TISTs: Some Key Points

  • Irrevocability. A Tennessee Investment Services Trusts (TIST) is irrevocable, meaning that once it is executed it generally cannot be altered, amended, revoked, or terminated.  As a result, it is very important that the trust provisions reflect your wishes.  This is particularly true with respect to the rules that apply during your lifetime, as the provisions that apply upon death can be typically be altered by your will through the exercise of a testamentary limited power of appointment.
  • Qualified Affidavit. When you first transfer assets to a TIST, you must execute a “Qualified Affidavit.”  By doing so, you are swearing that the transfer is not being made to defeat creditors, that it does not involve illegally obtained assets, and that it is not made in anticipation of bankruptcy.  Likewise, if you later add assets to your TIST, you will need to execute a new qualified affidavit.
  • Additional Contributions. You are generally free to make additional contributions of your own assets to a TIST.  Note, though, that each contribution starts a new two year statute of limitations with respect to those assets. The statute of limitations applicable to earlier contributions is unaffected.
  • Estate Taxes. As a trust funded with your own assets and from which you retain the right to receive distributions of income and principal, your TIST will be includible in your estate for death tax purposes.  As such, the primary purpose of a TIST is for asset protection purposes, not for the avoidance of death taxes.

Posted by Joel D. Roettger, JD, LLM, EPLS

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