executor who hires a good competent attorney to handle a Tennessee estate, then the answer may be no.  However, if you are concerned about the executor’s abilities to be handle the estate (and the estate has some actual value) then I recommend that the beneficiary hire an attorney to assist them with monitoring and following the estate proceedings. 

 

There are many complicated things that can happen in an estate.  Additionally, there are people out there who take advantage of being an executor of an estate and do things to improperly benefit themselves.  If you have suspicions about these things, it is much better to hire an attorney on the front end (or at least early on) to help you monitor the estate to make sure it is moving forward appropriately.  IT can be very painful and expensive if you delay this and try to fix the situation late in the process (although this is often when I get calls from beneficiaries asking this question).

 

Additionally, as a beneficiary in Tennessee you are entitled to information and documentation regarding the estate.  If you are not kept up to date on what is going on in the estate by the executor or the estate attorney, then you have a right to demand certain information.  An attorney can file a motion requesting an accounting of the estate along with supporting documentation to show the beneficiary is not being properly advised of what is going on in the estate.  This can be a very useful tool to make sure that the estate is moving forward properly.  Also, when an attorney gets involved for a beneficiary, that can often speed up the estate and there is a heightened awareness of keeping that beneficiary and their attorney up to date on the estate.

 

If you have suspicions or concerns about an estate in Tennessee, it is best to contact a Tennessee probate attorney to assist you with monitoring the estate. Continue Reading  

TAGS: Tennessee Probate Law Comments [1]
  
 

New 2015 IRS Contribution Limits for 401k, 403(b) and IRA Retirement Accounts.

Posted on Nov 2 2014 9:32PM by Attorney, Jason A. Lee

The IRS recently announced the new cost of living adjustments to the numerous annual limits on retirement contributions.  These limits impact the amount of money you can contribute to a retirement plan.  This can have an effect on how you formulate your estate and retirement planning in Tennessee.

 

The new 2015 annual limits for contributions to a 401(k), 403(b), most 457 plans and the federal government Thrift Savings Plan has increased from $17,500.00 to $18,000.00.  The helpful annual additional catch-up contributions to these plans, available for those over 50 was also increased from $5,500.00 to $6,000.00. 

 

The limit for contributions to an IRA (Roth or normal IRA) is not changed for 2015 and remains at the $5,500.00 level.  For those that take advantage of the Roth IRA, the AGI (Adjusted Gross Income) phase-out level for the ability to contribute was adjusted up for 2015.  The phase-out now begins at $183,000.00 for married couples filing jointly and $116,000.00 for singles and heads of household.

 

One other important thing to always remember, is that you need to update and keep current your beneficiary designations on your retirement accounts.  In Tennessee, if you have a proper beneficiary designation, these accounts pass outside of probate.  If you do not have any designation or if you name your estate as the beneficiary, then this money will pass through your estate in the probate process.

 

Follow me on Twitter at @jasonalee for updates from the Tennessee Wills and Estates blog.
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TAGS: Retirement plans - 401k etc., Taxes Comments [0]
  
 

Can a Tennessee Power of Attorney Give Themselves a Gift?

Posted on Oct 26 2014 7:45PM by Attorney, Jason A. Lee

One issue that comes up on occasion in Tennessee is whether an attorney-in-fact, under a Power of Attorney, can give gifts to themselves as power of attorney.  A recent Tennessee Court of Appeals’ decision, In Re: Conservatorship of Alfonso B. Patten, No. M2012-01078-COA-R3-CV, 2014 WL 4803146 (Tenn. Ct. App. 2014), discusses a situation where an attorney-in-fact gave herself significant gifts of money and real estate by utilizing the Power of Attorney of her father (the “Ward”).  These gifts were given with “no consideration” which means she did not pay anything for the “gifts”. 

 

The question, therefore, was whether the Power of Attorney document language allowed the attorney-in-fact to give gifts to herself and her husband.  Under Tennessee law, an attorney-in-fact can give gifts to himself or herself if the plain language in the Power of Attorney document provides for such a power in a clear and unambiguous way.  In this case, the attorney-in-fact argued that the Power of Attorney document provided clear language giving authority to give gifts.  Additionally, under T.C.A. § 34-6-110(a)(2), provides that “if the attorney-in-fact has the authority to make gifts, he or she may make gifts of the principal’s property in accordance with the principal’s personal history of making or joining in the making of lifetime gifts.”  The Court in the Patten case at issue found that the pattern of small gifts over the years by the Ward did not translate into a pattern of giving at the level of gifts that were given in this situation (totaling property in excess of $1,000,000.00).  As a result, in this particular case the Court found the Power of Attorney document did not provide explicit authority to give gifts and the gifts that were given were not in accordance with the prior actions of the father. 

 

The bottom line in Tennessee is that it is very risky to give gifts to yourself by using a Power of Attorney.  The gift giving power must be explicitly authorized in the Power of Attorney document or you run a great risk of being found to have breached the fiduciary duty or even of stealing (conversion) from the Ward.  If you have a...

