Trusts

Plain English Breakdown

The bill summary text and digest do not provide specific details on how these changes will affect existing trusts and estates without clear retroactive applicability.

Changes to Trust and Estate Laws

This act amends Tennessee's trust and estate laws, clarifying provisions related to wills executed outside of Tennessee, charitable organizations' rights, trustee protections for small trusts, direct payment of expenses by trustees, and liability protection for trustees managing closely held businesses.

What This Bill Does

• Clarifies that a will executed outside of Tennessee can be admitted to probate if it meets certain conditions.
• Gives charitable organizations receiving distributions under a trust the same rights as individual beneficiaries, including notice and participation in nonjudicial settlement agreements.
• Raises the threshold for trustees to terminate small trusts from $100,000 to $250,000.
• Allows trustees to pay properly incurred expenses directly from the trust estate without prior court approval.
• Provides that trustees acting in a managerial capacity with respect to closely held businesses are not liable for losses or failures to maximize returns if they act in good faith and believe their actions are in the best interest of the trust.

Who It Names or Affects

• Trustees, beneficiaries, charitable organizations, and courts dealing with trusts and estates in Tennessee.

Terms To Know

Qualified Beneficiary

A beneficiary who is entitled to receive trust income or principal under certain conditions.

Nonjudicial Settlement Agreement

An agreement between parties involved in a trust that can be used instead of going to court.

Limits and Unknowns

• The bill does not specify an effective date for the changes it makes.
• Some provisions may require further interpretation by courts or additional regulations to clarify their application.
• It is unclear how these changes will affect existing trusts and estates without clear retroactive applicability.

Official Summary Text

Present law authorizes a will executed outside of this state to have the same force and effect as a will executed in this state if it was in compliance with the law of the testator's domicile or the state in which the will was executed. This bill clarif
ies that such a will is sufficiently proved to be admitted to probate in this state if it is proved that the will could be admitted to probate (i) in the state where it was signed; (ii) under the law of the testator's domicile at the time of its execution
;
or (iii) is a will containing the signatures of at least two attesting witnesses, a holographic will, or a paper writing written on or before February 15, 1941, that meets certain requirements.

RIGHTS OF CHARITABLE ORGANIZATIONS

Present law gives a charitable organization expressly designated to receive distributions under the terms of a charitable trust the same rights as a qualified beneficiary if the charitable organization would be a qualified beneficiary if such charitable
organization were an individual beneficiary. A "qualified beneficiary" means a beneficiary who, on the date the beneficiary's qualification is determined, (i) is a distributee or permissible distributee of trust income or principal; (ii) would be a distr
ib
utee or permissible distrubutee of trust income or principal if the trust terminated on that date; or (iii) would be a distributee or permissible distributee of trust income or principal if the interests of the distributees terminated on that date without
causing the trust to terminate.

This bill clarifies that a charitable organization that receives the same rights as a qualified beneficiary may receive notice and information about the trust, as prescribed by present law. The charitable organization may also participate in nonjudicial
settlement agreements with respect to any matter involving the trust.

RIGHTS AND PROTECTIONS OF A TRUSTEE

Present law authorizes the trustee of a trust consisting of property having a total value of less than $100,000 or for which the trustee's annual fee for administering the trust is 5% or more of the market value of the trust to, after notice to the quali
fied beneficiaries, terminate the trust if the trustee determines that the value of the trust property is insufficient to justify the cost of administration. This bill raises the threshold to $250,000.

Present law provides that a trustee, trust advisor, or trust protector is entitled to be reimbursed out of the trust property for expenses that were properly incurred in the administration of the trust and expenses that were not properly incurred in the
administration of the trust to the extent necessary to prevent unjust enrichment of the trust. This bill authorizes a trustee to pay properly incurred expenses directly from the trust estate.

Present law treats a trustee, trust advisor, or trust protector who acts in accordance with the terms of a trust, an agreement of the qualified beneficiaries, or a court order as an excluded fiduciary. Instead of an agreement of the qualified beneficiar
ies, this bill requires a trustee, trust advisor, or trust protector to act in accordance with a nonjudicial settlement agreement to be treated as an excluded fiduciary.

