1. WHAT THE TRUST?!?
ESTATE PLANNING, AND PROBATE
A Simple Summary of Trusts, Estate Planning Documents,
and Probate in Tennessee
By
Arthur M. Fowler, III & Christy McInturff Huret
2. PRESENTERS
Fowler & Fowler, PLLC
130 East Market Street
Johnson City, TN 37604
(423) 929-3000, ext. 3
amf@fowlerlawfirm.com
McInturff & McInturff PLLC
801 Sunset Drive, E-2
Johnson City, TN 37604-3033
(423) 282-6000
christy@mcinturfflaw.com
Arthur M. Fowler, III Christy McInturff Huret
3. TRUST OR WILL
Applies during life
Affects only property
transferred to the Trust
Cannot appoint guardian
for children
May not have to probate
More expensive
Only applies after death
Affects only property in your
name
Can appoint guardian for
children
May have to probate
Less expensive but may
have probate cost
Trust Will
4. HOW IT WORKS
What John & Betty Own
Assets
House (H&W) Liquid Accounts (H&W)
Car (H) Personalty (H&W)
Car (W) Condo (Trust)
Life Insurance Retirement Account
5. JOHN DIES
What Happens to The Assets When John
Dies
BETTY
1. Sole owner of house
2. Sole owner of Household Furnishings
3. Still owns her car
4. Sole owner of Bank & Savings Accounts
5. Life insurance
TRUST
1. Condo
PROBATE
1. Retirement account because no
beneficiary
2. John’s car*
*Can transfer the car without going through Probate.
6. FIRST CHOICE IS WHETHER TO HAVE
A WILL
Do you want
to control
where your
assets go
after you die?
7. FIRST CHOICE IS WHETHER TO HAVE
A WILL
No Will (Intestate)
Split between heirs
Spouse, children (Spouse gets at least 1/3 of estate)
No spouse & no children, then to immediate family
DOES NOT go to State of Tennessee
Law sets preferences for person to handle probate
process (Personal Representative)
Personal Representative will have to post bond, file
inventory, and file accountings unless all heirs waive
8. FIRST CHOICE IS WHETHER TO HAVE
A WILL
Statistics
50% of Americans with children do not have a
Will
41% of Baby Boomers do not have a Will
Scherzer, Lisa, The Exchange, Yahoo Finance, May 6, 2012
9. LAST WILL & TESTAMENT
A Last Will & Testament is a
written legal statement by a
person, (Testator) naming a
person to disburse the
Testator’s assets (Personal
Representative) after the
testator’s death per the
instruction in the Will.
Considerations
Personal representative &
backup
Who will receive assets
Anyone you do not want to
receive assets
Anyone to receive assets is
a minor or have any issues
Who will take care of
children & backup
Trustee & backup
10. LAST WILL & TESTAMENT
Will (Testate)
Will tells how to divide your property
Can disinherit children
Cannot disinherit spouse (Elective Share)
Can give gifts to charities and non-family members
Designates person to handle the Probate Process
Designates who raises your minor children
Can put assets in trust after death
Can establish a special needs trust for disabled children
Generally must have original Will to probate
11. GENERIC WILL KITS & FORMS
Is inexpensive
Complete at your pace
and at your time
Simplistic
Do not have to answer
personal questions
Lack of conversation with
an attorney to spot issues
May not completely
understand and miss
something
May be too simplistic for
your situation
Laws change
Might not comply with
Tennessee law
PROS CONS
12. WILL ISSUES
Blended families
Impact when left to spouse
Holographic
Whole Will must be in testator’s handwriting (every word)
Cannot be typed unless meets all requirements under
Tennessee law
Interlineation (handwritten changes) can create problems
Destroying
If no Will, then Intestate
Write “Cancel” or “Void” in big letters across face of Will & tear
into two pieces
Keep cancelled Will until you do a new Will
13. WILL ISSUES
Execution
Everyone (witnesses & Testator) watches everyone sign
Problem can occur with Will Kit execution
Specific language
Leave $50,000 to my grandchildren
Daughter gets house so long as she lives in it
Pour over trusts
Minors
Beneficiaries with disabilities
15. SMALL ESTATE PROBATE PROCESS
Small Estates
Assets less than $50,000 & does not include real
property, jointly owned property, or beneficiary
designated property
Inexpensive
Can use when you have a Will
Simple process
Small Estate Affidavit
Order Opening Estate
You collect assets, pay bills, & disburse to heirs
Automatically closes after one year
Be careful of creditors
16. REGULAR PROBATE PROCESS
Court filings
Documents to open the Estate
Notice to creditors & TennCare
Documents to close the Estate
Time
If required to give notice to creditors, have to wait 4
months from first publication of notice to creditors before
Estate can be closed
Simple Estate can generally close within 6 months of
opening the Estate.
If probate, you can sell real estate 61 days after death,
but if you don't probate, may have to wait 1 year
17. REGULAR PROBATE PROCESS
Inheritance taxes
2015 is $5,000,000 for Tennessee & $5,430,000 for
Federal
2016 and after no inheritance tax for Tennessee but
$5,430,000+ for Federal
Portability
Costs
Depends upon complexity of Estate, family dynamics,
and claims
Simple Estate (open/close only) approximately $2,500,
plus court costs of approximately $400
18. MISCELLANEOUS
Muniment of Title/Affidavit of Heirship
Creditors
TennCare
Bank account under $10,000
Safety Deposit Boxes
Powers of Attorney & Living Wills