Articles Posted in Estate Planning

Establishing a trust may be advantageous for Tennessee estate planning purposes in some situations.  However, it is important to understand the limitations of revocable living trusts.  In a February 13, 2018 case, the Tennessee Court of Appeals considered a challenge filed by the beneficiary of a living trust against a trustee for exceeding her authority under the terms of the trust agreement.pen

The defendant in the case and her husband had executed a removable living trust agreement.  They conveyed approximately 200 acres of real property to the trust.  Upon the death of the husband, the trust was the sole residual beneficiary of his will.  The defendant, as the successor trustee, distributed all of the real estate in the trust to herself by way of a quitclaim deed.  She then terminated the trust.  Her son, who was a beneficiary of the trust, filed an action alleging that she had exceeded her authority under the trust.  He requested an accounting of the trust’s assets and sought the return of any wrongfully distributed assets.

In Tennessee, trusts are interpreted by looking at the language, context, purpose, and scope of the trust agreement to determine the grantor’s intent.  In addition, a trust must be interpreted in order not to frustrate the intent of the grantor.

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In some estate cases, disagreements may arise as to whether an asset is part of the estate to be distributed to the beneficiaries, or whether it is marital property belonging to the surviving spouse.  A previous blog post from 2016 highlighted this issue in a Tennessee estate litigation case before the Tennessee Court of Appeals.  The dispute centered around the ownership of a certificate of deposit that the decedent had purchased with funds from a joint checking account with his wife.  Since that post, the decision has been appealed and reviewed by the Supreme Court of Tennessee.  In a December 6, 2017 opinion, the court ultimately reversed the appeals court and overruled prior case law on the issue.writing check

During the administration of the decedent’s estate, his surviving wife filed a petition to designate a certificate of deposit, titled in the sole name of the decedent, as her separate marital property rather than part of the decedent’s estate, which had been left to his children of a prior marriage.  The decedent purchased the certificate of deposit with funds he withdrew from his and his wife’s joint bank account, designated with a right of survivorship.  The Court of Appeals ruled that the certificate of deposit belonged to the surviving spouse because the funds could be traced back to the joint account.

In Tennessee, a tenancy by the entirety is a form of property ownership unique to married persons.  Each spouse holds an interest in the entire property, rather than in undivided parts. Upon the death of one spouse, the survivor continues to own the whole property.  In most cases, one spouse cannot alone terminate the tenancy by transferring part of it to another party without the consent of the other spouse because it would destroy the other spouse’s ownership interest in the whole.  However, bank accounts are treated differently, and portions of a joint bank account may be unilaterally withdrawn without destroying the tenancy.

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Changes to the law can have a significant effect on the way an estate is administered. In a recent Tennessee estate litigation case involving a will contest, the Court of Appeals determined whether a 2016 amendment to the Tennessee Execution of Wills Act applied to a will that was executed prior to the effective date of the statute. The beneficiary of the decedent’s will argued that it was valid under the new law, while the decedent’s heir-at-law, her father, contended that it was invalid because it did not meet the requirements under the law in effect at the time of her death in 2015. pen

The decedent in the case executed her Last Will and Testament in June 2015. She signed the bottom of each of the three pages of her will in the presence of two witnesses, and the witnesses signed the attestation affidavit in the presence of the decedent, each other, and a notary public. However, the witnesses failed to sign the will itself. The decedent passed away in September 2015.

In April 2016, Tennessee enacted an amendment providing that wills executed prior to July 1, 2016 are validly executed if the witness signatures are affixed to an affidavit, provided that the signatures are made contemporaneously with the testator’s signature, and the affidavit contains language meeting the requirements of the law. On appeal, the court found that the language of the amendment was straightforward and unambiguous, and it clearly was intended to provide relief for testators like the decedent, who believed they had executed a valid will prior to July 1, 2016, when the two witnesses duly executed the attestation affidavit at the same time as the will was executed by the testator, but the witnesses failed to sign the will itself.

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Some issues brought up in Tennessee estate cases may seem unusual but are common enough that a skilled Tennessee estate litigation attorney will know how to approach them.  For example, in a September 28, 2017 case, family members of the decedent could not find her original will, although they knew she had executed it.  They filed a petition seeking to recognize and establish a copy of the lost will as the decedent’s last will and testament.  The trial court granted the petition, and the decedent’s heirs

The plaintiffs in the case were the decedent’s nephews by marriage.  They had assisted the decedent and her husband in maintaining their farm before their deaths.  When the decedent’s husband died in 2007, the plaintiffs visited the decedent every day, prepared her meals, and alternated spending nights with her because she didn’t want to be alone.  In 2007, the decedent executed a last will and testament bequeathing her personal property to her sister, her jewelry to her nieces, and the remainder of her estate, which included the farm and machinery, to the plaintiffs.  The will was last seen in 2012 when the decedent showed it to her sister and returned it to the safe in her home, but it could not be found after her death.

