Where There's a Will

3 Developments Enhance Tennessee’s Drive to Be a Top Trust Situs

In the last two decades, Tennessee trust laws have changed dramatically.1 Some changes were intended to give Tennessee residents greater flexibility, while others were designed to attract money from out-of-state grantors.2 As a result, Tennessee is often ranked among the top states for trust laws.3

Three recent developments enhance Tennessee’s reputation, both for Tennessee residents and for nonresidents considering creating a trust situs in Tennessee.

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Domestic Assets Protection Trusts in Light of 'Toni 1 Trust v. Wacker'

A spendthrift trust can protect trust corpus from claims by beneficiaries’ creditors. It took until the late nineteenth century for all states to accept spendthrift trusts created by a third party. No state approved a spendthrift trust created by a settlor for his own benefit. In fact, one of the leading cases to that effect was from Tennessee.1

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Unilateral Withdrawals from a Joint Account:  Equity Versus Certainty

In his seminal book, The Common Law, future Justice Oliver Wendell Holmes Jr. famously wrote: “The life of the law has not been logic: it has been experience.” This aphorism has endured, influencing one legal commentator to remark as follows:

Society creates law and law has to respond to society. Not slavishly and it can always guide society and you have to make choices and in the end someone’s going to decide in our society, we hope in some sort of democratic, small “d” manner what’s good. But you have to choose. You have to choose and of course the most horrible, difficult thing is to take responsibility and choose. And that’s what law is all about.1

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Changing a Life Insurance Beneficiary in Violation of an Injunction

In the recent Tennessee Supreme Court opinion issued in June 2018, Coleman v. Olson, the court dealt with the issue of an alteration of the beneficiary of a life insurance policy during the pendency of a divorce. Family law practitioners should take note of this case as it provides the clearest guidance available when dealing with a similar issue going well beyond the mere statutory language in its analysis of such situations.

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OBIT Power: The One Clause You Need (or Need to Add) in Every Irrevocable Trust

The mindset of estate planners has long been to vigorously guard against any estate tax inclusion. In 2013, Congress’s decision to make the $5 million federal estate tax exemption both permanent and portable between spouses rendered such purpose largely moot for all but a tiny percentage of Americans. Moreover, the federal estate tax exemption for 2018 through 2025 has doubled again, to $11,180,000 per person, or $22,360,000 per married couple, indexed for inflation, so that the percentage of Americans exposed to federal estate tax is minuscule indeed.

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Shifting the Paradigm

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?

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Planning for and Administering Digital Assets

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.

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We’re All Going to Die (and Other Happy Thoughts of an Estate Planner Turning 50)

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

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Community Property Trusts

Ah, Alaska! Like its melting glaciers, its trust law, heated by an unabashed desire to promote Alaskan trust business, has largely dissolved into a lake of reform. Tennessee has fished this lake and brought home catch. Limited by the rule against perpetuities? Abolish it![1] Bothered by creditors reaching self-settled trusts? Shelter them![2] In these triumphs of trust economics, one might wonder whether state legislators have adequately weighed the long-term social costs and benefits of such radical innovations.[3]

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