What is Estate Planning?
Estate planning is the process of planning and preparing for the management and distribution of the assets you have worked your entire life accumulating. It also includes ensuring your estate is distributed according to your wishes.
From our point of view, letting an estate planning attorney assist you with an estate plan while you are living will save your loved ones time, difficulty, money, and stress, in the event of your death or disability. Selecting a top estate planning attorney could help you develop a plan for your estate to ensure that: your assets are distributed as you intend them to be, your minor children have a guardian you appoint to raise them, and that their guardian has access to the funds needed to raise your minor children.
Do I really need to have a plan for my estate before I die?
Yes, You Really Do Need Estate Planning.
Working on an estate plan is not just for the elderly and the wealthy. Everyone has an estate, comprised of everything they own including vehicles, homes, banking and savings accounts, and other possessions. It is oftentimes dangerous to do this on your own. In fact, here is a blog post from our estate planning attorney on DIY estate planning.
When should I talk to a local professional about estate planning?
Short answer, you should talk to a top rated Chattanooga lawyer now. If you are living in Chattanooga, TN, everyone 18 years and older should have powers of attorney and advanced care directives (formerly known as living wills), at a minimum. In its most basic form, a power of attorney allows someone else to make financial and healthcare decisions for you if you are incapacitated.
I conduct a dozen or more estate planning seminars each year. Inevitably, someone says "Can't I just wait until my death is closer to get my affairs in order?". Techinically, yes, you can absolutely wait. Practically though, that is the absolute worst decision to make. Waiting until you get "closer to death" to get your affairs in order carries some huge presumptions: (1) it assumes that your death will not happen suddenly and (2) it assumes that you will always be in your right mind while you are living.
Another thing people often say to me at my seminars is something along the lines of, "I don't have a million dollars, so estate planning doesn't apply to me, right?". The idea that you must be rich before you need estate planning is a myth that has caused many families heartache and turmoil. Estate planning is about so much more than your stuff. Estate planning is about taking care of your loved ones after your death. If you have minor children, you need an estate plan and a lawyer to designate who will serve as the guardian of those children if something happens to you. Ideally, your estate plan would also designate how the guardian would spend any money or assets you left behind for those children.
What happens if I don't have an estate plan?
If you don't prepare an estate plan, the State you live in has a default estate plan for you. Here's what it looks like for Tennessee and Georgia residents:
- If you are married without children, your spouse will inherit everything
- If you are married with one child, your spouse and child will split everything 50/50.
- If you are married with more than one child, your spouse will receive at least one-third of your estate and your children will divide the rest.
- If you are not married but have children, your children will divide everything.
- If you are not married and have no children, your parents will split everything equally.
- If you have already experienced the death of your parents, your brothers and sisters (including half siblings) will split everything.
- If you are an only child, your grandparents will split everthing - but if they've already experienced death, your aunts and uncles (on both sides of your family) will divide everything.
- If any of the people referenced above have died, but they have children of their own, those children will divide whatever their parent would have received.
- This can go on for a while, but you get the point - and, if you don't, call us - that's what we are here for.
- For further self-educating, read this post from our point of view as our firm hase been serving Chattanooga for years and years. It is an article about what happens to a family member's debt after they pass away.
If the plan the State has for you is exactly what you would want to happen (for example, your spouse and kids inherit everything), you may be logically wondering "do I need to plan my estate after all". This is where I come in. The answer is still yes and there are several reasons why. Here are a few reasons to plan your estate:
- For starters, it is not uncommon for the house you live in with your spouse to be in only one partner's name. If the titled owner dies, that means the surviving spouse has to share the house with the deceased spouse's children. Those children would have equal rights to the house and the ability to force the sale of the house, if they choose to do so.
- Another reason you would still want to plan your estate is to make sure you have a backup plan in place. Let's say you are not married and have one daughter and a grandchild. If you and your child die in a car accident together, or if your child dies before you, your grandchild will inherit your estate. If your grandchild is a minor, their father (who is not your child) would be the presumed guardian over your grandchild's inheritance. If your grandchild's father is not financially responsible, your grandchild may never reap the benefit of their inheritance.
