When it comes to planning your estate, there's much to consider, and Attorney Scott H. Grant with Grant, Konvalinka & Harrison, P.C. has some insight to bear in mind, especially regarding probates.
"Probate is the way in which assets of someone who dies are passed to his or her spouse, children and other beneficiaries," Grant explained. "It is also a way in which creditors can submit a claim to the Court for unpaid debts. In Tennessee, the probate of estates over $50,000 require an attorney to represent the estate."
He went to share that probate requires that a personal representative or administrator (Executor) of the estate be appointed to marshal or gather the assets, provide an accounting of such assets, pay any debts, and make distributions to the beneficiaries.
"All probate estates in Hamilton County must be open a minimum of 4 months to allow for creditors to file their claims with the probate court for any outstanding debts," he added. "However, many estates can take much longer to administer for various reasons. Because probate can be expensive (depending on the size and complexity of the assets in the estate) and time consuming and open to the public, many people find it more desirable to avoid probate."
There are several ways to avoid probate in Tennessee, according to Grant. First, using joint tenancy with right of survivorship or tenants by entirety. Property held in this way passes to the survivor upon death. Second, you can name beneficiaries directly on various accounts such as checking accounts, savings account, brokerage accounts and certain certificates of deposit. However, these methods of avoiding probate can be problematic if the joint tenants pass away at the same time, or if a named beneficiary on an account predeceases the account owner. In both cases, you could end up with your estate being determined by State Law rather than what you originally intended to accomplish.
"A better way to avoid probate is using a revocable living trust," Grant said. "A revocable living trust is a document in which you determine who will get your property when you die and is similar to a Will. The document is 'revocable' because you can change the trust terms and beneficiaries while you are living as your circumstances and wishes change."
More importantly, you can have multiple contingent beneficiaries who can receive your estate if the named primary beneficiaries predecease you. The only caveat is that in order for the revocable living trust to avoid probate, you will need to transfer most, if not all, of your assets to the trust while you are living and name a trustee (which can be yourself) to control those assets during your lifetime. Because everything is owned by the trust and controlled by the trustee, there is no need for probate upon your death because the successor trustee that you have named in the revocable trust simply takes over the administration of the trust upon your death.
"After your death, the successor trustee only needs a copy of your death certificate and the original trust and he or she can collect your assets and distribute them in accordance with your trust," Grant noted. "In addition, once you pass away, the trust becomes irrevocable and can under certain circumstances provide creditor protection for the beneficiaries. "
There are many other types of strategies that can be used for avoiding probate, asset protection, and estate succession planning. Attorney Scott H. Grant, at Grant, Konvalinka & Harrison, P.C. can assist you in preparing your estate plan.
Grant, Konvalinka & Harrison, P.C. is located at Republic Centre, Ninth Floor 633 Chestnut Street and can be reached at 423-756- 8400.
Noteworthy:
"All probate estates in Hamilton County must be open a minimum of 4 months to allow for creditors to file their claims with the probate court for any outstanding debts." Scott H. Grant
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