Tennessee 2025-2026 Regular Session

Tennessee Senate Bill SB0534 Compare Versions

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10		-	~tate of \!tennessee
11		-	PUBLIC CHAPTER NO. 101
12		-	HOUSE BILL NO. 817
13		-	By Representatives Garrett, Farmer
14		-	Substituted for: Senate Bill No. 534
15		-	By Senator Stevens
16		-	AN ACT to amend Tennessee Code Annotated, Title 30 and Title 35, relative to trusts.
	1	+
	2	+	HOUSE BILL 817
	3	+	By Garrett
	4	+
	5	+	SENATE BILL 534
	6	+	By Stevens
	7	+
	8	+
	9	+	SB0534
	10	+	000657
	11	+	- 1 -
	12	+
	13	+	AN ACT to amend Tennessee Code Annotated, Title 30
	14	+	and Title 35, relative to trusts.
	15	+
17	16		BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
18		-	SECTION 1.. Tennessee Code Annotated, Section 30-1-404(b), is amended by deleting
	17	+	SECTION 1. Tennessee Code Annotated, Section 30-1-404(b), is amended by deleting
19	18		the language "Should any person entitled to serve as trustee" and substituting "Should any
20		-	, person entitled to serve or currently serving as trustee", and by deleting the language ",
	19	+	person entitled to serve or currently serving as trustee", and by deleting the language ",
21	20		provided that the then market value of the trust estate does not exceed one hundred thousand
22	21		dollars ($100,000)".
23	22		SECTION 2. Tennessee Code Annotated, Section 30-1-404(b)(2), is amended by
24	23		deleting the subdivision and substituting:
25	24		(2) The instrument does not contain provisions for the appointment of a
26		-	successor or substitute, or such provision is unable to be implemented, and the then
	25	+	successor or substitute, or such provision is unable to be implemented, and the then-
27	26		serving trustee does not, or an adult income beneficiary or vested remainderman do not
28	27		petition for the appointment of a successor or substitute trustee within three (3) months
29	28		after there is a vacancy in office or all sooner waive this right; or
30	29		SECTION 3. Tennessee Code Annotated, Section 35-15-104(a), is amended by adding
31	30		the following new subdivision:
32		-	(4) Has reason to know of it because the fact is accessible by the person through
33		-	electronic means, such person provided consent to receive information by electronic
34		-	means in a record, as defined in§ 47-10-102, and such consent has not been revoked.
35		-	Such information is deemed to be accessible by the person through electronic means if
36		-	the information was available through electronic means for at least sixty (60) days and if:
	31	+	(4) Has reason to know of it because the fact is accessible by the person
	32	+	through electronic means, such person provided consent to receive information by
	33	+	electronic means in a record, as defined in § 47-10-102, and such consent has not been
	34	+	revoked. Such information is deemed to be accessible by the person through electronic
	35	+
	36	+
	37	+	- 2 - 000657
	38	+
	39	+	means if the information was available through electronic means for at least sixty (60)
	40	+	days and if:
37	41		(A) The means of electronic access were provided in the record; or
38	42		(B) It can be shown that the electronic access was actually utilized at any
39	43		time.
40		-	SECTION 4. Tennessee Code Annotated, Section 35-15-109(a), is amended by ~~deleting~~
41		-	the subsection and substituting:
	44	+	SECTION 4. Tennessee Code Annotated, Section 35-15-109(a), is amended by
	45	+	deleting the subsection and substituting:
42	46		(a)
43	47		(1) Notice to a person under this chapter or the sending of a document to
44	48		a person under this chapter must be accomplished in a manner reasonably
45	49		suitable under the circumstances and likely to result in receipt of the notice or
46	50		document.
47	51		(2) Permissible methods of notice or for sending a document include:
48	52		(A) First-class mail;
49	53		(B) Personal delivery;
50		-	(C) Delivery to the person's last known place of residence or ~~place~~
51		-	of business; ~~HB817~~
	54	+	(C) Delivery to the person's last known place of residence or
	55	+	place of business;
52	56		(D) A properly directed electronic message; or
53	57		(E) Providing the notice or document through electronic means
54	58		when such person provided consent to receive information by electronic
55	59		means in a record, as defined in § 47-10-102, and such consent has not
56	60		been revoked. A notice or document is deemed to be accessible by the
57	61		person through electronic means if:
58	62		(i) The means of electronic access were provided in the
59	63		record; or
	64	+
	65	+
	66	+	- 3 - 000657
	67	+
60	68		(ii) It can be shown that the electronic access was actually
61	69		utilized at any time.
62		-	SECTION 5. Tennessee Code Annotated, Section 35-15-301, is amended by adding the
63		-	following new subsection:
	70	+	SECTION 5. Tennessee Code Annotated, Title 35, Chapter 15, Part 2, is amended by
	71	+	adding the following as a new section:
	72	+	35-15-206.
