New Legislation Continues to Affirm Tennessee as a Top Trust-Friendly State

May 30, 2023 | Understanding Trust Administration

Updates to the Tennessee Trust and Probate Codes Provide Options to Beneficiaries

The Governor of Tennessee recently signed into law SB 492/HB 1185—a bill containing several revisions to Tennessee’s Trust Code.

Over the past decade, Tennessee has significantly elevated its position as a desirable jurisdiction to situs a trust and this recently enacted legislation represents the combined effort of banking and trust practitioners to ensure Tennessee maintains this advantage.

The Tennessee Bankers Association Trust Legislative Committee meets annually to review Tennessee’s trust laws and determine what updates are needed for Tennessee to remain a leading trust jurisdiction and to enable trust administrators to better serve their clients. Runcie Clements, Chief Legal Officer & General Counsel and Leslie Malkiewicz, Vice President & Director, Legal, Senior Fiduciary Counsel at Cumberland Trust are active members of this collaborative committee.

“I and other members of our legal team have been fortunate to be a part of the Legislative Committee,” said Clements. “The Trust Legislative Committee is made up of some of the top legal minds and trust company professionals from across the state of Tennessee. The committee’s collective knowledge of the Tennessee Trust Code is tremendous as is its understanding of how our day-to-day practices are shaped by these laws,” said Clements.

Clements added, “as Cumberland Trust administers trusts for our clients, we maintain a consistent focus on the governing law. As we encounter unique challenges in trust administration each year, we take note of how Tennessee’s trust code may be made more internally consistent or better tailored to address various responsibilities of trust administration. We also note positive aspects of other states’ trust laws that can be incorporated into Tennessee’s trust laws to keep Tennessee at the forefront of the best state jurisdictions.”

Some of this new legislation includes technical corrections to wording and clarifications to amendments approved in previous years, while other revisions are more significant. However, collectively, they showcase a primary goal to support practical statutory framework for trust administration.

Representation of Beneficiaries

The bill made notable improvements to the representation of beneficiaries under T.C.A 35-15-303, including clarifying that when a trust is the beneficiary of another trust, the “beneficiary trust” may be represented by the trustee or the qualified beneficiaries or who would be qualified beneficiaries of the beneficiary trust if the beneficiary trust were then in existence. Moreover, a parent or spouse of an incapacitated adult who has assumed responsibility for the adult, may represent and bind the incapacitated adult if no conservator or guardian has been appointed and no agent has authority to act with respect to the matter in question.

In addition, while Tennessee’s Trust Code previously allowed for a person to be able to represent and bind that person’s minor or unborn descendant, however, this recent revision to the statute now creates a hierarchy for such representation if a disagreement or material conflict of interest arises between persons seeking to represent the same minor or unborn descendant. Under those circumstances, representation is determined by the following:

  1. If only one person is a beneficiary of the trust that is the subject of the representation, that person may represent the minor descendant or unborn descendant.
  2. If both persons are beneficiaries of the trust that is the subject of the representation, then the person who is related to the settlor, other than by reason of being married to the other person, may represent the minor descendant or unborn descendant.
  3. Subject to the below provision, if neither person is a beneficiary of the trust that is the subject of the representation, then the person who is the settlor of the trust that is the subject of the representation may represent the minor descendant or unborn descendant.
  4. If neither person is a beneficiary or settlor of the trust that is the subject of the representation, then the person who is related to the settlor, other than by reason of being married to the other person, may represent the minor descendant or unborn descendant.

Directed Trusts

A directed trust allows for the grantor or qualified beneficiaries of a trust to separate the trust administration function from the investment management function by appointing an investment advisor to manage the trust assets and removing that responsibility from the trustee. This is a critical factor for many trust grantors and beneficiaries since most have longstanding relationships with their financial advisors and wish to retain these services for their trusts and their heirs.

The Tennessee Trust Code has become a leading and progressive jurisdiction for directed trusts in recent years. In fact, many jurisdictions do not permit as many options for the creation of a directed trust as the Tennessee Trust Code. Historically, the Tennessee Trust code permitted directed trusts to be created through one of three ways: per the terms of the document, an agreement of the qualified beneficiaries, or through a court order. The new legislation added another method for the creation of a directed trust. Now, the person(s) with the power to appoint successor trustees can appoint multiple successor trustees and the person(s) with the ability to remove or replace a trustee can appoint an additional trustee to serve with a currently serving trustee. Such power to appoint multiple successor trustees and additional trustees under this statute includes the power to allocate various trustee powers, including the power to direct or prevent certain actions of the trustees, exclusively to one or more of the trustees serving from time to time.


Recent years have brought significant improvements to Tennessee’s decanting statute. This year, the language addressing a trustee’s ability to decant has been moved to create a new statute, T.C.A 35-15-818, which only addresses decanting.

Terminating or Modifying a Non-Charitable Irrevocable Trust

The bill made notable improvements to T.C.A 35-15-411, which provides the requirements for terminating or modifying a non-charitable irrevocable trust, both during the settlor’s lifetime and after the settlor’s death. Previously, terminating the trust was only allowed via court approval. This new amendment adds an alternative and now the trustee and qualified beneficiaries may terminate the trust via unanimous agreement.

Removing and Appointing Trustees

Another significant improvement was made to T.C.A 35-15-606, which addresses a settlor’s authority to remove and appoint trustees. The statute was amended to include that the settlor of a revocable trust may remove a trustee and appoint a successor trustee by giving written notice to the trustee being removed and to the successor trustee being appointed. If there are two or more settlors of the same revocable trust, then the removal and appointment of trustees must be made by unanimous decision of all settlors.

Fiduciary Release from Liability

The bill also included updates to T.C.A 35-15-817, the statute which regulates notification related to the discharge of fiduciary liability. Prior to the enactment of T.C.A 35-15-817 last year, a trustee could statutorily accomplish release from liability via non-judicial settlement agreement signed by all the qualified beneficiaries or by filing a court petition. T.C.A 35-15-817 provides the option for a trustee to obtain a release from liability if the trustee submits notice and other required items enumerated within the statute to the required parties with no objection received in writing within 45 days after receipt of the notice. The revision to the statute this year provides that the trustee is relieved from any liability for the most recent continuous period that the trustee served as trustee of the trust, not just the time covered by the notice.

Tennessee Probate Code

In addition to these latest revisions to the Tennessee Trust Code, improvements were also enacted to strengthen the state’s probate code. Similar to the trust code, the probate code now permits a personal representative and all persons whose consent is required to reach a binding settlement (e.g., personal representative, and beneficiaries of the estate and any resulting trusts) to be approved by the court may enter into a binding nonjudicial settlement agreement regarding any matter involving estate administration. This change should allow for greater administrative flexibility.

“These relevant and timely updates to Tennessee’s Trust and Probate Code will not only allow for more flexibility in administering trusts and estates, but also create more opportunities for Cumberland Trust to work together with our clients and their advisors to accomplish their goals,” said Malkiewicz.