Many clients ask what would happen to their estate if they passed away without a will. Well the answer could be more complicated than you think.
Let’s look at some examples:
In Tennessee, if you pass away and are unmarried and have only one child, the answer is quite simple. That child will inherit your entire estate, subject to any mortgages and liens. However, the more layers we add to this, the more complicated it gets.
If you are married when you pass away and have only one child, the estate would be split equally with one half going to your spouse and the other half going to your child. This may be unsettling because this might not have been how you desired your estate to be divided. Additionally, this gets complicated because the parties must either agree on how the real property is to be divided, or the court must do it for them. Additionally, if you are married with more than one child, the surviving spouse would receive one-third of the estate, with the children splitting the other two-thirds.
As you can see, this is getting more complex.
If you pass away unmarried and have more than one child, each of the children would divide the property equally. This seems simple, but in reality, it can cause many headaches. Usually children end up fighting over which child gets to keep which personal item that was important to the family because they all want mom’s favorite necklace that dad gave her on their fiftieth wedding anniversary. Additionally, each of the children will have a partial interest in the real property, which can be problematic because joint ownership causes so many complications that can require the court to get involved.
If you have a mortgage on your home, you might want to consider another option to ensure that your home does not go into foreclosure. Some people get a life insurance policy in the amount of the mortgage with your child as the beneficiary.
If you believe your child is not mature enough to handle the money responsibly, there are a few ways to ensure that the mortgage is paid while still leaving money to your children. One option is to make a trust and name a trustworthy family member as trustee to make sure that the child does not spend all of the money irresponsibly and has nothing left to live on. Another option would be to leave the money from the life insurance policy to your estate and leave instructions for your executor to pay off the mortgage first.
Trusts are also beneficial because they allow your heirs to skip over the costly and timely probate process sooner and give them access to the assets sooner.
While a simple will is less expensive, a trust is a great option to provide more protection and allow your heirs to bypass the probate process. While there are many goals when estate planning, a major consideration should always be: are we creating probate issues and are we doing all that we can to simplify the estate and turn probate assets into non-probate assets.
Overall, having either a will or trust is very important when planning for your loved one’s future. Our office can provide both of these services for you. Additionally, if a loved one has passed away, our office is available to guide you along the probate process.
*This is for informational purposes only and should not be considered legal advice.
*Citing generally Tenn. Code Ann. Titles 30, 31, 32, and 35.