Present law authorizes a trust to confer upon a person other than the settlor of a revocable trust the power to direct certain actions of the trustee upon agreement of the qualified beneficiaries. The trustee must act in accordance with an exercise of t
hat power. This bill clarifies that such power may only be granted by the terms of the trust, a court order, or a nonjudicial settlement agreement.

Present law authorizes a trust trustee to send a notice that the trust is terminating, in whole or in part, or seeking to be relieved from liability on such trustee's removal or resignation, to the grantor of a trust, if living; each qualified beneficiar
y or their representative; all other trustees serving at that time, trust advisors, and trust protectors; and any other persons whom the trustee reasonably believes may also have an interest in the trust. Persons receiving the notice have 45 days to obje
ct
to the notice in writing. For the purpose of determining the date a notice was received, if confirmation of the date of receipt is not available, then this bill requires that the notice be presumed to have been received five business days after the date
of mailing.. Further, this bill clarifies that any objection must identify the portion of the notice to which the person receiving the notice objects and the basis for the objection. This bill also authorizes objections to be withdrawn at any time in w
ri
ting.

Present law authorizes a trustee, who has authority to invade the principal of a trust to make distributions to or for the benefit of one or more proper objects of the exercise of the power, to appoint principal, to instead exercise that authority by appo
inting all or part of the principal of the trust in favor of a trustee of a second trust if the exercise of that authority does not reduce any income interest of any income beneficiary of certain trusts and is in favor of the proper objects of the exercis
e
of the power to appoint principal.

This bill clarifies that the trustee may exercise the power to appoint principal to a second trust by modifying or restating the trust instrument. For the purposes of this provision, a "second trust" generally
means an original trust after
such
modification or restatement
,
or a trust to which a distribution of property from an original trust is or may be made
under this provision. However, the exercise of the power to appoint principal to a second trust by restatement or modification of the original trus
t does not require the retitling of property titled to the original trust or a change in payable on death or beneficiary designation to the original trust.

TRUSTEES ACTING IN A MANAGERIAL CAPACITY

This bill provides that a trustee, trust advisor, or trust protector is not liable for any resulting loss or failure to maximize returns when acting in a managerial capacity with respect to a closely held business. However, this protection from liabilit
y only applies if the trustee, trust advisor, or trust protector is an excluded fiduciary acting pursuant to the valid direction of a trust protector or trust advisor; acts in good faith; acts with the care that a person in a like position would believe i
s
appropriate; reasonably believes that the action is in the best interest of the trust; and does not act with improper motive.

Further, this bill provides that a trustee, trust advisor, or trust protector is not liable to a beneficiary for any act or decision made in a managerial or controlling capacity with respect to a closely held business interest unless it does not comply w
ith the above requirements. Courts are prohibited from determining that the trustee, trust advisor, or trust protector failed to meet the standard merely because the court would have made a different business decision. However, the court's authority to
re
view conduct or grant appropriate relief is not limited if the trustee, trust advisor, or trust protector's actions do not meet the above requirements.

This bill clarifies that the liability protections described above apply regardless of whether the trustee, trust advisor, or trust protector receives compensation from the trust or business entity. However, such provisions do not alter the duties with
respect to the investment in or ownership of a closely held business.

CONFIDENTIAL INFORMATION FILED UNDER SEAL

This bill authorizes confidential information related to trusts to be redacted or filed under seal without a prior court order if certain conditions are met. However, the trustee and qualified beneficiaries must consent to the redaction or filing under
seal and complete, unredacted copies must be provided to the court in camera and to all qualified beneficiaries. As used in this paragraph, "confidential information related to trusts" includes (i) trust instruments, settlement agreements, modification a
gr
eements, trustee resolutions, inventories, accountings, and reports; (ii) the names and addresses of trust settlors, trustees, and beneficiaries; (iii) trust dispositive terms; (iv) corporate and company records relating to trusts; (v) personally identify
ing information; and (vi) any other information the court deems confidential.

This bill authorizes confidential information to be redacted or filed under seal if the underlying matter does not involve third parties; solely concerns the trustee and the qualified beneficiaries; and relates to matters involving the validity, construc
tion, and administration of a trust. Unless the court orders otherwise, once confidential information is redacted or filed under seal in a matter, it must be redacted or filed under seal in all subsequent filings and orders.

