Since 2012, Tennessee’s trust code has continued to evolve to help individuals and families protect, grow and efficiently manage wealth for generations to come. Some of the unique trust advantages of Tennessee include:
Directed Trusts
Investment management is the responsibility of a 3rd party designated as “investment direction advisor” or “trust advisor.” This arrangement bifurcates the duties of trust administration and investment management and can be drafted into the terms of a trust upon formation.
State Income Tax Advantage
Non-resident beneficiaries of Tennessee trusts are not subject to tax on dividends and interest.
Dynasty Trusts
Dynasty trusts are created to pass wealth from generation to generation without incurring transfer taxes. The assets placed in the trust (plus any increase in their value over the years) are subject to federal gift tax just once when the assets are transferred to the trust.
Non-Judicial Settlement Agreements
Trustees and beneficiaries may enter into binding agreements with respect to any matter involving the trust without judicial involvement, as the agreement does not violate a material purpose of the trust.
Decanting
Tennessee allows the trustee of certain irrevocable trusts to modify the way a trust is administered by pouring – or “decanting” – trust assets from the original irrevocable trust into a secondary irrevocable trust with revised trust terms.
Unitrust Conversions
A trustee of a Tennessee trust with traditional net income distribution provisions can make adjustments and conversions to allow a current income beneficiary to increase the beneficiary’s returns (to a rate between 3%-5% of the total market value of the trust). Converting a trust to a unitrust with a fixed return provides greater investment flexibility and aligns the interests of the current and remainder beneficiaries.
Asset Protection Trusts
A Tennessee Investment Services Trust (TIST) allows the creation of a trust designed to protect client assets from creditors.
