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When someone dies in Tennessee, their property usually has to go through probate court before it can be distributed to family members. This process can be expensive, time-consuming, and stressful for grieving families. Fortunately, Tennessee law provides several alternatives that can help you avoid or simplify probate. Let us explore your options and weigh the pros and cons of each. Our Attorneys at Breeding Carter, PC, can help discuss your estate planning matters to find the best and most informed choice for you and your family.
Joint Ownership: The Simple Solution
One of the most straightforward ways to avoid probate is through joint ownership of property. In Tennessee, when you own property jointly with someone else and one owner dies, the surviving owner automatically gets full ownership of the property. This works for bank accounts, real estate, cars, and other assets.
The Good: Joint ownership is incredibly simple to set up and manage. You just add someone’s name to your accounts or property deeds. When you die, there is no court involvement needed, and the survivor simply becomes the sole owner. This saves time, money, and hassle for your family.
The Not-So-Good: Once you add someone as a joint owner, they have equal rights to the property right away. They can withdraw money from joint bank accounts or even sell their share of jointly-owned real estate. You also lose some control over who ultimately inherits the property, since it automatically goes to the surviving joint owner regardless of what your will says.
Payable-on-Death Accounts: Banking Made Easy
Tennessee allows you to set up payable-on-death accounts at banks and credit unions. With these accounts, you maintain complete control during your lifetime, but the money automatically goes to your chosen beneficiaries when you die.
The Good: POD accounts are easy to set up. You just fill out a form at your bank. You keep full control of your money while you are alive, and your beneficiaries get the funds quickly after your death without any court involvement. If you name multiple beneficiaries, they will share the money equally unless you specify otherwise.
The Not-So-Good: This option only works for bank accounts and retirement accounts. You cannot use it for real estate, cars, or personal belongings. Also, if all your beneficiaries die before you do, the account will end up in probate anyway.
Small Estate Procedures
Tennessee recognizes that full probate proceedings might be overkill for smaller estates. The state offers simplified procedures that make the process faster and less expensive, though you will still need to work with the court system.
The Good: These procedures are designed to be as simple and inexpensive as possible. You will spend less time and money compared to full probate, while still getting official court approval for the property transfer.
The Not-So-Good: You are still dealing with court paperwork and procedures, just simplified ones. There are also limits on which estates qualify for these streamlined processes. Currently, the value of the estate must be less than $50,000 in order to qualify, so larger or more complex estates will still need full probate.
Trusts: A Flexible Probate-Avoiding Alternative
Another powerful tool for avoiding probate in Tennessee is the use of a trust. When you create a trust, you transfer ownership of your assets into the trust during your lifetime. The trust then “owns” the property, and upon your death, your chosen successor trustee distributes the assets according to the instructions you have set out—without the need for probate.
The Good: Trusts give you more flexibility and control than other probate-avoidance tools. With a revocable living trust, you can change your mind at any time—amend, add, or remove assets. You also retain control of your property while you are alive by serving as your own trustee. At death, your successor trustee can step in and manage or distribute your assets quickly and privately. Trusts can also help with complex family situations (like second marriages, blended families, or beneficiaries with special needs) where a simple joint account or POD designation might not provide enough protection.
The Not-So-Good: Trusts require more upfront effort and cost to set up. You must also “fund” the trust—meaning, you have to re-title assets (like your home or bank accounts) into the trust’s name. If assets are left out, they may still require probate unless you also have a “pour-over” will. For small or straightforward estates, the added cost of a trust may not make financial sense.
Making the Right Choice
Each probate alternative has its place, and the best choice depends on your specific situation. Joint ownership works well for married couples and close family members who trust each other completely. POD accounts are perfect for ensuring your bank accounts go to the right people quickly. Small estate procedures help when you need some court oversight but want to keep things simple.
The key is planning ahead. These alternatives work best when you set them up while you are healthy and thinking clearly. Consider your family dynamics, the types of property you own, and your goals for passing on your assets. With proper planning, you can save your loved ones significant time, money, and stress during an already difficult period.
Breeding Carter, PC is ready to help you make the best plan for you and your family, and avoid paying for costly mistakes later or not having the right plan or documents in place when those life-changing events occur. When those tragic moments happen in our life, having peace mind that a proper plan has already been put in place takes away some of the stress and allows for some peace of mind.
If you would like to speak with one of our attorneys to see how our firm could help you, please fill out this form.