One benefit of the pandemic is that American citizens have started to seriously think about their wills and the estate process. One disadvantage is that a majority of people are unaware of the inheritance laws of their state. For example, the state of Tennessee does not follow strict community property inheritance laws, which means you must be careful when it comes to creating an estate plan. You would not want to accidentally leave someone out because you thought they would automatically receive assets
So today, we want to look at the different types of inheritance laws and beneficiaries, so that you can be prepared when you create your own estate plan, and so that you know what is in store for you if you are named in someone else’s Will.
How property is classified in Tennessee
There three different ways to classify property for the sake of inheritance:
- Community property. This is a type of inheritance law where each spouse automatically owns half of what they each obtained while married. Under states that abide by community property law, after one spouse passes away, half of their estate immediately goes to their partner, and the other half is distributed to other beneficiaries.
- Common law property. States which follow common law policies don’t have an automatic assumption regarding inheritance. Inheritance is determined by a Will or by the name on the deed.
- Elective community property. This is what Tennessee offers. Spouses have the option to establish a community property trust where community property can be created through specific written documents. The property listed in these documents will be established and treated as community property, under the wishes of the couple. What is especially beneficial about Tennessee’s laws is that residents and non-residents to opt in.
What property is affected by Tennessee’s elective community property laws?
It depends on what you and your spouse decide. In essence, if you and your spouse own joint property – a house, a car, a checking account – you can create a community property trust, and classify any (or all) of those assets as community property. Anything left out of the trust remains separate property.
There are tax benefits to these trusts, especially for couples with significant assets. Because the spouses can also be named trustees, it guarantees that a surviving spouse remains control of the assets at all time, too.
The rights of beneficiaries in Tennessee
While community property trusts make things simpler for spouses, they are not a replacement for a strong estate plan. As probate litigation attorneys, we see firsthand the effects of a person dying intestate. So let us look at how beneficiaries can inherit, based on Tennessee law.
What are some of the inheritance rights of children?
When a person has biological or legally adopted children and is not married at the time of his or her death, the children are entitled to the complete inheritance of the estate. However, if their parent was married at the time of their death, the spouse and the children must split the estate evenly. If there are more than two children, however, this rule does not apply. Instead, the spouse is entitled to receive no less than one-third of the estate. Under these circumstances, the inheritance will significantly shrink.
Foster children and stepchildren do not have the same rights as biological or adopted children. Because of this, parents want to ensure that the foster and stepchildren are mentioned in the will; otherwise, they will not have any inheritance rights to the parents’ property.
What are the inheritance rights of children or grandchildren born outside of marriage?
Children who were born outside of a legal marriage are entitled to the same inheritance rights to their parents’ property. However, the child must prove paternity under Tennessee law, as paternity is not assumed. In regards to grandchildren, the only way that a grandchild is entitled to their grandparents’ estate is if their parent has passed away, or the grandchild is named in the will.
What inheritance rights do half relatives have?
The state of Tennessee recognizes “half-blooded” relatives as full-blooded relatives. Because of this, a half-sibling is entitled to the same inheritance rights as full-blooded siblings. If one of the heirs in an estate is undocumented but living in the United States, Tennessee will not prohibit him or her from their heir status. This also applies to legal residents that have not earned citizenship yet.
What are the inheritance rights of single individuals without children?
For single individuals that do not have children, there are multiple family members who will be assigned as heirs to the person’s estate.
- Surviving parents will inherit the estate of their child who predeceases them if that child is unmarried, and has no children of his or her own.
- Surviving siblings will inherit the estate of their sister/brother who predeceases them if that person is unmarried, has no children of his or her own, and both parents are deceased.
- If an unmarried, childless individual predeceases his or her parents and siblings, then the parents and siblings will split the estate if that child is unmarried, and has no children of his or her own.
- If the person has no living siblings or parents, the person’s estate will be split evenly between any nieces and nephews.
- If there are no nieces or nephews present to receive the inheritance, the estate will be split evenly between the person’s maternal or paternal grandparents.
- If the grandparents are no longer living, the estate will be evenly split between any maternal or paternal aunts and uncles.
Do Tennessee residents have to worry about an inheritance tax?
Tennessee is an inheritance tax-free state. However, there are additional tax returns that heirs and survivors must resolve for their deceased family members. Some examples of tax returns involve final individual federal and state income tax returns, federal estate income tax returns that are due by April 15 of the year following the person’s death, and federal estate tax returns that are due nine months after the person’s death.
At Wagner & Wagner Attorneys at Law, we leverage our years of knowledge and experience to benefit our clients and their families during some of the most difficult times in their lives. If you or a family member has questions about or issues navigating the probate system or wants help in writing a will, speak with an experienced probate lawyer at 423-756-7923, or complete our contact form to schedule a free initial consultation. We offer legal services in Cleveland and Chattanooga.
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