	73	+	(a) A judicial proceeding to contest whether a revocable trust or any amendment
	74	+	thereto, or an irrevocable trust was validly created may be commenced at any time
	75	+	following its execution, but shall not be commenced later than the first to occur of:
	76	+	(1) Two (2) years after the date of the settlor's death;
	77	+	(2) One hundred twenty (120) days after the date that the trustee notified
	78	+	in writing the person who is contesting the trust of the trust's existence, of the
	79	+	trustee's name and address, of whether such person is a beneficiary, and of the
	80	+	time allowed under this section for commencing a proceeding to contest the
	81	+	validity of the trust. However, a trustee does not have any liability under the trust
	82	+	instrument or to any third party or otherwise for failure to provide any such written
	83	+	notice. For purposes of this subdivision (a)(2), notice has been given when sent
	84	+	to the person to whom notice was given. Absent evidence to the contrary, it is
	85	+	presumed that notice was received by the person seven (7) days after it was sent
	86	+	to such person in accordance with § 35-15-109; or
	87	+	(3) The date the person's right to contest was precluded by adjudication,
	88	+	consent, or other limitation.
	89	+	(b) In the event a trust or trust provision is adjudged to be invalid, or if a
	90	+	distribution is adjudged to have been made in error, by the final judgment of a court
	91	+	having jurisdiction, which judgment is subject to no further appeal, any beneficiary
	92	+	having received an improper distribution shall, upon receipt of a copy of such order,
	93	+
	94	+
	95	+	- 4 - 000657
	96	+
	97	+	return the improper distribution to the court. If the beneficiary fails to return the improper
	98	+	distribution to the court, then the beneficiary is liable for costs, including reasonable
	99	+	attorney fees, incurred to recover the improper distribution from the beneficiary.
	100	+	SECTION 6. Tennessee Code Annotated, Section 35-15-817(h)(1), is amended by
	101	+	deleting "§ 35-15-604" and substituting "§ 35-15-206".
	102	+	SECTION 7. Tennessee Code Annotated, Section 35-15-301, is amended by adding
	103	+	the following new subsection:
64	104		(e) Notice, information, accountings, or reports given to a person who may
65	105		represent and bind another person under this chapter may serve as a substitute for and
66	106		have the same effect as providing notice, information, accountings, or reports directly to
67	107		the person being represented.
68		-	SECTION 6. Tennessee Code Annotated, Section 35-15-402(d), is amended by deleting
69		-	the word "and" immediately following the semicolon at the end of subdivision (1 ), by deleting the
70		-	language "describing the asset with particularity in the trust instrument." from subdivision (2)
71		-	and substituting "describing the asset; and", and by adding the following new subdivision:
72		-	(3)
73		-	(A) Tangible personal property other than money, an evidence of
74		-	indebtedness, a document of title, a security, and property used in a trade or
75		-	business may be assigned to a trust, either during the grantor's life or after the
76		-	grantor's death, by delivery of a written instrument that:
77		-	(i) Is signed by the transferor;
78		-	(ii) Identifies the tangible personal property in general terms; and
79		-	(iii) Specifically identifies the trust.
80		-	(B) Subdivision ( d)(3)(A) applies to such tangible personal property that is
81		-	owned when such written instrument is signed, and to property that is
82		-	subsequently acquired by the transferor. Moreover, such assignment is subject to
83		-	revocation or amendment pursuant to a written instrument delivered by the
84		-	transferor to the trustee, either during the transferor's life or following the
85		-	transferor's death, including pursuant to the terms of the transferor's last will and
86		-	testament. If such revocation or amendment is not delivered to the trustee within
87		-	six (6) months of transferor's death, then the trustee may presume that such
88		-	revocation or amendment does not exist.
89		-	SECTION 7. Tennessee Code Annotated, Section 35-15-709(b), is amended by deleting
90		-	the subsection and substituting:
	108	+	SECTION 8. Tennessee Code Annotated, Section 35-15-402(d), is amended by
	109	+	deleting the word "and" immediately following the semicolon at the end of subdivision (1), by
	110	+	deleting the language "describing the asset with particularity in the trust instrument." from
	111	+	subdivision (2) and substituting "describing the asset; and", and by adding the following new
	112	+	subdivision:
	113	+	(3) Tangible personal property other than money, an evidence of indebtedness,
	114	+	a document of title, a security, and property used in a trade or business may be
	115	+	assigned to a trust, either during the grantor's life or after the grantor's death, by delivery
	116	+	of a written instrument that:
	117	+	(A) Is signed by the transferor;
	118	+	(B) Identifies the tangible personal property in general terms; and
	119	+	(C) Specifically identifies the trust.
