Tag: parents

• Estate Planning is Not Just for the Affluent; Here Are 5 Reasons Why

  

  Estate planning is often associated with individuals who possess vast wealth or who are near end of life. But the truth is that estate planning is not just for the affluent, nor is it an end-of-life matter. Regardless of your current wealth level, engaging in proper estate planning is essential for everyone in Tennessee. Let’s…

  

  Estate planning is often associated with individuals who possess vast wealth or who are near end of life. But the truth is that estate planning is not just for the affluent, nor is it an end-of-life matter. Regardless of your current wealth level, engaging in proper estate planning is essential for everyone in Tennessee.

  Let’s go through five compelling reasons why estate planning is crucial for everyday people in a variety of situations. Having proper legal documents in place now will help carry out your wishes and minimize the risk of conflict and uncertainty in difficult situations.

  Estate Planning Helps Prepare for Incapacity

  Two fairly simple, but important types of documents are powers of attorney and a living will. Powers of attorney grant certain individuals the authority to make healthcare and/or financial decisions on your behalf. A living will provides end-of-life care instructions so your loved ones don’t have to guess what your wishes are.

  A power of attorney for property allows your agent to manage your financial affairs. This is especially important to have if you hold digital assets like cryptocurrency. Powers of attorney for property ought to expressly grant authority over cryptoassets.

  A power of attorney for healthcare allows your agent to authorize medical care if you are unable to speak on your own behalf. For example, after a major car wreck, an important surgery may be advisable to tend to injuries. The healthcare power of attorney authorizes your agent to communicate with healthcare providers about whether to proceed with the operation if you cannot do so.

  These powers of attorney are generally “durable.” This means the powers survive legal incapacitation so that your agent can actually make the decisions you want him or her to make for you.

  Additionally, a living will deals with end-of-life situations. If there is no hope for medical recovery, you may have particular desires about life support and administration of medications. The living will puts your desires in writing ahead of time and informs family members and healthcare providers what to do.

  Avoiding Family Disputes and Legal Battles

  

  Estate planning plays a pivotal role in avoiding family conflicts and legal battles that can arise after your passing. Clear instructions provided in a well-drafted will and/or trust can help prevent disagreements among family members regarding the distribution of your assets.

  If family members are upset about your estate plan, sometimes they may try to contest your will and/or trust. Estate and trust litigation can be very expensive and emotionally draining. And the expenses in defending against a claim may significantly reduce what your beneficiaries receive.

  One way to avoid this is through the drafting of an in terrorem (no contest) clause in your will or trust. This clause effectively disinherits anyone who brings a will contest without proper cause. This acts as a disincentive to engage in frivolous litigation.

  Another way to reduce the risk of a dispute is to have a revocable living trust that distributes your assets privately. While wills are public record, trusts are private instruments that pass property without court supervision. It is much harder to contest a trust than a will.

  Regardless of the size of your estate, disputes can arise, and emotions can run high. But having a comprehensive estate plan in place minimizes the risk of such conflicts. By clearly expressing your wishes and intentions, and planning for potential disputes, you can help maintain family harmony and protect your loved ones from unnecessary strain.

  Estate Planning Helps with Managing Small Businesses

  If you own a small business, estate planning becomes even more critical because others may rely on you for their paycheck. Without proper planning, your business may face uncertainties and disruptions in the event of incapacity or death.

  Estate planning documents—specifically a trust—allow you to designate a successor who will continue running the business. In order to ensure the security and continuing stability of your enterprise, a trust instrument should have an express clause granting authority to carry on business operations.

  Otherwise, your business has to go through probate, and a court-appointed receiver may have to oversee operations. This can be a major hindrance and cause stress and uncertainty for your workforce.

  Furthermore, proper estate planning can facilitate buy-sell agreements among business partners, protecting everyone’s interests and minimizing potential conflicts. It is important to consult with business partners and review any operating agreements when drafting your documents to ensure there is minimal risk of disputes or inconsistency.

