Contracts to Recover Unclaimed Property

Fee agreements with third parties for the recovery of property held by the Tennessee Division of Unclaimed Property are not uncommon. Such arrangements are now governed by statute:

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When Unclaimed Property is Presumed Abandoned

The following table summarizes when unclaimed property is presumed abandoned for purposes of the Tennessee Uniform Unclaimed Property Act:

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Year’s Support and Death of Surviving Spouse

As noted in the previous post, the death of the surviving spouse prior to filing for an elective share does not necessarily mean that she forfeits the right. But what about a year’s support?  Is it also available if the surviving spouse dies before filing?

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Elective Share and Death of Surviving Spouse

If the surviving spouse dies before filing for an elective share, does her right to dissent die with her?

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Anti-Lapse Statute Trumps Testator’s Intent

A recent Tennessee court of appeals case is a reminder that there are limits to how far the law on testator’s intent will take you.

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“Property” Under the New Unclaimed Property Act

What constitutes “property” for purposes of the Revised Uniform Unclaimed Property Act?

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Tennessee Enacts New Rules on Unclaimed Property

Tennessee has adopted the Revised Uniform Unclaimed Property Act (RUUPA). It became effective on July 1, and is codified at T.C.A. § 66-29-101, et seq. It replaces the Uniform Disposition of Unclaimed (Personal) Property Act.

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August 7520 Rate Announced

The 7520 rate for August 2017 will go back to 2.4%. A table showing historical 7520 rates since 2008 is here.

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Tennessee Quietly Makes More Probate Changes

While much attention has been given to the 2017 Probate Omnibus Bill (SB0769, now codified as Public Chapter 290), a little-known bill that also became effective on July 1 makes several important probate changes that should not be overlooked.

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Concealing or Destroying a Will

It’s a crime under Tennessee law: Any person who destroys or conceals the last will and testament of a testator, or any codicil thereto, with intent to prevent the probate thereof or defraud any devisee or legatee, commits a Class E felony. A Class E felony is punishable by not less than one (1) year nor more than six (6) years. In addition, the jury may assess a fine not to exceed three thousand dollars ($3,000), unless otherwise provided by statute. Relying on an earlier version of this statute, the Tennessee Court of Appeals has indicated that a person in possession of a will has a duty to bring it forward, absent knowledge of any defect in its execution. Sources: T.C.A. […]

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For a Limited Time Only: IRS Grants Extension to Elect Portability

Executors who discovered too late that they should have made a portability election have gotten a reprieve. 

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More on the Primacy of Beneficiary Designations

Beneficiary designations trump a will. Tennessee has a statute on it:

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Spousal Rollover When RLT is Beneficiary

Is a spousal rollover available when the beneficiary of an IRA is a revocable trust? Surprisingly, in some cases, the IRS says yes.

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Rushed Prenup Invalidated by Court

How much time must pass between the execution of a prenuptial agreement and the wedding of the parties in order for the agreement to be enforceable?

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Sales of Personal Property by Executors

How much leeway does an executor have when it comes to selling the personal property of an estate?

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Joint Revocable Trust: Gift on Creation?

Not if the non-contributing spouse has the unilateral power to revoke:

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July 7520 Rate Announced

The 7520 rate for July 2017 will drop to 2.2%. This is the lowest rate so far for the year. A table showing historical 7520 rates since 2008 is here. The effectiveness of various estate planning and charitable planning techniques is measured in terms of the 7520 rate. These techniques include Grantor Retained Annuity Trusts (GRATs), Qualified Personal Residence Trusts (QPRTs), Charitable Remainder Trusts (CRTs), and Charitable Lead Trusts (CLTs). If the assets transferred to these trusts appreciate faster than the 7520 rate in effect at the time of transfer, a plan would normally be considered successful in shifting value outside of a taxpayer’s estate for estate tax purposes.  Fortunately, the 7520 tends to be low relative to market rates of […]

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Reasonable Compensation of Executors

Serving as an executor is not an honor, it is work. As such, the person serving in this position will often want to be compensated for his, her, or its time. A common question is: how much is appropriate? The Tennessee Code simply provides that an executor is entitled to “reasonable compensation.” To wit: The clerk shall charge every accounting party with all sums of money the accounting party has received, or might have received by using due and reasonable diligence, and shall credit the accounting party with a reasonable compensation for services, and with disbursements supported by lawful vouchers. Elsewhere, in the statute dealing with priority of estate claims, it says as follows: (a) All claims or demands against […]