	120	+	SECTION 9. Tennessee Code Annotated, Section 35-15-402, is amended by
	121	+	designating subsection (d) as subdivision (d)(1) and adding the following as subdivision (d)(2):
	122	+
	123	+
	124	+	- 5 - 000657
	125	+
	126	+	(2) Subdivision (d)(1) applies to such tangible personal property that is owned
	127	+	when such written instrument is signed, and to property that is subsequently acquired by
	128	+	the transferor.
	129	+	SECTION 10. Tennessee Code Annotated, Section 35-15-604, is amended by deleting
	130	+	subsections (a) and (c).
	131	+	SECTION 11. Tennessee Code Annotated, Section 35-15-709(b), is amended by
	132	+	deleting the subsection and substituting:
91	133		(b) An advance, either by the trustee, trust advisor, or trust protector or by a
92	134		person named in § 35-15-701(c)(1), of money gives rise to a lien against trust property to
93	135		secure reimbursement with reasonable interest. Failure to pay to or reimburse a trustee
94	136		for expenses incurred pursuant to subsection (a) gives rise to a lien against all trust
95	137		property for the payment of all sums due or to become due for services, expenses,
96	138		advances, and the costs and expenses of enforcing such payment or reimbursement.
97		-	SECTION 8. Tennessee Code Annotated, Title 35, Chapter 15, Part 8, is amended by
	139	+	SECTION 12. Tennessee Code Annotated, Title 35, Chapter 15, Part 8, is amended by
98	140		adding the following as a new section:
99		-	2 HB817
100		-	(a) Unless the terms of a trust instrument expressly provide that a settler shall not
101		-	be reimbursed by a trust for the settler's personal income tax liability attributable to the
102		-	trust, if the settler of a trust is treated under 26 U.S.C. § 671 et seq. as the owner of all
103		-	or part of the trust, then a disinterested trustee, in the disinterested trustee's sole
	141	+	(a) Unless the terms of a trust instrument expressly provide that a settlor shall
	142	+	not be reimbursed by a trust for the settlor's personal income tax liability attributable to
	143	+	the trust, if the settlor of a trust is treated under 26 U.S.C. § 671 et seq. as the owner of
	144	+	all or part of the trust, then a disinterested trustee, in the disinterested trustee's sole
104	145		discretion, or another trustee at the direction of a trust advisor or trust protector who
105	146		would be treated as a disinterested trustee and otherwise has the power to direct
106		-	discretionary distributions under the trust instrument, may reimburse the ~~settler~~ for any
107		-	amount of the ~~settler~~'s personal federal, state, local, foreign, or other income tax liability
	147	+	discretionary distributions under the trust instrument, may reimburse the settlor for any
	148	+	amount of the settlor's personal federal, state, local, foreign, or other income tax liability
108	149		that is attributable to the inclusion of the trust's income, capital gains, deductions, and
109		-	credits in the calculation of the settler's taxable income under principals of 26 U.S.C. §
110		-	671 et seq. The trustee may pay such amount to the settler directly, or may pay the
111		-	amount to an appropriate taxing authority on the settler's behalf, as the trustee
	150	+	credits in the calculation of the settlor's taxable income under principals of 26 U.S.C. §
	151	+
	152	+
	153	+	- 6 - 000657
	154	+
	155	+	671 et seq. The trustee may pay such amount to the settlor directly, or may pay the
	156	+	amount to an appropriate taxing authority on the settlor's behalf, as the trustee
112	157		determines in the trustee's sole discretion. This power shall in all cases be exercised in
113	158		the sole and absolute discretion of a disinterested trustee or trust advisor or protector
114		-	who would be treated as a disinterested trustee, and no ~~settler~~ or other person may
	159	+	who would be treated as a disinterested trustee, and no settlor or other person may
115	160		compel the exercise of this power or enter into an express or implied agreement or
116	161		understanding regarding the exercise of such power. No policy of insurance on the
117		-	~~settler~~'s life held in the trust nor the cash value of any such policy, nor the proceeds of
118		-	any loan secured by an interest in the policy may be used to reimburse the ~~settler~~ or to
119		-	pay an appropriate taxing authority on the ~~settler~~'s behalf. Neither the trustee's power to
120		-	make payments to, or for the benefit of, the ~~settler~~ under this section, nor the trustee's
121		-	decision to exercise such power in favor of the ~~settler~~, causes the ~~settler~~ to be treated as
	162	+	settlor's life held in the trust nor the cash value of any such policy, nor the proceeds of
	163	+	any loan secured by an interest in the policy may be used to reimburse the settlor or to
	164	+	pay an appropriate taxing authority on the settlor's behalf. Neither the trustee's power to
	165	+	make payments to, or for the benefit of, the settlor under this section, nor the trustee's
	166	+	decision to exercise such power in favor of the settlor, causes the settlor to be treated as
122	167		a beneficiary of the trust for any purpose.
