Understanding Tennessee's Probate and Non-Probate Assets

Legal Q + A

Oct 23

Written By Graham Settleman

Protecting Your Loved Ones with Trusts and Powers of Attorney

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Estate planning is a crucial aspect of financial security, ensuring that your assets are distributed according to your wishes after your passing. While the fundamental principles of estate planning are generally consistent across the United States, state-specific laws and regulations can introduce nuances that significantly impact your plan. In Tennessee, several unique considerations must be taken into account to ensure your estate is handled effectively.

Probate and Non-Probate Assets

One of the primary factors to consider in Tennessee estate planning is the distinction between probate and non-probate assets. Probate assets are those that pass through the probate court process, which can be time-consuming and expensive. Non-probate assets, such as life insurance policies, retirement accounts, and revocable trusts, bypass the probate process and are distributed according to the designated beneficiaries.

Tennessee Marital Property Laws

Tennessee is a common-law state, meaning that property acquired during a marriage is generally considered marital property. This means that upon the death of one spouse, the surviving spouse is entitled to a portion of the marital estate. However, there are exceptions to this rule, such as property acquired before the marriage or property received as a gift or inheritance.

Powers of Attorney and Healthcare Directives

Powers of attorney and healthcare directives are essential estate planning documents that appoint individuals to make decisions on your behalf if you become incapacitated. In Tennessee, these documents must adhere to specific legal requirements. It is important to consult with an attorney to ensure that your powers of attorney and healthcare directives are valid and enforceable.

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Tennessee Homestead Exemption

The Tennessee Homestead Exemption provides protection for the primary residence of a homeowner. This exemption can limit the amount of property that can be seized by creditors to satisfy debts. The specific amount of the exemption varies depending on the county in which the property is located.

Trusts and Charitable Giving

Trusts are legal entities that can be used to hold and manage assets for the benefit of beneficiaries. Tennessee offers a variety of trust options, including revocable trusts, irrevocable trusts, and charitable trusts. Charitable trusts are a popular way to make charitable contributions while receiving tax benefits.

Estate Taxes

While there is no federal estate tax in Tennessee, the state does impose an inheritance tax. The inheritance tax is levied on the value of property received from a decedent who was a Tennessee resident. The tax rate varies depending on the relationship between the decedent and the beneficiary.

Conclusion

Estate planning in Tennessee requires careful consideration of state-specific laws and regulations. By understanding the nuances of Tennessee's estate planning landscape, individuals can create comprehensive plans that protect their assets and ensure their wishes are carried out after their passing. Consulting with an experienced estate planning attorney is highly recommended to navigate the complexities of Tennessee's estate laws and create a tailored plan that meets your specific needs.

Information published to or by The Industry Leader will never constitute legal, financial or business advice of any kind, nor should it ever be misconstrued or relied on as such. For individualized support for yourself or your business, we strongly encourage you to seek appropriate counsel.