# The 13 Questions Everyone Asks Me About Tennessee Revocable Trusts *And the Straight Answers You Actually Need* --- Let me tell you something—From the very begging of my practice, I get the same questions every time about trust. And you know what? They're good questions. Here's the deal: A revocable trust is probably the single best estate planning tool for 90% of Tennessee families. It's like having a good set of jumper cables in your trunk—you might not need them every day, but when you do, you'll be mighty glad they're there. --- ## 1. "Why shouldn't I just do this online? Isn't it cheaper and will save me money?" Have you ever flown Allegiant Airlines or something similar? They advertise $35 tickets to great places—sounds amazing, right? But there's always a catch. Want to bring a carry-on? Add $150. Check a bag? That's $300. Need a drink or snack? Another $20. By the time you're done, that "$35 ticket" costs more than flying Delta first class, and you're still cramped in a middle seat. Online trust services work the same way. Sure, the basic trust is $599. But then: - Want to include your rental property? Extra fee - Need to handle retirement accounts properly? Another add-on - Want tax planning provisions? Ka-ching - Need Tennessee-specific language? More money - Want someone to actually fund the trust? That's the premium package Before you know it, you've spent $2,000 on a DIY trust that might not even work. **Here's what those online services won't tell you:** - They can't give legal advice (it's actually illegal for them to do so) - They use one-size-fits-all templates that might not comply with Tennessee law - Nobody reviews your specific situation - When you die, your family has nobody to call **The real kicker?** I see these online trusts in my office all the time—when families come in to fix them. One couple spent $1,800 on an online trust, then paid me $3,500 to untangle the mess. Their "bargain" trust had the wrong Tennessee statute citations, didn't properly handle their LLC, and would've subjected their IRAs to immediate taxation. We can help most clients get exactly what they need with a real lawyer for about the same price as those online services once you add all their extras. Plus, you get: - Face-to-face consultation to understand your actual needs - Tennessee-specific documents that comply with current law - Proper funding instructions (the trust is worthless if assets aren't transferred) - Someone your family can actually call when you're gone - Updates when Tennessee law changes Look, I get it—everyone wants to save money. But your estate plan isn't the place to bargain hunt. It's like buying a parachute on Craigslist. Sure, it's cheaper, but do you really want to find out it doesn't work when you need it most? --- ## 2. "Jim, what exactly IS a revocable trust, and how's it different from a will?" Think of a revocable trust like a lockbox where you're both the owner AND the person holding the key. You can open it, close it, move stuff in and out, or even throw the whole thing away if you want. That's what "revocable" means—you're in complete control. Under Tennessee Code § 35-15-103, a revocable trust (also called a "living trust") is a legal arrangement where you transfer your assets to a trust that you control during your lifetime. The magic happens when you pass away—everything transfers automatically, no probate required. **Here's the difference from a will:** - **Will**: Like leaving instructions for after the funeral—requires probate court (6-12 months minimum in Tennessee) - **Revocable Trust**: Like handing someone the keys while you're still standing there—no court needed Let me tell you from personal experience—both my father and my father-in-law have passed away, and they both had revocable trusts. Because they'd moved most all of their assets into their trusts, settling their affairs was remarkably straightforward. No probate court, no public proceedings, no long delays. The successor trustees stepped right in, bills got paid, and the families could focus on grieving instead of fighting through legal red tape. Compare that to what I see with wills: 14 months in probate, $15,000+ in legal fees, and everything becoming public record. When you've just lost someone, the last thing you want is to spend over a year in court proceedings. The revocable trust meant we could handle everything privately and efficiently—exactly what you want during a difficult time. --- ## 3. "Do I really need one if I don't have millions?" This might be the biggest misconception I hear. Folks think trusts are for country club members and Nashville music executives. Nope. You need a revocable trust if you have: - A house (doesn't matter if it's worth $150,000 or $1.5 million) - Kids under 25 (or frankly, kids of any age who aren't great with money) - A family member with special needs - Property in multiple states (that cabin in Gatlinburg AND the condo in Florida) - A desire to keep your business out of the newspaper