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Percentage Fees in Probate Matters

Is it unlawful or unethical for an estate attorney to charge a fee based on a percentage of the estate? That was one issue raised in In re Estate of Bessie Adcock Bingham. In that case, the executor entered into a contract with an estate attorney, whereby the attorney agreed to represent the estate for a fee of 5% of the gross estate as determined by the Tennessee Department of Revenue Inheritance Tax Return. Evidently, this is a common practice in Bedford County. According to the trial court, [T]he cultural history of fees within our judicial district has long been… they were charged as percentages.” One of the beneficiaries objected, arguing that that charging a fee based on a percentage formula in a probate […]

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Children Born after the Will is Executed

A good Last Will and Testament will address the issue of children born after the document is executed. Nonetheless, the Tennessee Code has the situation covered: A child born after the making of a will, either before or after the death of the testator, inclusive of a mother-testator, not provided for nor disinherited, but only pretermitted, in the will, and not provided for by settlement made by the testator in the testator’s lifetime, shall succeed to the same portion of the testator’s estate as if the testator had died intestate. The statute goes on to say that a pretermitted child’s share is to be funded pro rata out of the shares of the other beneficiaries.  Note that the quoted statute only […]

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Revocable Trust as Post-Nup?

Can a revocable trust created by one spouse after marriage constitute an enforceable postnuptial agreement for divorce purposes? This question arose in a recent case decided by the Tennessee Court of Appeals. The facts are as follows: Husband and Wife were married in 2006. It was a second marriage for both parties. In 2009, Husband established a revocable trust, naming himself as trustee and Wife as successor trustee. The revocable trust named Husband as current beneficiary and Wife and children as remainder beneficiaries of anything left in the trust at Husband’s death. Husband also executed a will that directed his probate assets to the revocable trust at death. Husband funded the revocable trust with at least four properties: (1) a lakehouse […]

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TISTs: Who SHOULD be Trustee?

A previous post discusses who can legally be the trustee of Tennessee Investment Services Trust (TIST). A better question might be: who should be the trustee of a TIST? Choosing the wrong trustee could expose a TIST to creditors. One argument in favor of piercing a TIST is that the trustee is beholden to the grantor. That is, a creditor might argue there is a tacit understanding that the trustee will simply follow the grantor’s instructions without exercising independent judgment. This is simply a version of the alter ego argument discussed here. Essentially, the argument is that the trust is a sham and thus should be disregarded.  The best way to avoid this argument is to appoint a trustee that has written policies […]

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June 7520 Rate Announced

The 7520 rate for June 2017 will remain at 2.4%. A table showing historical 7520 rates since 2008 is here. The effectiveness of various estate planning and charitable planning techniques is measured in terms of the 7520 rate. These techniques include Grantor Retained Annuity Trusts (GRATs), Qualified Personal Residence Trusts (QPRTs), Charitable Remainder Trusts (CRTs), and Charitable Lead Trusts (CLTs). If the assets transferred to these trusts appreciate faster than the 7520 rate in effect at the time of transfer, a plan would normally be considered successful in shifting value outside of a taxpayer’s estate for estate tax purposes.  Fortunately, the 7520 tends to be low relative to market rates of return. Source: Rev. Rul. 2017-12 (pdf) Posted by Joel D. […]

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If You Want an Estate Tax Closing Letter, You Now Have to Ask for It

For estates that are required to file a Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return*, it is advisable not to close the estate until you know that the IRS has completed its examination of the return and has accepted it (either with or without adjustment). Until relatively recently, the IRS would notify you that the return had been accepted by sending an estate tax closing letter. However, that is no longer the case. For estate tax returns filed after June 1, 2015, the IRS will only issue estate tax closing letters upon request. Specifically, the executor must call the IRS at (866) 699-4083 and provide the following information: Name of the decedent; Decedent’s social security number; Date of death. […]

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Health Insurance and Gift Tax

Are payments of health insurance premiums for a child, grandchild, or other party subject to federal gift? No, provided the payment is made correctly. I.R.C. § 2503(e)(2) excludes from gift tax any amount paid on behalf of an individual: (A) as tuition to an educational organization described in section 170(b)(1)(A)(ii) for the education or training of such individual, or (B) to any person who provides medical care (as defined in section 213(d)) with respect to such individual as payment for such medical care. For this purpose, medical care is defined under Section 213(d) as amounts paid for: for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body, […]

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