Legal Advice at the Speed of Life™ from a Licensed Attorney – Right here in Tennessee

Wills FAQ

Q

Is VolunteerWills™ Right For Me?

A

For the majority of Tennesseans, the answer is yes. Our system is design to provide basic Wills and Power of Attorney documents to protect you and your family. We do not provide tax advice or complex legal advice. Our system is not the proper forum for such advice. An attorney with expertise in your area of legal need should be consulted regarding your particular situation if:

  • Your total taxable estate (including stocks, bonds, real estate, business interests, cash, life insurance, personal property, retirement plans, etc.) exceeds or in the near future will exceed the $1 million Tennessee Inheritance Tax Exemption. Likewise, if your estate exceeds or in the near future will exceed the $5 million applicable exclusion for Federal Estate Taxes. Please e-mail AdvancedServices@VolunteerWills.com if you are interested in setting up a consultation with an attorney to discuss a plan for your taxable estate.
  • You have a child with special needs. Often a special needs trust is needed to assure the well being of the child in the absence of the testator.
  • You are a married couple and one spouse is a non U.S. citizen (requires specialized planning).
  • You are a same-sex couple (requires specialized planning).
  • You want to set up a QTIP trust in your will, which keeps a surviving spouse from disinheriting your children (typically in a second or third marriage situation where you have children from a previous marriage).
  • You desire to disinherit a spouse or child (requires specialized drafting).
  • You own real property in more than one state and you desire to help your family avoid ancillary probate proceedings in the other state by creating a Revocable Living Trust (Ancillary probate is often a simplified probate process that is conducted in a state other than Tennessee where you own real property; even if you do own property in another state you can still create a Will based estate plan, however, ancillary probate will be necessary to re-title your out of state real property upon your death).

What Legal Services Are Provided By VolunteerWills™

A

We provide Simple Wills and Financial Powers of Attorney for a reasonable flat fee throughout the state of Tennessee. We specifically limit ourselves to these areas in order to provide our estate planning clients with a higher level of service.

Q

What Services Are Not Provided by VolunteerWills™.com?

A

Although not an all inclusive list, we do not provide the following services online: wills with trusts for minors, wills with more than 5 specific bequests, wills with more than one specific bequest of real property, health care power of attorney documents, special needs trusts, QTIP trusts, revocable living trusts, bypass trusts, or estate planning for non-U.S. citizens. We do not provide tax advice of any kind. We do not provide estate planning for taxable estates (estates over $1 million). However, if you are interested in setting up a consultation with an attorney regarding a taxable estate, please e-mail: advancedservices@volunteerwills.com.

Q

What are the Typical Provisions Included In a Will?

A

The provisions in a Will vary depending on individual facts and circumstances (they will also vary depending on whether you choose the “Basic” or “Simple” plan). However, our standard “Basic” Will typically includes the following provisions:


  • Article First: Payment of Debts, Expenses, & Taxes

  • Article Second: Distribution of Tangible Personal Property

  • Article Third: Distribution of Residuary Estate

  • Article Fourth: Appointment of Executor

  • Article Fifth: Powers of Executor

  • Article Sixth: Survival Clause

  • Article Seventh: Miscellaneous

Q

Who Can Make a Will?

A

Any person of sound mind eighteen (18) years of age or older may make a will.

Q

Who Needs a Will?

A


  • Anyone over the age of 18 who owns any property (whether personal or real property).

  • Single persons who want to decide for themselves where their property will go.

  • Spouses to protect their surviving spouse.

  • Parents to protect children and spouse.

Q

Why Do I Need a Will?

A


  • Absent a will, state laws of intestate succession apply to the distribution of your property at death. In other words, the courts will decide where property goes based upon predetermined succession laws.


  • Upon your death, your spouse or estate may have to furnish bond, pay bond premiums, and make a full accounting of the estate, all of which can be avoided with a will.


  • Allows you to appoint a guardian whom you trust to take care of your children in your absence. The court may or may not appoint the same person. Why leave such an important decision up to a stranger in the court system?


  • Allows you to select an Executor/Executrix (Personal Representative) to administer your estate according to your wishes.

Q

What Are the Benefits of Having a Will?

A


  • Assures that property will be distributed according to your wishes.

  • Someone will inherit your property one day. You can determine who that will be.

  • Allows you to appoint an Executor/Executrix to administer your estate.

  • Allows you to appoint a Guardian for minor children.

  • Allows you to appoint a Trustee for a children’s trust.

  • Provides for the most economical distribution of your property.

  • Can reduce delay in the distribution of your estate.

  • Can minimize expenses in the settlement of your estate.

  • Provides a vehicle for charitable giving.

  • Provides you with peace of mind that your estate affairs are in order.

Q

What Happens If I Die Without A Will?