In Tennessee, the long-standing presumption is that if a will is traced into the hands of the testator and not found after her death, the testator canceled or revoked it.  The presumption can be overcome with adequate proof, which Tennessee courts have defined as clear and convincing evidence.  Proponents of the lost will can overcome the presumption of revocation by showing that the testator did not have control of the will after its execution, that she had lost testamentary capacity for a period before her death, and that the will was in existence at the time the mental alienation occurred.

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A last will and testament is generally valid if it meets certain statutory requirements.  In an August 15, 2017 Tennessee estate case, the son of the decedent contested the validity of the will submitted into probate for his father.  The affidavit attached to the purported will was signed, in the presence of the testator, by two witnesses.  After a hearing, the trial court held that the will and accompanying affidavit were not in strict compliance with the statute and denied admission of the will to probate.  The proponent of the will, the decedent’s wife, appealed that decision to the Court of Appeals of Tennessee.signature sticker

In Tennessee, a will must be signed by the testator and at least two witnesses.  The testator must signify to the witnesses that it is his will and either sign the will, acknowledge that he already signed the will, or have someone else sign his name while in the testator’s presence.  The witnesses must then sign in the presence of the testator and each other.

In 2016, the Tennessee legislature amended the law to allow for a separate affidavit containing the witnesses’ signatures to be integrated into a will executed prior to July 1, 2016, as long as the signatures were made at the same time as the testator signed the will.  If the witnesses signed the affidavit on the same day as the testator, it is presumed that they signed at the same time, unless there is convincing evidence otherwise.

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Some types of estate assets, such as a person’s business interests, can be complicated to settle during probate without a valid will or any other estate planning tools. In a June 29, 2017 Tennessee estate decision, the Court of Appeals was asked to decide which of the decedent’s heirs was entitled to ownership of a company operated by the decedent. The lower court had concluded that the widow was the owner of all of the shares of stock in a summary judgment motion, and the decedent’s daughters appealed.stock market

The stock certificate at issue was titled in the name of the decedent and his widow as joint tenants with rights of survivorship. The widow argued that the shares of stock in the corporation passed to her as the surviving joint tenant with right of survivorship. The decedent’s daughters, however, argued that the corporation’s assets should be part of the decedent’s estate. The daughters contended that the stock certificate was defective, citing a Tennessee statute that requires a share certificate issued by a corporation to be signed by two officers who are designated in the bylaws or by the board of directors. The widow responded that even if there was a technical defect resulting from the lack of a second signature, the clear intent of the incorporators and directors was to issue the shares of stock to the decedent and the widow as joint tenants with rights of survivorship.

On appeal, the court stated that the question of the ownership of the corporate stock turned on the intent of the directors and incorporators. The court observed that the widow had presented affidavits supporting the conclusion that she, the decedent, and the incorporator intended to issue the stock as joint tenants with rights of survivorship, and the stock certificate itself also supported her argument. The court went on to find that although the certificate was not signed by two corporate directors or officers as directed by Tennessee statute, it could nevertheless be used to indicate the intent of the issuers of the stock.

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Probate and estate administration can be difficult to settle when there are claims or challenges involved. In a May 26, 2017 case, the Court of Appeals of Tennessee reviewed a claim against the decedent’s attorney-in-fact, which alleged undue influence arising from a confidential relationship. The decedent’s survivors, two nieces and one nephew, filed the complaint against the attorney-in-fact, who was the decedent’s other nephew. Following a bench trial, the lower court dismissed the complaint, finding that although a presumption of undue influence had been raised by a confidential relationship between the defendant and the decedent, the defendant had successfully rebutted the presumption. The plaintiffs brought an appeal.pencil on desk

To prove undue influence, the plaintiffs generally must prove the existence of suspicious circumstances warranting the conclusion that the decedent did not act freely and independently. Examples of such suspicious circumstances may include the existence of a confidential relationship between the decedent and the defendant, the decedent’s physical or mental deterioration, the defendant’s active involvement in procuring the will, secrecy concerning the will or the lack of independent advice, the unjust or unnatural nature of the will’s terms, fraud or duress, or any other circumstances that establish undue influence. Under Tennessee law, there is a presumption of undue influence when the dominant party in a confidential relationship, i.e., the defendant, receives a benefit from the decedent. Once a presumption of undue influence arises, the defendant must establish that the transaction at issue was fair by clear and convincing evidence to rebut the presumption.