  Taking Care of Special Needs Family Members

  

  If you have a loved with a significant disability, estate planning is also especially crucial. Creating a special needs trust allows you to provide for their financial well-being without jeopardizing eligibility for government assistance programs, such as TennCare and Supplemental Security Income (SSI).

  Through proper planning, you can rest knowing that their care, medical needs, and quality of life are protected, even when you’re no longer there to provide that support yourself.

  There are very specific limits on what assets an SSI recipient can hold. But with a special needs trust, you still can provide for these loved ones with special needs. The key aspect of these trusts is that they provide supplemental support. But these trusts prohibit the use of funds that would disqualify the beneficiary from government assistance.

  Appointing Guardians for Minor Children

  In your Last Will & Testament, you can (and should) name a guardian for your minor children. This applies whether you have a one- or two-parent home.

  For two parent homes, both spouses should name a primary and alternate guardian if both parents die simultaneously or one spouse predeceases the other. If you do not name this person yourself, the probate court will decide who your minor children’s guardian will be.

  Especially if you want your children raised with certain values, naming a guardian who will honor those desires is critical. Otherwise, the court may place your minor children into a home with values different than yours.

  The nominated guardian is often, but does not have to be, a family member. You may wish the guardian to be a family friend, instead. The important thing is that this person is responsible and will properly care for your children until adulthood.

  Final Thoughts on Estate Planning for Everyday People

  Estate planning is a vital process for everyone, not just the affluent. There are a variety of difficult situations that can happen to us in this life. But making your wishes made known through properly drafted and executed legal documents will minimize hardship on your family.

  Regardless of the size of your estate, making your estate plan maximizes the likelihood that your wishes will be honored, your loved ones will be provided for, and potential conflicts are avoided. Making these plans us an investment. But it does not have to be an exorbitant expense to get basic documents drafted and executed.

  Connell Law, PLLC is here to provide residents of Middle Tennessee with estate planning and small business legal services. Reach out today for your free consultation. Plan today for a more peaceful tomorrow.

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• The Pitfalls of Giving Your House to Adult Children During Life

  

  In the realm of estate planning, it’s not uncommon for parents to contemplate giving their homes to their adult children during life. There would be no need for probate, the parents can still live in the house, and there may even be some Medicaid planning accomplished. But this seemingly straightforward strategy can lead to significant…

  

  In the realm of estate planning, it’s not uncommon for parents to contemplate giving their homes to their adult children during life. There would be no need for probate, the parents can still live in the house, and there may even be some Medicaid planning accomplished. But this seemingly straightforward strategy can lead to significant legal and financial complications.

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• How Beneficiary Designations Fit into Your Estate Plan

  

  Estate planning is a multifaceted process that involves careful consideration of how your assets will be distributed after death. While many individuals focus on creating a will or a trust, it’s easy to overlook another essential component of holistic estate planning: beneficiary designations. In this discussion, we will delve into the crucial role that beneficiary…

  

  Estate planning is a multifaceted process that involves careful consideration of how your assets will be distributed after death. While many individuals focus on creating a will or a trust, it’s easy to overlook another essential component of holistic estate planning: beneficiary designations.

  In this discussion, we will delve into the crucial role that beneficiary designations play in your Tennessee estate plan. We will specifically address how various accounts interact with your plan, including life insurance, retirement accounts, bank accounts, and investment accounts.

  Additionally, we’ll address naming primary and contingent beneficiaries, unique considerations for minor children, and emphasize the importance of reviewing and updating these designations regularly.

  What is a Beneficiary Designation?

  Beneficiary designations dictate who will receive the proceeds of these accounts upon your passing. You specify on various financial and insurance accounts who that beneficiary will be.

  Contrary to what many believe, these designations take precedence over your Last Will & Testament. This makes them a powerful tool in quickly directing the distribution of those assets. A beneficiary designation is a non-probate transfer. It happens quickly and outside the supervision of any court.

  Without designating a beneficiary on these types of accounts, the assets may end up in the probate estate. The result is significant delays in getting the asset to your loved ones.

  What Types of Assets Have Beneficiary Designations?

  

  We will cover four common types of accounts that have beneficiary designations: life insurance, retirement accounts, bank accounts, and investment accounts.

