Tennessee Law on a Living Trust

By Wayne Thomas

A living trust can be used to safeguard your property during your lifetime and help avoid probate at death. In Tennessee, it is common for the creator of a living trust to oversee the distribution of the trust's funds and receive trust income during his lifetime. Knowing the requirements for creating a living trust and the circumstances in which it may be modified will ensure that your trust operates according to your wishes in Tennessee.


A living trust is a trust established during the lifetime of the creator, referred to as a settlor in Tennessee. The person appointed to oversee the trust is known as the trustee, and the individuals receiving under the trust terms are referred to as beneficiaries. The trust can be either revocable or irrevocable. Revocable trusts can be withdrawn or modified by the settlor at any time; irrevocable trusts are not subject to modification or withdrawal, absent certain conditions outlined in state law. Upon the death of the settlor, a revocable trust becomes irrevocable.


A living trust can be established in Tennessee by transferring title to property from the settlor's name to the trust. The state will recognize trusts created orally without a written instrument if the settlor's intent to create the trust can be shown by clear and convincing evidence. Trusts must be established voluntarily and not be the product of coercion or the undue influence of another person. The types of property that can be used to fund a trust are diverse and includes real estate, automobiles, stocks, business interests and other personal property.

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An irrevocable living trust may be modified or terminated in Tennessee under certain circumstances. If the terms of the trust become contrary to public policy or unlawful, you may petition the court to have it dissolved. An example might be a trust set up to support the beneficiaries' drug addiction. Another ground for modification or termination is based on consent, provided that all of the beneficiaries agree and the settlor does not object. This is true even if the material purpose of the trust has not been achieved, such as agreeing to dissolve a trust that was created to support your education while you are still in school.


A living trust might be affected by the property division aspect of a divorce proceeding in Tennessee. A court is required to divide all property that was acquired during the marriage, unless it can be shown to be the separate property of one spouse. If a trust was created before the marriage, it is considered separate property and not subject to property division. If created during the marriage, it will most likely be subject to division unless you can provide evidence that you and your spouse intended it to be treated as separate property. This might be in the form of a valid prenuptial agreement covering property that was used to establish the trust while you were married.

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