Tennessee Authorizes Self-Settled Spendthrift Trusts and Modifies RAP

The following is from Naomi Snyder, Trust law protects assets from creditors, Tennessean.com, Aug. 5, 2007:

Tennessee has liberalized its trust law to make things easier for those who have millions or hundreds of thousands of dollars to protect.

For the first time, people can set up trusts in Tennessee to benefit themselves and still try to protect assets from creditors or lawsuits, a nice deal for people who have a lot of assets and a lot of liability, such as medical doctors or business owners.

Previously in Tennessee, someone setting up a trust to name himself as a beneficiary couldn’t also enjoy asset protection from creditors. * * *

Eleven states allow asset protection for trusts in which the person setting up the
trust can name himself as beneficiary, getting, for example, a regular stream of income from the trust’s investments.

Tennessee’s new law, which went into effect in July, also allows for trusts that effectively last 360 years instead of 90 years — joining about 20 other states that have this provision.

The article also quotes our colleagues, Robert H. Sitkoff (Harvard Law School) and Max Schanzenbach (Northwestern University School of Law).