  • Life Insurance. This is an important component of many estate plans. It provides a financial safety net for your loved ones when you’re no longer there to support them. When you purchase a life insurance policy, you must name one or more beneficiaries to receive the death benefit. The death benefit passes to your named beneficiaries tax-free. If the policy has a cash-value, the insurance company often keeps this amount, though.
  • Retirement Accounts. Tax-advantaged retirement plans, such as your 401(k) and IRA, typically include beneficiary designations. The purpose of these accounts is to replace your working income in retirement years. But the beneficiary designation determines what happens to the remaining funds after death. For a 401(k), the default beneficiary is your spouse. Only a spouse can waive this, and it must be in writing. For IRAs and other retirement accounts, you must tell the custodial institution who the beneficiary will be.
  • Bank Accounts. Checking and savings accounts hold liquid cash that we use to pay our bills or save for various goals. These accounts are usually in our sole name or have joint ownership with a spouse. For jointly-owned accounts, ownership automatically passes to the survivor. But the person you designate as the payable-on-death (POD) beneficiary will receive the account balance at the time of your death.
  • Investment Accounts. If you hold securities in a brokerage investment account, chances are the account has a transfer-on-death (TOD) designation available. That person will receive the assets held in that account, as well as getting a step-up in tax basis. Efficient transfer of investment accounts is important, as market volatility may require swift action that probate would otherwise make difficult.

  Naming Your Beneficiaries

  Accounts that have a beneficiary designation usually have primary and contingent options. The primary beneficiary is who will receive that asset upon your death. But life doesn’t always go according to plan, and the ones we plan on leaving assets to may predecease us. The contingent beneficiary is the backup if that happens.

  You generally have the option of naming one or multiple beneficiaries on a given account. Spouses usually name each other as primary beneficiaries. Unmarried people will usually name a close family member. If you have multiple children, you may wish to distribute these assets equally, and can indicate so on the beneficiary designation forms.

  If a revocable living trust is part of your estate plan, naming the trust as the beneficiary may be a good option. But this is not always the case, so having trusted legal counsel is important to determine how to incorporate your trust into beneficiary designations.

  It’s essential to review and update these designations periodically to ensure they align with your current wishes. This is especially so when life events like marriages, divorces, or births occur. The last thing we want to see is a bitter ex-spouse get the entire balance of your retirement account or life insurance policy because you forgot to make a few simple changes.

  Considerations for Minor Children

  

  Naming minor children as beneficiaries raises unique considerations. While you may want to leave assets to your children, minors cannot directly inherit assets in their own name.

  Instead, you may opt to establish a trust. This can be either in your will (a testamentary trust) or as a separate entity (a revocable living trust). The trust will hold and manage the assets on behalf of your minor children.

  At Connell Law, PLLC, we often advise using the living trust. But each client’s situation has unique considerations that we take into account.

  Alternatively, you may designate a custodian under the Tennessee Uniform Transfer to Minors Act (UTMA) to manage these assets for the minor’s benefit. Most states allow for an UTMA to hold property for the minor until age 21. In Tennessee, you may create an UTMA that holds property until the minor reaches age 25. Tenn. Code Ann. § 35-7-121.

  Final Thoughts on Beneficiary Designations in Your Estate Plan

  Comprehensive estate planning is not just about wills and trusts. Beneficiary designations play a pivotal role in ensuring that your wishes determine where your assets go. They also avoid the burdensome probate process.

  By properly naming primary and contingent beneficiaries, considering minor children’s needs, and vigilantly reviewing and updating these designations, you can make your estate plan more effective and reduce the potential for unintended conflicts.

  For assistance creating or updating your estate plan, including your beneficiary designations, reach out to Connell Law, PLLC today for a free consultation. We’ll help you plan today for a more peaceful tomorrow.

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• Parents of College Students Need Powers of Attorney; Here’s Why

  

  College students are legally adults, but may still need assistance while away at school. A power of attorney enables you as the parent to assist your child if it becomes necessary.