- Step-children cannot inherit in Tennessee or Georgia without a will. If you have a blended family, estate planning is especially important for you as the absence of an estate plan could result in your separate children not receiving an inheritance at all from you if you die before your spouse and you and your spouse owned everything jointly. Assets and real estate that are jointly owned by married couples become the sole property of the surviving spouse. I cannot count the number of times I've seen a husband and wife own their bank accounts and real estate jointly. Husband has two sons. Wife has one daughter. Wife dies first. Husband becomes the sole owner of everything. Husband later dies and his sons inherit everything. This leaves the wife's daughter without any of her mother's belongings and without any inheritance from her mother at all. Morals lead people to believe that the husband's sons will share with the wife's daughter. My experience in this area has shown otherwise.
- If the person set to inherit from you has special needs or otherwise receives government assistance, any outright inheritance from you would likely result in that person being disqualified for any government assistance (e.g., social security, disability, or medicaid). It is still possible to leave that person an inheritance, but it must be done through a proper trust as a part of an estate plan.
To get familiar with more information about estate planning, view our blog.
Working with Our Top Rated Estate Planning Attorney
Wills and Trusts, Advanced Care Directives, Conservatorships and Guardianships, and Powers of Attorney:
Wills are one of the most important tools used in estate planning. A will is a formal expression of how you would like your estate to be distributed after your death. A will is much more than words on a piece of paper. It must comply with the requirements set forth under State law. Contrary to popular belief, in order for a will to mean anything, it must go through probate after your death. The word "probate" means "to prove a will". As such, a will means nothing until a court says it does. Jelks knows exactly how the court works.
A trust is another tool which can be used to help distribute your assets after your death. A trust allows for a high degree of control over how and when your estate is distributed. There are multiple types of trust. The most common trusts are contingent trusts, special needs trusts, revocable trusts, and irrevocable trusts.
- Contingent Trust. A contingent trust is a trust that only comes into existence if certain conditions are met. Contingent trusts are often used for minor children to manage the way that child's inheritance is distributed to their guardian to ensure that the inheritance is spent responsibly. Of course, if your child is an adult at the time of your death, this trust would never come into existence. Most parents, however, will keep their child's inheritance in trust for several years after the child turns 18 to ensure that the child is financially responsible to manage their inheritance once they receive it.
- Special Needs Trust. The purpose of a special needs trust is to ensure that a person who is receiving government assistance (e.g., disability or Medicaid) is not disqualified from receiving that assistance as a result of that person's inheritance from you. To be clear, you can still leave an inheritance to a person with special needs but it must be done through a special needs trust, which is sometimes also referred to as a supplemental needs trust.
- Revocable Living Trust. A revocable living trust is a trust that comes into existence immediately, before your death, and can be altered at any time. While this can certainly cause clients to raise an eyebrow (or two), a qualified lawyer who focuses in the area of estate planning will explain the way this trust works in detail so that you understand and become comfortable with it. As the creator of the trust, you are the grantor (creator), trustee (manager), and the beneficiary of the trust as long as it is before your death. Placing your assets in a revocable trust does not limit your access to those assets and does not change the way you have used those assets prior to creating the trust. Revocable trusts are a common estate planning tool as they can eliminate the need for probate after your death - this would save your estate a significant amount of money (which would increase the inheritance to your loved ones) and allow your loved ones to access their inheritance much sooner than they are allowed to do so when a probate takes place (12 month minimum in probates minus special circumstances). Click here to read more about the probate process.