A

It is said that we all have a will- we either choose to create one or the Tennessee laws of intestate succession apply. Intestate succession is the statutory method of distributing an estate’s assets that are not disposed of by a will. Property may pass by intestate succession where: the decedent dies without a will, the decedent’s will is denied probate due to improper execution, or the decedent’s will does not dispose of all of his property resulting in a partial intestacy (usually because the will contains no residuary clause). If a person dies without a valid will their survivors will face a complicated, time-consuming, and expensive legal process. With an intestate estate, the probate court must step in to divide up the estate using legal defaults that give property to surviving relatives. Therefore, intestacy may mean that people who would never have been chosen to receive property will in fact be entitled to a portion of the estate. Additionally, state intestacy laws only recognize relatives, so close friends or charities that the deceased favored do not receive anything. If no relatives are found, the estate typically goes to the state government. When made aware of the consequences of intestacy, most people prefer to leave instructions rather than subject their survivors and property to government-mandated division.

Intestate succession in Tennessee is applied in the following order: 1) all to spouse if there are no issue; 2) if the spouse and children survive, the spouse takes the greater of a share equal to that of each of the decedent’s children or one third of the net estate- meaning the spouse receives either the same share as the children if it is at least 33% of the estate; 3) if no spouse then to descendants (children) equally; 4) if no spouse or descendants then the estate passes to the decedent’s parents; 5) to brothers and sisters if none of the above (or to the issue of any deceased brother or sister); 6) if none of the above then to grandparents or their issue; 7) if none of the above then the estate escheats to the State of Tennessee.

Q

What Is Probate?

A

Probate is the judicial distribution of property after death. When an individual dies owning property in his or her name, that property generally must go through probate. Probate is a legal procedure that establishes ownership of property in others. The probate system is designed to ensure the validity of a will, to give notice to all possible claimants of property, and to resolve ownership disputes and rights. Probate courts also distribute property not covered by a will (intestate estates) according to legal defaults. Procedurally, the probate court first establishes whether the deceased left a valid will. If so, the probate process guides the division of property in accordance with the will’s provisions. If the estate is intestate or if a will is found to be invalid, the probate division applies state laws to divide up the estate. The probate court then signs off on the final accounting of the distribution, thereby finalizing the transfers of ownership. While making a will does not prevent the need for probate, a carefully drafted will minimizes the time a personal representative spends in court and speeds up the distribution of property to survivors. A properly drafted will also waives the executor’s duties of accounting and posting a bond, which can save even the smallest of estates potentially thousands of dollars. Furthermore, the probate process in Tennessee is relatively fast, relatively inexpensive, and is mostly private.

Q

What Is A Probate Asset?

A

Probate assets are those assets in the decedent’s sole name at death or otherwise owned solely by the decedent and which contain no provision for automatic succession of ownership at death. The probate process only controls the disposition of probate assets. A few examples of probate assets include: a bank account in the sole name of the decedent, the death benefit of a life insurance policy where the decedent’s estate is the named beneficiary, real estate titled in the sole name of the decedent or real estate held by the decedent as a tenant in common, investment accounts (stocks, bonds, mutual funds) where the decedent is the sole owner and no beneficiary is named (or the named beneficiary has predeceased the decedent), and retirement accounts where no beneficiary has been named (or the named beneficiary has predeceased the decedent). At death, probate assets are transferred through the Probate Court according to the decedent’s Will, and if there is no Will, according to state intestacy statutes.

Q

What Is A Non-Probate Asset?

A

Non-Probate assets are those assets which pass to beneficiaries under an instrument other than a will. Therefore, probate is not required for the property to change hands upon death. Examples of Non-Probate assets include:

  • Bank Accounts (savings, checking, CD’s) held as joint tenants with right of survivorship (“JTWROS”) with another person.

  • Investment Accounts (stocks, bonds, mutual funds) held as JTWROS with another person.

  • Life Insurance Policies where a surviving beneficiary is properly named and the decedent’s estate is not the named beneficiary.

  • Annuities where a surviving beneficiary is properly named and the decedent’s estate is not the named beneficiary.

  • Retirement Accounts (IRA’s, 401K’s, pension plans) where a surviving beneficiary is properly named and the decedent’s estate is not the named beneficiary.

  • Real Estate owned by a husband and wife as tenants by the entirety with right of survivorship (“TBEWROS”) is a non-probate asset when the first spouse dies. However, it is a probate asset when the second spouse dies or where the spouses die simultaneously.

  • Other contractual agreements which contain Payable on Death (P.O.D.) or Transfer on Death (T.O.D) beneficiary designations.

  • Interests held in Trust such as property transferred during the decedent’s life into a Revocable Living Trust or an Irrevocable Trust.

Upon the decedent’s death, these assets will automatically pass to the named beneficiaries or survivor without court supervision. This is called passing “outside of the will” or passing “by operation of law”. Therefore, the provisions in a will do not control the distribution of non-probate assets. The transfer of non-probate assets typically require the beneficiary to present a death certificate and an affidavit.

Q

Why Do I Need To Know the Difference Between Probate and Non-Probate Assets When Creating My Will?

