Après la signature de votre trust du Tennessee

What signing did, and what it did not do

A trust is created only if the settlor has capacity, indicates an intention to create it, names a definite beneficiary (or a charitable purpose, an animal's care or another purpose the statute allows), gives the trustee duties to perform, and is not the same person as the sole trustee and the sole beneficiary (Tenn. Code Ann. § 35-15-402(a)). The capacity to create, amend, revoke or add property to a revocable trust is the capacity to make a will, and a trust existing on or executed after July 1, 2004 need not be executed with a will's formalities to dispose of property at death (Tenn. Code Ann. § 35-15-601).

What the signing did not do is move anything. A lifetime trust is valid as to the assets it holds to the extent they have been transferred to it (Tenn. Code Ann. § 35-15-402(d)). Until the deeds are recorded and the accounts retitled, the instrument describes a plan the property has not joined, and whatever is still outside it at death passes by the will or by intestacy, through the probate court.

A trust created under an instrument executed on or after July 1, 2004 is revocable unless its terms expressly provide that it is irrevocable (Tenn. Code Ann. § 35-15-602(a)). That presumption does not reach an instrument executed before that date; its own terms, and a licensed Tennessee attorney of your choosing, answer the question for it.

Funding: real estate

Real property joins the trust by a deed to the trustee, recorded. The statute names the recording of the deed as the transfer, and a recital in the trust instrument that the settlor assigns, holds or has delivered the property does not transfer an asset capable of registration (Tenn. Code Ann. § 35-15-402(d)(1)). A deed of conveyance is a writing the register of deeds records (Tenn. Code Ann. § 66-24-101(a)(4)); keep the recorded deed, or a copy showing the book and page, with the trust instrument, because a successor proves the trust's title from it.

A deed into the trust is a conveyance like any other. A mortgage, a homeowner's policy and a title policy each have terms of their own about a transfer, and a lender or insurer may need to be told; read those terms, or ask the licensed Tennessee attorney who prepares the deed, before it is signed. A refinance or a sale later can take a parcel out of the trust, and only a new deed puts it back.

When a trustee of a trust that holds real estate later resigns or is removed, the change is recorded where the land lies: the court's order, or an acknowledged memorandum of it, identifying each parcel (Tenn. Code Ann. § 35-1-101(a)). Without a court order, the departing trustee records an instrument reciting the resignation or removal, naming the successor and identifying each parcel; if the departing trustee has not done so within 30 days, the successor records it (Tenn. Code Ann. § 35-1-101(b)).

Funding: accounts, businesses, vehicles and everything else

An asset capable of registration — stocks, bonds, bank and brokerage accounts and the like — joins the trust when its registration is completed in the name of the trust or the trustee (Tenn. Code Ann. § 35-15-402(d)(1)); the institution's own form does it, usually with a certification of trust. An asset that is not capable of registration joins by a recital of assignment describing it (Tenn. Code Ann. § 35-15-402(d)(2)). A vehicle is titled under its own law, and an interest in a closely held company follows the company's documents — the operating agreement, the bylaws, any buy-sell terms — as well as the assignment.

Tangible personal property — furniture, jewelry, art, collections, but not money, evidences of indebtedness, documents of title, securities or property used in a trade or business — can be assigned to the trust, during life or after death, by delivery of a written instrument the transferor signs that identifies the property in general terms and specifically identifies the trust; it reaches property owned when it is signed and property acquired later (Tenn. Code Ann. § 35-15-402(d)(3)(A), (B)). The assignment can be revoked or amended by a writing delivered to the trustee, including by the transferor's will; if none is delivered within six months after the death, the trustee may presume that none exists (Tenn. Code Ann. § 35-15-402(d)(3)(B)).

Beneficiary designations — life insurance, retirement accounts, payable-on-death and transfer-on-death registrations — pass outside both the will and the trust, to whoever the designation names. Statutes protect some of these assets from creditors (Tenn. Code Ann. §§ 26-2-105(b), 56-7-203), and the choice between naming a person, the trust or the estate carries tax consequences; a licensed Tennessee attorney or a tax adviser of your choosing answers it for your plan.

