Asset Protection Strategies We Use
There is no single strategy that works for everyone. Our attorneys take the time to understand your specific needs, the nature of your assets, and your long-term goals before recommending any approach.
If you are a business owner, the conversation typically starts with entity structure and often includes a TIST or irrevocable trust for assets held outside the business. If you are a married couple with real estate, tenants by the entirety and TBE trust planning are often the most immediate priorities. If you have accumulated significant personal wealth or face high professional liability, a TIST is frequently the most powerful tool available. The right plan depends on who you are and what you are protecting.
The following are some of the most effective tools we use.
Irrevocable Trusts
An irrevocable trust removes assets from your personal ownership, which means those assets are generally beyond the reach of creditors. Because you no longer legally own what is held in the trust, it cannot be taken to satisfy most personal claims or judgments. Certain irrevocable trusts can also provide meaningful estate tax advantages, allowing families to transfer wealth to the next generation more efficiently.
Spendthrift Trusts
A spendthrift trust protects a beneficiary from outside creditors and from their own financial decisions. Under Tennessee law, the protection is broad.
A creditor cannot reach the beneficiary’s interest in the trust, cannot intercept distributions, and cannot force the trustee to make any payment to them. That protection covers all types of beneficial interests, including remainder interests, and it holds up in federal bankruptcy proceedings as well.
Tennessee law also allows a trustee to pay a beneficiary’s expenses directly to third parties rather than distributing cash to the beneficiary. No creditor can reach those payments, and the trustee has no liability for making them. This means the trust can take care of a beneficiary’s actual needs without putting money in their hands where it could be reached.
It is also worth noting that if a child inherits assets in trust and serves as trustee, Tennessee law can still preserve creditor protection so long as distributions to that child are limited to an ascertainable standard such as health, education, maintenance, or support.
If you have a child or loved one you want to protect from the effects of divorce, creditors, or poor financial decisions, a spendthrift trust gives you meaningful control over how they benefit from what you leave behind.
Self-Settled Trusts
In Tennessee, the law allows you to create a self-settled trust in which you are both the person who funds the trust and a beneficiary. This is a powerful combination that many states do not permit. A properly structured self-settled trust can protect your assets from future creditors while still allowing you to benefit from those assets under the right circumstances. Tennessee’s laws in this area are among the most favorable in the country, making it an attractive option for residents and non-residents alike.
Business Structures
Structuring your business correctly is one of the most effective ways to protect your personal wealth. Limited liability companies, corporations, and other business structures create a legal boundary between your business liabilities and your personal finances. Without proper business structures in place, a lawsuit against your business can reach your personal property, retirement accounts, and savings. Our attorneys advise clients on the best structures for their situations, whether they are starting a new business or reorganizing an existing one.
Tenants by the Entirety
For married couples in Tennessee, how you hold title to real property matters. When a married couple owns real estate as tenants by the entirety, a creditor with a judgment against only one spouse generally cannot place a lien on or force the sale of that property. The protection is automatic and costs nothing beyond making sure the title is correct. It does not extend to joint debts, and it ends upon divorce or the death of either spouse.
For many couples, simply confirming the title is held correctly is a meaningful and often overlooked first step.
Tenants by the Entirety Trusts
Tennessee law allows married couples to transfer real property into a revocable living trust while keeping the creditor protection of tenants by the entirety ownership. This matters because many couples are unaware that putting real estate into a basic revocable trust will strip away that protection. Under Tennessee law, there is a way around this.
When the trust is drafted to satisfy the requirements of Tennessee law, the property can remain protected from the separate creditors of either spouse. This will still provide couples with the traditional estate planning benefits of a trust, including probate avoidance and incapacity planning. After the first spouse passes, the surviving spouse’s share becomes subject to their individual creditors to the extent they can vest title in themselves personally, which is another reason proper drafting matters.
Retirement Accounts
Federal and Tennessee law already provide strong creditor protection for many retirement accounts, including 401(k)s and IRAs. Maximizing contributions and understanding those protections is an often-overlooked piece of a complete asset protection plan.
Tennessee Investment Services Trust (TIST)
One of the most distinctive tools available to Tennessee residents is the Tennessee Investment Services Trust, commonly known as TIST. Referred to nationally as a Domestic Asset Protection Trust, or DAPT, the TIST is Tennessee’s version of this powerful planning vehicle. Tennessee authorized these trusts in 2007, and its laws have since become some of the most favorable in the country for this type of planning. TIST is a tool that Attorneys Thomas Steelman and John Crow have extensive knowledge of and regularly use to help clients protect significant assets.
John Crow 
Thomas Steelman 