when you die Under Tennessee Code § 32-1-105, every will goes through probate—that's public record. Your nosy neighbor can look up exactly what you left and to whom. With a trust? Complete privacy. --- ## 4. "Can I really change it anytime I want?" Absolutely. That's the beauty of it. Tennessee Code § 35-15-602 makes it crystal clear—as long as you're alive and competent, you can: - Change beneficiaries (mad at your kid? take them out for a while) - Add or remove assets - Change trustees - Dissolve the whole thing It's like editing a Word document instead of carving in stone. I update trusts all the time—new grandkids, divorced kids, sold businesses, you name it. Usually takes about an hour and costs less than a good set of tires. --- ## 5. "What actually goes INTO the trust?" Here's where people mess up. Creating a trust without funding it is like buying a pickup truck and never putting anything in the bed. Worthless. You'll transfer: - **Real estate** (through a deed—Tennessee Code § 66-5-108) - **Bank accounts** (change them to trust ownership) - **Investment accounts** (your broker knows how) - **Business interests** (LLCs, partnerships) - **Valuable personal property** (that art collection, the classic car) **What stays out:** - **IRAs and 401(k)s** (name the trust as beneficiary, don't transfer ownership—moving these INTO the trust triggers immediate taxation. That's like cashing out your entire retirement to save on probate. Don't do it.) - **Pensions and deferred compensation** (Federal law—ERISA specifically—won't let you transfer these. Name the trust as beneficiary after your spouse) - **403(b)s, 457 plans, TSPs** (government and nonprofit retirement plans—same rules as IRAs) - **Life insurance** (the trust can be beneficiary, but if it owns the policy during your life, you lose control) - **Annuities** (usually keep these out—check with your agent, some can be transferred without tax issues, others can't) - **Health Savings Accounts (HSAs)** (these die with you if owned by a trust—keep them personal, name spouse as beneficiary) - **Your everyday checking account** (keep about $10,000-$15,000 personal for convenience—you don't want to write "John Smith, Trustee" on every check at Kroger) Here's the thing about retirement accounts: Under the SECURE Act (changed in 2019), your kids have to drain inherited IRAs within 10 years now. But if you name your trust as beneficiary with the right language—what we call "see-through" provisions under Treasury Regulation § 1.401(a)(9)-4—you can still get some tax planning flexibility. **Let me break down these "see-through" provisions in plain English:** Think of it like tinted windows on your truck—the IRS needs to "see through" your trust to identify the actual humans who'll benefit from the retirement account. If they can't see through clearly, they treat your trust like a non-person, and your beneficiaries might have to drain that IRA in 5 years instead of 10. That's potentially hundreds of thousands in extra taxes. **Your trust needs these five things to qualify as "see-through":** 1. **Valid under state law** (Tennessee recognizes it—check) 2. **Becomes irrevocable at your death** (revocable trusts do this automatically—check) 3. **Beneficiaries must be identifiable** (the IRS needs names, not vague descriptions like "my descendants") 4. **Documentation provided to the IRA custodian** (they need a copy by October 31st the year after death) 5. **All beneficiaries must be individuals** (no charities, no estates as backup beneficiaries) **Here's where folks mess up:** They name their trust as IRA beneficiary but include a charity as contingent beneficiary, or say "pay my debts first." Boom—you just failed the see-through test. Now instead of your 35-year-old daughter having 10 years to draw down that million-dollar IRA, she might have to take it all in 5 years. On a million bucks, that's an extra $150,000+ in unnecessary taxes. **The smart fix:** Use what I call "segregation language"—your trust should say that retirement benefits go into a separate pot that only living, breathing humans can touch. No charities, no estate creditors, no paying Aunt Sally's funeral bills from the IRA portion. Getting this language right could save your family six figures in taxes—that's worth a conversation with your attorney to make sure you've got it covered. I always tell clients: "If it has a title or deed, it probably needs to be in the trust. If it has special tax treatment, it probably stays out but names the trust as beneficiary." --- ## 6. "How much is this going to cost me?" Let's talk turkey. In Tennessee, you're looking at: - **Basic revocable trust package**: $2,500-$5,000 - **Complex trust (business owners, multiple properties)**: $5,000-$10,000 - **Funding assistance** (transferring everything): $1,500-$3,000 Sounds like a lot? Let me show you the alternative: - **Probate costs**: 3-5% of your estate value - **Time**: 6-18 months minimum - **Privacy**: Zero On a $500,000 estate, probate