The written list for tangible personal property

A revocable trust that becomes irrevocable at the settlor's death may refer to a written statement or list that disposes of items of tangible personal property the trust does not otherwise specifically dispose of — other than money, evidences of indebtedness, documents of title, securities and property used in a trade or business (Tenn. Code Ann. § 35-15-605(a)(1)).

To be effective as evidence of the intended disposition, the writing is in the settlor's handwriting or signed by the settlor, is dated, and describes the items and the beneficiaries with reasonable certainty. It may be prepared before or after the trust is signed, it may be altered later if the settlor signs and dates the alteration, and it may have no significance apart from its effect on the trust's dispositions (Tenn. Code Ann. § 35-15-605(a)(2)). Where more than one effective writing exists, the most recent writing or alteration revokes whatever is inconsistent in the earlier ones (Tenn. Code Ann. § 35-15-605(a)(3)).

Keep the list with the instrument and tell the successor where it is: a trustee who distributes an item to the apparent beneficiary without actual knowledge of the list is not liable for it, and has no duty to recover the item (Tenn. Code Ann. § 35-15-605(b)).

The certification of trust (§ 35-15-1013)

Banks, brokers and title companies ask for proof that the trust exists and who may act for it. In place of a copy of the instrument, the trustee may furnish a certification of trust, signed by the trustee or trustees with signatory authority and attested by a notary public (Tenn. Code Ann. § 35-15-1013(a)). It states the trust's existence and the date it came into existence; the settlor, the acting trustee and the named successors, or that none is named; the trustee's administrative and managerial powers; whether the trust is revocable and who holds a power to revoke it; the signature authority among several trustees; the conditions for a successor's succession, or that a third party may rely on a successor without proof of it; the identification number where the transaction needs it; how trust assets should be titled; and that, to the trustee's knowledge, the trust has not been revoked, modified or amended in a way that makes the certification incorrect (Tenn. Code Ann. § 35-15-1013(a)(1)–(9)).

It need not contain the dispositive provisions (Tenn. Code Ann. § 35-15-1013(b)). A person who relies on it without actual knowledge that it is incorrect is not liable to anyone for so acting (Tenn. Code Ann. § 35-15-1013(d)); a third party may still ask for more information to clear up an ambiguity or an inconsistency, and need not contract with the trustee at all (Tenn. Code Ann. § 35-15-1013(f)). Sign one at funding and keep it with the original.

Tell your successor trustee, and leave a map

Name a successor, and an alternate. A vacancy that has to be filled — where no trustee remains — is filled by the person the terms designate, then by a person the qualified beneficiaries appoint unanimously, then by the court (Tenn. Code Ann. § 35-15-704(b), (c)). A successor who lives outside Tennessee may serve (Tenn. Code Ann. § 35-50-107(a)(2)(D)), after appointing the Secretary of State as agent for service of process before acting (§ 35-50-107(b)(2)).

The successor accepts by the method the terms provide or, where none is exclusive, by accepting delivery of the property, exercising powers or performing duties; a designated trustee who does not accept within a reasonable time after knowing of the designation and the trust's assets is deemed to have rejected the office (Tenn. Code Ann. § 35-15-701(a), (b)). Without accepting, the successor may act to preserve the property, sending a rejection within a reasonable time if declining, and may inspect it (Tenn. Code Ann. § 35-15-701(c)). A successor who can find the papers decides faster; leave a map:

• Where the signed original and every amendment are kept.
• The recorded deeds, and the county where each parcel lies.
• Each account: the institution, how it is titled, and whether it carries a beneficiary designation.
• The certification of trust, the tangible-property assignment and the written list of items.
• The will, the durable power of attorney and the advance directive, and who holds each.
• The people to call: the alternate successor, the beneficiaries, and the licensed Tennessee attorney of the settlor's choosing, if there is one.

