Key Takeaways
- A Tennessee living trust allows you to avoid probate and keep your estate private after the grantor’s death.
- Tennessee no longer has estate tax or inheritance taxes, but the federal estate tax may apply to very large estates.
- A revocable living trust lets you manage trust assets during your lifetime and name a successor trustee to take over without a court process.
- To work properly, the trust must be funded by transferring assets into the trust. This includes real property, financial accounts, and other trust property.
- A living trust does not replace all legal documents. Most people still need a will, especially for any assets not titled in the trust.
Proactive estate planning is all about making life easier for the people you care about. Many Tennesseans are surprised to learn that even simple estates may go through the probate process, which can delay access to funds, add court fees, and place family matters in the public record.
A revocable living trust offers a way to manage your assets during your lifetime and transfer them after the grantor’s death without the probate court stepping in.
Whether you’re hoping to keep your affairs private, simplify what happens to your home, or prepare for changes in health, understanding how a Tennessee living trust works can help you make the best possible decisions today, not during a crisis later.
Below is a clear overview of what a living trust does, who may benefit, and how the process works under Tennessee state law.
What Is a Living Trust in Tennessee?
A living trust is a legal arrangement that allows a person (the grantor) to place assets into a trust agreement during their lifetime. The trustee manages the trust property for the benefit of the chosen beneficiaries.
A revocable trust (the most common option) can be changed at any time. An irrevocable trust is permanent and typically used for specific tax or long-term planning goals.
Unlike a will, a living trust can transfer ownership to beneficiaries without going through probate court.
How a Tennessee Living Trust Works
Planning for a trust will likely feel unfamiliar at first, but the steps are easier to follow once you know the basic structure.
Ultimately, a living trust is designed to function during your lifetime and continue smoothly after your passing, without requiring family members to go through the court process.
Revocable vs. Irrevocable Trusts
- Revocable living trust: You keep control during your lifetime and can amend the trust document at any time. It does not remove assets from creditors’ reach.
- Irrevocable trusts: Harder to change and often used for long-term care planning or protection from future claims.
Most people in Tennessee choose a revocable trust to make the probate process simpler for family members later. Additionally, probate costs can reach up to 7% of the estate’s value if not properly handled or avoided. The higher the estate’s net worth, the higher the probate costs could be.
Key Roles
Every trust has a few VIP members, and familiarizing yourself with these roles can make the planning process feel less like a headache. Each person or entity involved has a clear purpose to keep things running smoothly.
- Grantor: Creates and funds the trust
- Trustee: Manages trust assets
- Successor trustee: Takes over at the grantor’s death or incapacity
- Beneficiaries: Receive the trust property
Married couples may select co-trustees or share a joint revocable trust depending on goals and property ownership.
Why Many Tennesseans Use a Revocable Living Trust
For many families, a living trust is less about legal complexity and more about sleeping easy at night. It offers a way to stay in control while reducing stress for loved ones later on.
✔ Helps Avoid Probate
Tennessee probate is public and may involve court fees, delays, and paperwork. A funded living trust allows assets to pass directly to beneficiaries without a court process.
✔ Keeps Finances Private
Probate records are public, which means anyone can view information about an estate. A living trust keeps distributions confidential, protecting both your privacy and your beneficiaries’.
For families who value discretion or wish to prevent conflict, this can be especially reassuring.
✔ Maintains Control During Your Lifetime
A revocable trust lets you retain control of your property even after the trust is created. You can:
- Manage the assets as a trustee
- Add or remove trust property
- Update beneficiaries
- Dissolve the trust if your plans change
Many people appreciate that a trust can adapt as life changes, whether that means a move, a new grandchild, or shifting financial needs. It’s a flexible tool that supports your wishes without locking you into decisions before you’re ready.
Tennessee and Taxes: What to Know
Taxes are a common concern during estate planning, but the rules in Tennessee are more straightforward than many expect. Knowing what does and does not apply can help you relax.
- Tennessee has no estate or inheritance tax.
- The federal estate tax currently applies only to very large estates (worth several million dollars).
- A living trust does not reduce federal estate tax unless paired with advanced tax planning.
Tennessee is also not a Uniform Probate Code state, but state law does provide simplified procedures for small estates.
What Can Be Placed Into a Living Trust?
Not every asset needs to go into a trust, and deciding what belongs inside can feel like one of the biggest questions. The good news is that most property can be included, provided it is properly transferred.
Common trust assets include:
- Real estate and rental property
- Bank and brokerage accounts
- Vehicles and business interests
- Personal valuables
Retirement accounts (such as IRAs and 401(k)s) usually are not retitled into a trust. Instead, beneficiary designations are updated to align with the estate plan.
Funding the trust is the step that gives it power. Without moving assets into the trust, those items may still end up in probate.
Steps to Create a Living Trust in Tennessee
Creating a living trust is a guided process, and you don’t have to figure it out on your own. An attorney will help you understand your options and complete each step, including:
- Choosing the type of trust (revocable or irrevocable)
- Drafting the trust document
- Signing with a notary public
- Transferring ownership of assets into the trust
- Selecting a successor trustee to manage the estate after the grantor’s death
Most people also sign a “pour-over” will to catch any assets not titled in the trust.
What Happens After the Grantor’s Death
When a trust is properly set up, the transition after the grantor’s death is more streamlined and less stressful for loved ones. Instead of waiting on the court process, the successor trustee can begin carrying out instructions right away.
The successor trustee:
- Manages the remaining trust property
- Pays final expenses and taxes
- Distributes assets to beneficiaries based on the trust agreement
In many cases, this avoids the probate process entirely.
FAQs About Living Trusts
1. Does a living trust avoid probate in Tennessee?
If the trust is properly funded, most trust assets pass outside probate court, which can reduce delays and extra costs for your family. While some situations may still require limited court involvement, a living trust often streamlines the process and keeps matters private.
2. Does Tennessee have estate or inheritance taxes?
No. Tennessee eliminated both its estate tax and inheritance tax. However, the federal estate tax may still apply to very large estates, so families with significant assets may want to discuss additional planning options with an attorney or financial advisor.
3. Do married couples need one trust or two?
Some couples choose a joint Tennessee living trust, while others create separate trusts depending on how assets are owned and their family goals. The right approach often depends on remarriage, blended families, or individual property, so it’s helpful to talk through your situation before deciding.
4. Do I still need a will?
Yes. A will directs any property not placed in the trust and names guardians for minor children. Most people also sign a simple “pour-over” will so any remaining assets are transferred into the trust after death.
5. Can creditors reach trust assets?
With a revocable living trust, assets remain accessible to creditors during the grantor’s lifetime because the grantor still controls the property. Only certain irrevocable trusts may offer protection, and those involve different rules and planning considerations.
6. How much does a living trust cost in Tennessee?
Costs vary based on the estate’s complexity, the type of trust, and the assets involved. An attorney can give a more accurate estimate after learning about your goals and what you’d like the trust to cover.
7. Can I name more than one trustee?
Yes. Co-trustees are permitted under Tennessee law if provided for in the trust agreement. Some families choose this option for shared responsibility or to provide support if one trustee becomes unavailable later.
Thinking About a Tennessee Living Trust?
Planning ahead can feel like a great deal to carry, especially when you’re trying to make the right decisions for the people who matter most. A Tennessee living trust can bring more predictability to the future and help your family avoid unnecessary stress when the time comes.
At Elder Law of Nashville, we take the time to understand what matters to you: your estate, your health, and the people you want to protect. When you’re ready, we’ll walk you through your options and help you move forward at a pace that feels comfortable.
Book your consultation today.