A

Because the provisions in a will have no bearing over the distribution of non-probate assets to your beneficiaries. This should be taken into account when you are creating your will so that your overall estate plan accomplishes your ultimate goals. As you are creating your will, you should also take steps to make sure that your non-probate property will pass according to your wishes. For bank accounts, investment accounts, life insurance policies, annuities, retirement accounts, and other T.O.D. and P.O.D. contracts, you should obtain copies of the documentation which shows how the asset is titled and who is named as the beneficiary. The beneficiary designations should reflect your wishes, while taking into account their impact on your overall estate plan. If necessary, beneficiary designations should be changed by requesting the appropriate forms with the person/entity responsible for managing the asset (i.e., banker, employer, financial advisor, or insurance agent). Successor beneficiaries should also be named in the event that your primary beneficiary predeceases you. Beneficiary designations can typically designate that the asset be divided into fractional shares (i.e., a life insurance death benefit could pay each of your three children 1/3). For real estate, you should obtain a copy of the deed(s) and make certain that the asset is properly titled. If not, you should seek the advice of an attorney to help you re-title the asset. If you do not have the real estate deed in your possession, you should obtain a copy from the county register of deeds office in the county where the real estate is located. All non-probate assets should be properly titled and all beneficiary designations should be updated to reflect your wishes. Additionally, you should review and update beneficiary designations if your circumstances or desires change. Failure to plan for the distribution of non-probate assets can have devastating consequences regarding taxation, equitable distribution, and family strife. Due to complex state and federal gift taxes, income taxes, and estate taxes, a CPA should be consulted anytime you are shifting or re-titling assets.

Q

Can I Just Re-Title All of My Assets Into Joint Ownership Instead of Creating A Will?

A

Generally, your will only controls distribution of assets that are titled in your name alone at the time of your death. With that in mind, some people believe that placing all of their assets in joint tenancy with right of survivorship arrangements and payable on death (P.O.D.) accounts is an inexpensive way to avoid probate and the need to create a will. This type of “backyard” estate planning is never recommended, as there are numerous risks. First, if a married couple dies in a common accident then their spouse beneficiary is not alive to receive the property. Therefore, the property will end up passing according to state intestacy laws because the couple did not have a will in place. Likewise, if a non-spouse beneficiary predeceased the decedent, then state intestacy laws will control the distribution of property. Secondly, holding property jointly with a child gives the child an ownership interests in the entire property. So, if you have a joint bank account with your adult child, the child can exhaust all of the funds in the account. Also, the funds are subject to the child’s creditors. Thirdly, giving a joint ownership or full ownership rights to another can cause significant federal and state gift tax consequences. If ownership is transferred for less than fair market value, then a potentially taxable gift occurs. On the other hand, a properly drawn will names your executor, names your guardian, avoids costly court requirements, and disposes of property according to your wishes if your spouse or beneficiaries predecease you. A will based plan along with updated beneficiary designations on your right of survivorship and P.O.D. accounts is always the sensible choice. On the contrary, backyard estate planning offers very little (if any) reward and plenty of risks.

Q

Should I Mention Real Estate In My Will?

A

Real Estate (real property) is not typically mentioned in a will. If real estate is held jointly by husband and wife as tenants by the entirety with right of survivorship, it will pass automatically to the surviving spouse by operating of law. Even if the will expresses something to the contrary, such property will pass automatically to the joint owner. However, property owned in the decedent’s name alone and property held in a tenancy in common without right of survivorship, are probate assets and are subject to the provisions in a will. Unless otherwise specified, real estate subject to the provisions in a will passes according to the remainder (residuary) clause in the will (which means the primary beneficiaries named in the will receive the property). If the real property is a probate asset and the testator wants the property to pass to the residuary beneficiaries, there is no reason to specify such in the will. However, if the testator wishes to distribute the real property in a pre-residuary clause in the will, this option is available.

Q

Can I Make Specific Bequests (Specific Gifts) In My Will?

A

A specific bequest is a statement in the Will that a certain asset or specific amount of money will be given to a beneficiary(ies). Specific bequests may be cash, motor vehicles (automobiles, tractors, recreational vehicles, etc.), stocks and bonds (assuming a beneficiary designation does not already control disposition by operation of law), and business interests (i.e., LLC membership interests or stock in a corporation). A specific bequest may be made to an individual or to a charitable organization. However, these bequests will be distributed first and may deplete your estate if there are not enough assets in the estate to make specific bequests and residuary distributions to your ultimate beneficiaries. Also, specific bequests lapse (become null and void) if the property given cannot be found at your death, which can make the probate process more complicated. Therefore, if you make specific bequests, only give property or amounts of cash that you are reasonably sure you will have when you die. If you make no specific bequests, all of the property will pass to your residuary beneficiaries.

Q

What Is Meant By The Residuary Or Remainder Of My Estate?