runs you $15,000-$25,000. The trust pays for itself before you even factor in the time and headache you're saving your family. --- ## 6. "Who should be my trustee when I'm gone?" This is where the rubber meets the road. Under Tennessee Code § 35-15-701, your successor trustee steps in when you can't manage things anymore (disability or death). **Let me be real frank about what skills they need:** - **Financial common sense** (not necessarily a CPA, but someone who knows a good investment from a Nigerian prince email) - **Backbone** (when cousin Eddie wants his "inheritance" early for his sure-fire business idea, your trustee needs to say no) - **Organization** (they'll be dealing with taxes, accountings, and distributions—if their car looks like a tornado hit it, maybe look elsewhere) - **Time and availability** (settling an estate is a part-time job for 6-12 months) - **Geographic proximity** (managing Tennessee rental property from Seattle is a nightmare) **Character matters more than credentials:** - Someone who won't play favorites with your kids - Patient enough to deal with beneficiaries asking "when do I get my money?" every week - Honest as a summer day is long (they'll have access to everything) - Thick-skinned enough to handle family dynamics without taking it personally **Your options:** - **Adult children** (if they get along—and that's a big if. Nothing destroys families faster than money fights) - **The "responsible" child** (but consider naming the others as co-trustees for checks and balances) - **Trusted friend or family member** (your brother who's been a CFO for 20 years might be better than your artist son) - **Professional trustee** (bank or trust company—costs 1-2% annually but worth it for complex estates or family drama) - **Combination** (family member + professional as co-trustees—family provides the heart, professional provides the expertise) **Now, about Trust Protectors** (Tennessee Code § 35-15-808): This is like having a referee for your trust. A trust protector is someone with limited powers to: - Remove and replace bad trustees - Resolve disputes between trustees and beneficiaries - Adapt the trust to law changes or family circumstances - Approve major decisions (selling the family business, etc.) Think of them as the adult in the room when things get heated. I usually recommend: - Your long-time attorney or CPA - A trusted family advisor - That level-headed family friend who everyone respects **Here's an example of how a trust protector could save your family millions:** Imagine naming your old business partner as trust protector. Your son (the trustee) wants to sell the family company for quick cash—maybe he gets an offer that seems good to him. But the trust protector, with their business experience, could step in and say "Hold on, let's get an investment banker to properly value this." That investment banker might get 40% more for the business. On a $5 million company, that's an extra $2 million for your family. That's the power of having the right trust protector in place. **Red flags for who NOT to pick:** - Anyone with substance abuse issues (even if they're "better now") - The child who's always asking for money - Someone going through a nasty divorce or bankruptcy - Anyone who can't tell you what interest rate they're paying on their mortgage - The family member who still thinks multi-level marketing is a good investment **"But Jim, what if I don't have ANYBODY I trust?"** You're not alone. Sometimes your kids aren't ready, your siblings are worse with money than you are, and your best friend is pushing 80. That's when you need a corporate trustee—a bank or professional trust company. **The upside of corporate trustees:** - They don't die, get divorced, or move to Costa Rica - Professional investment management - They've seen every family situation (your drama won't faze them) - Completely impartial—they follow the document, period - They carry insurance if they mess up **The downside? Cost.** Here's what Tennessee banks and trust companies typically charge: - **Annual fee**: 0.75% to 1.5% of assets under management - **Minimum annual fee**: $3,000 to $7,500 (even if your trust is small) - **Special fees**: Selling real estate (1-5%), dealing with a business (hourly rates) **Real example**: On a $1 million trust, you're looking at $10,000-15,000 per year. Over 10 years managing your kids' inheritance? That's $100,000-150,000 in fees. But here's the thing—if the choice is between a corporate trustee charging 1% or your gambling son-in-law blowing through the whole inheritance in two years, that 1% looks pretty reasonable. **My recommendation**: Consider a hybrid approach. Name a corporate trustee but require them to consult with a "trust advisor" (someone you trust who knows your family but doesn't want the full responsibility). Or name the corporate trustee as a backup—"First National Bank, but only if my brother Tom can't or won't serve." Some solid Tennessee corporate trustees