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If a person has exerted undue influence over a decedent in matters concerning his or her estate planning, it may be appropriate to overturn a bequest in some instances.  In an opinion released on March 14, 2017, the Court of Appeals of Tennessee reviewed a claim of undue influence following the decedent’s death.  The nieces of the decedent filed the complaint, contesting the validity of a quitclaim deed and the decedent’s will on the ground that they were results of undue influence exerted upon the decedent by her stepson and his wife.  After a jury found the documents to be valid, the plaintiffs brought the current appeal.golden pen

The decedent in the case died in 2012.  After the decedent’s death, a will that she executed in 1985 was submitted for probate.  However, the defendants subsequently provided a document dated in 2010, purporting to be the decedent’s will.  In the 2010 will, the decedent revoked all prior wills, disinherited the plaintiffs, and named the stepson as the sole beneficiary.  They also submitted a 2011 codicil that designated the stepson’s wife as the sole beneficiary in the event that her husband predeceased the decedent.  Lastly, the defendants presented a 2010 quitclaim deed conveying the decedent’s real property to herself, her stepson, and his wife as joint tenants with right of survivorship.

The defendants had moved into the house next door to the decedent in 1985.  After the decedent suffered a stroke in 2005, the defendants began caring for her.  In 2010, the decedent executed a document designating the defendants as her powers of attorney.  Witnesses testified that the 2010 will was read aloud to the decedent, and she seemed to be mentally sharp, although she was in a wheelchair, and her stepson steadied her arm so that she could sign.

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When planning the distribution of your estate, it is important to understand the legal consequences of naming beneficiaries on non-probated assets.  In a February 28, 2017 opinion, the Court of Appeals of Tdocuments-1427202-640x480-300x225ennessee considered whether evidence of the decedent’s intent was relevant in deciding the matter of her life insurance proceeds.  The decedent in the case had a life insurance policy designating her husband and sister as beneficiaries.  The husband filed suit to recover the proceeds left to the sister and place them in a trust for the benefit of his and the decedent’s son.  The trial court concluded the son was entitled to the proceeds based on the theory of promissory estoppel, and the sister appealed.

The decedent had been diagnosed with terminal cancer when her son was twelve years old.  A few years later, her husband discovered he had terminal cancer and was not expected to outlive the decedent.  The decedent’s life insurance policy initially named her husband as sole beneficiary.  However, the decedent added her sister as a co-beneficiary of her life insurance policy a few weeks before her death, unbeknownst to her husband.  Her husband believed that she left half the proceeds to her sister for the purpose of taking care of their son, who was a minor and would soon have no living parents to take care of him.  When the husband became concerned that the decedent’s sister was going to use the proceeds for purposes other than his son’s welfare, he filed a complaint against her and the life insurance company.

In the circuit court proceedings, the husband relied on a document created by the decedent that allocated $30,000 to her sister, her sister’s children, and her mother, and the substantial remainder of her sister’s share of the proceeds to the decedent’s son.  There was also testimony by several parties regarding the decedent’s wishes that the insurance proceeds be used by her sister to care for her son.

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The distribution of assets in a decedent’s estate may sometimes lead to disputes among beneficiaries.  In a February 15, 2017 opinion, the Court of Appeals of Tennessee decided a controversy regarding the disposition of several certificates of deposit that were held in joint tenancy, with right of survivorship, by the decedent and her daughter.  The other beneficiaries of the decedent’s estate argued that the certificates of deposit were probate assets.  The trial court denied the beneficiaries’ objection and closed the estate, prompting an appeal to the higher

The decedent died in 2008, leaving a valid will that devised her estate in equal shares to her children or their survivors.  Among her estate were three certificates of deposit titled in the names of the decedent or her daughter, with boxes checked on the signature card to indicate that they were held in joint tenancy with right of survivorship.  The decedent had originally opened and funded the original certificates of deposit decades before without her daughter’s assistance or knowledge.  During the administration of the decedent’s estate, the other beneficiaries contended that the CDs should be included in the residual estate, while the daughter argued they were non-probate assets because they were held in joint tenancy with right of survivorship.

In Tennessee, the decedent’s intent determines the disposition of the CDs at issue.  To establish the decedent’s intent, the court may consider the signed bank signature cards expressing the right of survivorship, as well as other extrinsic evidence to demonstrate intent as to the type of ownership.  At the trial, the daughter testified that she became aware of the CDs in the 1980s when she began to assist the decedent with her business affairs.  The daughter also stated that she renewed the CDs as joint tenants with right of survivorship while the decedent was alive, since it was the decedent’s wish to have them remain in joint tenancy.

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