Last week’s blog addressed some basics about estate administration options and probate. Some of the things that make probate so challenging for the average person are the number of regulations, the constant changes in the law, and the necessity of dealing with financial institutions which may be reluctant to cooperate for security and legal reasons. This week’s blog covers some of the recent changes to procedures and rules in Tennessee. The good news is that some of these changes make the process easier for those administering estates.
When handling any of the types of property addressed below (or any other property potentially subject to probate), it is important to know the statutes and to be prepared. Because of the high standards of security in the financial industry, resolving issues related to a decedent’s finances can be challenging. Going to the bank or financial institution with a copy of the relevant Tennessee statute, the death certificate, the Will (if any), and other relevant paperwork for the situation can help to expedite the process. Here is a summary of the common issues that may allow probate to be bypassed, including related statutory changes enacted in 2016 by the Tennessee General Assembly:
Safe Deposit Boxes: T.C.A. Section 45-2-905 permits a qualified personal representative of the decedent’s estate to access and remove contents from a safe deposit box held in a banking institution. A copy of the Last Will and Testament is sufficient authorization for the named personal representative to access the safe deposit box. If a personal representative of the decedent’s estate has not requested access to the contents within sixty (60) days following date of death, the financial institution may then permit access by the surviving spouse or any next-of-kin of the decedent for the purposes of inventory and the removal of contents. T.C.A. Section 45-3-514 similarly applies to Savings and Loan Associations.
Real Estate: Muniment of Title is a legal action used to legally transfer clear title of one type of property (for assets such as real estate, a bank account, or a stock account) to a beneficiary. This procedure is appropriate only if the decedent executed a valid Will. If the decedent did not execute a valid Will, a probate attorney may be able to assist in establishing title to real estate parcels with affidavits of heirship.
Vehicles: If a decedent individually owned one or more vehicles at their death, probate is not required to transfer the title if there are no known creditors and all heirs-at-law sign off on the transfer. The TDOR Vehicle Services Division’s required Affidavit of Inheritance form can be found by following this link. In case family members then wish to promptly transfer the title to another relative or friend as a gift or for less than fair market value, TDOR has an affidavit form documenting such transfers.
Final Wages Up to $10k: T.C.A. Section 30-2-103 permits an employee to designate a beneficiary to receive payment for any wages or salary due at the time of the employee’s death. If a beneficiary has not been designated, a sum of up to $10K may be paid directly to the surviving spouse of the decedent or, if none, then to the child(ren) of the decedent as tenants in common.
Small Bank Accounts Up to $15k: T.C.A. Section 45-2-708 and T.C.A. Section 45-3-514 permit banks and savings and loan associations the discretion to pay out accounts in the name of the decedent for total sums that do not exceed $15,000. Payments can be issued at any time after thirty (30) days from the date of the death and should be made to (in order of priority): the personal representative named in any Will, the creditor for funeral expenses, the creditor for expenses of the decedent’s last illness, the surviving spouse, or the next of kin. In 2016 the aggregate accounts balance cap increased from $10,000 to $15,000. Please note that these statutes do not cover credit unions. A credit union may or may not cooperate with settling small account balances pursuant to the banking institutions statute.
Checks Made Payable to Decedent or Decedent’s Estate Up to $10k: T.C.A. Section 45-2-711 and T.C.A. Section 45-3-524 permit banks and savings and loan associations the discretion to negotiate checks for up to $10,000 made out to a decedent or the decedent’s estate at any time after ninety (90) days from date of the death. Payments should be made to, in order of priority: the personal representative named in any Will whether probated or not and whether probate is open or has been discharged; the surviving spouse; or the next of kin. Once again, these statutes do not cover credit unions, which may or may not cooperate with negotiating decedent checks pursuant to the banking institutions statute.
Life Insurance Up to $15k – Proof of Death: T.C.A. Section 56-7-206 allows proof of death for any life insurance policy with a value of $15,000 or less to be more easily furnished by submitting a photocopy of the death certificate. The death certificate copy must be accompanied by a sworn statement from the doctor who signed the certificate or the funeral director who conducted burial services that the certificate is authentic. In 2016 the life insurance policy cap increased from $7,500 to $15,000. This statute is intended to make the insurance payout process easier to navigate. However, there is a gap between this statute and the statutes permitting banks and savings and loan associations to negotiate checks made out to the decedent’s estate only if those checks are for amounts up to $10,000. But in cases where a named beneficiary is listed on the insurance policy, which allows the funds to bypass probate, this statute should make it a little easier for the policy disbursement process to proceed efficiently.
U.S. Savings Bonds Up to $100k: If no survivor is named on savings bonds collectively valued up to $100,000, and the estate of the person who died (or died last if two people are named on the bond) has not been and will not be formally administered through a court, then those seeking disposition of the paper bonds must follow these steps:
- Complete FS Form 5336.
- Sign the form in the presence of a certifying official authorized to administer Signature Guaranteed Medallion stamps. Notary public certification is not acceptable.
- Create a mailing packet with the original bonds, completed FS Form 5336, and proof of death of all deceased persons named on each bond. Mail the package to P.O. Box 0214 at the Treasury Retail Securities Site. For more details about this process or related inquiries, visit the Treasury Direct website.
In addition to all these statutory changes to estate administration law, the Tennessee inheritance tax has been repealed as of 2016. Therefore, it is no longer required to prepare and submit related tax returns. Additionally, no Tennessee Department of Revenue (“TDOR”) Tax Release Letters are required going forward. However, a person may still be required to file certain tax returns with the IRS. Consulting with an experienced CPA or tax attorney is strongly recommended to avoid missteps and delays.
Many nuances are involved with determining the best course of action for accessing and transferring a decedent’s assets. Consulting with an experienced attorney about the individual circumstances is the best way to assess available options, choose the most appropriate course of action, and resolve a loved one’s property issues with minimum expense and delay.