include: - First Horizon (formerly First Tennessee Bank) - Pinnacle Financial Partners - Truist (formerly SunTrust/BB&T) - Argent Trust Company - Cumberland Trust (personal note here—their president is a good friend with an incredible resume. If I had to pick a corporate trustee for my own family, Cumberland would be at the top of my list. They actually answer the phone, and they treat million-dollar trusts and hundred-thousand-dollar trusts with the same respect. That's rare in this business.) Interview them like you'd interview a heart surgeon. Ask about their fees, their investment approach, and how they handle family conflicts. If they talk down to you or seem annoyed by questions, walk away. Here's my advice: Have a frank conversation with your potential trustee. Show them the trust document. Explain what's involved. If they look overwhelmed or start making excuses, pick someone else. Better to hurt feelings now than have a disaster later. And if nobody fits the bill? That's what corporate trustees are for—expensive, but better than a family disaster. --- ## 7. "What about taxes? Will this save me money?" I need to level with you here—a revocable trust does NOT save taxes during your lifetime. The IRS sees right through it (Revenue Ruling 85-13). You still report everything on your personal return, same as always. **But here's what it DOES do:** - Avoids Tennessee probate fees and taxes - Can include tax planning for your heirs (generation-skipping provisions under Tennessee Code § 35-15-116) - Allows for smooth business succession without tax surprises Think of it this way: It's not about saving YOU taxes—it's about making sure your kids don't get hammered with unnecessary costs and delays. --- ## 8. "What happens if I become incapacitated?" This might be the best reason for a trust, and nobody talks about it enough. Without a trust, if you have a stroke or dementia, your family needs to go to court for a conservatorship (Tennessee Code § 34-1-101). That means: - Public proceedings - Annual accountings to the court - Ongoing legal fees - Family stress through the roof With a revocable trust? Your successor trustee steps in immediately. No court, no public record, no yearly reports to a judge. It's like having a spare key hidden under the mat instead of calling a locksmith. I've seen this save families $20,000+ and months of heartache. One client's dad had Alzheimer's—the trust let them seamlessly manage his care without a single court appearance. --- ## 9. "Is it true that trusts avoid creditors and lawsuits?" Hold your horses—that's IRREVOCABLE trusts, not revocable ones. Under Tennessee Code § 35-15-505, a revocable trust offers zero protection from creditors while you're alive. If someone sues you and wins, they can reach trust assets just like they could reach your regular bank account. **What a revocable trust DOES protect against:** - Your beneficiaries' creditors (with proper language) - Estate recovery claims after death - Challenges to your estate plan (harder to contest than a will) If you want bulletproof asset protection, we need to talk about irrevocable trusts or Tennessee Asset Protection Trusts. Different animal entirely. --- ## 10. "How do I know if my trust is still good, or if it needs updating?" Tennessee law changes, federal tax law changes, and more importantly—your life changes. Under Tennessee Code § 35-15-411, you should review your trust every 3-5 years or after major life events. **Red flags your trust needs updating:** - It's more than 5 years old - Still mentions your ex-spouse (yikes) - Lists deceased trustees or beneficiaries - Doesn't mention new grandkids - Was created in another state - Still references old federal estate tax numbers Here's what I tell folks: Pull it out every time you renew your driver's license. If something looks off, fix it. A trust amendment usually costs $500-$1,000—way cheaper than problems down the road. --- ## 11. "What exactly happens when my spouse dies—do I still control everything?" This is where revocable trusts can get interesting. It depends on how your trust is written, but here's what typically happens: **For Simple Revocable Trusts:** The surviving spouse usually becomes sole trustee and maintains complete control. You can change beneficiaries, sell assets, amend the trust—the whole nine yards. It's like nothing changed except you're managing it alone now. **For More Complex Trusts (with tax planning):** Some trusts split into multiple parts when the first spouse dies: - **Survivor's Trust**: Your own assets—you control this 100% - **Marital Trust**: For the surviving spouse's benefit—you get all income, access to principal for needs - **Family/Bypass Trust**: Preserves the deceased spouse's estate tax exemption—more restricted access Think of it like this: Simple trusts are like keeping all your eggs in one basket that you control. Complex trusts are like dividing those eggs into different baskets—you control some completely, others have rules