  

  As college students gear up to head back to school, there’s a lot to think about. Textbooks, tuition, roommates, class schedules, and more. But something that Tennessee parents often overlook is having Powers of Attorney in place for their college students.

  While it might not be at the top of the back-to-school checklist, having Powers of Attorney in place before the kids leave for college is a crucial step for both practical and legal reasons.

  In this article, we’ll discuss why Powers of Attorney are needed, along with two important aspects of life that these documents cover.

  Why is a Power of Attorney Needed?

  It’s easy to consider your college student as your child. And that’s true. But once your child reaches the age of 18, the law considers him or her to be an adult. This means the access you previously had over his or her life fundamentally changes.

  Whereas before, you could act in almost any capacity necessary on the child’s behalf, you cannot do that when your college student is over 18. Your now-adult child must authorize you to speak and/or act on his or her behalf. Otherwise, the school, doctors, financial institutions, etc. cannot speak with you about your student’s status.

  This may be a difficult concept to grasp, especially after 18 years of being able to act for your child. But the law declares 18 to be the age of majority. At this stage, things change. And it’s important to be proactive so that you can assist your college student while he or she is away.

  With a Power of Attorney, there is an agency relationship. The one making the Power of Attorney is the Principal, and the one receiving the power is the Agent. The Agent owes a duty of care to the Principal and must follow instructions closely when using this authority.

  Here are the types of situations these Powers of Attorney will help you effectively manage, should the need arise.

  Power of Attorney for Healthcare Helps During Medical Emergencies

  

  When students move away to college, they gain newfound independence and autonomy. But this independence comes with its own set of challenges, particularly in times of medical emergencies.

  Accidents and illnesses happen unexpectedly. If a student is unable to communicate his or her wishes, having a Durable Power of Attorney for Healthcare in place makes a world of difference. For a college student, typically a parent would serve as Agent, but others may also fill this role.

  A Durable Power of Attorney for Healthcare grants the Agent legal authority to communicate with healthcare providers and make medical decisions on your student’s behalf. This is especially critical if the student is incapacitated and is unable to make those decisions or communicate.

  This could involve deciding on treatment options, surgeries, or even end-of-life care. Without this legal document, you as the parent will face roadblocks in accessing important information or making vital decisions during a medical crisis.

  This is especially important if your college student is attending school a significant distance away from where you live. So, if you live in Murfreesboro, but your student is in Knoxville, you’ll still be able to protect his or her interests.

  The Durable Power of Attorney for Healthcare enables you to act promptly should the need arise.

  Power of Attorney for Property Helps with Financial Matters

  College is a period of significant financial growth and responsibility. Students have bank accounts, credit cards, student loans, and other financial matters to manage in their own names for the first time.

  If your student becomes incapacitated, having a Durable Power of Attorney for Property allows the parent, as the Agent, to step in and handle financial affairs on his or her behalf.

  The Durable Power of Attorney for Property is separate from the Durable Power of Attorney for Healthcare. Both documents generally ought to be durable, though—meaning the authority survives the Principal’s incapacitation.

  A Durable Power of Attorney for Property can provide varying levels of authority. This can range from managing day-to-day expenses to handling major financial transactions. If you are assisting your college student with paying tuition, it is wise to have this in place to ensure smooth processing of all financial obligations.

  Without these legal documents in place, parents will encounter difficulties accessing their child’s financial accounts or making critical financial decisions in situations if their student is unable to do so.

  Final Thoughts on Powers of Attorney for Parents of College Students

  

  Sending a child off to college is a significant milestone for both parents and students. While the focus is often on academics and personal growth, it’s equally important to address practical and legal considerations.

  Establishing Powers of Attorney before your student heads back to school is a proactive step. It will provide peace of mind during a highly formative and sometimes volatile stage of life.

  Speak with your college-aged child about the critical need for these documents. Since the student is an adult, he or she will be the one creating the power and giving it to you or whichever person chosen for Agent.

  Connell Law, PLLC assists college students and their parents with preparing Powers of Attorney. To get these important documents in place, reach out to us today to schedule your free consultation.

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