A

Your residuary estate is whatever property remains after paying debts and expenses of administration, and distribution of any specific bequests. Your residuary estate may be left to individuals, charitable organizations, or both. Because many people do not make specific bequests, the residuary usually describes all the property in your estate left to your primary beneficiaries.

Q

What Is A Spousal Elective Share?

A

Under T.C.A. § 31-4-101(a)(1), a surviving spouse may elect against his or her share under the decedent’s will, or against the intestate share if there is no will. If the surviving spouse elects to exercise this right, they will be entitled to an amount equal to the value of the decedent’s net estate multiplied by a percentage which is based on the number of years of marriage. Therefore, a surviving spouse may demand a larger distribution of their deceased spouse’s estate, even if the decedent wanted them to have a smaller share. The elective share percentage is determined as follows:

Number of Years Married Elective Share %
less than 3 years 10% of net estate
3-6 years 20% of net estate
6-9 years 30% of net estate
9 years or more 40% of net estate

Q

How Can I Change My Will?

A

If a will is valid, it is effective until it is changed, revoked, destroyed, or invalidated by the writing of a new will. Changes or additions to an otherwise acceptable will can be most easily accomplished by adding a Codicil. A Codicil is a document amending the original will, with equally binding effect. Therefore, a Codicil must be executed in compliance with applicable law, using the same formality as the original will. Wills should not be changed by simply crossing out existing language or adding new provisions, because those changes do not comply with the formal requirements of will execution. If a change needs to be made to your will you should seek the advice of an attorney. VolunteerWills™ also provides Codicil services to clients who have created their will with us. For more information please e-mail advancedservices@VolunteerWills.com.

Q

When Should I Consider Creating A New Will?

A

An outdated will may not achieve its original goals because its underlying assumptions may have changed. Additionally, changes in probate and tax law may change the effectiveness of certain provisions. If a will is based on outmoded circumstances, for example if a chosen devisee has died or has alienated the testator, the probate period may be extended as the court determines how to construe the old provisions. Wills should be reviewed at least every two (2) years, as well as upon major life changes such as births, adoptions, deaths, marriages, divorces, and major shifts in a testator’s property. Because state law governs wills, if a testator moves to Tennessee from another state, their will should be reviewed for compliance with Tennessee’s laws (a new will created in Tennessee makes it easier on loved ones to settle your estate in Tennessee).

Q

How Can I Revoke My Will?

A

A testator can revoke a will by: 1) creating a new will, or 2) by a physical act such as intentionally destroying, obliterating, burning, or tearing up the will. Changed circumstances may also revoke a will. A divorce, for example, revokes all provisions in a will in favor of the former spouse. However, the rest of the will remains valid and the will is read as if the former spouse predeceased the testator. Also, marriage plus the birth or adoption of a child revokes a pre-marital will. An attorney should be consulted when a testator desires to revoke their will.

Q

How Can A Person Leave Property to Minor Children?

A

Generally, the law requires that adults manage children’s inheritances until the children turn eighteen. If a testator wants to leave property to children, it makes sense to name an adult to manage that property. Otherwise, a court will name someone to safeguard the property, a procedure that may delay speedy transfer of assets. There are several ways a will can provide for property management while heirs are underage, including:


  • Trusts: A will can establish a trust to handle property left to children. A trustee is named to manage the property for the children’s benefit, and distribute trust property according to the testator’s instructions. A will can either set up an individual trust for each individual child, or a pot trust that covers multiple children. The trustee usually follows instructions to spend trust funds to meet children’s needs until they come of age. When the child or youngest child covered by the trust reaches eighteen or another given age, the trust funds usually are distributed amongst the beneficiaries and the trust ends. A trust for minors can be very flexible. For example, the testator can specify that the children are to receive 1/3 of the trust principal at the ages of 21, 25, and 30. Or the trust may specify that all of a child’s share of the trust principal be distributed to any child who is 18 years of age. Due to its flexibility, most clients prefer setting up a trust for minors as opposed to allowing transfers under the statutory guidelines of the Uniform Trust to Minors Act. For more information on adding a trust form minors clause to your Will, please review “What is a Trust” and “How do I choose a trustee for my children’s trust” below.

  • Uniform Transfers to Minors Act (UTMA) Custodians: The UTMA is a law that exists in almost every state, and gives a testator the ability to choose a custodian to manage property left to a child. If at the testator’s death, the child is a minor, the custodian will manage the property until the child reaches the statutory age of twenty -one (21). At that age, the child receives whatever is left of the property outright. Unlike a trust, the testator cannot change the age at which the child receives this distribution.

  • Property Guardians: A will can name a property guardian for a child. At the testator’s death, if the child is still underage, the probate court will appoint the chosen guardian to manage property for the child. At age 18, the child receives the property outright and without restrictions.

Q

What Is A Trust?

A

A trust is a legal device whereby a trustee (an individual such as a spouse or an institution, such as a bank or a law firm) manages property as a fiduciary for one or more beneficiaries. The trustee holds “legal title” to the property and the beneficiaries hold “equitable title” to the property and are entitled to payments from the trust income and sometimes from the trust corpus as well. Some essential terms are:


  • Grantor- the grantor is also known as the trustor or settlor. The grantor is the person who transfers the trust property to the trustee.


