Tennessee’s Trust Law Changes

Tennessee has built a reputation as one of the more trust-friendly states in the country. Lawmakers recently updated the Tennessee Trust Code again, adjusting how trusts are administered and reported. These changes can affect families who already hold trusts and those who are planning to create one.

A Quick Look at the Updates

The legislation took effect on July 1, 2025, and amended portions of the Tennessee Trust Code found under Titles 30 and 35. It grew out of work by the Tennessee Bankers Association Trust Committee, a group that proposes refinements to trust law most years. The 2025 package touched several areas of day-to-day trust administration.

The full text of the measure is available through the Tennessee public chapters record.

Beneficiaries Serving in a Non-Fiduciary Role

One change clarifies when a person connected to a trust acts as a fiduciary. Under the updated rule, a trust advisor or trust protector serves in a non-fiduciary capacity only when the trust document specifically appoints them that way. And a person acting in a non-fiduciary role faces liability only if they act in bad faith or with reckless indifference. For families, this removes some guesswork about who carries fiduciary duties and who does not.

Electronic Delivery of Trust Statements

Trustees have long mailed paper statements to beneficiaries, partly to keep a record that delivery happened. The new rule lets beneficiaries consent to receive statements and related materials electronically, so long as those materials stay accessible online for at least 60 days. The practical results include:

• Faster communication between trustees and beneficiaries
• Less paper and fewer mailing delays
• A cleaner record of what was shared and when

This update reflects how most families already manage their financial documents.

Tax Reimbursement for Grantor Trusts

Grantor trusts often shift income tax liability to the person who created the trust, even on income that person never personally receives. The 2025 law adds a default rule that allows a disinterested trustee to reimburse the grantor for that tax burden, as long as the trust does not prohibit it. This matters because recent IRS guidance warned against adding reimbursement language to an existing trust through later modification. A built-in statutory option gives families another path.

Public Trustee Appointments Without a Value Cap

Earlier law let a court appoint a public trustee only when a trust held $100,000 or less. The 2025 change removed that cap, so a public trustee may now be appointed regardless of trust size. The law also allows interested parties to waive the three-month waiting period, which can shorten the process when a trustee position sits vacant.

What These Changes Mean for Your Plan

Most of these updates favor flexibility. Still, they work best when your trust documents are written with them in mind. A trust drafted years ago may not address electronic delivery or grantor tax reimbursement at all. Reviewing existing documents helps confirm the language matches both your goals and current law.

If you are setting up a new trust, an Alcoa, TN trust lawyer can explain how these provisions apply to your situation. Families weighing estate planning in Alcoa often have questions about who controls a trust, how reporting works, and what happens when a trustee steps down.

The attorneys at Carpenter & Lewis PLLC help Tennessee families review existing trusts and adjust their plans as state law changes. If these recent updates have you wondering whether your documents still hold up, scheduling a review is a sound next step.