Updated January 25, 2024
The Tennessee living trust is a legal document created with the purpose of transferring ownership of one’s assets into an entity to avoid probate after death. Aside from avoiding probate, a living trust allows a Trustee to manage the Grantor’s (person who created the trust) assets so they maintain use of these assets during their lifetime, even if they become mentally incapacitated. A living trust has similarities to a will, such as naming Beneficiaries to which the Grantor’s assets will be distributed upon death, but the benefit of a living trust is the ability to distribute assets to the beneficiaries without going through the probate court process. Tennessee does not use the Uniform Probate Code, therefore, probate procedures are lengthy and costly. Bypassing the probate process means the Beneficiaries will gain access to their inherited funds/property/estate in a more timely manner. Furthermore, the contents of a living trust are private and there will be no public record of the assets or the distribution of these assets once the Grantor dies.
Laws – Title 35, Chapter 15 (Tennessee Uniform Trust Code)
Will (Last Will and Testament) – Assets not included in a living trust should be written in a Grantor’s will so the heirs mentioned can claim their inheritance after the Grantor’s death. All assets in a will must go through the probate process in Tennessee.
Types
Irrevocable – Once created and signed, a Tennessee irrevocable trust cannot be altered or revoked, except in very special circumstances. The major benefits to an irrevocable trust are the minimizing of estate taxes and the protecting of a Grantor’s assets from creditors and potential lawsuits.
Revocable – The contents of a revocable trust can be amended, changed, or reclaimed at any point during the Grantor’s lifetime. Due to the dynamic nature of a revocable trust, all assets transferred into the trust are still considered, in some form, the Grantor’s personal property; therefore, these assets are subject to creditor and estate tax claims.
Individual Roles
The four (4) roles attached to a living trust are as follows:
Grantor – Individual who creates the trust.
Trustee – Individual in control of the trust during the Grantor’s lifetime. More often than not, the Grantor will appoint himself as the Trustee.
Successor Trustee – Individual in charge of the distribution of assets in the living trust upon death or mental incapacitation of the Grantor.
Beneficiaries – Individuals who have been selected to inherit the assets placed in the living trust upon the Grantor’s death.
How to Make a Living Trust in Tennessee
In accordance with § 35-15-402, a Tennessee living trust is only established if the Grantor is of sound mind and has not been coerced or unduly influenced by another party into creating the trust. A Trustee (typically same as Grantor) and Successor Trustee must be appointed and Beneficiaries must be mentioned in order for the assets within the living trust to be distributed after the death of the Grantor. Signing the living trust in front of a notary public will help avoid any legal issues in the future, but is not required. Next, the Grantor should transfer any real estate, automobiles, stocks, business interests, or personal property into the living trust. Any assets not placed in the trust should be written down in the Grantor’s will.
Real Estate – The transfer of real estate property may be done through a general warranty deed or a quitclaim deed. Check with an attorney to figure out which deed suits your particular situation.
Stocks and Bonds – Transferring stocks or bonds into a living trust can be a complicated process, but keep in mind that in most cases an FS Form 1851 must be completed and signed. In other cases, certification is accomplished by completing an IRS Form 1-9. It’s best to consult an attorney or financial advisor when reissuing stocks and bonds to a trust.
Motor Vehicles – To transfer a vehicle to a living trust, the deed to the vehicle must be signed over to the trust. Consult the Tennessee Bill of Sale page to download the necessary forms.
Do I Need a Living Trust in Tennessee?
Individuals with large estates or property in multiple states could benefit from creating a living trust. A living trust will avoid the probate process (or processes if property is owned in multiple states) after the Grantor dies, which could save time and money. Maintaining privacy is another advantage of a living trust as the assets within the trust will be distributed by the Successor Trustee to the Beneficiaries outside of a courtroom. However, for those with small estates worth less than $50,000, a faster and less expensive procedure is offered in Tennessee. These individuals can avoid probate without creating a living trust by completing a Tennessee Small Estate Affidavit.