This bill clarifies that it does not reduce the power of any court to order the production of unredacted and complete copies of filings for cause shown. However, the existence of a compelling interest to have confidential information regarding the trust
redacted or filed under seal must be presumed. In determining whether this presumption is overcome, the court may consider whether a public entity or official would benefit from secrecy, the information involves a matter of public concern, or the inform
at
ion is important to other litigation.

FAMILY-OWNED NONCORPORATE ENTITIES

The Excise Tax Law of 1999 imposes a tax on all persons doing business in this state equal to 6.5% of net earnings. However, there are many exemptions, including family-owned noncorporate entities. Present law defines "family-owned" in this context to
mean an entity in which at least 95% of the ownership units of the entity are owned by members of the family. With respect to an individual, the following are such members of the family (i) an ancestor of such individual; (ii) the spouse or former spouse
o
f such individual; (iii) a lineal descendant of such individual, including legally adopted children, a lineal descendant of such individual's spouse, or of a parent of such individual; (iv) the spouse or former spouse of any lineal descendant; or (v) the
estate or trust of a deceased individual who, while living, was any of the above.

This bill, instead, defines "family-owned" to mean that at least 95% of the voting rights, capital interest, or profits of the entity are owned either by natural persons who are relatives or by trusts for the benefit of such relatives or by
the estate of a deceased individual who was a relative while living.
N
atural persons are considered relatives, if, by blood or adoption, they are descended from a common ancestor and their relationship with each other is that of a first cousin or closer, or if they are
a spouse or former spouse of any such person or a lineal descendant of a spouse or former spouse of any such person
.

Current Bill Text

SENATE BILL 1910
By Stevens

HOUSE BILL 2454
By Garrett
HB2454
011475
- 1 -

AN ACT to amend Tennessee Code Annotated, Title 32;
Title 35 and Title 67, relative to trust and estate
law.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Section 32-1-107, is amended by
redesignating the current section as subsection (a) and adding the following new subsection:
(b) A will described in subsection (a) is sufficiently proved to be admitted to
probate in this state if it is proved that the will could be admitted to probate:
(1) In the state where it was signed;
(2) Under the law of the testator's domicile at the time of its execution; or
(3) In a manner prescribed by § 32-2-104, § 32-2-105, or § 32-2-110.
SECTION 2. Tennessee Code Annotated, Section 35-15-110, is amended by deleting
the section and substituting:
(a) A charitable organization expressly designated to receive distributions under
the terms of a trust has the rights of a qualified beneficiary under this chapter, if the
charitable organization, on the date the charitable organization's qualification is being
determined, would be a qualified beneficiary under this chapter if such charitable
organization were an individual beneficiary. Any such charitable organization expressly
designated in the terms of a trust may receive notice and information pursuant to §§ 35-
15-705, 35-15-813, and 35-15-817, and participate in nonjudicial settlement agreements
under § 35-15-111.
(b) The attorney general and reporter may exercise the rights of a qualified
beneficiary with respect to a charitable trust having its principal place of administration in

- 2 - 011475

this state if all of the interests in the trust that are for a charitable purpose, in the
aggregate, on the date the attorney general and reporter's qualification is being
determined, would cause an individual beneficiary to be a qualified beneficiary under this
chapter if all of such interests were for the benefit of an individual beneficiary instead of
for charitable purposes.
SECTION 3. Tennessee Code Annotated, Section 35-15-103, is amended by deleting
the language "an agreement of the qualified beneficiaries" wherever it appears and substituting
"a nonjudicial settlement agreement".
SECTION 4. Tennessee Code Annotated, Section 35-15-414(a), is amended by
deleting the language "one hundred thousand dollars ($100,000)" and substituting "two hundred
fifty thousand dollars ($250,000)".
SECTION 5. Tennessee Code Annotated, Section 35-15-709, is amended by adding
the following as a new subsection:
(c) A trustee may pay properly incurred expenses directly from the trust estate,
including the payment of attorney's fees and expenses in defense of an action of the
trustee. This subsection (c) does not limit the ability of the court to prevent further
disbursement from the trust by the trustee, or demand immediate reimbursement back to
the trust property at any time, or authorize an award pursuant to part 10 of this chapter.
SECTION 6. Tennessee Code Annotated, Section 35-15-710, is amended by deleting
the language "an agreement of the qualified beneficiaries" and substituting "a nonjudicial
settlement agreement".
SECTION 7. Tennessee Code Annotated, Section 35-15-808(b), is amended by
deleting the language "an agreement of the qualified beneficiaries" and substituting "a
nonjudicial settlement agreement".

