Tennessee Investment Services Trusts (TISTs)

Diligent, Experienced Attorney Serving Memphis, Tennessee

A few years ago, the state of Tennessee enacted the Investment Services Trust Act, which allows you to put your assets into a trust that will be protected from creditors, from lawsuits, from divorce settlements or any other form of legal obligation.

As you can see, the Tennessee Investment Service Trust (TIST) is an extremely powerful tool for protecting your assets. You can set your trust to make yearly payments to you or your family members, or you can let money stay in the trust and continue to accumulate interest indefinitely.

To learn more about TISTs, schedule an appointment with Windsor Law Offices, today. Just call (901) 680-0101 or contact our offices online. Attorney John R. Windsor Jr. has practiced law since 1991 and has a Masters in Taxation. He provides experienced, knowledgeable services and counsel to help clients make the most of their estates.

No one knows what the future holds. Protect your Assets.

Using a TIST, a doctor can protect his or her assets from potential medical malpractice lawsuits. A similar principle holds for engineers, lawyers and other people in "high risk" professions. In addition, a TIST can protect your estate from property division if you go through divorce.

Because the TIST has been shown to have such a strong appeal for doctors, Windsor Law Offices offers a planning module specifically created for physicians.

Who Is Eligible to Create a TIST?

Anyone in sound financial standing with no outstanding obligations to creditors can create a TIST. If you do have obligations to creditors (like a mortgage, for example), they will have to consent to your creation of the TIST.

To schedule an initial consultation, call us today at (901) 680-0101 or contact our offices online. We look forward to hearing from you. Find more detailed, in-depth information about TISTs below...

Summary of Tennessee Investment Services Trusts ("TISTs")

Effective July 1, 2007, a new Tennessee law allows a settlor to transfer assets to an irrevocable trust of which the settlor is a discretionary beneficiary, and have the assets protected from the settlor's future creditors. This is a powerful tool to be used for those who want to protect some [but, not all] of their assets from future creditors. Some portion of the assets must be in or placed in Tennessee, and the Trustee must not be the Settlor [creator] of the trust, and must have a Tennessee trustee who materially participates in the administration. We provide individual trustee services to certain clients, or can recommend a corporate trustee located in Tennessee to provide these services at a cost effective price.

Requirements

The statute sets forth very specific requirements that must be met in order to obtain the benefit of the statute, including:

(1) the trustee must be a Tennessee resident or authorized by Tennessee law to act as a trustee and subject to supervision by the Tennessee Department of Financial Institutions, the FDIC, the Comptroller of the Currency, or the Office of Thrift Supervision;

(2) at least some of the assets owned by the TIST must be held in Tennessee;

(3) the Tennessee trustee must materially participate in the administration of the TIST; and

(4) the settlor may not be the trustee. Upon transferring assets to a TIST, the settlor is required to sign an affidavit which states that the transfer to the trust will not render the transferor insolvent, that the transferor does not intend to defraud a creditor by transferring assets to the trust, and that he does not have any pending or threatened court actions against him other than those identified in the affidavit. The affidavit must also state that the settlor does not contemplate filing for bankruptcy.

A TIST must be irrevocable. There are certain rights that the transferor is allowed, but is not required to retain, including: (1) the power to veto a distribution from the trust; (2) a testamentary power to appoint the trust assets; (3) the right to receive income from the trust; (4) the right to direct the investments of the trust; (5) the right to receive principal payments at the discretion of the trustee or another advisor; and (6) the right to remove and replace the trustee or other advisor.

Creditors

A creditor who had a potential claim against the settlor prior to the transfer to the TIST may be able to set aside the transfer as a fraudulent conveyance. If a creditor does not attempt to set aside the transfer to the TIST within four years after the transfer to the trust, the creditor will be barred from attaching the property that was transferred to the TIST. A creditor will still be able to attach any property that is distributed from the TIST to the settlor; however, creditors would not be able to attach the assets retained inside the TIST.

A creditor is not allowed to sue the trustee of the TIST or any advisor involved in the counseling, drafting, preparation, execution or funding of a TIST. In the event such suit is maintained, there are protections which can be drafted into the trust to protect the assets.

The statute contains provisions which allow trusts that were previously established in other states to move to Tennessee and obtain the benefits of the statute as long as the trust complies with the requirements of the statute. This will facilitate the repatriation of numerous trusts established by Tennesseans with trustees located in other states. It is not expected that TISTs will provide income or transfer tax benefits to Tennessee residents. However, they can be utilized by certain nonresidents of Tennessee to reduce state income taxes in their home states.

How to Use a TIST

TISTs may be used to protect younger persons, who otherwise have funds or are making an adequate living to protect these assets from future creditors. Creditors who the funds might be protected from for all TIST Settlors can be judgment creditors, such as a future estranged spouse, credit card or business loan creditors, creditors from lawsuits from car accidents, and whatever other creditors might come to mind.

These trusts can be a powerful tool to provide peace of mind in setting apart at least some portion of assets for the benefit of the settlor in the future. High risk professions would potentially be excellent candidates for this type protection.

If you would like to discuss the potential benefits of this planning opportunity, contact us online or call our office at (901) 680-0101 to schedule an initial consultation.