Keep it current, by its own method

Amend or revoke by substantial compliance with the method the terms provide. Where the terms provide none, or do not make theirs exclusive, a later will or codicil that expressly refers to the trust or specifically devises property that would otherwise have passed under it does it, as does any other method manifesting clear and convincing evidence of the settlor's intent (Tenn. Code Ann. § 35-15-602(c)). Where two settlors created or funded the trust, each may revoke or amend as to the portion attributable to that settlor's contribution, and community property follows its own rule (Tenn. Code Ann. § 35-15-602(b)).

An agent under a power of attorney may revoke, amend or direct distributions only to the extent the trust or the power expressly authorizes, and a conservator or guardian only where the instrument specifically grants the power (Tenn. Code Ann. § 35-15-602(e), (f)). A trustee who does not know of a revocation or an amendment is not liable for acting on the trust as it stood (Tenn. Code Ann. § 35-15-602(g)), so deliver each amendment to the trustee and keep a copy with the original.

Review the plan after a marriage, a divorce, a birth or a death, a move, a sale or a refinance: each can leave the trust's terms, its titles and the beneficiary designations pointing different ways. A divorce's effect on a will is set by statute (Tenn. Code Ann. § 32-1-202); its effect on a trust is a question the instrument and a licensed Tennessee attorney answer. Registration with the Secretary of State is optional: the trustee of a trust administered in Tennessee may file a confidential statement with the items the statute lists and a $250 fee (Tenn. Code Ann. § 35-15-113), and no trust's validity depends on it.

Incapacity

A revocable trust names who manages the property if the settlor cannot; the terms decide how incapacity is determined, and a provider may release information to a physician or an attorney whose affidavit says it is needed to determine a capacity an instrument turns on (Tenn. Code Ann. § 35-50-125). An advance directive for health care (Tenn. Code Ann. § 68-11-1803) and a durable power of attorney cover what the trust does not; the agent reaches the trust only as far as the trust or the power expressly allows (Tenn. Code Ann. § 35-15-602(e)).

What happens at your death

The trust becomes irrevocable. The successor accepts (Tenn. Code Ann. § 35-15-701) and, within 60 days after the acceptance and the funding, notifies the current income beneficiaries, the vested ultimate remainder beneficiaries and the nonfiduciary power holders that the trust has been established (Tenn. Code Ann. § 35-15-813(b)). The trust answers for the settlor's debts, the costs of administration and the funeral expenses (Tenn. Code Ann. § 35-15-505(a)(6)); the contest window runs two years from the death or 120 days from a notice (Tenn. Code Ann. § 35-15-604); the trustee distributes within a reasonable time with a reasonable reserve (Tenn. Code Ann. § 35-15-817(a)). Tennessee levies no inheritance or estate tax on a decedent who dies in 2016 or later (Tenn. Code Ann. § 67-8-318).

The mistakes that follow a signing

The same short list turns up when a successor opens the file.

• The trust was signed and never funded: the accounts are still in the settlor's name, so they pass by the will or by intestacy, through the probate court.
• The instrument recites that the settlor assigns the house and the accounts, but no deed was recorded and no registration changed — and for an asset capable of registration a recital alone transfers nothing (Tenn. Code Ann. § 35-15-402(d)(1)).
• A refinance or a sale took the house out of the trust, and no deed put it back.
• A beneficiary designation names someone the plan no longer means to benefit.
• An amendment was made by a method other than the one the terms make exclusive (Tenn. Code Ann. § 35-15-602(c)).
• The list of personal items is unsigned or undated, so it is not effective under the statute as evidence of the intended disposition (Tenn. Code Ann. § 35-15-605(a)(2)).
• Nobody told the successor where anything is.

If you have not signed yet, or need a change

TrusteeClear does not draft trusts, wills, deeds or amendments and does not review yours; it organizes the record for the trustee's side of the story. Questions about your own plan, a change to it, or a funding step that is not routine are for a licensed Tennessee attorney of your choosing.