- 3 - 011475

SECTION 8. Tennessee Code Annotated, Section 35-15-817(f), is amended by adding
the following language to the end of the subsection:
In order to be effective, any such person's objection must identify with reasonable
specificity the portion of the notice or exhibits to which the beneficiary objects and the
basis for the objection. A general objection without reasonable specificity is ineffective
and must be disregarded.
SECTION 9. Tennessee Code Annotated, Section 35-15-817(j), is amended by adding
the following language to the end of the subsection:
Any objection may also be withdrawn at any time in writing and such objection will have
no effect and will be disregarded.
SECTION 10. Tennessee Code Annotated, Section 35-15-817(k), is amended by
deleting the language "ten (10) business days" and substituting "five (5) business days".
SECTION 11. Tennessee Code Annotated, Section 35-15-818, is amended by deleting
the language "subdivision (a)(1)" and substituting "subdivision (1)".
SECTION 12. Tennessee Code Annotated, Section 35-15-818, is amended by deleting
the language "and" at the end of subdivision (11), deleting subdivision (12), and substituting:
(12) The trustee may exercise the power to appoint principal under subdivision
(1) by modifying or restating the trust instrument; and
(13) For purposes of this section:
(A) "Original trust" means the trust from which principal is being
distributed; and
(B) "Second trust" means an original trust after modification or
restatement under this section, or a trust to which a distribution of property from
an original trust is or may be made under this section; provided, that the exercise
of the power to appoint principal under this section to a second trust by

- 4 - 011475

restatement or modification of the original trust does not require the retitling of
property titled to the original trust or a change in a payable on death or
beneficiary designation to the original trust, even if the second trust is created by
a fiduciary or other person.
SECTION 13. Tennessee Code Annotated, Title 35, Chapter 15, Part 8, is amended by
adding the following new section:
(a) When acting in a managerial capacity with respect to a closely held business,
including serving as a director, officer, manager, general partner, or other controlling
person of such entity, a trustee, trust advisor, or trust protector is not liable for any
resulting loss or failure to maximize returns; provided that:
(1) The trustee, trust advisor, or trust protector is an excluded fiduciary
acting pursuant to valid direction of a trust protector or trust advisor; or
(2) The trustee, trust advisor, or trust protector:
(A) Acts in good faith;
(B) Acts with the care that a person in a like business position
would reasonably believe appropriate under similar circumstances;
(C) Reasonably believes the action or inaction is in the best
interest of the trust and its beneficiaries; and
(D) Does not act with an improper motive, as defined in § 35-15-
814(a)(1)(A), including an intent to benefit the trustee personally or to
further any purpose other than the best interests of one (1) or more
beneficiaries.
(b) A trustee, trust advisor, or trust protector is not liable to a beneficiary for any
act, omission, or decision made in a managerial or controlling capacity with respect to a
closely held business interest, unless the act or omission does not comply with

- 5 - 011475

subsection (a). A court shall not determine that the trustee, trust advisor, or trust
protector failed to meet this standard merely because the court would not have
exercised the discretion in the same manner.
(c) This section applies regardless of whether the trustee, trust advisor, or trust
protector receives compensation from the trust or the business entity; provided, that any
such compensation is reasonable, disclosed, and not prohibited by the terms of the trust.
(d) This section does not limit the court's authority to review conduct or to grant
appropriate relief under title 35, chapter 15, part 10, if the trustee, trust advisor, or trust
protector's actions are shown to be a breach of trust not protected under this section.
(e) This section does not alter the duties with respect to the investment in or
ownership of a closely held business, including, but not limited to, those imposed by the
Tennessee Uniform Prudent Investor Act of 2002, compiled in title 35, chapter 14, such
as the duty to diversify.
SECTION 14. Tennessee Code Annotated, Title 35, Chapter 15, Part 11, is amended
by adding the following new section:
(a) Confidential information related to trusts that is contained in court filings,
including court orders, may be redacted or filed under seal without a prior court order so
long as unredacted and complete copies of such filings are promptly provided to the
court in camera and to all qualified beneficiaries, and the trustee and qualified
beneficiaries consent to the redaction or filing under seal if the underlying matter:
(1) Does not involve third parties;
(2) Solely concerns the trustee and the qualified beneficiaries; and
(3) Relates to matters involving the validity, construction, and
administration of a trust, including the duties and powers of a trustee and the
rights and interests of a beneficiary.

