Tennessee has positioned itself as the premier trust jurisdiction in the Southeast. The state adopted the Uniform Trust Code in 2004, but has modified it significantly to compete with national trust destinations like South Dakota, Nevada, and Delaware. Tennessee offers no state income tax, 360-year dynasty trusts, silent trust provisions, and asset protection trust legislation. The Tennessee Trust Code is found at Tenn. Code Ann. Sections 35-15-101 and following.
This guide applies to both revocable and irrevocable trusts in Tennessee.
Where Tennessee trust law lives
Tennessee's trust statutes are codified in Tenn. Code Ann. Title 35, Chapter 15. The code follows the UTC structure but includes significant Tennessee-specific enhancements. Related provisions include the Tennessee Investment Services Act and the state's asset protection trust statutes. Tennessee has been actively updating its trust laws to attract trust business from other states.
Accounting and notice requirements
Tennessee follows the UTC's standard notice framework with modifications. Trustees must notify qualified beneficiaries within 60 days of accepting trusteeship of an irrevocable trust, providing information about the trust's existence, the trustee's contact information, and the beneficiary's right to request trust terms and accountings.
Annual accounting to qualified beneficiaries is required under the default rules. The trust instrument can modify many of these notice requirements, and Tennessee's silent trust provisions (Section 35-15-813(e)) allow the trust creator to restrict or eliminate beneficiary information rights under certain conditions.
The statute of limitations for breach of trust claims is one year from the date the beneficiary received a report that adequately disclosed the relevant information. If no report is provided, the backstop is five years from the trustee's removal, resignation, or death, or from the termination of the beneficiary's interest (Section 35-15-1005). The one-year window after disclosure is one of the shorter limitation periods in the region.
Trustee duties
Tennessee trustees must administer the trust in good faith, following the trust's terms and the interests of beneficiaries. The standard UTC duties apply: loyalty, impartiality, prudent administration, and prudent investing. Tennessee's directed trust provisions allow trust responsibilities to be divided among different advisors and the trustee, with the trustee protected from liability when following a trust director's instructions.
Compensation follows the trust instrument first, with "reasonable under the circumstances" as the default standard.
What makes Tennessee different
No state income tax. Tennessee does not impose a state income tax on individuals or trusts. The state's Hall income tax on interest and dividends was fully repealed in 2021. Trust income accumulated in a Tennessee trust is not taxed at the state level.
360-year dynasty trusts. Under Section 66-1-202(f), Tennessee trusts can last up to 360 years. This allows for multi-generational wealth planning spanning many generations, making Tennessee competitive with states that have abolished the Rule Against Perpetuities entirely.
Silent trust provisions. Section 35-15-813(e) allows the trust creator to limit or eliminate the trustee's duty to inform beneficiaries and provide accountings. This flexibility lets families create trusts where younger beneficiaries do not learn about the trust's existence or assets until a specified age or event. This is a significant departure from the default UTC notice requirements.
Asset protection trusts. Tennessee allows self-settled asset protection trusts, which can protect trust assets from the trust creator's future creditors under certain conditions. Tennessee's asset protection trust provisions have been expanded over time and are competitive with other leading asset protection states.
No-contest clause enforcement. Tennessee enforces no-contest clauses (also called in terrorem clauses), which can forfeit a beneficiary's interest if they challenge the trust. Some neighboring states, like Florida, do not enforce these clauses.
TrustHelm tip: Tennessee's one-year statute of limitations after a trustee provides an adequate report means that timing matters on both sides. TrustHelm's document vault and reminder system can help trustees track when reports are sent and help beneficiaries monitor when limitation windows open and close.
The most common Tennessee trust mistakes
Not funding the trust. As in every state, the most common mistake is failing to transfer assets into the trust. Real estate, bank accounts, and investment accounts all need to be retitled in the trust's name to receive the benefits of the trust structure.
Assuming silent trust provisions apply automatically. The trust instrument must specifically include language restricting beneficiary information rights. Without these provisions, the default UTC notice requirements apply in full.
Not taking advantage of Tennessee's trust-friendly features. Many Tennessee trusts are drafted using generic templates that do not incorporate the state's distinctive provisions, like directed trust structures, asset protection features, or dynasty trust duration. Working with an attorney who understands Tennessee's specific trust laws can make a significant difference.
Overlooking the one-year limitation window. Trustees who provide regular, detailed accountings with proper notices start the one-year clock. Failing to provide these reports means the longer five-year backstop applies, leaving the trustee exposed to claims for a much longer period.
When to talk to an attorney
You should consult a Tennessee trust attorney if you are considering establishing a dynasty trust or asset protection trust, if you want to include silent trust provisions in your trust instrument, if you are a trustee trying to understand your reporting obligations under a trust with modified notice requirements, or if you are a beneficiary whose information rights have been restricted.
If you need help finding a qualified estate planning attorney in your area, visit TrustHelm's Find an Attorney tool.
This guide is for educational purposes only and does not constitute legal advice. Consult a qualified attorney for decisions about your trust.