- Irrevocable trusts. Irrevocable trusts are the least common of the trusts mentioned here. Most people that form irrevocable trusts are doing so as a part of Medicaid planning. People that are anticipating an illness that would result in their placement in a long-term care facility are often concerned that they will need government assistance (Medicaid) to help them pay for the ever-increasing costs of such facilities. They have also heard horror stories about the State "taking their house" after their death to pay the State back for their Medicaid benefits. Irrevocable trusts cannot be changed and are different from revocable trusts in that you cannot be the trustee (manager) of the trust, which means that you lose control over the assets owned by the trust. If drafted properly, you would still have the right to live in the house, but you would not have the right to sell the house (among other things). Irrevocable trusts are not for everyone and carry risks that can be explained only by a qualified attorney.
Our Law Firm's Estate Planning Attorneys Will Also Teach You About Powers Of Attorney and Advanced Care Directives
In its most basic form, a power of attorney is a person you designate to make healthcare or financial decisions for you in the event of your incapacitation. A power of attorney is only effective while you are living. As such, after your death, the only other thing your power of attorney can do is handle your funeral arrangements and the disposition of your body if you've given your lawyer the power to do so. You may be saying to your self, "Self, you can't afford a power of attorney!" If you are, check out this blog post by our firm on how a power of attorney could be the least expensive option for you.
A conservatorship is a court proceeding where a judge appoints someone to make decisions for an incapacitated person who either did not have a power of attorney or their power of attorney is neglecting or abusing their powers. Conservatorship proceedings can be expensive and you lose the ability to chose who makes your decisions. Our attorney wrote this piece on the most common questions about conservatorship.
Discuss and plan with your family
Discussing arrangements for your estate and children after your death, or the medical treatment for you or an ill loved one, can be especially difficult. As a professional estate planning attorney Amanda Jelks and her team of lawyers understand the sensitivity of the death process and will be serving you to make sure your family is provided for. As your estate planning attorneys our aim is to make sure you and your family leave our office with peace of mind.
To start the process, schedule a meeting with our team using the link at the top of the page. During your visit, we will discuss your estate needs and customize a super helpful plan for you.
Here are a few common questions the atttorney will cover:
Wills & Trusts:
- Who will raise my children if I don't have a will? Consider reading this article by our attorney on the guardian selection process.
- How do I make sure my adult children (or the guardian of my minor child) are responsible with their inheritance? (Here's a blog post by our law firm on wills for step children)
- Can I prevent my son-in-law or my daughter-in-law from accessing an inheritance left to my child?
- How can I make sure my ex-wife or my ex-husband doesn't end up with a portion of my estate?
- When should I talk to my business partner if I'm leaving my share of the business to a family member in my will?
- If I leave an inheritance to my loved one who is receiving social security or Medicaid, will they lose their state benefits?
Advanced Care Directives (Living Will)
- What is the difference between a will and a living will?
- Can my power of attorney override the decisions I have made in my living will?
Powers of Attorney:
- How do I obtain a power of attorney for a parent?
- What happens to my business if I am no longer competent to make decisions?
- Are there limits to the powers I grant to a power of attorney?
Conservatorship or Guardianship
- My parent doesn't have a power of attorney and now they are ill and no longer competent to sign a power of attorney. How can I help manage their healthcare and assets?
- Now that my child with special needs has turned 18 years old, their doctors will no longer communicate with me. How can I maintain control of my adult child's healthcare and manage their assets when my child is not able to handle these things on their own?
- The power of attorney for my loved one is not doing their job. How can I take their power of attorney’s place and make sure my loved one is properly cared for?
Not having an estate plan in place at the time of death or disability can lead to difficulties for your loved ones. Decisions about how your estate should be handled, can end up being made for you by the court, via the probate process. Estate planning is the first step to ensuring that your assets will be handled in the way that you specify at the time of your death. Choosing the right estate planning attorney represents an important consideration for your loved ones and their future. Attorney Amanda Jelks is at the top of her game. She is absolutely committed to serving her clients and their families. She wants them to feel as much peace of mind as possible about how their estate will be handled when the time of death comes for a you or a loved one.
Don't let fear keep you from being responsible for your estate. Let our firm help you prepare..
Trust us and give the top rated attorneys at our firm a call. We hope to hear from you super soon.