- 6 - 011475

(b) Unless the court orders otherwise, confidential information once redacted or
filed under seal must be redacted or filed under seal, as applicable, without a prior court
order in all subsequent filings and orders in the matter. Unredacted and complete
copies of such filings and orders must be promptly provided in camera to the court and
to all qualified beneficiaries, unless a court orders otherwise.
(c)
(1) This section does not abridge the power of any court of competent
jurisdiction to order the production of unredacted and complete copies of
petitions, filings, and orders that have been redacted or filed under seal to a
qualified beneficiary or any other interested person for cause shown. The
existence of a compelling interest for filing documents redacted and under seal
with a court must be presumed for all matters involving a trust since such matters
involve purely private litigants, matters of purely private concern with little
legitimate public interest, and risk serious embarrassment or specific harm from
disclosure.
(2) In determining whether the presumption of a compelling interest for
filing redacted documents and under seal is overcome, a court may consider,
among other factors, whether:
(A) A public entity or official would benefit from secrecy;
(B) The information involves a matter of public concern; or
(C) The information is important to other litigation such that
sharing the information would promote fairness and efficiency.
(d) As used in this section, "confidential information related to trusts" includes:
(1) Trust instruments, settlement agreements, modification agreements,
trustee resolutions, inventories, accountings, and reports;

- 7 - 011475

(2) The names and addresses of trust settlors, trustees, and
beneficiaries;
(3) Trust dispositive terms, including, without limitation:
(A) Purely private litigants; and
(B) Matters of purely private concern with little legitimate public
interest;
(4) Corporate and company records relating to trusts;
(5) Personally identifying information, including, without limitation, social
security numbers and dates of birth; and
(6) Any other information the court deems confidential, if there is a
compelling interest in protecting the confidentiality of the information which
outweighs the public interest in accessing such information.
SECTION 15. Tennessee Code Annotated, Section 35-15-1201(a), is amended by
deleting the language "an agreement of the qualified beneficiaries" and substituting "a
nonjudicial settlement agreement".
SECTION 16. Tennessee Code Annotated, Section 35-15-1201(a)(14), is amended by
deleting the subdivision and substituting:
(14) The power to appoint under § 35-15-818;
SECTION 17. Tennessee Code Annotated, Section 67-4-2008(a)(11)(B)(i), is amended
by deleting the subdivision and substituting:
(i) "Family-owned" means that at least ninety-five percent (95%) of the voting
rights, capital interest, or profits of the entity are owned either by natural persons who
are relatives or by trusts for the benefit of such relatives or by the estate of a deceased
individual who was a relative while living. For this purpose, natural persons are
considered relatives, if, by blood or adoption, they are descended from a common

- 8 - 011475

ancestor and their relationship with each other is that of a first cousin or closer than that
of a first cousin, or if they are a spouse or former spouse of any such person or a lineal
descendant of a spouse or former spouse of any such person.
SECTION 18. Tennessee Code Annotated, Section 67-4-2008, is amended by deleting
subdivisions (a)(11)(B)(ii) and (v).
SECTION 19. The Tennessee Code Commission is requested to publish in Tennessee
Code Annotated the revisions to the official comments for Chapter 1 of Title 32, Chapter 15 of
Title 35, and Chapter 4 of Title 67 that are filed with the executive secretary of the Tennessee
Code Commission by May 19, 2026, by duly authorized representatives of the Trust Committee
of the Tennessee Bankers Association.
SECTION 20. This act takes effect July 1, 2026, the public welfare requiring it.