How to Create a Living Trust in Tennessee

Tennessee law offers flexibility when creating these legal arrangements, making them accessible to property owners across the Volunteer State. Whether you own a modest home in Nashville or substantial assets throughout Tennessee, understanding how to create a living trust can help ensure your wishes are carried out exactly as you intend. The process involves several important steps, from deciding between revocable and irrevocable trusts to properly funding your trust with assets.

Consider working with a financial advisor if you need help with your own long-term financial planning.

Creating a Living Trust in Tennessee

A living trust in Tennessee offers a practical way to manage your assets during your lifetime and distribute them after death without going through probate. This legal arrangement allows you to transfer property to beneficiaries more efficiently than a will alone. Setting up a living trust is largely the same regardless of where you live in the U.S. Here are the basic six steps you’ll need to take:

Identify what should go into the trust: Some assets can’t, such as 401(k) plans and IRAs, which have to be in an individual’s name. Other things like bank accounts, securities and life insurance policies can, but don’t need to, as long as you set up payable-on-death accounts or designate your beneficiaries. Most likely, it’s real estate and business interests that you want to protect with a living trust. (But as long as you are setting up the trust, you may decide to put everything you can in the trust.)
Choose the appropriate type of living trust: You probably want it to be revocable (as opposed to irrevocable), so that you can remove assets or cancel the whole trust, in the event you need to sell some assets and use the proceeds. If you are single, your best option is likely a single trust. If you’re married, a Tennessee Community Property Trust will hold what you own jointly without your having to split property or say who owns what.
Choose your trustee: This is who will manage your trust. With revocable trusts, it can be you, or in the case of a joint trust, you and your spouse can be co-trustees. If you name yourself, you’ll also need to choose a successor trustee for when you die.
Create a trust agreement: You’re safest hiring an attorney to do this for you. But if you want to do this as cheaply as possible, you can use an online program.
Sign the trust document: This must be completed in front of a notary public.
Transfer your property into the trust: By state law, the trust will not take effect until deeds and titles are transferred or put in the name of the trust. For things that can’t be titled, like jewelry or art, it’s enough to just list them in the trust agreement. Again, you can do the paperwork yourself, though you’ll probably want a lawyer to help you.

What Is a Living Trust?

A living trust is like a will in the sense that they are a legal documents that assign where property is to go when the owner dies. The difference is that a living trust is also an entity that holds the property while the owner or grantor is alive. The primary aim of a living trust is to avoid probate, a court process that can take months and even years.

The trust, then, requires someone to manage it, and this person is called the trustee. As mentioned earlier, the trustee can be the grantor if it’s a revocable trust, or it can be an adult child, other relative, friend, lawyer or anyone you trust. When the grantor dies, it’s the trustee’s job to distribute assets as the grantor instructed. In the case that the grantor was their trustee, the successor trustee would step in.

As noted earlier, there are revocable and irrevocable living trusts. The former is commonly preferred for its flexibility. Also, the grantor does not give up ownership rights. On the other hand, grantors of irrevocable trusts do give up all claim to control and ownership, and as a result, are off the hook for taxes.

How Much Does It Cost to Create a Living Trust in Tennessee?

The cost of setting up a living trust varies, depending on whether you use a lawyer, the lawyer’s fees and the costs for retitling assets. By not using an attorney, you’ll lower the amount considerably, since it’s the lawyer’s fees that are the biggest expense. Online programs will run you a few hundred dollars, while attorney’s fees are generally one thousand dollars or more, but it could be double that if you’re a couple.

If you’re not a detail-oriented person or uncomfortable going it alone, make sure the lawyer you hire is a trust specialist. Also, discuss fees upfront. If they are a fixed flat fee, make sure that retitling assets is included in the scope of work. If fees are hourly, ask for an estimate of how long the project will take and what would cause overruns.

Why Get a Living Trust in Tennessee?

The primary reason for creating a living trust in Tennessee, or anywhere, is to avoid probate, the court process for enacting a will. In Tennessee, probate will take at least four months. That’s how long state law gives creditors to submit any claims to an estate. And if many creditors are involved or people are contesting the will, probate can take years. Tennessee is not one of the states that has adopted the Uniform Probate Code, which simplifies the probate process.

In addition to taking a long time, all the while bank accounts are frozen and bills related to the estate are due, probate can be costly. There are attorney fees plus probate fees, which, in Tennessee, run from one to six percent of the estate value. The fees and time can be even higher if there is property in other states.

Another reason for getting a revocable living trust is that your heir is disabled. In this case, the trustee will manage the trust and follow your instructions in providing for your beneficiary. Also, a living trust is a good choice for people who want to postpone the distribution of assets until heirs reach a certain age. With a will, assets are distributed once probate concludes.

Who Should Get a Living Trust in Tennessee?

Since the primary reason for getting a living trust is to avoid probate, people who are concerned about the delay and costs of the court process should consider a living trust. This is generally the case for those who live in states that have a lengthy probate period.

Tennessee’s probate period is considered long and it does not use the Uniform Probate Code. So, a living trust is likely a good call if your estate is worth more than $50,000. At or below that amount, Tennessee allows for a simplified small estate process, which makes a living trust unnecessary.

You may especially want to get a living trust if your heirs will have a hard time paying the bills of your estate while it is frozen. Or if you own property in other states that also have lengthy probate periods.

Additionally, as stated earlier, you may want to set up a living trust for a disabled heir or perhaps an irresponsible one. Also, living trusts are a way for people to disinherit their children or leave more to some than others. This is because they’re harder to contest than wills. As for irrevocable trusts, these only make sense for very wealthy people who are also trying to minimize taxes.

Living Trusts vs. Wills

A living trust is a legal arrangement where you transfer ownership of your assets to a trust during your lifetime, with specific instructions for their management and distribution. A will, on the other hand, is a legal document that outlines how you want your assets distributed after your death and only takes effect once you’ve passed away. Even if you have a living trust, it would still be wise to have a will. The will can cover what was left out of the trust either by choice or accident. It can also leave instructions such as:

Forbidding your heirs from selling or giving away certain property
Forgiving a loan made to a relative
Stating your preference for the guardians of children who are minors

This chart compares living trusts and wills to help you understand the capabilities of both estate planning tools:

Living Trusts vs. Wills

Task	Living Trusts	Wills
Names a property beneficiary	Yes	Yes
Allows revisions to be made	Depends on type	Yes
Avoids probate court	Yes	No
Requires a notary	Yes	No
Names guardians for children	No	Yes
Names an executor	No	Yes
Requires witnesses	No	Yes

Living Trusts and Taxes in Tennessee

A living trust will not lower your Tennessee estate or inheritance taxes, since the state does not levy either kind. Your federal estate taxes will also likely not be affected by a revocable living trust. The 2025 exemptions are $13.99 million and $27.98 million, respectively (doubled for married couples filing jointly).

Bottom Line

Learning how to create a living trust in Tennessee can provide significant benefits for your estate planning needs. By establishing a trust, you can ensure your assets are distributed according to your wishes while potentially avoiding the time-consuming probate process. Remember that Tennessee has specific requirements for creating a valid living trust, including proper documentation, funding the trust with your assets, and ensuring all legal formalities are observed.

Estate Planning Tips

A financial advisor can help you with tax planning and wealth transfers, as well as investing assets to preserve capital. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Designate your beneficiaries. As tedious as filling out the forms can be, it is well worth the trouble. Pensions, life insurance policies, retirement accounts and brokerage accounts can all be easily transferred if you designate your beneficiaries. Then keep them updated, especially if you subsequently have children or get divorced.