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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. 

 

Follow me on Twitter at @jasonalee for updates from the Tennessee Wills and Estates blog.
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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. 

 

Follow me on Twitter at @jasonalee for updates from the Tennessee Wills and Estates blog.
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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.   

 

Follow me on Twitter at @jasonalee for updates from the Tennessee Wills and Estates blog.
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Tennessee Court of Appeals Finds that Tennessee Estate Must be Opened to File Suit on Behalf of Deceased for Promissory Note Breach of Contract

Posted on Sep 1 2014 8:52PM by Attorney, Jason A. Lee

The Tennessee Court of Appeals in the recent decision of Doris Guyear, Heir of Leroy Guyear, deceased v. Joey Blalock, et al No. M2012-01562-COA-R3-CV, 2014 WL 3697564 (Tenn. Ct. App. 2014) discussed efforts to collect on a promissory note that was owned by a deceased individual.  In this case, the owner of the promissory note died and his widow desired to collect on the promissory note as his heir.  She therefore filed a complaint in the name of his estate to collect on the promissory note.  The problem was, there was no estate opened.  The wife then amended the complaint on several occasions to try to fix the problem by being listed as the “next friend” of the deceased and ultimately as a “partner” of the deceased.  However, the plaintiff never actually opened up an estate for her husband in order to properly proceed with the lawsuit to enforce the promissory note that her husband owned.

 

As a result, the question addressed by the Tennessee Court of Appeals was whether the wife could bring a suit for the promissory note of her deceased husband without formally opening up an estate.  Ultimately, the Tennessee Court of Appeals found that the spouse could not bring this cause of action for breach of contract for the promissory note in her individual capacity or in the capacities that she attempted.  Rather, the spouse was required to open up an estate in order to properly bring this lawsuit for breach of contract.  The Court specifically stated as follows:

 

The proper way to establish the respective rights of Leroy Guyear's heirs to his property would have been through the administration of his estate. If Doris Guyear had been appointed as the administrator, then she would have had the right, and perhaps even the duty, to sue on behalf of his estate in order to collect any debts that were owed to her late husband. See, State v. Anderson, 84 Tenn. 321, 338 (1886); Carr v. Lowe's Executor, 54 Tenn. 84, 90 (1871); State v. Fulton, 49 S.W. 297, 301. The trial judge alerted Ms. Guyear to the necessity of opening the estate and becoming its administrator if she wished to bring suit in its name, but she chose not to do that for whatever reason, and rather to amend her complaint by bringing it in her own name and as her late husband's “next friend.”

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What is the Purpose of Naming a Trustee in a Tennessee Will?

Posted on Aug 24 2014 9:59PM by Attorney, Jason A. Lee

A lot of people do not completely understand the different positions that are often identified in a Tennessee will.  One such position that is identified in many wills is the position of a trustee.  Often wills provide for assets to be paid to certain individuals including minor children.  This often occurs when people designate a minor child as a direct beneficiary in a will (such as to a son or daughter).  Or money or property can be left to adult children but if those adult children are deceased when the person who wrote the will dies, then potentially their minor children (grandchildren) could obtain assets (this is often done when there is a per stirpes designation in a will). 

 

For this reason, it is almost always important to name a trustee in your will even if a trustee is unlikely to ever actually be needed.  The trustee is the person who would hold the money or assets on behalf of the minor individual until the time the assets are distributed to the beneficiary at the appropriate time.  This is a very important position.  Essentially this is the individual who makes all decisions about when the minor children can have access to any of the money left to them in trust.  Oftentimes, a minor child will still need money to be used for their benefit like to buy them clothing, school supplies, a car or to pay for their education.  This should be an individual that you absolutely trust. 

 

Often in wills a trust that is established for minor children or minor grandchildren will terminate at a certain age.  Many people provide that the trust will terminate once that person reaches 25 or 30 years old.  I recommend that you do not allow the trust to terminate at 18 years of age because in my opinion 18 year olds should not be getting a large chunk of money.  It is best to keep the trust active for an extended period of time beyond age 18 so the money is not squandered.  When the child reaches a more advanced age, they are more lik...

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After Someone Dies What Happens to Their Creditor Debt in Tennessee? Who is Responsible to Pay the Debt?

Posted on Aug 9 2014 2:51PM by Attorney, Jason A. Lee

An individual who dies who owes money to creditors is largely still responsible for that debt after they are deceased.  Specifically, their estate owes the money to the creditors.  Many people are confused about this.  It is important to note that if nobody else was a co-signor or legally responsible for the debt, then family members, even spouses are not necessarily responsible for the debt.  Be very careful when receiving creditor collection calls after your loved ones passing because often they will try to get others to pay the debt of the deceased – often these individuals are not actually legally responsible for this debt.  