  • Trust Property- a trust must have property. Trust property includes assets like cash, securities, real property, tangible personal property, and life insurance policies. These assets can be either transferred during the life of the grantor (“inter vivos”) or at his or her death (“testamentary”). The trust property is also referred to as the corpus, principal, or trust res.


  • Trustee- The trustee is the individual or entity responsible for holding and managing the trust property for the benefit of the beneficiary. Trustees can be a corporate fiduciary or any competent individual who is not a minor. The trustee holds legal title to the trust property. As such, the trustee has a fiduciary duty to the beneficiaries with respect to the trust property. In the event of a breach of fiduciary duty, a trustee may be held personally liable. Such breaches include failing to pay out distributions or misappropriation.


  • Beneficiary- the beneficiary is the individual or entity who will receive the benefits of the trust property. The beneficiary holds the beneficial title to the trust property. The trust document must clearly identify the beneficiary or beneficiaries. The children of the testator are the beneficiaries of testamentary trusts for minors created in a will.


  • Trusts are estate planning tools that can replace or supplement wills as well as help manage property during life. A trust manages the distribution of a person's property by transferring its benefits and obligations to different people. There are many reasons to create a trust, making this property distribution technique a popular choice for many people when creating an estate plan.

Q

How Is a Trust Created?

A

The basics of trust creation are fairly simple. To create a trust, the grantor transfers legal ownership to a person or institution (the “trustee”) to manage that property for the benefit of another person (the “beneficiary”). The trustee often receives compensation for his or her management role. As stated above, trusts create a fiduciary relationship running from the trustee to the beneficiary, meaning that the trustee must act solely in the best interests of the beneficiary when dealing with the trust property. If a trustee does not live up to this duty, then the trustee is legally accountable to the beneficiary for any damage to his or her interests. The grantor may act as the trustee himself or herself, and retain ownership instead of transferring the property, but he or she still must act in a fiduciary capacity. A grantor may also name himself or herself as one of the beneficiaries of the trust. In any trust arrangement, however, the trust cannot become effective until the grantor transfers the property to the trustee.

Trusts fall into two broad categories, “testamentary trusts” and “living trusts.” A testamentary trust transfers property into the trust only after the death of the grantor. Because a trust allows the grantor to specify conditions for receipt of benefits, as well as to spread payment of benefits over a period of time instead of making a single gift, many people prefer to include a trust in their wills to reinforce their preferences and goals after death. The testamentary trust is not automatically created at death but is commonly specified in a will and so as a will provision, the trust property must go through probate prior to commencement of the trust. A trust for minor children is a common testamentary trust.

Example: A parent specifies in her will that upon her death her assets should be transferred to a trustee. The trustee manages the assets for the benefit of her children until they reach an age when the parent believes they will be ready to control the assets on their own.

Q

What Is a Revocable "Living" Trust?

A

A revocable living trust is an estate planning tool that deeds property to heirs (similar to a will), but permits the grantor to retain complete control over the property during his or her lifetime. The grantor may buy, sell, make gifts, amend or even revoke the trust at any time. This means that the grantor can take back the funds placed into the trust or change the trust terms at a later date if desired. Thus, the grantor is able to reap the benefits of the trust arrangement while maintaining the ability and flexibility to change the trust document at any time prior to death. Upon the grantor’s death, the property passes to the beneficiaries, avoiding the delay and expense of probate. In the right situation, a Revocable Living Trust can be the key instrument which achieves your estate planning goals. In other areas of the country such as California and Florida, the Revocable Living Trust is widely used to avoid probate due to arduous and costly probate procedures in those jurisdictions. In Tennessee, however, the probate process is fairly efficient, relatively inexpensive, and mostly confidential. Revocable Trusts are generally used for the following purposes: asset management, avoidance of probate, and avoidance of ancillary probate if real property is owned in more than one state.

Q

Do I Need a Revocable Living Trust As Opposed to a Will?

A

Typically the answer in Tennessee is no. Some planners assert that everyone should have a living trust, while others believe that a will is all most people need. Before you make a decision, you should keep a few things in mind. First, the probate process in Tennessee is relatively fast, relatively inexpensive, and is mostly private. Secondly, the creation and maintenance of a living trust is more costly than creating a will (typically 2 to 4 times the cost to create a Will based estate plan), although the cost of probate will likely be avoided with a living trust. There are several situations where a living trust could be the proper estate planning tool, including:



  • You want to avoid the probate process altogether.

  • You own real property in more than one state and you want to avoid ancillary probate (property not owned in trust in other states will need to go through the probate process in that state in order for title to pass according to your will; although ancillary probate is often a fairly inexpensive and expedited probate process).

