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Far too few Americans prioritize estate planning. An estimated 60% of people lack even a rudimentary will, let alone a trust or other asset protection strategy. Unfortunately, when people pass away without taking the right steps to safeguard their legacy, they leave their assets—and their heirs—to the mercy of Tennessee’s courts, which follow a strict legal formula for disbursing inheritances.
Intestate Succession in Tennessee
When someone passes away without a will or other estate plan, their estate is disbursed according to Tennessee’s intestate succession laws. For example:
- If you die with children but no spouse, your children inherit everything.
- If you die with a spouse but no children, your spouse inherits everything.
- If you die with a surviving spouse and surviving children, your spouse and children share the intestate property. However, the spouse’s share must not be less than the equivalent of one-third of the intestate assets.
- If you die with living parents but no spouse or children, your parents inherit everything.
- If you die with siblings, but no spouse, children, or parents, then your siblings inherit everything.
- If the court cannot identify any living relative or prospective heir, then the entire estate “escheats” to the State of Tennessee.
Since intestate succession laws favor close living relations, some people believe that they do not necessarily need to create an estate plan—especially if they are planning to leave everything to their spouse or children.
However, relying on the courts to fulfill your final wishes always presents a risk. After all: Tennessee’s intestate laws are rigid, and they will not accommodate any unusual or exigent circumstances. If you have an estranged child, sibling, or spouse, they could still be entitled to your assets, even if you would prefer that your properties or accounts be divided differently.
Avoiding Intestacy in Tennessee
The simplest way to avoid intestacy is to create a last will and testament. However, wills are imperfect documents: not only can they be challenged, but they do nothing to shield the estate’s heirs from the rigors of Tennessee probate, the intensive and intrusive legal process of dissolving an estate.
Fortunately, some assets are not typically subject to probate. They include:
Assets held by a revocable living trust
Trusts are among the most popular and time-tested ways of keeping an estate out of probate. When a grantor establishes a revocable living trust, they retain the rights of use and access to any assets transferred to the trust’s control. Once they pass away, the designated trustee or trustees will disburse the trust’s assets to named beneficiaries in accordance with the grantor’s conditions. In general, trust assets are never subject to probate, providing a comparatively secure method of distributing inheritances.
Life insurance proceeds
Most up-to-date life insurance policies do not have to go through probate. Since life insurance policies have a designated beneficiary, the policy’s proceeds are paid directly to the named recipient. However, life insurance policies that have lapsed or contain inconsistencies can become problematic, especially if the beneficiary is a former spouse or estranged relative.
Funds in an IRA or other retirement savings account
Investment retirement accounts provide the option to name a beneficiary. If the beneficiary is an individual, a trust, or an organization, then the account is not subject to probate.
“Payable-on-death” bank accounts
Similar to life insurance policies and IRAs, any “payable-on-death” account will not be subject to intestacy proceedings or probate since it already has a designated heir.
Jointly owned properties
Real properties may be subject to probate if they are solely owned by the decedent or included in a last will and testament. However, jointly owned properties with rights of survivorship will pass outside of probate to the other owners, be they family or friends.
Avoid Intestacy and Speak to an Estate Planning Professional Today
Intestacy proceedings can pose significant financial and emotional hardship for families. Fortunately, you do not have to entrust your life’s work to a Tennessee probate court: Quraishi Law & Wealth could help you create a rock-solid will, establish a revocable living trust, and revise your beneficiary designations to ensure that your legacy remains safe against uncertainty.
Please send Quraishi Law & Wealth a message online or call us at 870-275-4304 to schedule your initial consultation as soon as possible.
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