attached. The key question to ask: "Is my trust designed for tax planning or just probate avoidance?" If it's just probate avoidance, you'll likely have full control. If it's tax planning, expect some restrictions to preserve those tax benefits. **What you CAN always do:** - Live in the house - Receive income from all trust assets - Access money for health, maintenance, and support - Usually remove and replace trustees if needed **What you MIGHT not be able to do** (in tax-planned trusts): - Change who gets assets after you die (kids' inheritance is locked in) - Sell certain assets without trustee approval - Access principal beyond your needs I've seen surviving spouses surprised both ways—some thought they'd have restrictions and didn't, others thought they'd have complete freedom and found guardrails. Pull out your trust and look for sections about "division upon first death" or "survivor's trust"—that'll tell you which type you have. --- ## 12. "What happens when we're both gone—how do our kids actually get their inheritance?" This is where your revocable trust really earns its keep. When the second spouse dies, the trust becomes your instruction manual from the grave—and trust me, your kids will thank you for the clarity. **Here's the typical process:** **Immediate Steps** (usually 30-60 days): - Successor trustee steps in (often your most responsible adult child or a corporate trustee) - Pays final expenses, debts, and taxes - No probate court—everything happens privately - Beneficiaries get noticed, but the public doesn't **Distribution Timeline** (typically 6-12 months): Unlike probate, which can drag on for years, trust administration usually wraps up in under a year. The trustee: - Files final tax returns - Liquidates assets if needed - Makes specific gifts (Dad's watch to Junior, Mom's ring to Susie) - Distributes according to your instructions **How Kids Receive Their Inheritance:** **Option 1 - Outright Distribution** (simplest but riskiest): Kids get their inheritance free and clear. Great if they're responsible adults. Risky if they're young, getting divorced, have creditor problems, or struggle with money. **Option 2 - Staged Distributions** (popular middle ground): - 1/3 at age 25 - 1/3 at age 30 - Balance at age 35 Gives kids time to mature while learning to manage money. **Option 3 - Lifetime Protective Trusts** (maximum protection): Each child's inheritance stays in a separate trust for their lifetime: - Protected from divorce, lawsuits, creditors - Child can be their own trustee (or not) - Distributions for health, education, maintenance, support - Child controls where it goes at their death I'm seeing more families choose Option 3 lately. Why? Because giving your 30-year-old son $500,000 outright when he's going through a divorce is like handing half to his ex-wife. The lifetime trust prevents that. **For Minor Children or Grandchildren:** The trust automatically holds their inheritance until they're old enough (you decide the age). The trustee manages it, paying for education, health, support—all the things you'd do if you were here. **Special Situations Your Trust Can Handle:** - **Disabled beneficiary**: Creates a special needs trust to preserve government benefits - **Substance abuse issues**: Trustee has discretion to withhold distributions - **Spendthrift child**: Distributions for needs, not wants - **Equal vs. fair**: You can treat children differently if circumstances warrant Here's what I tell parents: Your trust is your last chance to parent. You can build in protections, incentives (like education requirements), and guardrails. Or you can just dump money in their laps. The choice is yours, but once you're gone, you can't fix bad decisions. The beauty of a revocable trust? Your kids can often access funds within weeks for immediate needs—no waiting for probate. And if you've structured it right, their inheritance is protected for life while still being available when they truly need it. --- ## The Bottom Line Look, a revocable trust isn't magic, but it's pretty close. It's the difference between leaving your family a well-organized filing cabinet versus a shoebox full of receipts. In Tennessee, with our specific probate laws and procedures, it just makes sense for most families. Here's my advice: If you own a home, have kids, or just want to make life easier for whoever's left behind, get a revocable trust. It's not about being rich—it's about being smart. The Tennessee Uniform Trust Code (Title 35, Chapter 15) gives us one of the most flexible, user-friendly trust environments in the country. Take advantage of it. **Remember**: The best trust is the one that's actually funded and up-to-date. Don't be the person with a beautiful trust document sitting in a drawer while all your assets are still in your personal name. That's like buying a security system and never turning it on. --- *Got questions? That's what I'm here for. Estate planning doesn't have to be complicated—it just needs to be done right.*