Protecting Your Assets in Tennessee: Planning for the Unexpected

In Tennessee, the essential estate planning documents include: 1) A Last Will and Testament to direct how your assets should be distributed; 2) A Durable Power of Attorney to appoint someone to handle your financial affairs if you become incapacitated; 3) A Healthcare Power of Attorney (or Healthcare Proxy) to designate someone to make medical decisions for you; 4) A Living Will (Advance Directive) to specify your end-of-life care preferences; and 5) Potentially a Trust, depending on your specific circumstances and asset protection goals.

If you die without a will in Tennessee (known as dying 'intestate'), your assets will be distributed according to the state's intestacy laws. Generally, your assets would first go to your spouse and children in proportions determined by state law. If you have no spouse or children, assets would pass to other relatives in a specific order: parents, siblings, and more distant relatives. This process may not align with your wishes and can be more time-consuming and expensive than if you had a will in place.

Tennessee offers several ways to protect your home: 1) Homestead exemption provides protection of up to $25,000 for individuals or $50,000 for married couples against certain creditors; 2) Placing your home in a properly structured trust; 3) Holding property as tenancy by the entirety if you're married, which protects against creditors of only one spouse; 4) Considering long-term care insurance to protect against nursing home costs that might otherwise force a sale of your home; and 5) For older homeowners, exploring whether a life estate might be appropriate for your situation.

Yes, you can avoid probate in Tennessee through several methods: 1) Creating a revocable living trust and transferring assets into it during your lifetime; 2) Setting up payable-on-death designations for bank accounts; 3) Using transfer-on-death registrations for securities and vehicles; 4) Holding property in joint tenancy with right of survivorship; 5) For smaller estates, Tennessee offers simplified probate procedures if the estate value is under certain thresholds; and 6) Using beneficiary designations on retirement accounts, life insurance policies, and similar assets.

To protect assets from nursing home costs in Tennessee, consider: 1) Long-term care insurance purchased well before you need care; 2) Medicaid planning, which might involve creating an irrevocable trust at least five years before needing care (due to Medicaid's five-year lookback period); 3) Purchasing an annuity that complies with Medicaid requirements; 4) Exploring Tennessee's TennCare CHOICES program for long-term services and supports; and 5) Consulting with an elder law attorney to create a personalized plan that considers your specific circumstances while complying with Tennessee and federal laws.

A Tennessee Investment Services Trust (TIST) is Tennessee's version of a domestic asset protection trust. This self-settled trust allows you to be a beneficiary of your own trust while potentially protecting assets from future creditors. To establish a valid TIST, you must follow specific requirements: the trust must be irrevocable, have a qualified trustee (usually a Tennessee resident or institution), contain a spendthrift provision, and be governed by Tennessee law. TISTs offer stronger asset protection than available in many other states, but they must be properly structured and are subject to certain exceptions for specific types of creditors.

To protect business assets in Tennessee: 1) Choose the right business entity (LLC, corporation, etc.) that provides liability protection; 2) Maintain proper corporate formalities and separation between personal and business finances; 3) Obtain adequate business insurance including general liability, professional liability, and business interruption coverage; 4) Consider creating multiple LLCs to separate valuable assets from high-liability operations; 5) Implement a business succession plan; 6) Use buy-sell agreements if you have business partners; and 7) Consider whether a business trust might be appropriate for your situation.

A living trust in Tennessee offers several benefits: 1) Probate avoidance, saving time and money in estate administration; 2) Privacy, as trust assets and distributions remain confidential unlike probated wills; 3) Continuity of asset management during incapacity without court intervention; 4) Potential reduction in estate taxes for larger estates; 5) Protection against challenges compared to wills; 6) Flexibility to include provisions for minor children or beneficiaries with special needs; and 7) Ability to manage distribution of assets over time rather than all at once. However, trusts require proper funding and maintenance to be effective.

To protect assets for minor children in Tennessee: 1) Create a will that names a guardian for your children and establishes a testamentary trust; 2) Consider a living trust with provisions for minor children; 3) Set up a Uniform Transfers to Minors Act (UTMA) account for smaller amounts; 4) For larger amounts, establish a separate children's trust with specific distribution terms; 5) Name contingent beneficiaries on life insurance policies and retirement accounts, or preferably name a trust as beneficiary; 6) Consider a 529 college savings plan with appropriate successor owner designations; and 7) If your child has special needs, explore special needs trusts to preserve eligibility for government benefits.