Living trust Tennessee: how it works and who it suits

What a trust in Tennessee is

A trust is set out in a deed and is not a company. The settlor transfers assets to a trustee, who holds legal title and runs them for the beneficiaries according to what the deed says.

A living trust in Tennessee usually means a trust made during the settlor’s lifetime rather than by will. It is usually revocable, and the statute’s creditor rules do not apply to it. The investment services trust is a separate tool.

The Tennessee Investment Services Act of 2007 sets rules for a qualified disposition into an investment services trust (source: Tennessee Code: Tennessee Investment Services Act of 2007, chapter 16).

Most families prefer a discretionary trust, where the trustee decides who receives what and when. The settlor writes a letter of wishes to steer those choices and can revise it; it does not bind the trustee.

A trust cannot hide anything. Banks, tax authorities and the trustee itself must be told who is behind it, and an unclear picture ends in a refusal to act.

The real benefit is that the arrangement carries on. A professional trustee keeps following the deed once the settlor has stepped back, fallen ill or died.

Who sets up trusts in Tennessee

This page is written for founders, business owners and families with assets in more than one country, many of whom already have a link to the United States.

Typical goals include holding a portfolio or company shares for several generations, keeping the settlor in the pool of possible beneficiaries, or placing assets in a framework that the family’s advisers already know.

Living abroad does not stop you from beginning. The trustee still has to verify who you are.

If we have not met in person, we ask for one more confirmation, such as a second set of documents or a first payment from an account in your own name.

If you also need a will, a Tennessee lawyer can align it with the trust deed.

A trust that already exists can keep its current trustee while we coordinate the papers and reporting.

If a trust already exists, our trust administration service shows what administration covers once we are appointed.

Features families ask about

Four features come up most often. Each is a tool, not a result, and each point below carries its source.

• Creditor limits. Claims against a trust of this kind lapse 18 months after a qualified disposition (source: Tennessee Code: Tennessee Investment Services Act of 2007, chapter 16).
• Burden of proof. A creditor must prove intent to defraud by clear and convincing evidence.
• Exceptions. Overdue child support, overdue alimony and debts under a marital property division can still reach the trust.
• Long duration. A trust may last up to 360 years (source: Chambers: Tennessee Trust Bill Takes Effect and Makes Important Changes to the State’s Trust Laws).

Forced heirship, legitime and elective share claims are not among the exceptions. How a court in your own country treats a Tennessee trust is a question for your lawyer there.

The law and features page sets out each rule and its source.

What the trustee does

A trustee must follow the deed, act for the beneficiaries and keep proper records. In practice the work breaks down as follows.

• holding title to the assets and keeping them separate from its own;
• trustee meetings with minutes for each distribution or major decision;
• accounts and an asset report sent to the settlor;
• a periodic refresh of identity checks on the people connected to the trust;
• collecting the self-certification forms used for tax reporting.

For an investment services trust, the Code requires a qualified trustee: a Tennessee-resident individual or a supervised entity Tennessee law allows (source: Tennessee Code: qualified trustee and trust instrument, chapter 16).

Tennessee also has a section on private trust companies, which a family can use as its own trustee (source: Tennessee Code: Private Trust Companies, chapter 2). Your lawyer confirms the rules before one is formed.

Documents and steps to start

At the start the trustee asks for identity papers, evidence of the origin of your money and wealth, and the facts that go into the trust documents.

A fixed sequence applies: enquiry, identity checks, structure design, drafting, signing, any filings and finally funding. Each stage is described in the step-by-step guide.

A Tennessee law firm drafts the deed, with your letter of wishes alongside it. You review the draft with your own lawyer.

Speed depends on how complete your documents are and on third parties, namely the law firm, the trustee’s own checks and your bank.

Cost in brief

Cost comes in three parts: the trustee’s set-up work, the law firm’s drafting and third-party charges for things like company formation or tax advice. Trustee and administration fees then recur each year.

We publish the set-up fee for a standard trust; annual administration, event-based work and third-party charges are quoted after we review your case. The cost guide explains what shapes the total, and you can ask for a quote and a start date.

Identical assets do not guarantee identical estimates. The structure, the asset types, how many beneficiaries there are and which countries are involved all change the amount of work.

Tax and reporting in brief

Tax follows residency, and the trust, the settlor and each beneficiary can be resident in different places. Your tax adviser confirms the position for your case.

At federal level, a non-US person’s estate files Form 706-NA when US-situated assets exceed the IRS threshold at death (source: Internal Revenue Service: Some nonresidents with U.S. assets must file estate tax returns).

The trustee gathers tax residence forms from the settlor and other controlling persons, and keeps the records that banks need.

Facts we reviewed, with source and date

The Internal Revenue Service fact comes from the agency site.

The Tennessee facts come from a copy of the Code and a law firm’s commentary on a trust bill, each cited where it appears. Your lawyer confirms how it applies to your deed.

Choosing between Tennessee and another place

What chiefly separates one place from another is who serves as trustee and from where. Each guide explains how; the jurisdictions hub lists every place, all open for new trusts.

Beyond that, weigh three things:

1. Where your family and assets are. A trustee close to the business and the bank is easier to work with.
2. Which place your advisers know best. Their familiarity with the law shortens drafting and review.
3. How much paperwork you want in one hand. One coordinating team means fewer hand-offs.

Leave tax and legal comparisons between places to your advisers. The outcome follows your residence and your assets, not the place by itself.

Use the side-by-side comparison tool to put Tennessee beside another place. You can also read the set-up guide first.

Tell us what you are planning and request a quote to start. To read about guarding assets against claims in general, see wealth structuring and asset protection.