In this blog, Partner David Heller explains how a will works in Tennessee.
Once probate is opened for an estate, the provisions of the will control the distribution of the client’s assets that do not otherwise pass outside of probate. Ways to pass assets outside of probate are joint tenancy with right of survivor accounts, retirement plan beneficiary designations, life insurance beneficiary designations, payable on death (POD) accounts, transfer on death (TOD) accounts, and similar arrangements. Many people try to avoid probate by using such account arrangements, mistakenly believing that assets will still be distributed under the terms of the will, but they will actually be owned outright by the beneficiary listed with the institution.
For example, a client has one daughter and two sons. The client puts their daughter’s name on his/her bank account with the designation of right of survivorship. Assuming the client dies before the daughter, at the client’s death the bank account now belongs wholly to the daughter. None of the account’s money will pass to either of the two sons, even if the will instructs for assets to be divided equally among the three children. Because the bank account passed outside of probate, the distribution instructions of the will do not apply. And because the account was designated with a right of survivorship, the daughter receives the entire balance of the bank account. Of course, the daughter is free to split the remainder among all three of them, but she has no obligation to do so.
Some people believe, incorrectly, that if you make a will, you avoid probate. This is not correct. If you make a will, the probate generally flows more smoothly, but it is still essential.
Most horror stories surrounding wills and probate involve situations where there is no will. Passing assets by the beneficiary or survivorship arrangements can destroy family wealth preservation planning and tax planning.
When a client dies without a will, he/she is referred to as dying intestate. Even though no will exists, if the client had assets in his/her own name, there has to be a probate process. Like with a will, the process will appoint the Personal Representative in charge of the estate. The state has laws about how the intestate probate assets are divided among the family members.
Wills should be prepared by a qualified attorney. Many homemade and internet wills could fail to give you everything that is needed, including probate without bringing in witnesses, designations of guardians for minors, the appointment of trustees, and adequate backup provisions for various other contingencies.
If you have any questions or comments about this topic, please do not hesitate to contact the estate planning lawyers at Martin Heller Potempa & Sheppard, PLLC.
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