What You Need to Know About Avoiding Probate in Tennessee
Probate is a tricky process to go through as it deals with the matters of the estate after an individual passes away. In a time of grief, you may not want to go through the legalities of a will, which is why it can help to take measures to avoid the probate process. Here is everything you need to know on how to avoid probate in Tennessee.
What is Probate?
Probate is a process that takes place after an individual passes. It involves the administration and checking the validity of a well.
Taxes and Probate
Tennessee does not require estates in Tennessee to pay an estate tax. You will need to pay federal estate tax if the estate is deemed large enough. The exception for federal estate tax is $12.06 million as of 2022. Inheritance taxes, on the other hand must be paid by the heirs, if the combines value of the assets is over 1 million dollars. Forms for filing can be found on through the Tennessee Department of Revenue.
Are there any types of estates that do not need to go through the probate process in Tennessee?
In Tennessee, estates worth less than $50,000 and do not contain real estate, are allowed to go through a small estate process which is far less expensive than regular probate.
Why would an individual want to avoid probate?
Aside from the inconvenient timing of probate, an individual may want to avoid probate for other reasons. Probate can be a lengthy process. Since Tennessee is one of the states that does not use a Uniform Probate Code, the court proceedings can be even longer. The probate process also can become expensive. For probate, the executor and attorney will need to be paid. Court fees will also be assessed.
Related: How to Avoid Probate
How can you avoid probate in Tennessee?
Due to the time-consuming nature of the probate process, while a person is still alive, they may wish to make decisions that will spare their beneficiaries from going through the probate process after they pass away.
The four most common and legal ways to avoid probate in Tennessee include the following:
- Living trusts
- Joint ownership
- Payable on death designation
- Transfer on death registration
A living trust can be established while you are still alive. You can use a living trust for estate planning, which allows you to still use your assets, but be able to name beneficiaries for when you pass away. Most assets are eligible for a living trust. For example, real estate, bank accounts, vehicles, and property can all be put in a living trust for your beneficiaries to access after you pass. While you can set most things in a living trust, there are some exceptions. You can not transfer life insurance and retirement accounts to a trust. Once you pass, the individual who the deceased named as their successor trustee can transfer the assets in the trust to the beneficiaries, all the while avoiding the probate process.
What is joint ownership?
Joint ownership is when two individuals are responsible for owning a property. Along with joint ownership, when two individuals own property together, the right of survivorship is honored. This dictates that the surviving partner in the ownership will own the property once the other owner passes.
How does joint ownership help avoid the probate process?
Since the surviving owner will have the rights to the property, there is no need for the probate process because the surviving owner will have the rights to transfer the property to whomever they want.
Related: How to Avoid Probate in Tennessee
Payable on death designation
A payable on death designation is also called a POD designation. Tennessee allows individuals to add a POD designation to bank accounts. This includes savings accounts and certificates of deposits. While you are still living, you can use all the money in the bank accounts. Your beneficiaries can only claim the money once you pass. The beneficiary is then allowed to take the money from your bank account after you pass without going through the probate process since you have already designated that that bank account belongs to them after your passing.
Transfer on death registration
A transfer on death registration applies to securities. This allows you to register stocks and bonds in brokerage accounts so that way your beneficiary will be able to inherit the account once you pass. Since the beneficiary only needs to go through the brokerage to claim their assets, they can bypass the probate process.