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Where is Probate Filed When a Person Dies Outside the State of Tennessee but is a Resident of Tennessee?

Posted on Oct 12 2014 10:28PM by Attorney, Jason A. Lee

I recently had a question about where probate should be filed for a resident of Tennessee when they die outside the State of Tennessee.  The answer to this question is that the probate estate should still be filed in Tennessee (there may some limited exceptions to this general rule, but this is the general rule).  Under Tennessee law, probate is filed in the county of residence at the time of an individual’s passing.  There are two different statutes on this issue, one dealing with intestate (no will) situations and one dealing with situations where there is a will. 

 

For situations involving a will, T.C.A. § 32-2-101 provides as follows:

 

Wills shall be proved and recorded and letters testamentary granted in the probate court of the county where the testator had the testator's usual residence at the time of the testator's death, or, in case the testator had fixed places of residence in more than one county, in either or any of those counties.

 

For situation where there is no will, T.C.A. § 30-1-102 provides as follows:

 

Letters of administration shall be granted by the probate court of the county where the intestate had usual residence at the time of the intestate's death, or, in case the intestate had fixed places of residence in more than one county, the probate court of either county may grant letters of administration upon the intestate's estate....

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TAGS: Jurisdiction, Tennessee Probate Law Comments [0]
  
 

Does Divorce Automatically Revoke the Life Insurance Beneficiary Status of the Ex-Spouse in Tennessee?

Posted on Sep 28 2014 4:18PM by Attorney, Jason A. Lee

One issue that comes up on occasion in Tennessee is whether a life insurance policy beneficiary designation is revoked automatically by a divorce.  The short answer to this question is no, a divorce does not revoke a life insurance beneficiary designation.  This is the default rule in Tennessee. 

 

Often life insurance companies will deny life insurance payouts to ex-spouses on the basis that they assert a divorce revokes the beneficiary designation.  That is not the rule in Tennessee.  In fact, there is a Tennessee Supreme Court case that has addressed this issue. See Bowers v. Bowers, 637 S.W.2d 456 (Tenn. 1982). 

 

Many life insurance companies that write policies in Tennessee are actually located outside of the State of Tennessee.  They often have non-Tennessee attorneys review life insurance policies and the beneficiary status when there is a divorce.  Some of these attorneys do not know the Tennessee law on this issue.  If you receive a denial of life insurance as an ex-spouse when you are still listed as a beneficiary on the life insurance policy, you should hire an attorney to assist you with obtaining these life insurance benefits.  Obviously, every fact situation is different, but the general rule in Tennessee is that the divorce does not revoke the life insurance beneficiary designation. 

 

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As a Beneficiary to a Tennessee Estate, Can I Hire An Attorney and Will the Estate Pay For My Attorney Fees?

Posted on Sep 21 2014 4:00PM by Attorney, Jason A. Lee

As a beneficiary, you can hire your own attorney to represent you and your interests as a beneficiary.  However, the vast majority of the time, you will be responsible to pay your attorneys legal fees.  However, there are circumstances where an attorney for a beneficiary can apply to the court to have attorney’s fees paid by the estate. 

 

Most often a beneficiary hires an attorney due to questions or concerns about the executor or executrix and the way the estate is being handled.  Often it can be very helpful in this circumstance to hire an attorney directly to advocate for you as a beneficiary in order to correct any problems or mishandling of the estate.  If you do not act, significant mistakes can be made and potentially estate assets can be compromised which ends up reducing the size of the estate that may be distributed to the beneficiary.  If the beneficiary’s attorney takes actions that directly benefits the estate, then the beneficiary’s attorneys may be awarded attorney’s fees by the court.  The Tennessee Court of Appeals has discussed this general rule as follows:

 

As a general rule, for attorneys' fees to be allowed out of an estate, the attorney must have been employed by the personal representative of the estate; however, there is an exception where an attorney's services have inured to the benefit of the estate and, in those cases, the court has discretion to allow fees.

 

Merchants &a...

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Can a Person Hide a Will From Beneficiaries in Tennessee?

Posted on Sep 14 2014 9:39PM by Attorney, Jason A. Lee

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. 

 

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Can a Non-Resident of Tennessee Serve as a Conservator of an Incompetent Person in Tennessee?

Posted on Sep 7 2014 10:08PM by Attorney, Jason A. Lee

The answer to this question is yes, in most circumstances.  T.C.A. § 35-50-107 addresses this issue.  This statute provides in subsection (a)(2)(F) that:

 

(2)  The following nonresident persons or corporations may serve as fiduciaries, whether the appointment is by will, deed, trust agreement, court order or decree or otherwise:

………..

(f)  Any person may serve as the conservator of the person of an incompetent person, regardless of the residence of the conservator;

 

As a result any resident or non-resident may serve as a conservator of an incompetent person even if the conservator does not live in Tennessee.  This statutes applies when there is an actual person who is serving as the conservator as opposed to a corporate entity of some kind (although there are rules that can allow this as well).  Further, there are specific requirements for non-resident conservators to comply with but with the help of a Tennessee attorney, these rules are not too difficult to follow.   

 

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