  • You want your assets to transfer automatically upon death, avoiding the delays of the probate court (average probate in Tennessee last about 6 months, however, challenges by the estates creditors are only available for 4 months when an estate goes through probate).

  • You know that you will be moving to another state in the near future and you want to make sure that your primary estate planning document is effective in other states as well. Wills are state specific documents and there is a chance that a will might not meet the execution formalities required in the new state (although if a will is validly created in the old state, it is generally accepted in the new state). However, the trust is not subject to the same formality requirements of a will and offers mobility advantages to its grantor.


For the large majority of Tennesseans, a Will based plan is the most economical and efficient choice for their estate planning needs.

Q

How Do I Choose a Trustee For My Children's Trust?

A

The choice of a trustee is extremely important. The trustee owes beneficiaries a fiduciary duty to act in their best interests and usually receives compensation for trust management activities, so the grantor usually wants to make this decision personally. Many grantors choose family members or close friends due to personal confidence in those individuals, but others prefer professional trustee institutions (such as attorneys, trust companies, banks, or CPA’s) because of staff expertise. A grantor should consider the burden posed by the trust's administration, the compensation required by a trustee, and the particular needs of the trust. If a trustee is not specified in the trust document, then a court will appoint one, possibly choosing a trustee the grantor would not have chosen freely. Legally, it is not necessary to notify the trustee prior to creating a trust, but a trustee may decline his or her appointment. Therefore, the grantor should choose someone who is willing to take on the required responsibilities, and should inform them of their appointment. It is advisable to choose an alternate trustee in the event the original choice is unable or unwilling to accept the trust obligations when the trust commences.

Q

Will My Family Have to Pay Estate ("death") Taxes When I Pass Away?

A

We cannot provide the answer to that question as we do not provide tax advice of any kind. Both state and federal rules and regulations are extremely complex and the advice of an estate planning attorney and tax professionals regarding tax savings is essential. However, a general understanding of estate taxes is necessary for any client with significant assets.

  • Tennessee Inheritance Taxes: Some states, such as Tennessee, have inheritance taxes that devisees to a will must pay; recipients under a will or trust also may face federal estate tax consequences. In Tennessee, inheritance taxes are imposed on decedent’s estates that exceed the maximum single exemption. The current Tennessee inheritance tax exemption is $1 million. Any inheritance amounts over the aforementioned exemption are taxed at rates ranging from 5.5% to 9.5%.
  • Federal Estate Taxes: In general, when an individual passes away, the transfer of assets to his or her beneficiaries will be taxed. This is called the estate tax. Although there have been significant changes in recent years concerning the estate tax, it still remains a formidable concern for those who are subject to its reach. The estate tax rate is 35% for the years 2011-2012. For larger estates, the United States Treasury could be the largest beneficiary of one’s estate! Thankfully, there are alternatives to paying nearly half of one’s estate to the federal government such as:
    • The Marital Deduction – You can leave an unlimited amount to a surviving spouse resulting in a 100% deduction (and no estate tax due) for those assets left to a spouse.
    • The Charitable Deduction – You can leave an unlimited amount to a tax exempt charity resulting in a 100% deduction (and no estate tax due) for those assets left to charity.
    • The Applicable Exclusion Amount – You can also leave assets to any other person or entity without paying estate tax so long as the total amount of all non-spouse, non-charity bequests are less than the applicable exclusion amount available in the year of your death. Under current law, the amount is $5 million (2011-2012). A table showing the applicable exclusion amounts can be found below.

Applicable Federal and State Exemptions

Transfer Year Federal Estate Tax Exclusion Federal Gift Tax Exclusion Tennessee Inheritance Tax Exemption
2011 $5,000,000 $5,000,000 $1,000,000
2012 $5,000,000 $5,000,000 $1,000,000
2013 ? ? $1,000,000

Under the current law in 2011, if your total taxable estate (including stocks, bonds, real estate, business interests, life insurance, personal property, retirement plans, etc.) exceeds the $5 million applicable exclusion equivalent, your estate will be subject to federal estate taxes at a rate of 35%. Furthermore, if your taxable estate exceeds the $1 million Tennessee Inheritance Tax Exemption, your estate will be subject to state inheritance taxes. However, there are many planning strategies available to help you minimize your estate tax burden. If your estate will potentially incur a Federal or Tennessee tax burden the advice of an attorney and an accountant should be sought.

Q

Is Life Insurance Part Of My Taxable Estate?

A

While life insurance proceeds are not taxed as income, the proceeds of an insurance policy (“death benefit”) will be included in your gross estate for federal and Tennessee estate tax calculation purposes. However, a properly drafted Irrevocable Life Insurance Trust (ILIT) can remove the insurance from your taxable estate. To consult with an attorney regarding an ILIT, please e-mail advancedservices@VolunteerWills.com.

Q

What Is A QTIP Trust?

