Tennessee Investment Service Trusts

When exploring options for safeguarding your wealth, one of the most powerful tools for protecting your assets is the Tennessee Investment Services Trust (TIST). This unique legal structure under the Tennessee Investment Services Act allows you to effectively shield your assets from potential creditors and retain control over your investments. Contact the team at Crow Estate Planning & Probate to learn more about this domestic assets protection trust and whether it is right for your financial and protection needs.

TIST Basics

To establish a TIST, you must meet the following requirements:

One of the trustees on the TIST is a Tennessee resident or corporate trustee authorized to serve in Tennessee. You cannot serve as a trustee on your own TIST.
Some of the property held in the trust must be in Tennessee. This can include an investment account in a bank or an investment company based in Tennessee.

While a TIST is an irrevocable trust, you are able to retain control over many aspects of the trust, such as:

Making investment decisions.
Determining the process for distributing trust property among beneficiaries after your death.
Appointing who serves as a trustee, removing trustees, and appointing a successor trustee.
Vetoing proposed distributions to other trust beneficiaries.
Deciding how you receive distributions from the trust, such as the principal or 5% of the trust’s initial or annual value.

What Are Some Limitations of a TIST?

As with any trust, there are some limitations to be aware of. The biggest disadvantage of a TIST is that you cannot sign any documents that the TIST is agreeing to and only the trustee can sign. Some other limitation include:

Irrevocable: TISTs are irrevocable, which means you cannot alter the language of the trust.
Future claims: A TIST can only protect your assets against future claims, not preexisting ones.
Exclusionary claims: TISTs cannot shield your assets from obligations like alimony or past-due child support.
Tax considerations: Since the client can receive distributions from the trust, it is often still viewed as part of the client’s estate when calculating estate taxes. For this reason, it’s important to develop an estate plan as you set up your TIST.

How to Tell if a TIST Is Right for You

Determining if a TIST is right for you begins with evaluating your current financial situation and your asset protection requirements. Consider these key factors:

Assess Your Assets and Wealth

If you have considerable assets such as a home, investments or a business that you want to protect from legal claims, a TIST may provide the level of protection you need. A TIST is a great option if your assets are likely to grow in value in the future.

Evaluate Your Risk Exposure

If you are a business owner or work in a field with high liability, like medical, legal, or consulting, you may be at a higher risk for a lawsuit, making it essential to protect your assets. A TIST is also beneficial if you have significant debt and want to shield your assets from creditors.

Understand Your Control Preferences

A TIST allows you to maintain some control over your assets, unlike traditional irrevocable trusts. If you want more control over your investments and distributions, you may want to explore other trust options.

What Are Some of the Tax Benefits of a TIST?

TISTs offer several tax return benefits, especially in how they handle income and distributions. The major advantage is that the TIST isn’t exposed to Franchise and Excise tax so it is usually used for commercial properties rather than using an LLC. Some of the other top tax-related benefits of a TIST include:

Protection of inherited assets: If you inherit assets and place them into a TIST, those assets are separate from your marital property, and you will not include them in the property divided between spouses during a divorce.
Avoiding taxes for asset growth: If you intend to set aside some or all of the assets in your trust for your beneficiaries, you can potentially protect them from paying estate taxes on future asset growth.
Better investment decisions: Your trustee can provide advice on investments and business choices for smarter financial decisions.
Help with tax compliance: The trustee for your TIST can help you understand your estimated income tax to make it easier to file your taxes and comply with all tax laws.

Learn More From the Experienced Tax Attorneys at Crow Estate Planning & Probate

At Crow Estate Planning & Probate, our attorneys understand how and when to use a Tennessee Investment Services Trust to provide the highest financial advantage. Forming a TIST can be complex and requires attention to detail. Our team is happy to help you understand what you need to know about a TIST, if one is right for you, and how to create one. Contact one of our attorneys today to learn more about TISTs or any of your estate planning needs.

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Very attentive. Made sure to clearly understand my needs and expectations for setting up my trust.

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Tennessee Investment Services Trust (TIST)

TIST Basics

What Are Some Limitations of a TIST?

How to Tell if a TIST Is Right for You

Assess Your Assets and Wealth

Evaluate Your Risk Exposure

Understand Your Control Preferences

What Are Some of the Tax Benefits of a TIST?

Learn More From the Experienced Tax Attorneys at Crow Estate Planning & Probate

Hear From Our Clients

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