Estate Planning Law in Tennessee: Overview
Tennessee does not impose a state estate tax (repealed in 2016), inheritance tax, or income tax on wages (the Hall Income Tax on interest and dividends was repealed in 2021). The state is a common law property state with an elective share. Tennessee has its own probate code. Holographic wills are recognized. The state allows transfer-on-death deeds. The small estate threshold is $50,000. Tennessee has modern trust laws, including a domestic asset protection trust statute enacted in 2007 and provisions allowing trusts to last up to 360 years.
Key Statutes & Deadlines
State Estate Tax
No state estate tax (repealed 2016)
Tenn. Code § 67-8-101
Asset Protection Trust
Tennessee Investment Services Trust Act (2007)
Tenn. Code § 35-16-101
Dynasty Trust
Trusts can last up to 360 years
Tenn. Code § 66-1-202
Small Estate Threshold
$50,000 for small estate affidavit
Tenn. Code § 30-4-103
Will Execution
Two witnesses; holographic wills permitted
Tenn. Code § 32-1-104
Tax-Friendly Environment
Tennessee eliminated its state estate tax in 2016 and its income tax on interest and dividends in 2021, making it one of the most tax-friendly states. Combined with no general income tax and competitive trust laws, Tennessee is increasingly attractive for estate planning and trust formation.
Asset Protection Trusts
Tennessee enacted the Investment Services Trust Act in 2007, allowing domestic asset protection trusts. The DAPT requires a Tennessee trustee and a two-year fraudulent transfer limitation period. The settlor can be a discretionary beneficiary while receiving asset protection from future creditors.
Dynasty Trusts
Tennessee allows trusts to last up to 360 years, far exceeding the traditional rule against perpetuities. This extended duration enables multi-generational wealth transfer while minimizing transfer taxes.
Tennessee Court System
Tennessee probate is handled by the Chancery Court, Circuit Court, or dedicated Probate Court depending on the county. Davidson County (Nashville) has a dedicated Probate Court. The process involves filing the will, qualifying the executor, inventorying assets, and distributing the estate. Appeals go to the Court of Appeals and Supreme Court.
Damages & Penalties
Tennessee has no state estate, inheritance, or income tax. Fiduciaries face liability for breach. Courts can remove and surcharge fiduciaries. The DAPT statute has specific exceptions for child support and pre-existing claims.
Recent Legislative Changes
Tennessee repealed its estate tax in 2016 and its Hall Income Tax in 2021. The state enacted its DAPT statute in 2007 and extended trust duration to 360 years.
Key Takeaways
- No state estate tax, inheritance tax, or income tax.
- DAPT statute allows domestic asset protection trusts.
- Trusts can last up to 360 years.
- Holographic wills recognized.
- Transfer-on-death deeds available.
- Small estates under $50,000 qualify for affidavit.
- Increasingly competitive trust jurisdiction.
Frequently Asked Questions
Does Tennessee have a state estate tax?
No, Tennessee repealed its estate tax in 2016 and has no inheritance or income tax.
Does Tennessee allow asset protection trusts?
Yes, Tennessee enacted its DAPT statute in 2007 with a two-year limitation period. A Tennessee trustee is required.
How long can a trust last in Tennessee?
Up to 360 years.
Are holographic wills valid?
Yes, holographic wills in the testator's handwriting and signed are valid.
Does Tennessee allow transfer-on-death deeds?
Yes, TOD deeds are available for real property.
What is the small estate threshold?
$50,000 for the small estate affidavit.
This guide is provided for general informational purposes only and does not constitute legal advice. Tennessee laws may change, and the information here may not apply to your specific situation. For advice tailored to your circumstances, consult with a qualified Tennessee attorney.