Kyle Shannon 
One of the best things you can do for yourself and your family is to secure the legacy you have worked so hard to build, and one way to do that is to leverage legally backed protection for your assets. Failing to do so could lead to high risks of losing your assets to lawsuits and creditor claims.
If you live in Tennessee and want to protect your assets, the good news is that you’re in a trust-friendly jurisdiction. Consider the Tennessee Investment Services Trust, commonly known as TIST.
What Is a TIST?
A Tennessee Investment Services Trust (TIST) is a form of irrevocable asset protection trust that shields your assets from lawsuits and creditors after a specified period while keeping them in your control. Unlike a traditional third-party trust that requires a separate person, like a spouse, to be the beneficiary of the trust, a TIST allows you to name yourself as the beneficiary.
In practice, a TIST involves relinquishing ownership of your assets in the self-settled trust, while maintaining access and control. Technically, you can’t settle a lawsuit or creditor claim with assets you don’t own.
When you protect your assets in a TIST, although you surrender legal ownership of the assets, the Tennessee Investment Services Act of 2007 allows you to retain certain rights, including:
- Right to participate in the trustee’s decision-making process concerning your investments.
- Right to exercise veto authority over distributions from the trust.
- Right to remove and replace a trustee with a successor.
- Right to appoint trust assets during lifetime or by will at death.
Legal Requirements for Establishing a TIST
A TIST is contingent on two key elements. To rightfully bring your assets under the protection of a TIST, the trust must satisfy these requirements:
- One of the trustees must be a qualified trustee, either a Tennessee resident or a corporate trustee with a license to operate in Tennessee. As the grantor, you can’t appoint yourself as a trustee in your own TIST.
- Some trust assets must be located or held in Tennessee — for example, a bank or investment account in a Tennessee-based institution.
Who Can Execute a TIST?
Tennessee residents, whether individuals, LLCs, corporations, or joint ventures, can create a TIST, provided they meet the following requirements:
- Create the trust under the provisions of Tennessee law.
- Have a minimum of one qualified Tennessee trustee.
This kind of trust is recommended for:
- Individuals in high-risk professions like medicine and law.
- Families seeking to protect generational wealth.
- Individuals with high net worths.
- Business owners.
Who Can’t Execute a TIST?
While TISTs are generally open to everyone, you can’t execute one in certain circumstances:
- Insolvency: You can’t create a TIST if you’re currently insolvent or if executing one will render you so.
- Bankruptcy: If you have filed for bankruptcy or intend to file for bankruptcy, the law will not permit you to create a TIST.
- Illegal assets: The assets you intend to transfer to the trust must be obtained legally. Otherwise, you cannot create a TIST.
- Fraudulence: To qualify to create a TIST, you must act in good faith without an intention to defraud creditors.
Although not a strict requirement, you can file a qualified affidavit stating and confirming ownership of the assets and compliance with the preceding legal requirements.
Key Features of a TIST
A TIST has several distinct features that set it apart from other trusts.
- Irrevocability: Once a TIST is created and executed, the language of the trust can’t be changed or revoked, meaning you can never regain title to the assets in the trust or transfer them to another entity. This feature of a TIST makes it crucial to properly examine the trust’s language before executing it, because failure to do so can lead to permanent mistakes.
- Self-settled: A TIST allows you to be the grantor, who transfers the assets, and the beneficiary, who receives the benefits.
- Asset flexibility: With a TIST, you can transfer various assets, including real estate, securities, and investment portfolios.
Pros of a TIST
TISTs are a top choice for Tennessee residents and nonresidents because they provide several advantages for grantors and beneficiaries. Some major benefits of a TIST are:
- Asset protection: A properly executed TIST protects assets from future creditors and lawsuit claims. With such protection, you can rest assured that you won’t lose your wealth and holdings.
- Control retention: Although the assets you transfer to a TIST are no longer in your name, the law allows you to retain specific controls and rights over them as a beneficiary.
- Tax exclusion: Assets in a TIST are excluded from your individual state income tax.
- Durability: You can execute a TIST to extend beyond you to protect your assets for future generations.
Cons of a TIST
While a TIST protects your assets from legal losses and keeps them under your control, they are not without limitations. Some of the drawbacks of this trust include:
- Irrevocability: When you create a TIST, you relinquish ownership of your assets even though you still control them. The language of the trust is irrevocable, meaning you, as the grantor can’t alter or change the terms of the trust.
- Succession limitations: You can choose trustees related to you. However, if you replace an existing trustee with a successor, that successor cannot be related to or subordinate to you.
- Future claims: You can only create a TIST to protect future claims, not existing ones.
Best Principles for Creating a TIST
To create a TIST, you should follow these best practices:
- Ensure compliance with the laws of Tennessee.
- Appoint qualified Tennessee trustees.
- Transfer unencumbered assets to the trust.
- Name trust beneficiaries adequately.
- Set out the general terms for the investment, management, and distribution of the assets.
- Execute a qualified affidavit to create a rebuttable presumption that you transferred your assets to the trust on the execution date.
Reach out to Discuss Whether a TIST Is Right for You
There are several pros and cons of establishing a TIST. Despite the drawbacks, a TIST protects your assets adequately and secures your legacy, giving you peace of mind. If you’re unsure if a TIST is right for you and your needs, our team of experienced tax attorneys at Crow Estate Planning & Probate can help. When you contact one of our attorneys, they’ll educate you more about TISTs and advise on the best course of action.
About the Author
Kyle Shannon is an attorney and the Special Counsel for Digital Assets at Crow Estate Planning and Probate, PLC. He joined Crow in the fall of 2021, combining his legal education and personal experience in the digital asset space to provide tailored planning for our clients. He completed his Bachelor of Science Degree in Political Science from Austin Peay State University, then went on to graduate with his Juris Doctorate from the Oklahoma City School of Law. He is proud to call Clarksville home and help his community with their estate planning, digital asset planning, or business planning needs. Learn More.
Licensed in Tennessee