A

The entire value of an estate passing to a surviving spouse receives a marital deduction from estate taxes if the surviving spouse is a U.S. citizen and if the property passing to the surviving spouse is not a “terminable interest”. If the property passes to the surviving spouse as a terminable interest, then the transfer does not qualify for the marital deduction unless technical requirements are met. A terminable interest is an interest which will terminate or fail on the lapse of time or the occurrence or failure to occur of a contingency. An interest which passes from the decedent to any other person other than their surviving spouse and such other person enjoys the interest after the termination of the spouses interest, is a terminable interest. For example, leaving property to a surviving spouse which terminates if the spouse remarries is a terminable interest. An exception to the terminable interest rules is a Qualified Terminable Interest Trust (QTIP). A QTIP Trust provision included in a will or revocable trust based plan allows the testator to leave property for the benefit of the surviving spouse during their lifetime while maintaining control over where the property goes after the surviving spouse’s death. If properly drafted, a QTIP election will be made by the decedent’s executor and the QTIP will qualify for the estate tax marital deduction. The following technical rules apply: 1) the surviving spouse must receive all of the income from the trust during their lifetime, payable at least annually; 2) no person including the spouse can appoint the income to anyone other than the spouse during the spouse’s lifetime; 3) the QTIP property is included in the surviving spouses taxable estate when they die; 4) QTIP treatment must be elected by the executor of the estate upon the testator’s death. A QTIP trust can be a good option where spouses are in a second or third marriage. For example, the surviving spouse is provided with income from the trust for life and when they die the first spouse’s children from their first marriage receive the remainder of the trust. If the first spouse is concerned that their surviving spouse could disinherit their children, then a QTIP trust can be useful. This type of trust offers many advantages, however, the testator should keep in mind that the surviving spouse looses control over the assets placed into the trust (though they are still entitled to income from the trust) which could be problematic if the surviving spouse will need the property outright for standard of living and cash flow purposes. Additionally, the surviving spouse is more likely to exercise their spousal elective share rights before the QTIP trust is created. VolunteerWills™.com does not provide QTIP trust services, however, if you are interested in speaking with an attorney about a QTIP trust, please e-mail advancedservices@VolunteerWills.com.

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Who Should Be the Beneficiary of My IRA?

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Tax deferred accounts such as IRA’s consist of money which has not been subject to federal income taxes. Therefore, when funds are distributed from the IRA to the participant or to the plan’s beneficiaries upon the participant’s death, federal income taxes will be assessed. A surviving spouse can roll over the IRA into their own IRA in order to defer the distribution income taxes and a non-spousal designated beneficiary can roll over the IRA into an Inherited IRA, thereby deferring the distribution income taxes. The period for deferral varies depending on the specific circumstances. Additionally, an IRA roll over must occur within 60 days of the participants death in order to meet the IRS guidelines. If the estate of the participant is the named beneficiary, income taxes will be due upon death. A trust may also be named beneficiary of the IRA and the trust can defer income taxes, however, very technical rules must be followed in order to do so. So, who should you name as beneficiary of your IRA? A spouse is typically the best choice with children being named as contingent beneficiaries. A charity would be a good choice if a spouse and/or children are not named. Your estate would be the next best choice. A trust would be the last option. IRA participants should consult with their financial advisor or human resources specialist to make sure that their beneficiary designations on the plan reflect their wishes, and they should review the beneficiary designations regularly.

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What is a Health Care Power of Attorney?

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A Health Care Power of Attorney is a document which names someone to make health care decisions for you (your “health care agent”) if you develop a condition that makes it impossible for you to speak for yourself (you become “incompetent”), and it makes clear (in the form of written instructions to your health care agent) what medical treatment you would want if you can no longer speak for yourself. VolunteerWills™ does not provide nor do we charge a fee for health care documents. With quality documents available online for free, which meet the statutory requirements of the Tennessee Code, we direct all clients to print and execute Health Care documents from one of two websites. The Tennessee Department of Health website is available at:

http://health.state.tn.us/AdvanceDirectives/index.htm

For clients who would prefer a Health Care Power of Attorney from a distinctly Pro Life perspective , we would suggest the National Right to Life’s “Will to Live” available at:

http://www.nrlc.org/euthanasia/willtolive/index.html

Only one of the aforementioned Health Care Power of Attorney documents (either the Will to Live or Advanced Medical Directives provided by the Tennessee Department of Health) is necessary. Having health care directives is critically important to your estate plan and your life plan. Even if we are not preparing the documents, all clients should have these documents in place. Please be proactive about printing the form of your choice, completing the form, and signing the form in the presence of a notary public according to the specific directions. Please do not put this off for a later time. The best time to execute the appropriate health care directives is when you are updating or creating your overall estate plan.

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How Do I Find A Notary Public?