 

Required Notice to Creditors:

 

If a probate estate is opened up for a deceased person, then the creditors are put on notice of the opening of the estate and they have a certain amount of time (generally 4 months) to file a claim against the estate. See T.C.A. § 30-2-306.  This is a formal requirement and requires an actual filing of the claim in the Tennessee probate estate.  Any and all known creditors must be specifically sent notice of the opening of the estate. See T.C.A. § 30-2-306.  Additionally, an advertisement must be placed in a newspaper on two consecutive weeks to put additional creditors on notice. See T.C.A. § 30-2-306.  If the creditors do not file a claim with the estate within the appropriate statutory time period then their claim can be completely waived.  Additionally, if a probate estate is not opened up in a timely fashion then creditors can actually open up an estate in order to make sure they collect on the amount of money that is owed to the creditor.  Of course this only makes sense if there are actual assets in the estate.  

 

Creditor Claims Are Extinguished After 12 Months Post-Death:

 

One other very important thing to know is that if an estate is not opened up until greater than 12 months after death, then you are not required to provide a notice of creditors and the creditor claims against the estate are considered to be expired (except for TennCare).  For this reason, it is extremely important that if you have a claim aga...

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In Tennessee What is an Executor/Executrix, What Do They Do and Who Should you Select?

Posted on Aug 3 2014 9:54PM by Attorney, Jason A. Lee

An executor or executrix is someone that you designate in your will to administer your estate.  Often times, this individual is now called your “personal representative”.  This is a very important position and you need to be very careful in selecting who you want to handle these duties.  Basically, you need to make sure that you select someone for this position that you absolutely trust.  The most common selections for people to serve in this role are (1) spouse and (2) a child (once the children are older).

 

The executor or executrix is ultimately the individual responsible to move forward with the probate of your will, if necessary.  This individual is required to comply with Tennessee law and deadlines for administering your estate.  This includes putting creditors on notice, filing appropriate paperwork with the Probate Court and eventually distributing your assets as you desire in your will.  In almost all circumstances I recommend that an executor or executrix in Tennessee should hire an attorney to assist them in these matters to make sure that they comply with their duties under Tennessee law.

 

It is important to note that there are many statutes that govern the responsibilities of an executor or executrix.  This is why a Tennessee attorney should be consulted to ensure compliance with those statutes.  If Tennessee law is not complied with, the executor or executrix can be found personally responsible for any losses or inappropriate distributions from the estate.  This can sometime be a very large amount of money.  It is simply not worth it to handle these duties without representation.  That is the classic “penny wise but pound foolish” scenario. 

 

Follow me on Twitter at @jasonalee for updates from the Tennessee Wills and Estates blog.
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New 2014 Tennessee Statute Increases Number of Estates that Are Not Required to File Inheritance Tax Return

Posted on Jul 28 2014 10:17PM by Attorney, Jason A. Lee

The Tennessee Legislature in the 2014 Tennessee Legislative Session passed Public Chapter No. 808 which greatly increases the number of Tennessee estates that do not need to file any kind of inheritance tax return.  This new bill amended T.C.A. § 67-8-409.  Prior to this amendment, estates where an individual died before January 1, 2014 were exempt from filing a Short Form Inheritance Tax Return if the gross value of the decedent’s estate did not exceed $100,000.00 and the trial court waived the requirement.  With this new amendment, estates where the deceased died on January 1, 2014 or after, no Short Form Inheritance Tax Return is required as long as the gross value of the estate is $1,000,000.00 or less (and the Court provides a waiver in the Order).  For those who die in 2015, the amount estates can be valued before the requirement to file an inheritance tax return will be $2,000,000.00.  The court can simply waive the filing of the Inheritance Tax Return upon a statement of the gross amount of the estate (this is generally done as a matter of course in Tennessee).

 

As I have previously discussed the Tennessee Inheritance Tax will be abolished effective January 1, 2016.  This new amendment to Tennessee law further attempts to eliminate the necessity of filing Inheritance Tax Returns with the Tennessee Department of Revenue. 

 

Follow me on Twitter at @jasonalee for updates from the Tennessee Wills and Estates blog.
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Can a Non-Resident of Tennessee Serve as a Trustee of a Tennessee Trust?

Posted on Jul 13 2014 7:22PM by Attorney, Jason A. Lee

In most circumstances the answer to this question is, Yes.  T.C.A. § 35-50-107 addresses this issue specifically and provides in subsection (a)(2)(D) as follows:

 

(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:

……

(D) Any person may serve as trustee of a trust, regardless of the residence of the trustee;

 

As a result any resident or non-resident may serve as a trustee of a Trust even if the trustee does not actually live in Tennessee.  This statutes applies when there is an actual person who is serving as a trustee 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 trustee’s to comply with but with the help of a Tennessee attorney, these rules are not too difficult to follow. 

 

Follow me on Twitter at @jasonalee for updates from the Tennessee Wills and Estates blog.
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