Section 5 of the most recent Probate Omnibus Bill, Public Chapter No. 340, adds a new section to Tennessee Code § 31-1-104. Section (d) provides:
In a proceeding to determine letters of guardianship or conservatorship, the court shall be vested with the authority to direct any fund or part of the fund decreed to belong to a minor or person with a disability, or in which there is recovery in favor of a minor or person with a disability, into a trust created under the Tennessee Uniform Trust Code, compiled in title 35, chapter 15 with such fiduciary appointed upon order of the court according to this chapter.
Although it was possible to accomplish this under the prior rules, the court now has explicit authority to transfer the ward’s assets to a trust. This will be attractive to many clients, as the guardianship and conservatorship rules typically require ongoing court supervision, annual accountings, a property management plan, and court authorization for certain transactions involving the ward’s property.
The statute is broad enough to allow transfers to existing trusts or trusts created specifically for purposes of the guardianship or conservatorship. Interestingly, the statute does not impose any requirements on the trust, such as:
- Whether it will be revocable or irrevocable;
- Who the trustee can be;
- Whether a corporate co-trustee should be required;
- Whether bond or accountings will be required;
- The distribution provisions of the trust; or
- The duration of the trust.
Evidently, these issues are left to the discretion of the court.
The new law took effect in May 2019.
Posted by Joel D. Roettger, JD, LLM, EPLS