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You will need a Tennessee notary public (for the self-proving affidavit) and two disinterested and competent witnesses (witness not entitled to a share of your estate) to witness your signature in order to make the signing of your Will and Financial Power of Attorney legally binding. A notary in your area may be found through a phone book or internet search. Additionally, the County Clerk’s office in your county should be able to provide a notary and 2 witnesses for the signing of your will at the courthouse. Please contact your County Clerk to set up an appointment. Furthermore, the following website contains a notary directory for the state of Tennessee: (http://www.123notary.com). The choice of a notary is made solely by the client and at their own risk. Although VolunteerWills™ provides each client with detailed signing instructions, we take no responsibility for errors or omissions by your chosen notary or witnesses during the execution of your documents.

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Where Should I Keep My Estate Planning Documents Once They Have Been Signed?

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The original will should be kept in a safe place so that it will not get lost or harmed by fire or weather, such as in a fireproof safe or a safe-deposit box. Additionally, the testator should leave readily available instructions to the executor regarding the whereabouts of the original will. For example, a notation can be placed on any copies of the will stating the location of the original will. The executor should also be fully informed (either in writing or orally) of the location of safe deposit boxes, the whereabouts of any keys to such safe deposit box, have access to such safe deposit boxes, and should be informed of any codes necessary to access a fireproof safe. Some Tennessee counties will allow you to record the Will in their probate records for a small fee, however, you should contact your specific county to see if this option is available. Financial Power of Attorney documents should also be kept in a safe place such as a fireproof safe or a safe-deposit box. Furthermore, you should inform your attorney in fact(s) of their appointment.

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Should I Include Funeral Instructions In My Will?

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Funeral instructions and instructions for the disposition of remains should not be included in your will. Instead, a separate writing with such instructions should be created by you and your executor should be informed of its whereabouts.

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Can I Find A Service That Is Cheaper Than VolunteerWills™ To Prepare My Will and Power of Attorney?

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Sure you can, however, it is true that you get what you pay for. Are we the cheapest option? No. Are we the most expensive option? No. We provide high quality legal services from licensed Tennessee attorneys in a cost effective and efficient manner. There are countless do it yourself estate document prep websites and software programs, however, there is no substitute for competent and state licensed legal counsel. When compared with other services available on the web, we believe that our services are the best available in the marketplace today. We are so confident, that we encourage you to explore all of your options before making a decision. After you have done so, we believe that you will become one of our clients. We look forward to the opportunity to serve you.

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How Long Does It Take Prepare My Will and Power of Attorney?

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After a consultation with a licensed Tennessee Wills Attorney we prepare a draft of your Will and Financial Power of Attorney and e-mail them to you for your review. After you have approved the draft we will e-mail you the final documents with the detailed signing instructions. It takes about ten (10) business days to receive a draft of your documents. The entire process takes about ten (10) to twelve (12) business days. The process may take longer if the client does not approve the draft in a timely manner. Expedited service is available for an additional $150.00 flat fee per Will based plan. Expedited orders are given priority for internal handling. The average turnaround time for an expedited order is three (3) to five (5) business days (subject to client’s timely approval of the document drafts). Due to potential processing delays (typically involving a client’s untimely approval of document drafts), we make no guarantee regarding the above turn around times. However, we will use our best efforts to complete all orders within the stated times. There are many software programs and document prep websites that are able to complete Wills and Power of Attorney documents in less time. We, however, do not engage in this type of “fast food” estate planning. Our service provides clients with professionally prepared documents and a consultation with a licensed Tennessee Attorney. An unlicensed document preparer may be able get you fill in the blank documents overnight, while a traditional law office may not be able to schedule an appointment for you for several weeks. Our clients find that VolunteerWills™ strikes the proper balance between efficiency and professional service.

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How Do I Get Started?

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Just register, login, and fill out the simple Online Questionnaire and follow the easy steps to completion.

Q

What Advanced Estate Planning Services Does VolunteerWills™.com Provide In Addition to Standard Wills and Financial Powers of Attorney?

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We are able to provide assistance with the following advanced legal services:


  • Wills with Trusts for minor/adult children or beneficiaries

  • Complex Wills (more than 5 specific bequests or more than 1 real property bequest)

  • Codicils (an amendment to a Will that VolunteerWills™ has prepared)

  • Deeds (used to re-title real estate for estate planning purposes)

  • Financial Powers of Attorney (stand alone document)

  • Wills with Bypass Trust (aka Credit Shelter Trust) Provisions (for taxable estates)

  • Estate Plans for TN Inheritance Taxable and Federal Estate Taxable estates

  • Wills with Tennessee "Gap" Trust Provisions

  • Revocable Living Trusts

  • Irrevocable Trusts

  • Irrevocable Life Insurance Trusts (ILIT’s)

  • QTIP Trusts

  • Wealth Preservation Planning

  • Family Limited Liability Companies (FLLC’s)

  • Conservation Easements

  • Charitable Trusts

  • Buy-Sell Agreements for business owners


Please e-mail inquires regarding advanced services to: advancedservices@VolunteerWills.com. Such services are not offered through our online forum, however, one of our attorneys would be glad to talk with you about the possibility of assisting you with your advanced legal needs. A legal assistant and/or attorney will contact with more information. The consultation is free and you will be under no obligation to use our services.