WILLS

We can prepare your will, whether it is simple or complex. A will is important, even for a small estate. In addition to giving property, a will allows you to make decisions about guardians for your children, and other essential decisions affecting your children’s well-being if something were to happen to you. For those with significant assets, the timely preparation of or review of your current will is essential as current estate tax laws may subject you to unnecessary taxes.

ADDITIONAL DOCUMENTS

Most people when working on their wills should consider several other important documents, which we can create for you, including the following:

• Living Will – A living will is an instrument, signed with the formalities statutorily required for a will, by which a person directs that his or her life not be artificially prolonged by extraordinary measures when there is no reasonable expectation of recovery from extreme physical or mental disability

• Health Care Power of Attorney – Generally a power of attorney for healthcare must be in writing and signed by the principal. Unless otherwise stated, the authority is effective only upon a determination that the principal lacks capacity, and it ceases to be effective once the principal regains his capacity. The agent must make decisions in accordance with the principals’ relevant instructions, if there are any, or in the principal’s best interests.

• General Power of Attorney – A power of attorney is an instrument granting someone authority to act as agent or attorney-in-fact for the grantor. A durable power of attorney is a power of attorney that remains in effect during the grantor’s incompetency.

ESTATE TAXES

Estate taxes may seem overwhelming. Without proper planning, estate taxes can eat into significant portions of your estate, leaving your heirs with less than you may have intended. Married couples have an unlimited amount they can pass to other spouse without being taxed. However, there are several methods such as using a Credit Shelter Trust to pass along property using both spouses’ unified credits thereby saving significant taxes upon the death of the second spouse.

FEDERAL ESTATE TAXES

Federal estate taxes are changing each year until they disappear in 2010, and unless Congress acts to extend the law or change it, then the unified credit will drop to 1 million in 2011 and estates above this will be taxed at an astonishing rate of 55%. See the chart below for a year by year look at the unified credit amount and the tax rate. There is an unlimited marital deduction for couples, but the second generation will be hit with tax at a higher than necessary rate without some estate planning.

Timing Your Death
Estate-tax rates and unified credit*

*Amount excluded from the estate tax

STATE ESTATE TAXES

Tennessee, along with several other states, have “decoupled” from the Federal Estate Tax unified credit amount, which is the amount excluded from estate taxes. Decoupled means that the Tennessee exempt amount is at $1 million while the Federal amount is at $2 million in 2006, and the Tennessee amount shall remain there even as the Federal amount increases as set forth in chart above.

On amounts of above the exemption in Tennessee that there is a graduated Tennessee state rate of estate tax starting at 5.5% on $40,000 above the exempt amount and going up to $30,300 plus 9.5% of an amount over $444,000 above the exempt amount as of 2006.
TCA § 67-8-314