123	168		(b) This section does not apply if the application of this section would disqualify a
124	169		trust for, or reduce the amount of, a marital deduction, a charitable deduction, or another
125	170		specific tax benefit otherwise available to any person for state or federal income, gift,
126	171		estate, or generation-skipping transfer tax purposes.
127		-	(c) The power described in this section becomes exercisable on and after
128		-	December 31, 2025, and applies to trusts existing before, on, and after such date.
129		-	(d) The person otherwise having the power to exercise the discretion described
130		-	in this section may at any time renounce the power in writing and, unless otherwise
131		-	limited, such renouncement applies permanently with respect to the trust as a whole,
132		-	such that a person does not have this power with respect to the trust at any time after
133		-	the renunciation.
134		-	( e) A person is not liable for exercising or failing to exercise the power described
135		-	in this section, or for exercising or failing to exercise the ability to renounce such power.
136		-	SECTION 9. Tennessee Code Annotated, Section 35-15-1005, is amended by adding
	172	+	SECTION 13. Tennessee Code Annotated, Section 35-15-1005, is amended by adding
137	173		the following new subsection:
138	174		(f) For purposes of this section, a person is deemed to have actual knowledge of
139	175		information that is accessible by the person through electronic means if the person
140	176		provided consent to receive information by electronic means in a record, as defined in §
141	177		47-10-102, and such consent has not been revoked. The information is deemed to be
142	178		accessible by the person if:
143	179		(1) The means of electronic access were provided in the record; or
	180	+
	181	+
	182	+	- 7 - 000657
	183	+
144	184		(2) It can be shown that the electronic access was actually utilized at any
145	185		time.
146		-	SECTION 10. Tennessee Code Annotated, Section 35-15-1102, is amended by deleting
147		-	the last sentence and substituting "However, the execution of an inter ~~vivas~~ trust instrument, a
	186	+	SECTION 14. Tennessee Code Annotated, Section 35-15-1102, is amended by deleting
	187	+	the last sentence and substituting "However, the execution of an inter vivos trust instrument, a
148	188		document to transfer an asset to or from a trust, or a consent, release, ratification, modification,
149	189		termination, or settlement agreement pursuant to § 35-15-109, § 35-15-111, § 35-15-411, or §
150	190		35-15-412 is considered a transaction for purposes of § 47-10-103.".
151		-	SECTION 11. Tennessee Code Annotated, Section 35-15-1202, is amended by deleting
	191	+	SECTION 15. Tennessee Code Annotated, Section 35-15-1202, is amended by deleting
152	192		the section and substituting:
153		-	3 HB817
154	193		(a) A trust advisor or trust protector, other than a beneficiary, is a fiduciary with
155	194		respect to each power granted to such trust advisor or trust protector. In exercising a
156	195		power or refraining from exercising a power, a trust advisor or trust protector acting as a
157	196		fiduciary shall act in good faith and in accordance with the terms and purposes of the
158	197		trust and the interests of the beneficiaries.
159	198		(b) A trust advisor or trust protector is an excluded fiduciary, regardless of
160	199		whether the trust advisor or trust protector is serving in a fiduciary capacity, with respect
161	200		to each power granted or reserved exclusively to any one (1) or more other trustees,
162	201		trust advisors, or trust protectors.
163	202		(c) Notwithstanding subsection (a), a trust advisor or trust protector may serve in
164	203		a nonfiduciary capacity when specifically appointed in such capacity, and when acting in
165	204		such capacity is liable only for acting in bad faith or with reckless indifference.
166		-	SECTION 12. The Tennessee Code Commission is requested to publish in Tennessee
	205	+	SECTION 16. The Tennessee Code Commission is requested to publish in Tennessee
167	206		Code Annotated the revisions required to conform to the current state of the law the official
168	207		comments for Chapter 1 of Title 30 and Chapter 15 of Title 35 that are filed with the executive
	208	+
	209	+
	210	+	- 8 - 000657
	211	+
169	212		secretary of the Tennessee Code Commission by May 19, 2025, by duly authorized
170	213		representatives of the Trust Committee of the Tennessee Bankers Association.
171		-	SECTION 13. This act takes effect July 1, 2025, the public welfare requiring it.
172		-	4 HOUSE BILL NO. 817
173		-	PASSED: March 10, 2025
174		-	Q
175		-	CAMERON S'="TON, SPEAKER
176		-	HOUSE OF REPRESENTATIVES
177		-	~""""'~~~~
178		-	~
179		-	~~ ... .,,..
180		-	RANDYMCt
181		-	SPEAKER OF THE SENATE
182		-	APPROVED this Bi?fl: day of (Y)QY~ 2025
183		-	~Ut-
184		-	BILL LEE, GOVERNOR
	214	+	SECTION 17. This act takes effect July 1, 2025, the public welfare requiring it.