Should Most Tennessee Trusts Last Indefinitely?

Many of our clients make their first wills in order to name guardians and trustees for their minor children. Traditionally, trusts for minors contained a scheduled termination date, providing that the entire trust would distribute when the beneficiary reached a certain age or in installments over time. However, the divorce and creditor protections afforded by Tennessee trust law raise the question, should any trust include an automatic termination date?

Turning Virtual Impossibility into Tangible Reality

Ingrid, a 42-year-old, single mother of three, died unexpectedly last month, and her adult daughter Annette has hired you to help her with the intestate administration. You learn from Annette that Ingrid comfortably supported herself and her children from advertising revenue generated by her parenting and motherhood blog site, neverendingdiapers.com, an associated Twitter account, and a YouTube channel about the joys and challenges of parenting.

Estate planning in Tennessee has changed significantly since the beginning of the millennium. Federal estate and gift tax exemptions have grown dramatically, and Tennessee has repealed its inheritance and gift taxes. At the same time, fewer clients today are confident that their wealth will multiply several times throughout their lives. These two factors combine to make transfer tax planning a more limited need for Tennessee residents, and fewer trusts are created with a transfer tax motive. Some assume trusts will no longer have a prominent role in estate plans.

Serving as a fiduciary is not for the faint of heart. The recent Meyers case,[1] interpreting the statute of limitations for claims of breach of duty under the Tennessee trust code, shows how trustees can fulfill their obligations to beneficiaries and reduce the likelihood of a lawsuit.

TBE or Not TBE, That Is the Question

Marriage is a matter of more worth
Than to be dealt in by attorneyship. — 1 Henry VI 5.5.50-1

Marriage is sacred in the eyes of Tennessee law, so much so that it has its own forms of property rights, including tenancy by the entirety (TBE), available only to spouses.[1] Among TBE’s unique characteristics is that it may not be severed unilaterally by one spouse (or one spouse’s creditors). The Tennessee Court of Appeals recently applied that principle in Estate of Fletcher, reaching a result that is both logical and equitable, but perhaps surprising to some.[2]

First you forget names; then you forget faces; then you forget to zip up your fly; and then you forget to unzip your fly.

— Attributed to Branch Rickey

Death is the destiny of everyone; the living should take this to heart.

— Ecclesiastes 7:2

No one here gets out alive.

— The Doors

Gooooood morning, Tennessee! Renowned actor and comedian Robin Williams, for whom living was an awfully big adventure and who will be remembered longer than many dead poets, passed away in 2014. His talent made him wealthy, so in 2012 he rushed to august professional advisors, including a wizard of an estate planning lawyer who composed a sophisticated revocable trust to dispose of a portion of Williams’ estate.[1]

“Close don’t count in baseball. Close only counts in horseshoes and hand grenades.”
– Hall of Fame baseball player Frank Robinson[1]

When is a will not a will, even when the testator, witnesses and drafting lawyer intend it to be a will? When the statutory requirements for execution are not strictly followed. The Tennessee Court of Appeals recently reiterated that point in In re Estate of Morris.[2] The opinion should lead lawyers to check their will forms and clients’ existing wills to make sure they comply with the statute of wills.

There are planning options to protect inherited retirement accounts from the beneficiaries’ creditors.

At the end of the third quarter of 2014, an estimated $7.3 trillion was held in Americans’ individual retirement accounts (IRAs), almost 11 percent of all household financial assets in the United States.[1] A recent United States Supreme Court ruling means that, without good estate planning, a significant portion of that wealth might not be protected from creditors when it passes to beneficiaries at the owners’ deaths.

How many times per day do you see something like this?

Required Circular 230 Tax Advice Disclosures: