Title 35 Fiduciaries And Trust Estates
Chapter 1 Appointment and Removal of Trustees § 35-1-101. Real property — Documents to be recorded — Trust property. - (a) When real estate is held as a part of the trust property, the court order accepting the resignation or ordering the removal of a trustee and appointing a successor, or an acknowledged memorandum of the order, shall be recorded in the county where any real estate is located, identifying each parcel of real estate held by the trust.
- (b)
- (1) When real estate is held as part of the trust property and a trustee has resigned or been removed without order of a court, the resigning or removed trustee shall execute and record an instrument that:
- (A) Recites the resignation or removal of the trustee;
- (B) Gives the name and address of the successor trustee, if any; and
- (C) Identifies each parcel of real estate held by the trust.
- (2) A successor trustee, or a remaining trustee if there is no successor, shall execute and record the instrument described in subdivision (b)(1) if the resigning or removed trustee fails to record the required instrument within thirty (30) days after resigning or being removed.
History (3)
- Acts 1986, ch. 566, § 1
- 1992, ch. 951, § 11
- T.C.A. § 35-1-111.
§ 35-1-102. Appointment of public trustee. - In addition to the other provisions for the appointment of trustees in this chapter, a public trustee may be appointed by the court pursuant to title 30, chapter 1, part 4.
History (2)
- Acts 1987, ch. 322, § 19
- T.C.A. § 35-1-121.
Chapter 3 Investment of Trust Funds § 35-3-101. Authority of court. - The court is authorized to have the money and funds in the hands of clerks and receivers, or trustees, in litigation or under the control of the court, invested under such rules and orders in each case as may be legal and just.
History (4)
- Acts 1865, ch. 19, § 1
- Shan., § 5433
- mod. Code 1932, § 9592
- T.C.A. (orig. ed.), § 35-301.
§ 35-3-102. Authorized investments. - All trustees, guardians and other fiduciaries in this state, unless prohibited, or another mode of investment is prescribed by the will or deed of the testator or other person establishing the trust, may invest all funds in their hands in securities specified in §§ 35-3-103 — 35-3-111, and may also invest funds in income-producing commercial or residential property.
History (5)
- Acts 1931, ch. 100, § 1
- C. Supp. 1950, § 9596.1
- modified
- T.C.A. (orig. ed.), § 35-302
- Acts 2016, ch. 640, § 3.
§ 35-3-103. Federal and state securities. - (a) Investments may be made in bonds, notes and stock of the United States and any state and territory of the United States.
- (b) In the absence of an express provision to the contrary, if an indenture or other governing instrument directs, requires, authorizes or permits investment in United States government obligations, a bank, trust company, trust department or other fiduciary may invest in the obligations, either directly or in the form of securities or other interests in any open end or closed end management type investment company or investment trust registered under the federal Investment Company Act of 1940 (15 U.S.C. § 80a-1 et seq.), if the portfolio of the investment company or investment trust is limited to United States government obligations and to repurchase agreements fully collateralized by the obligations and if the investment company or investment trust actually takes delivery of the collateral, either directly or through an authorized custodian.
History (6)
- Acts 1931, ch. 100, § 1(a)
- C. Supp. 1950, § 9596.1(A)
- modified
- T.C.A. (orig. ed.), § 35-303
- Acts 1987, ch. 89, § 1
- 2008, ch. 672, § 1.
§ 35-3-104. Securities of foreign governments. - Investments may be made in bonds, notes and stock issued or guaranteed by any foreign government with which the United States is at the time of sale or offer of sale of the bonds, notes or stock maintaining diplomatic relations and which foreign government has not, for at least thirty (30) years prior to the making of the investment, defaulted for more than thirty (30) days in the payment of any part either of principal or interest of any bond, note, stock or other evidence of indebtedness issued by it; provided, that if the foreign government has not been in existence for as much as thirty (30) years, but has been in existence for not less than ten (10) years, then the investment may be made in securities issued or guaranteed by it, if it has not defaulted in the payment of any part either of principal or interest of any bond, note, stock or other evidence of indebtedness issued by it since it has been in existence.
History (4)
- Acts 1931, ch. 100, § 1(b)
- C. Supp. 1950, § 9596.1(B)
- modified
- T.C.A. (orig. ed.), § 35-304.
§ 35-3-105. Bonds of counties — “Net revenue” defined. - (a) Investments may be made in bonds of any county in the state and bonds of any city or town in the state having a population of not less than two thousand (2,000) by the last federal census preceding the investment, regardless of whether the bonds are payable from taxes levied on property in the county, city or town, or are payable solely from revenues of the waterworks system, electric distribution system or both owned and operated by the issuing county, city or town, or are payable from both taxes and revenues; provided, that the county, city or town has not defaulted within fifteen (15) years preceding the investment, for more than ninety (90) days, in the payment of any part of either principal or interest on any bond, note or other evidence of valid indebtedness.
- (b) Before any funds may be invested in bonds payable solely from waterworks, electric revenue or both, there shall be furnished with the bonds a certified copy of an operating statement issued by the official in charge of the operations of the waterworks or electric distribution systems, showing that the net revenue from the system or systems pledged to and available for the principal of and interest on all outstanding bonds payable from that revenue, covering a period of twelve (12) consecutive months out of the fifteen (15) months preceding the investment, have been at least one and one-third (1⅓) times the highest combined principal and interest requirements for any one (1) year on all bonds then outstanding that are payable from the pledged revenues of the system or systems.
- (c) “Net revenue” means total revenue less operating expenses incurred in connection with the operation of the system or systems.
History (6)
- Acts 1931, ch. 100, § 1(c)
- 1939, ch. 143, § 1
- 1949, ch. 275, § 1
- C. Supp. 1950, § 9596.1(C)
- modified
- T.C.A. (orig. ed.), § 35-305.
§ 35-3-106. Municipal bonds. - Investments may be made in bonds and notes of any county, city or town in any state or territory of the United States that has a population, as shown by the last federal census next preceding the investment, of not less than forty-five thousand (45,000) and has not defaulted within twenty-five (25) years next preceding the investment, for more than thirty (30) days, in the payment of any part of either principal or interest of any bond, note or other evidence of indebtedness.
History (4)
- Acts 1931, ch. 100, § 1(e)
- C. Supp. 1950, § 9596.1(D)
- modified
- T.C.A. (orig. ed.), § 35-306.
§ 35-3-107. Real estate bonds and notes. - Investments may be made in bonds and notes secured by first mortgage or deed of trust on real estate located in this state; provided, that:
- (1) The face or principal amount of the bonds or notes does not exceed one-half (½) the actual value of the real estate as appraised by one (1) or more licensed real estate dealers acting for unincorporated trustees, guardians or other fiduciaries, and in case of incorporated trustees, guardians or other fiduciaries, the appraisal shall be made by an agent or committee composed of or selected by the board of directors or executive committee of the incorporated trustee, guardian or other fiduciary;
- (2) The trustee, guardian or other fiduciary or any institution controlled by that entity or person has not received any commission from the borrower or issuer in the making of the mortgage or deed of trust or the underwriting of the securities secured by the mortgage or deed of trust, unless the commission charged the borrower or issuer does not exceed one percent (1%) per annum of the aggregate principal amount of the bonds or notes; and
- (3) Any probate or chancery court of the county where the fiduciary is located, upon the application of any beneficiary of the trust or of any person connected with any beneficiary, by consanguinity or affinity, within the sixth degree as computed by the civil law, may, at any time, either restrain the making of any such proposed investment, if the investment is not consummated, or if consummated, require the fiduciary promptly to dispose of the bonds or notes at the best price then obtainable and otherwise reinvest the funds, and the court may exercise such power to restrain or compel disposal in all cases in which the court may find that action to be necessary to protect the interest of any beneficiary.
History (4)
- Acts 1931, ch. 100, § 1(f)
- C. Supp. 1950, § 9596.1(E)
- modified
- T.C.A. (orig. ed.), § 35-307.
§ 35-3-108. Railroad obligations. - (a) Investments may be made in the following railroad obligations:
- (1) Obligations issued, assumed or guaranteed as to principal and interest by endorsement, or so guaranteed, which guaranty has been assumed;
- (2) Obligations for the payment of the principal and interest of which a railroad corporation such as is described in this section is obligated under the terms of a lease made or assumed; or
- (3) Equipment trust obligations in respect of which liability has been incurred by a railroad corporation incorporated under the laws of the United States, or any state of the United States, and owning and operating within the United States not less than five hundred (500) miles of standard-gauge railroad line, exclusive of sidings, or if the mileage so owned is less than five hundred (500) miles, the railroad operating revenues from the operation of all railroads operated by it, including the revenues from the operation of all railroads controlled through ownership of all, except directors' qualifying shares, of the voting stock of the owning corporation, was not less than ten million dollars ($10,000,000) each year for at least five (5) of the six (6) fiscal years next preceding the investment.
- (b) Provided, that:
- (1) In each year for at least five (5) of the six (6) fiscal years and in the last fiscal year next preceding the investment, the amount of income of such railroad corporation available for its fixed charges, as defined in subsection (c), was not less than one and one-half (1½) times its fixed charges, as defined in subsection (c);
- (2) In each year for at least five (5) of the six (6) fiscal years next preceding the investment, the railroad corporation has paid dividends in cash upon its capital stock equivalent to at least one-fourth (¼) of its fixed charges, or if the railroad corporation has not paid such dividends, that the amount of income available for its fixed charges was not less than one and one-half (1½) times its fixed charges for at least nine (9) of the ten (10) fiscal years and in the last fiscal year next preceding the investment;
- (3) At no time within the period of six (6) years has the railroad corporation failed regularly and punctually to pay the matured principal and interest of all its mortgage indebtedness; and
- (4) The security, if any, for the obligations shall be property wholly or in part within the United States and the obligations shall be:
- (A) Fixed interest-bearing bonds secured by direct mortgage on railroad owned or operated by the railroad corporation;
- (B) Bonds secured by first mortgage upon terminal, depot or tunnel property, including lands, buildings and appurtenances, used in the service of transportation by one (1) or more railroad corporations; provided, that the bonds are the direct obligation of, or that payment of principal and interest of the bonds are guaranteed by, endorsement by or guaranteed by endorsement, which guaranty has been assumed by, one (1) or more railroad corporations;
- (C) Equipment trust obligations, comprising bonds, notes and certificates, issued in connection with the purchase for use on railroads of new standard-gauge rolling stock through the medium of an equipment trust agreement, and which obligations, so long as any of them are outstanding and unpaid or unprovided for, shall be secured by an instrument:
- (i) Vesting title to the equipment in a trustee free of encumbrance; or
- (ii) Creating a first lien on the equipment, or, pending the vesting of title, by the deposit of cash in trust to an amount equal to the face amount of the obligations issued in respect of the equipment, title to which is not yet so vested; provided, that the maximum amount of the obligations so issuable shall not exceed eighty percent (80%) of the cost of the equipment; and provided further, that the owner, purchaser or lessee, or the owners, purchasers or lessees, of the equipment shall be obligated by the terms of the obligations or of the instrument to:
- (a) Maintain the equipment in proper repair;
- (b) Replace any of the equipment that may be destroyed or released with other equipment of equal value, or, if released in connection with a sale of the equipment, to deposit the proceeds of the sale in trust for the benefit of the holders of the obligations pending replacement of the equipment;
- (c) Pay any and all taxes or other governmental charges that may be required by law to be paid upon the equipment;
- (d) Pay, in accordance with the provisions of the obligations or of the instrument, to holders, or to the trustee for the benefit of holders, of the obligations the amount of interest due on the obligations or of the dividends payable in respect of the obligations; and
- (e) Pay the amount of the entire issue of the obligations in annual or semiannual installments each year throughout a period of not exceeding fifteen (15) years from the first date of issue of any of the obligations that the amount of the respective unmatured installments at any time outstanding shall be approximately equal; provided, that unless the owner, purchaser or lessee of the equipment, or one (1) or more of the owners, purchasers or lessees shall be a railroad corporation as is described in and meets the requirements of this section preceding subdivision (b)(4)(A), the obligations shall be guaranteed by endorsements as to principal and as to interest or dividends by the railroad corporation;
- (D) Bonds of the railroad corporation secured by irrevocable pledge as collateral under a trust agreement of other railroad bonds that are legal investment for fiduciaries under this section, have a maturity not earlier than the bonds that they secure and of a total face amount not less than the total face amount of the bonds that they secure; or
- (E) Fixed interest-bearing mortgage bonds other than those described in subdivisions (b)(4)(A) and (B), income mortgage bonds, collateral trust bonds or obligations other than those described in subdivision (b)(4)(D), or unsecured bonds or obligations, issued, assumed or guaranteed as to principal and interest by endorsement by, or so guaranteed, which guaranty has been assumed by, the railroad corporation; provided, that in each year for at least five (5) of the six (6) fiscal years and in the last fiscal year next preceding the investment:
- (i) The amount of income of the railroad corporation available for its fixed charges, as defined in subsection (c), was not less than twice the sum of:
- (a) Its fixed charges, as defined in subsection (c); and
- (b) Full interest on the income mortgage bonds, if any;
- (ii) The net income of which after deductions was not less than ten thousand dollars ($10,000); and
- (iii) The railroad corporation has made the dividend and principal and interest payments required by subdivisions (b)(4)(C)(ii)(d) and (e).
- (c) The amount of income available for fixed charges shall be the amount obtained by deducting from gross income all items deductible in ascertaining net income other than contingent income interest and those constituting fixed charges. Fixed charges shall be rent for leased roads, miscellaneous rents, fixed interest on funded debt, interest on unfunded debt and amortization of discount on funded debt.
- (d) Accounting terms used in this section shall be deemed to refer to those used in the accounting reports prescribed by the accounting regulations for common carriers subject to the Interstate Commerce Act (U.S.C. Title 49). If the interstate commerce commission prescribes accounting regulations in which are defined the terms “income available for fixed charges” and “fixed charges,” the definitions of those terms as so prescribed shall be taken and used in lieu of the definitions set forth in subsection (c) for all purposes.
- (e) For purposes of this section, the revenues, earnings, income and fixed charges of, and dividends paid by, any railroad corporation, all or substantially all of the railroad lines of which have been acquired through merger, consolidations, conveyance or lease by another railroad corporation and remain in its possession, shall be deemed to be revenues, earnings, income and fixed charges of, and dividends paid by, the latter corporation.
- (f) Not more than twenty-five percent (25%) of the assets of any trust shall be loaned or invested in the bonds, notes and certificates in this section defined, and not more than ten percent (10%) of the assets shall be invested in such bonds, notes and certificates for which any one (1) railroad corporation shall be obligated.
History (4)
- Acts 1931, ch. 100, § 1(g)
- C. Supp. 1950, § 9596.1(F)
- modified
- T.C.A. (orig. ed.), § 35-308.
§ 35-3-109. Public utility bonds. - (a) Investments may be made in the bonds of any corporation that at the time of the investment is incorporated under the laws of the United States or any state of the United States, or the District of Columbia, and transacting the business of supplying electrical energy or artificial gas or both for light, heat, power and other purposes; provided, that at least seventy-five percent (75%) of the gross operating revenues of any such corporation are derived from that business, and not more than fifteen percent (15%) of the gross operating revenues, are derived from any one (1) kind of business other than supplying electricity and gas; and provided further, that corporation is subject to regulation by the Tennessee public utility commission or a public utility commission, or other similar regulatory body duly established by the laws of the United States or the states in which such corporation operates, subject to the following conditions:
- (1) The corporation has all franchises necessary to operate in territory in which at least seventy-five percent (75%) of its gross income is earned, which franchises shall either be indeterminate permits or agreements with or subject to the jurisdiction of the Tennessee public utility commission, or other duly constituted regulatory body, or extend at least five (5) years beyond the maturity of the bonds;
- (2) The outstanding full paid capital stock of the corporation is equal to at least two-thirds (⅔) of the total debt secured by mortgage lien on any part or all of its property; provided, that in case of a corporation having nonpar value shares, the amount of capital that such shares represent is the capital as shown by the books of the corporation;
- (3) The corporation has been in existence for a period of not less than eight (8) fiscal years and at no time within the period of eight (8) fiscal years next preceding the date of the investment has the corporation failed to pay promptly and regularly the matured principal and interest of all its indebtedness direct, assumed or guaranteed, but the period of life of the corporation, together with the period of life of any predecessor corporation or corporations from which a major portion of its property was acquired by consolidation, merger or purchase shall be considered together in determining the required period;
- (4) For a period of five (5) fiscal years next preceding the investment the net earnings of the corporation have averaged per year not less than twice the average annual interest charges on its total funded debt applicable to that period, and for the last fiscal year preceding the investment its net earnings have been not less than twice the interest charges for a full year on its total funded debt outstanding at the time of the investment, and for that period the gross operating revenues of any such corporation have averaged per year not less than one million dollars ($1,000,000), and the corporation has for each year either earned an amount available for dividends or paid in dividends an amount equal to four percent (4%) upon a sum equivalent to two-thirds (⅔) of its funded debt;
- (5) The bonds must be part of an issue of not less than one million dollars ($1,000,000) and must be mortgage bonds secured by a first or refunding mortgage secured by property owned and operated by the corporation issuing or assuming them, or must be underlying mortgage bonds secured by property owned and operated by the corporations issuing or assuming them. The bonds are to be refunded by a junior mortgage providing for their retirement; provided, that the bonds under the junior mortgage comply with the requirements of this section and that the underlying mortgage is either a closed mortgage or remains open solely for the issue of additional bonds which are to be pledged under the junior mortgage. The aggregate principal amount of bonds secured by the first or refunding mortgage plus the principal amount of all the underlying outstanding bonds shall not exceed sixty percent (60%) of the value of the physical property owned as shown by the books of the corporation and subject to the lien of the mortgage or mortgages securing the total mortgage debt; and provided further, that, if a refunding mortgage, it must provide for the retirement on or before the date of their maturity of all bonds secured by prior liens on the property; and
- (6) Not more than twenty-five percent (25%) of the assets of any trust shall be loaned on or invested in bonds of electric and gas corporations, and not more than ten percent (10%) of the assets of any trust shall be invested in the bonds of any one such corporation, as authorized by this section.
- (b) In determining the qualifications of any bond under this section where a corporation has acquired its property or any substantial part thereof within five (5) years immediately preceding the date of the investment by consolidation or merger, or by the purchase of all or a substantial portion of the property of any other corporation or corporations, the gross operating revenues, net earnings and interest charges of the several predecessor or constituent corporations shall be consolidated and adjusted so as to ascertain whether there has been compliance with the requirements of subdivision (a)(4).
- (c)
- (1) The gross operating revenues and expenses of a corporation, for the purposes of this section, shall be, respectively, the total amount earned from the operation of, and the total expense of maintaining and operating all property owned and operated by or leased and operated by the corporation, as determined by the system of accounts prescribed by the Tennessee public utility commission, public utility commission or other similar regulatory body having jurisdiction in the matter. The gross operating revenues and expenses, as defined in this subdivision (c)(1), of subsidiary companies may be included; provided, that all the mortgage bonds and a controlling interest in stock or stocks of the subsidiary companies are pledged as part security for the mortgage debt of the principal company.
- (2) The net earnings of any corporation, for the purpose of this section, shall be the balance obtained by deducting from its gross operating revenues, its operating and maintenance expenses, taxes other than federal and state income taxes, rentals and provision for renewals and retirements of the physical assets of the corporation, and by adding to the balance its income from securities and miscellaneous sources, but not, however, to exceed fifteen percent (15%) of the balance.
History (6)
- Acts 1931, ch. 100, § 1(h)
- C. Supp. 1950, § 9596.1(G)
- modified
- T.C.A. (orig. ed.), § 35-309
- Acts 1995, ch. 305, § 100
- 2017, ch. 94, § 34.
§ 35-3-110. Telephone corporation bonds. - (a) Investments may be made in the bonds of any corporation that at the time of the investment is incorporated under the laws of the United States or any state of the United States, or the District of Columbia, and is authorized to engage and is engaging in the business of furnishing telephone service in the United States, and provided the corporation is subject to regulation by the interstate commerce commission or a regulatory authority, or public utility commission or other similar federal or state regulatory body duly established by the laws of the United States or the states in which the corporation operates, subject to the following conditions:
- (1) The corporation has been in existence for a period of not less than eight (8) fiscal years and at no time within that period of eight (8) fiscal years next preceding the date of the investment has the corporation failed to pay promptly and regularly the matured principal and interest of all its indebtedness direct, assumed or guaranteed, but the period of life of the corporation, together with the period of life of any predecessor corporation or corporations from which a major portion of its property was acquired by consolidation, merger or purchase, shall be considered together in determining the required period;
- (2) The outstanding full paid capital stock of the corporation is at the time of the investment equal to at least two-thirds (⅔) of the total debt secured by all mortgage liens on any part or all of its property;
- (3) For a period of five (5) fiscal years next preceding the investment, the net earnings of the corporation have averaged per year not less than twice the average annual interest charges on its total funded debt applicable to that period, and for the last fiscal year preceding the investment, the net earnings have been not less than twice the interest charges for a full year on its total funded debt outstanding at the time of the investment, and for that period, the gross operating revenues of the corporation have averaged per year not less than five million dollars ($5,000,000), and the corporation has for each of those years either earned an amount available for dividends or paid in dividends an amount equal to four percent (4%) upon all of its outstanding capital stock; and
- (4) The bonds must be part of an issue of not less than five million dollars ($5,000,000) and must be secured by a first or refunding mortgage, and the aggregate principal amount of bonds secured by the first or refunding mortgage, plus the principal amount of all underlying outstanding bonds, shall not exceed sixty percent (60%) of the value of the property, real and personal, owned absolutely and subject to the lien of the mortgage; provided, that, if a refunding mortgage, it must provide for the retirement of all bonds secured by prior liens on the property. Not more than thirty-three and one-third percent (33⅓%) of the property constituting the specific security for the bonds may consist of stock or unsecured obligations of affiliated or other telephone companies, or both.
- (b) In determining the qualification of any bond under this section, where a corporation has acquired its property or any substantial part of its property within five (5) years immediately preceding the date of the investment by consolidation or merger or by the purchase of all or a substantial portion of the property of any other corporation or corporations, the gross operating revenues, net earnings and interest charges of the several predecessor or constituent corporations shall be consolidated and adjusted so as to ascertain whether there has been compliance with the requirements of subdivision (a)(3).
- (c) The gross operating revenues and expenses of a corporation, for the purpose of this section, shall be respectively the total amount earned from the operation of, and the total expense of maintaining and operating, all property owned and operated by or leased and operated by the corporation, as determined by the system of accounts prescribed by the interstate commerce commission or the Tennessee public utility commission, or public utility commission, or other similar federal or state regulatory body having jurisdiction in the matter.
- (d) The net earnings of any corporation, for the purpose of this section, shall be the balance obtained by deducting from its gross operating revenues its operating and maintenance expenses, provision for depreciation of the physical assets of the corporation, taxes other than federal and state income taxes, rentals and miscellaneous charges, and by adding to the balance its income from securities and miscellaneous sources, but not, however, to exceed fifteen percent (15%) of the balance. “Funded debt” means all interest bearing debts maturing more than one (1) year from date of issue.
- (e) Not more than twenty-five percent (25%) of the assets of any trust shall be loaned on or invested in bonds of telephone corporations, and not more than ten percent (10%) of the assets of any trust shall be invested in the bonds of any one (1) telephone corporation, as authorized by this section.
History (6)
- Acts 1931, ch. 100, § 1(i)
- C. Supp. 1950, § 9596.1(H)
- modified
- T.C.A. (orig. ed.), § 35-310
- Acts 1995, ch. 305, § 101
- 2017, ch. 94, § 35.
§ 35-3-111. Obligations of certain federal agencies. - Trustees, guardians and other fiduciaries may also invest in or lend on the following obligations issued by the following authorized federal agencies:
- (1) Bonds and/or debentures issued by a federal home loan bank organized under the “Federal Home Loan Bank Act” (47 Stat. 725, 12 U.S.C. § 1421 et seq.);
- (2) Stock of federal savings and loan associations organized under the “Home Owner's Loan Act of 1933” (48 Stat. 128, 12 U.S.C. § 1461 et seq.), and amendments to that act, and/or building and loan associations, licensed to do business in Tennessee, where the stock of the associations is insured by the federal savings and loan insurance corporation;
- (3) Notes, bonds, debentures or other obligations issued under title IV of the act of congress of the United States entitled “National Housing Act,” approved June 27, 1934 (48 Stat. 1246, 12 U.S.C. § 1701 et seq.), and any amendments thereto; and
- (4) Mortgages guaranteed or insured under title III of the act of congress of the United States, entitled “Servicemen's Readjustment Act of 1944,” approved June 22, 1944 (58 Stat. 284, 38 U.S.C. § 1801 et seq. [repealed]), and any amendments thereto.
History (6)
- Acts 1935 (E.S.), ch. 36, § 1
- 1939, ch. 73, § 1
- 1949, ch. 175, § 1
- C. Supp. 1950, § 9596.1(I)
- modified
- T.C.A. (orig. ed.), § 35-311.
§ 35-3-112. State and federal bond issues — Reports. - Guardians, executors, administrators and trustees shall also be authorized and empowered to invest money and funds in their hands in the bonds of the state, of the United States, or obligations issued separately or collectively by or for federal land banks, federal intermediate credit banks and banks for cooperatives under the act of congress known as the Farm Credit Act of 1971 (85 Stat. 583, 12 U.S.C. § 2001 et seq.) and amendments to that act, or in obligations issued under the Home Owner's Loan Act of congress (12 U.S.C. § 1461 et seq.), or notes or bonds secured by mortgage or trust deed insured by the federal housing administrator, or bonds and/or debentures issued by national mortgage associations; also to lend on the security of any such bonds to the extent of eighty-five percent (85%) of their face value; and, in either case, make report thereof to the court where the guardian, executor, administrator or trustee is qualified, unless another mode of investment is required by will or deed of the testator or another person who has established the funds.
History (11)
- Acts 1865, ch. 19, § 2
- Shan., § 4281
- Acts 1925, ch. 9, § 1
- Shan. Supp., § 4281a4
- mod. Code 1932, § 8497
- Acts 1935, ch. 136, § 1
- 1935, ch. 187, § 1
- 1937, ch. 75, § 1
- C. Supp. 1950, § 8497
- Acts 1976, ch. 585, § 2
- T.C.A. (orig. ed.), § 35-312.
§ 35-3-113. Life, endowment or annuity contracts of life insurance companies. - (a) Executors, trustees and guardians are authorized, with the approval of a probate court or other court of competent jurisdiction, to invest out of income or principal of funds in their custody, in single or annual premium life, endowment or annuity contracts of legal reserve life insurance companies duly licensed and qualified to transact business within the state.
- (b) Such contracts may be issued on the life or lives of any beneficiary, cestui que trust or ward, who may have a vested or contingent interest in the estate, or on the life or lives of any parent, trustor or other person in whom any beneficiary, cestui que trust or ward may have an insurable interest, and shall such be so drawn that the legal title of the policy or contract shall be in and the proceeds or avails of the proceeds payable to and in the control of the fiduciary making the investment, and may be retained and shall be subject to transfer, assignment and conveyance by the fiduciary as other personal property held in the account.
History (5)
- Acts 1939, ch. 133, §§ 1-3
- 1945, ch. 150, § 1
- mod. C. Supp. 1950, § 9596.2
- T.C.A. (orig. ed.), § 35-313
- Acts 2010, ch. 725, § 22.
§ 35-3-114. Certificates of deposit and savings accounts. - All trustees and guardians in this state, unless prohibited, or another mode of investment is prescribed, by the will or deed of the testator or other person establishing the trust, may invest trust funds in their hands, in addition to the investments heretofore authorized, in certificates of deposit of, and savings accounts in, any national or state bank in the United States, including itself if such trustee or guardian is a national or state bank in the United States otherwise qualified, whose deposits are insured by the federal deposit insurance corporation, at the prevailing rate of interest of such certificates or savings accounts. No trustee or guardian shall invest in such certificates of deposit of, or savings accounts in any one (1) bank, an amount from any one (1) fund in the trustee's or guardian's care in excess of such amount as is fully insured as a deposit in the bank by the federal deposit insurance corporation, unless the investment is first approved by a court of competent jurisdiction.
History (5)
- Acts 1939, ch. 170, § 1
- C. Supp. 1950, § 9596.3 (Williams, § 9596.7)
- Acts 1975, ch. 331, § 1
- T.C.A. (orig. ed.), § 35-314
- Acts 1989, ch. 288, § 1.
§ 35-3-115. Public housing authority obligations. - Notwithstanding any restrictions on investments contained in any laws of this state, the state and all public officers, municipal corporations, political subdivisions, and public bodies, all banks, bankers, trust companies, savings banks and institutions, building and loan associations, savings and loan associations, investment companies, and other persons carrying on a banking business, all insurance companies, insurance associations and other persons carrying on an insurance business, and all executors, administrators, guardians, trustees and other fiduciaries may legally invest any sinking funds, moneys or other funds belonging to them or within their control in any bonds or other obligations issued by a housing authority pursuant to the Housing Authorities Law, compiled in title 13, chapter 20, and any amendments to that law, or issued pursuant to the Memphis Housing Authority Law, chapter 615 of the Private Acts of 1935, as amended by chapter 900 of the Private Acts of 1937, and any amendments to that law, or issued by any public housing authority or agency in the United States, when the bonds or other obligations are secured by a pledge of annual contributions to be paid by the United States government or any agency of the United States government. The bonds and other obligations shall be authorized security for all public deposits, it being the purpose of this section to authorize any persons, firms, corporations, associations, political subdivisions, bodies and officers, public or private, to use any funds owned or controlled by them, including, but not limited to, sinking, insurance, investment, retirement, compensation, pension and trust funds, and funds held on deposit, for the purchase of any such bonds or other obligations; provided, that nothing contained in this section shall be construed as relieving any person, firm or corporation from any duty of exercising reasonable care in selecting securities.
History (3)
- Acts 1939, ch. 155, § 1
- C. Supp. 1950, § 9596.4 (Williams, § 9596.8)
- T.C.A. (orig. ed.), § 35-315.
§ 35-3-116. Courts empowered to authorize retention of original investments. - (a) Any guardian, personal representative, trustee or other fiduciary may make, in the county in which appointed, application to the chancery court, or to any other court therein having concurrent jurisdiction, for permission to retain and hold in unchanged form any security or investment originally forming a part of the estate, and the court shall have the authority and power to authorize the guardian, personal representative, trustee or other fiduciary, to retain and hold in unchanged form any security or investment originally forming a part of the estate, upon it being made to appear to the court that retention of the security or investment is to the manifest interest of the estate. The authority to retain securities or investments, when granted to the fiduciary by the instrument under which the fiduciary is acting, is not affected by the foregoing provisions.
- (b) The application in every such case shall be made by bill or petition, and the beneficiaries be made the defendants and served with process, and the cause shall be conducted and heard in the same manner as other suits in chancery.
- (c) A guardian ad litem shall be appointed for all defendants under disability, and the decree of the court authorizing the retention of the securities or investments shall set out fully the reasons and object moving the court in granting to the fiduciary the authority so to do.
- (d) It is not intended to impose upon a fiduciary any duty or obligation in addition to those arising under previously existing law, nor is it intended to change, modify or alter any investment statute of the state, except insofar as variations from those statutes may be made through proceedings authorized by this section.
History (3)
- Acts 1945, ch. 53, §§ 1-4
- mod. C. Supp. 1950, §§ 9596.5-9596.7 (Williams, §§ 9596.9-9596.11)
- T.C.A. (orig. ed.), §§ 35-316 — 35-318.
§ 35-3-117. Investment in securities of management investment company or investment trust by bank or trust company — Fiduciary liability — Abuse of fiduciary discretion. - (a) Notwithstanding any other law, a bank or trust company, to the extent it acts at the direction of another person authorized to direct investment of funds held by the bank or trust company, or to the extent that it exercises investment discretion as a fiduciary, custodian, managing agent, or otherwise with respect to the investment and reinvestment of assets that it maintains in its trust department, may invest and reinvest the assets, subject to the standard contained in this section, in the securities of any open-end or closed-end management investment company or investment trust registered under the Investment Company Act of 1940 (15 U.S.C. §§ 80a-1 — 80a-64). The fact that the bank or trust company, or any affiliate of the bank or trust company, is providing services to the investment company or trust as investment advisor, sponsor, distributor, custodian, transfer agent, registrar or otherwise, and receiving reasonable remuneration for the services, does not preclude the bank or trust company from investing in the securities of the investment company or trust.
- (b) In the absence of express provisions to the contrary in the governing instrument, a fiduciary will not be liable to the beneficiaries or to the trust with respect to a decision regarding the allocation and nature of investments of trust assets unless the court determines that the decision was an abuse of the fiduciary's discretion. A court shall not determine that a fiduciary abused its discretion merely because the court would not have exercised the discretion in the same manner.
- (c) If a court determines that a fiduciary has abused its discretion regarding the allocation and nature of investments of trust assets, the remedy is to restore the income and remainder beneficiaries to the positions they would have occupied if the fiduciary had not abused its discretion, according to the following rules:
- (1) To the extent that the abuse of discretion has resulted in no distribution to a beneficiary or a distribution that is too small, the court shall require a distribution from the trust to the beneficiary in an amount that the court determines will restore the beneficiary, in whole or in part, to the beneficiary's appropriate position, taking into account all prior distributions to the beneficiary;
- (2) To the extent that the abuse of discretion has resulted in a distribution to a beneficiary that is too large, the court shall restore the beneficiaries, the trust, or both, in whole or in part, to their appropriate positions, taking into account all prior distributions, by requiring the fiduciary to withhold an amount from one (1) or more future distributions to the beneficiary who received the distribution that was too large or requiring that beneficiary to return some or all of the distribution to the trust;
- (3) To the extent that the court is unable, after applying subdivisions (c)(1) and (2), to restore the beneficiaries, the trust, or both, to the position they would have occupied if the fiduciary had not abused its discretion, the court may require the fiduciary to pay an appropriate amount from its own funds to one (1) or more of the beneficiaries or the trust or both.
- (d) Upon a petition by the fiduciary, the court having jurisdiction over the trust or agency account shall determine whether a proposed plan of investment by the fiduciary will result in an abuse of the fiduciary's discretion. If the position describes the proposed plan of investment and contains sufficient information to inform the beneficiaries of the reasons for the proposal, the facts upon which the fiduciary relies, and an explanation of how the income and remainder beneficiaries will be affected by the proposed plan of investment, a beneficiary who challenges the proposed plan of investment has the burden of establishing that it will result in an abuse of discretion.
History (9)
- Acts 1951, ch. 125, §§ 1-6 (Williams, §§ 9596.12-9596.17)
- Acts 1968, ch. 518, § 1
- 1971, ch. 61, § 1
- 1974, ch. 634, § 1
- T.C.A. (orig. ed.), §§ 35-319 — 35-324
- Acts 1989, ch. 288, § 2
- 1991, ch. 386, § 1
- 2001, ch. 57, §§ 1, 2
- 2002, ch. 696, § 15.
§ 35-3-118. Stocks or bonds held by fiduciary in nominee's name. - (a) Trustees, guardians and other fiduciaries owning stocks or registered bonds may hold them in the name of a nominee without mention of the fiduciary relationship in the stock certificates, stock registration books, or registered bond or bond registry; provided, that:
- (1) The records and all reports and accounts rendered by the fiduciary clearly show the ownership of the stock or bond by the fiduciary, and the facts regarding its holding; and
- (2) The nominee deposits with the fiduciary a signed statement showing the fiduciary ownership, either endorses the stock certificate or registered bond in blank, or signs a transfer power in blank, and attach it to the certificate or bond, and does not have possession of or access to the stock certificate or bond, except under the immediate supervision of the fiduciary.
- (b) The fiduciary shall be personally liable for any loss resulting from any act of the nominee in connection with the securities so held.
- (c) This section shall apply to all such fiduciary relationships.
History (3)
- Acts 1953, ch. 165, §§ 1, 3 (Williams, § 9596.8b)
- 1957, ch. 49, § 1
- T.C.A. (orig. ed.), § 35-325.
§ 35-3-119. Tennessee Valley authority obligations. - Notwithstanding any restrictions on investments contained in any laws of this state, the state and all public officers, municipal corporations, political subdivisions, and public bodies, all banks, bankers, trust companies, savings banks and institutions, building and loan associations, savings and loan associations, investment companies, and other persons carrying on a banking business, all insurance companies, insurance associations and other persons carrying on an insurance business, and all executors, administrators, guardians, trustees and other fiduciaries may legally invest any sinking funds, moneys or other funds belonging to them or within their control in any bonds or other obligations issued by the Tennessee Valley authority pursuant to the Tennessee Valley Authority Act of 1933 (16 U.S.C. § 831), and any amendment to that act, and the bonds and other obligations shall be authorized security for all public deposits, it being the purpose of this section to authorize any persons, firms, corporations, associations, political subdivisions, bodies and officers, public or private, to use any funds owned or controlled by them, including, but not limited to, sinking, insurance, investment, retirement, compensation, pension and trust funds, and funds held on deposit, for the purchase of any such bonds or other obligations. Nothing contained in this section shall be construed as relieving any person, firm or corporation from any duty of exercising reasonable care in selecting securities.
History (2)
- Acts 1961, ch. 128, § 1
- T.C.A., § 35-326.
§ 35-3-120. Federally guaranteed loans and investments. - (a) Banks, trust companies, insurance companies, building and loan associations, credit unions, trustees and others acting in a fiduciary capacity, trust funds, pension and profit-sharing funds, real estate investment trusts, and other financial institutions, originating mortgagee institutions, and other institutions approved as mortgagees and otherwise meeting the requirements of the federal housing administration or veterans administration to act as mortgagees under the programs of these agencies may:
- (1) Make loans and advances of credit and purchases of obligations representing loans and advances of credit that are eligible for credit insurance by the federal housing commissioner, and may obtain that insurance;
- (2) Make loans secured by real property or leasehold, that the federal housing commissioner insures or makes a commitment to insure, and may obtain that insurance;
- (3) Invest their funds, eligible for investment, in notes or bonds secured by mortgage or trust deed insured by the federal housing commissioner, and in debentures issued by the federal housing commissioner, and also in securities issued by the Federal National Mortgage Association; and
- (4) Make any loans and advances of credit and purchases of obligations representing loans and advances of credit that are eligible to be guaranteed or insured in whole or in part by the veterans administration or administrator of veterans affairs, or secured by real property or leasehold as the administrator of veterans affairs makes a commitment to guarantee or insure.
- (b) No law of this state, requiring security upon which loans or investments may be made, or prescribing the nature, amount or form of the security, or prescribing or limiting interest rates upon loans or investments, or limiting investments of capital or deposits, or prescribing or limiting the period for which loans or investments may be made, shall apply to loans or investments made pursuant to this section.
History (2)
- Acts 1961, ch. 43, §§ 1, 2
- T.C.A., §§ 35-327, 35-328.
§ 35-3-121. Investments in securities by banks or trust companies. - Unless the governing instrument, court order, or a statute specifically directs otherwise, a bank or trust company serving as trustee, guardian, agent, or in any other fiduciary capacity may invest in any security authorized by this chapter even if that fiduciary or an affiliate of that fiduciary, as defined in [former] § 35-3-117(d) [repealed], participates or has participated as a member of a syndicate underwriting the security, if:
- (1) The fiduciary does not purchase the security from itself or its affiliate; and
- (2) The fiduciary does not purchase the security from another syndicate member or an affiliate, pursuant to an implied or express agreement between the fiduciary or its affiliate and a selling member or its affiliate, to purchase all or part of each other's underwriting commitments.
History (2)
- Acts 1983, ch. 60, § 1
- T.C.A., § 35-329.
§ 35-3-122. Liability of fiduciaries for losses. - Whenever an instrument under which a fiduciary is acting reserves to the settlor or vests an advisory or investment committee or in any other person or persons including one (1) or more other fiduciaries, to the exclusion of the fiduciary or to the exclusion of one (1) or more of several fiduciaries, authority to direct the making or retention of any investment, or to perform any other act in the management or administration of the fiduciary account, the excluded fiduciary or fiduciaries shall not be liable, either individually or as a fiduciary, for any loss resulting from the making or retention of any investment or other act pursuant to that direction.
§ 35-3-123. Trustee liability — Action upon written directions. - (a) A trustee of a revocable, irrevocable or testamentary trust is not liable to any beneficiary for any act performed or omitted pursuant to written directions from the person holding the power to revoke, terminate or amend the trust.
- (b) A trustee of a revocable, irrevocable or testamentary trust is not liable for any investment action performed or omitted pursuant to written directions from the person to whom the power to direct the investment or management of the account is delegated by the trustor.
§ 35-3-124. Investment in tuition units. - Notwithstanding any other law to the contrary, trustees and others acting in a fiduciary capacity, including governmental agencies such as court clerks, may invest funds held in trust for a minor through the purchase of tuition units on behalf of the minor under the Tennessee College Savings Trust Act, compiled in title 49, chapter 7, part 8.
History (2)
- Acts 1997, ch. 64, § 1
- 2017, ch. 400, § 2.
Chapter 5 Judicial or Trust Sales § 35-5-101. Twenty days' notice by publication. - (a) In any sale of land to foreclose a deed of trust, mortgage or other lien securing the payment of money or other thing of value or under judicial orders or process, advertisement of the sale shall be made at least three (3) different times in some newspaper published in the county where the sale is to be made.
- (b) The first publication shall be at least twenty (20) days previous to the sale.
- (c) This section shall not apply where the amount of indebtedness for the payment of which the property being sold does not amount to more than two hundred dollars ($200), in which event the owner of the property may order that advertisement be made by written notices posted as provided in § 35-5-103, instead of by notices published in a newspaper.
- (d) Nothing in this section shall be construed as applying to any notice published in accordance with any contract entered into heretofore, and expressed in a mortgage, deed of trust or other legal instruments.
- (e) In any sale of land to foreclose a deed of trust, mortgage, or other lien securing the payment of money or other thing of value or under judicial orders of process, the trustee or other party that sells the property shall send to the debtor and any co-debtor a copy of the notice required in § 35-5-104. The notice shall be sent on or before the first date of publication provided in subsection (b) by registered or certified mail, return receipt requested. The notice shall be sent to the following:
- (1) If to the debtor, addressed to the debtor at:
- (A) The mailing address of the property, if any; and
- (B) The last known mailing address of the debtor or any other mailing address of the debtor specifically designated for purposes of receiving notices provided at least thirty (30) days prior to the first publication date in written correspondence or written notice in accordance with the loan agreement from the debtor to the creditor, but only if the last known mailing address of the debtor or other mailing address designated by the debtor is different from the mailing address of the property; and
- (2) If to a co-debtor, addressed to the co-debtor at the last known mailing address of the co-debtor or any other mailing address of the co-debtor specifically designated for purposes of receiving notices provided at least thirty (30) days prior to the first publication date in written correspondence or written notice in accordance with the loan agreement from the co-debtor to the creditor, but only if the last known mailing address of the co-debtor or other mailing address designated by the co-debtor is both different from the mailing address of the property and different from the mailing address of the debtor determined as provided in subdivision (e)(1)(B).
- (f) Unless postponement or adjournment is contractually prohibited, any sale hereunder may be adjourned and rescheduled one (1) or more times without additional newspaper publication, upon compliance with the following provisions:
- (1) The sale must be held within one (1) year of the originally scheduled date;
- (2) Each postponement or adjournment must be to a specified date and time, and must be announced at the date, time and location of each scheduled sale date;
- (3) If the postponement or adjournment is for more than thirty (30) days, notice of the new date, time, and location must be mailed no less than (10) calendar days prior to the sale date via regular mail to the debtor and co-debtor; and
- (4) Notice of the right to postpone or adjourn without additional newspaper publication shall not be required to be published in any newspaper publication.
History (11)
- Code 1858, § 2145 (deriv. Acts 1855-1856, ch. 83, § 1)
- Acts 1859-1860, ch. 60
- Shan., § 3838
- mod. Code 1932, § 7793
- Acts 1943, ch. 123, § 1
- mod. C. Supp. 1950, § 7793
- Acts 1957, ch. 41, § 1
- T.C.A. (orig. ed.), § 35-501
- Acts 2006, ch. 801, § 10
- 2008, ch. 743, § 1
- 2011, ch. 505, § 2.
§ 35-5-102. Notice in newspaper not required. - If no newspaper is published in the county in which the land is to be sold, the advertisement in a newspaper is dispensed with, unless ordered by court.
History (4)
- Code 1858, § 2147 (deriv. Acts 1855-1856, ch. 83, § 2)
- Shan., § 3840
- Code 1932, § 7795
- T.C.A. (orig. ed.), § 35-502.
§ 35-5-103. Posting written notices. - Whenever the advertisement cannot be made in a newspaper, the officer shall make publication of the sale for thirty (30) days by written notices posted in at least five (5) of the most public places in the county, one (1) of which shall be the courthouse door, and another in the neighborhood of the defendant; if of realty, in the civil district where the land lies.
History (6)
- Code 1858, § 2148 (deriv. Acts 1855-1856, ch. 83, § 3)
- Shan., § 3841
- Code 1932, § 7796
- Acts 1943, ch. 123, § 2
- C. Supp. 1950, § 7796
- T.C.A. (orig. ed.), § 35-503.
§ 35-5-104. Contents of advertisement or notice — Contents of deed memorializing sale. - (a) The advertisement or notice shall:
- (1) Give the names of the plaintiff and defendant, or parties interested;
- (2) Give a concise description of the land; such description shall include a legal description, which means a reference to the deed book and page that contains the complete legal description of the property, and common description, which means, if available, the street address and map and parcel number of the property. In the event no street address exists, a subdivision, lot or tract number may be used. A metes and bounds description may be, but is not required to be, included in the description of the land;
- (3) Mention the time and place of sale;
- (4)
- (A) Identify each and every lien or claimed lien of the United States with respect to which 26 U.S.C. § 7425(b) requires notice to be given to the United States in order for the sale of the land thus advertised not to be subject to the lien or claim of lien of the United States;
- (B) For every lien or claim of lien of the United States so identified, affirmatively state that the notice required by 26 U.S.C. § 7425(b) to be given to the United States has been timely given;
- (C) For every lien or claim of lien of the United States so identified, state that the sale of the land thus advertised will be subject to the right of the United States to redeem the land as provided for in 26 U.S.C. § 7425(d)(1);
- (5)
- (A) Identify each and every lien or claimed lien of the state with respect to which § 67-1-1433(b)(1) requires notice to be given to the state in order for the sale of the land thus advertised not to be subject to the lien or claim of lien of the state;
- (B) For every lien or claim of lien of the state so identified, affirmatively state that the notice required by § 67-1-1433(b)(1) to be given to the state has been timely given; and
- (C) For every lien or claim of lien of the state so identified, state that the sale of the land thus advertised will be subject to the right of the state to redeem the land as provided for in § 67-1-1433(c)(1); and
- (6) For each concise description of land, provide the corresponding names of the parties interested.
- (b) The deed memorializing the sale shall, in addition to any other requirements as may now or hereafter exist under the laws of the state with respect to the proper form of deeds, in order that they might qualify for recording in the various offices of registers of counties in this state, whenever subsection (a) has required notice to be given to the United States and/or to this state, state that the land described therein is conveyed subject to the rights of the United States to redeem the land as provided for in 26 U.S.C. § 7425(d)(1) and/or is subject to the right of this state to redeem the land as provided for in § 67-1-1433(c)(1), as appropriate, shall have attached to it, as exhibits, a copy of the notice thus provided to the United States, a copy of the written response of the United States to the notice thus provided, if any, a copy of the notice thus provided to the state, and a copy of the written response of the state to the notice thus provided, if any, as appropriate.
- (c) Nothing in this section shall be construed to require inclusion of a street address if it does not exist or is not in common use. Also, utilization of the street address, if any, which appears in the records of the assessor of property with respect to the property involved shall be conclusively presumed to be in compliance with this section.
- (d) For the purposes of this section, “parties interested” includes, without limitation, the record holders of any mortgage, deed of trust, or other lien that will be extinguished or adversely affected by the sale and which mortgage, deed of trust, or lien, or notice or evidence thereof, was recorded more than ten (10) days prior to the first advertisement or notice in the register's office of the county in which the real property is located. “Parties interested” also includes a person or entity named as nominee or agent of the owner of the obligation that is secured by the deed of trust and that is identifiable from information provided in the deed of trust, which shall include a mailing address or post office box of the nominee or agent.
History (10)
- Code 1858, § 2149 (deriv. Acts 1855-1856, ch. 83, § 1)
- Shan., § 3842
- Code 1932, § 7797
- Acts 1982, ch. 801, § 1
- T.C.A. (orig. ed.), § 35-504
- Acts 1992, ch. 621, § 1
- 1994, ch. 618, § 1
- 1999, ch. 66, § 1
- 2011, ch. 505, § 1
- 2015, ch. 213, §§ 1, 2.
§ 35-5-105. Notice in writing if printer refuses. - If the printer will not make the publication for the rates provided in § 8-21-1301, the officer or person conducting the sale shall make publication by written notices as provided in §§ 35-5-103 and 35-5-104.
History (4)
- Code 1858, § 2151 (deriv. Acts 1855-1856, ch. 83, § 3)
- Shan., § 3844
- Code 1932, § 7799
- T.C.A. (orig. ed.), § 35-506.
§ 35-5-106. Sale without advertisement is not void. - Should the officer, or other person making the sale, proceed to sell without pursuing the provisions of this chapter, the sale shall not, on that account, be either void or voidable.
History (4)
- Code 1858, § 2152 (deriv. Acts 1855-1856, ch. 83, § 4)
- Shan., § 3845
- Code 1932, § 7800
- T.C.A. (orig. ed.), § 35-507.
§ 35-5-107. Effect of noncompliance with chapter. - Any officer, or other person, referenced in § 35-5-106 who fails to comply with this chapter commits a Class C misdemeanor and is, moreover, liable to the party injured by the noncompliance, for all damages resulting from the failure.
History (5)
- Code 1858, § 2153 (deriv. Acts 1855-1856, ch. 83, § 5)
- Shan., § 3846
- Code 1932, § 7801
- T.C.A. (orig. ed.), § 35-508
- Acts 1989, ch. 591, § 113.
§ 35-5-108. Plan of division of land — Sale of portion of land. - At any time before ten o'clock a.m. (10:00 a.m.) on the day of sale, the defendant or other person whose property is to be sold may deliver to the officer or person making the sale, a plan of division of the lands to be sold, subscribed by the defendant or other person, bearing a date subsequent to the date of advertisement, in which case so much of the land as may be necessary to satisfy the debt and costs, and no more, shall be sold according to the plan furnished. If no such plan is furnished, the land may be sold without division.
History (4)
- Code 1858, § 2154 (deriv. Acts 1799, ch. 14, § 3)
- Shan., § 3847
- Code 1932, § 7802
- T.C.A. (orig. ed.), § 35-509.
§ 35-5-109. Published ending time and published start time for auctions. - The published ending time for auctions conducted under this chapter on an internet-based bidding platform and the published start time for an in-person auction must be between the hours of nine o'clock a.m. (9:00 a.m.) and seven o'clock p.m. (7:00 p.m.) of the day fixed in the notice or advertisement. The day fixed may be any day Monday through Saturday, but must not be fixed on a state or federal legal holiday. However, this section does not apply to sales of parcels pursuant to title 67, chapter 5.
History (8)
- Code 1858, § 2155 (deriv. Acts 1807, ch. 99, § 1)
- Shan., § 3848
- Code 1932, § 7803
- T.C.A. (orig. ed.), § 35-510
- Acts 2014, ch. 912, § 3
- 2015, ch. 414, § 1
- 2017, ch. 187, § 2
- 2019, ch. 471, § 1.
§ 35-5-110. Bidding on land sales may be reopened by clerks — Court's power not abridged. - In all sales of land made under orders, and decrees of the circuit, probate, chancery, appeals and supreme courts where an advance bid of as much as ten percent (10%) of the original bid is made, the clerk, or clerk and master, of the court is empowered, at no additional fee, commission or cost, to accept the advance bid and reopen the biddings on the sale, and to receive additional bids, and to hold the sale open for advance bids to some day by the officer designated, and give the purchaser and the parties, or their attorneys of record, notice of the reopening of the biddings, and to report this action to the court for confirmation without any order or decree of the court authorizing the reopening first being had, unless the court's order or decree for the sale of the land specifically prohibits the acceptance of an advance bid; provided, that nothing in this section shall be construed as abridging the rights and jurisdiction of the court to reopen the biddings on such terms as the court may deem right.
History (5)
- Acts 1899, ch. 37, § 1
- Shan., § 3848a1
- mod. Code 1932, § 7804
- T.C.A. (orig. ed.), § 35-511
- Acts 2014, ch. 930, § 1.
§ 35-5-111. State may bid at execution or judicial sales. - Whenever the state is interested in the proceeds of any execution sale or any judicial sale, to any extent whatsoever, the state, acting through its attorney general and reporter, may bid on and buy in property either real or personal, at that sale, to the same extent as any natural person might do. Any sums due and payable on behalf of the state, as costs of sale or as a part of the purchase price of the property so bid in and paid by the state, shall be paid out of the general fund of the state treasury upon the warrant of the governor.
History (3)
- Acts 1943, ch. 11, § 1
- C. Supp. 1950, § 7804.1
- T.C.A. (orig. ed.), § 35-512.
§ 35-5-112. Auctioneer services and fee — Manner and method of sale of real property at discretion of court. - (a) Whenever real or personal property is to be sold at public sale under any order or decree of any court in this state, the court, judge or chancellor under whose jurisdiction the sale is to be made has the discretionary authority to secure the services of an auctioneer licensed in this state to conduct the public sale and to fix the auctioneer's fee, the fee to be not more than eight percent (8%) of the sale price on sales of real property and not more than ten percent (10%) of the sale price on sales of personal property, these fees not to include the expenses of sales, and to order the fee to be paid out of the proceeds of the sale.
- (b) Whenever real property is sold at a public sale conducted by an auctioneer, the manner and method of sale is at the discretion of the court. As used in this section, “public sale” includes auctions on internet-based bidding platforms, in-person, on-site, or off-site auctions, and other accepted auction methods, so long as the auctions are open for participation by the public at large. The court, in its discretion, may impose additional conditions or procedures upon the sale of property as are reasonably necessary.
- (c) If the clerk of the court or clerk and master is also a licensed auctioneer, then the clerk or clerk and master shall receive fees in that person's capacity as clerk, or clerk and master, or special commissioner, and shall not receive any extra fee as a licensed auctioneer.
History (7)
- Acts 1975, ch. 334, §§ 1, 2
- 1976, ch. 772, § 1
- 1978, ch. 769, § 1
- T.C.A., §§ 35-513, 35-514
- Acts 2011, ch. 320, § 1
- 2015, ch. 414, § 2
- 2019, ch. 471, § 2.
§ 35-5-113. Auction sales in divorce proceedings. - The provisions and procedures of this chapter apply to all auction sales of property ordered by a court pursuant to § 36-4-121, to accomplish the equitable division of property in divorce cases. The court, in its discretion, may impose any additional conditions or procedures upon the sale of property in divorce cases as are reasonably designed to ensure that the property is sold for its fair market value.
§ 35-5-114. Trustee's attendance at foreclosure — Successor trustee. - (a) In any sale of land to foreclose a deed of trust, mortgage, or other lien securing the payment of money or other thing of value, the trustee or person or entity holding a similar position may attend the foreclosure either in person or by an agent. If the trustee attends by an agent, the agent may receive bids and conduct the sale on behalf of the trustee. The trustee shall execute any applicable trustee's deed or similar conveyance instrument. The appointment of an agent by a trustee need not be by written instrument, nor is there any recording required relative to the appointment.
- (b)
- (1) The beneficiary may, unless the deed of trust contains specific language to the contrary, appoint a successor trustee at any time by filing a substitution of trustee for record with the register of deeds of the county in which the property is situated.
- (2) The substitute trustee or its delegate shall succeed to all the power, duties, authority and title of the original trustee and any previous successor trustee or delegatee.
- (3)
- (A) In the event the substitution of trustee is not recorded prior to the first date of publication by the substitute trustee, the beneficiary shall include in the substitution of trustee instrument, which shall be recorded prior to the deed evidencing sale, the following statement:
- Beneficiary has appointed the substitute trustee prior to the first notice of publication as required by T.C.A. § 35-5-101 and ratifies and confirms all actions taken by the substitute trustee subsequent to the date of substitution and prior to the recording of this substitution.
- (B) Once a substitution of trustee instrument containing the statement set forth in subdivision (b)(3)(A) is timely recorded, it shall act as conclusive proof as a matter of law that the substitute trustee has been timely appointed and has acted with authority of the beneficiary.
- (c) A substitution of trustee shall be recorded prior to any sale, and no action may be instituted against any person who, acting in good faith without knowledge to the contrary, relies upon the validity of the substitution of trustee or written statements by the beneficiary or substitute trustee as to the authority of the substitute trustee.
- (d) If the name of the substitute trustee is not included in the first publication, then, not less than ten (10) business days prior to the sale date, the substitute trustee shall send notice by registered or certified mail to the debtor or any co-debtor, as provided in § 35-5-101, and to any interested parties, giving the name and address of the substitute trustee. If the trustee is not a resident of this state, the notice shall include the name and address of a registered agent of the substitute trustee who is located in the state. Record notice of the mailing provided in this subsection (d) shall be evidenced by the substitute trustee's recordation of an affidavit recorded prior to the deed evidencing the sale or by recitation on the substitute trustee's deed.
History (2)
- Acts 1993, ch. 415, § 1
- 2006, ch. 951, § 1.
§ 35-5-115. Discovery proceedings for nonresidents. - (a)
- (1) IF a nonresident creditor holds indebtedness secured by residential real property that is located in this state and owned by a state resident, OR
- (2) IF a nonresident trustee or agent is involved in foreclosure proceedings relative to residential real property that is located in this state and owned by a resident,
- (3) THEN all discovery proceedings, including, but not limited to, the production of requested documents and the deposition of witnesses, shall be conducted in the county in which the residential real estate is located or in which the litigation is pending.
- (b) The court in which such litigation is pending may make orders consistent with the purposes of this section to prevent undue burden on any party.
§ 35-5-116. Trustee as necessary party. - (a) Any trustee named in a suit or proceeding, as related to a sale of real property under a trust deed or mortgage, may plead in the answer that the trustee is not a necessary party by a verified denial, stating the basis for the trustee's reasonable belief that the trustee was named as a party solely in the capacity as a trustee under a deed of trust, contract lien, or security instrument.
- (b) Within thirty (30) days after the filing of the trustee's verified denial, a verified response is due from all parties to the suit or proceeding setting forth all matters, whether in law or fact, that rebut the trustee's verified denial.
- (c) If a party has no objection or fails to file a timely verified response to the trustee's verified denial, the trustee shall be dismissed from the suit or proceeding without prejudice.
- (d) If a respondent files a timely verified response to the trustee's verified denial, the matter shall be set for hearing. The court shall dismiss the trustee from the suit or proceeding without prejudice, if the court determines that the trustee is not a necessary party.
- (e) A dismissal of the trustee pursuant to subsections (c) and (d) shall not prejudice a party's right to seek injunctive relief to prevent the trustee from proceeding with a foreclosure sale.
- (f) A trustee shall not be liable for any good faith error resulting from reliance on any information in law or fact provided by the borrower or secured party or their respective attorney, agent, or representative or other third party.
§ 35-5-117. Deficiency judgment sufficient to fully satisfy indebtedness on real property after trustee's or foreclosure sale. - (a) In an action brought by a creditor to recover a balance still owing on an indebtedness after a trustee's or foreclosure sale of real property secured by a deed of trust or mortgage, the creditor shall be entitled to a deficiency judgment in an amount sufficient to satisfy fully the indebtedness.
- (b) In all such actions, absent a showing of fraud, collusion, misconduct, or irregularity in the sale process, the deficiency judgment shall be for the total amount of indebtedness prior to the sale plus the costs of the foreclosure and sale, less the fair market value of the property at the time of the sale. The creditor shall be entitled to a rebuttable prima facie presumption that the sale price of the property is equal to the fair market value of the property at the time of the sale.
- (c) To overcome the presumption set forth in subsection (b), the debtor must prove by a preponderance of the evidence that the property sold for an amount materially less than the fair market value of property at the time of the foreclosure sale. If the debtor overcomes the presumption, the deficiency shall be the total amount of the indebtedness prior to the sale plus the costs of the foreclosure and sale, less the fair market value of the property at the time of the sale as determined by the court.
- (d)
- (1) Any action for a deficiency judgment under this section shall be brought not later than the earlier of:
- (A) Two (2) years after the date of the trustee's or foreclosure sale, exclusive of any period of time in which a petition for bankruptcy is pending; or
- (B) The time for enforcing the indebtedness as provided for under §§ 28-1-102 and 28-2-111.
- (2) Nothing contained in this section shall be construed as limiting a person entitled to bring such action from electing to sue on an indebtedness in lieu of, prior to, or contemporaneously with enforcement of a deed of trust or mortgage.
History (2)
- Acts 2010, ch. 1001, § 1
- T.C.A. § 35-5-118.
Chapter 9 Administration of Private Foundations, Charitable Trusts or Split-Interest Trusts § 35-9-101. Prohibited acts. - In the administration of any trust that is a “private foundation,” as defined in § 509 of the Internal Revenue Code of 1954 (26 U.S.C. § 509), a “charitable trust,” as defined in § 4947(a)(1) of the Internal Revenue Code of 1954 (26 U.S.C. § 4947(a)(1)), or a “split-interest trust,” as defined in § 4947(a)(2) of the Internal Revenue Code of 1954 (26 U.S.C. § 4947(a)(2)), the following acts are prohibited:
- (1) Engaging in any act of self-dealing, as defined in § 4941(d) of the Internal Revenue Code of 1954 (26 U.S.C. § 4941(d)), that would give rise to any liability for the tax imposed by § 4941(a) of the Internal Revenue Code of 1954 (26 U.S.C. § 4941(a));
- (2) Retaining any excess business holdings (as defined in § 4943(c) of the Internal Revenue Code of 1954 26 U.S.C. § 4943(c)), that would give rise to any liability for the tax imposed by § 4943(a) of the Internal Revenue Code of 1954 (26 U.S.C. § 4943(a));
- (3) Making any investments that would jeopardize the carrying out of any of the exempt purposes of the trust, within the meaning of § 4944 of the Internal Revenue Code of 1954 (26 U.S.C. § 4944), so as to give rise to any liability for the tax imposed by § 4944(a) of the Internal Revenue Code of 1954 (26 U.S.C. § 4944(a)); or
- (4) Making any taxable expenditures (as defined in § 4945(d) of the Internal Revenue Code of 1954 (26 U.S.C. § 4945(d)), that would give rise to any liability for the tax imposed by § 4945(a) of the Internal Revenue Code of 1954 (26 U.S.C. § 4945(a)); provided, that this section does not apply either to those split-interest trusts or to amounts of those split-interest trusts that are not subject to the prohibitions applicable to private foundations by reason of § 4947 of the Internal Revenue Code of 1954 (26 U.S.C. § 4947).
History (2)
- Acts 1971, ch. 3, § 1
- T.C.A., § 35-1001.
§ 35-9-102. Distribution of amounts to avoid tax liability. - In the administration of any trust that is a private foundation or that is a charitable trust, there shall be distributed, for the purposes specified in the trust instrument, for each taxable year, amounts at least sufficient to avoid liability for the tax imposed by § 4942(a) of the Internal Revenue Code of 1954 (26 U.S.C. § 4942(a)).
History (2)
- Acts 1971, ch. 3, § 2
- T.C.A., § 35-1002.
§ 35-9-103. Applicability of §§ 35-9-101 and 35-9-102. - Sections 35-9-101 and 35-9-102 do not apply to any trust to the extent that a court of competent jurisdiction determines that the application would be contrary to the terms of the instrument governing the trust and that the same may not properly be changed to conform to those sections.
History (2)
- Acts 1971, ch. 3, § 3
- T.C.A., § 35-1003.
§ 35-9-105. References to Internal Revenue Code. - All references to sections of the Internal Revenue Code of 1954 (U.S.C. title 26), include future amendments to those sections and corresponding provisions of future internal revenue laws.
History (2)
- Acts 1971, ch. 3, § 5
- T.C.A., § 35-1005.
§ 35-9-106. Authority to amend trust for tax benefits. - (a) It is the purpose of this section to preserve the intent of testators and grantors of testamentary and inter vivos charitable remainder trusts created prior to and after August 31, 1972, by minimizing the imposition of federal income and excise taxes, imposed upon the assets of such trusts, and thereby preserving the maximum amount of the trust assets for the charitable, educational, religious and benevolent purposes for which their remainders were intended. The attorney general and reporter shall perform such acts as, in the attorney general and reporter's opinion, will result in the effectuation of this declaration of purpose.
- (b)
- (1) Notwithstanding any provisions to the contrary in the governing instrument or in any other law of this state, the trustee of any split-interest trust as defined in § 4947(a)(2) of the Internal Revenue Code of 1954 (26 U.S.C. § 4947(a)(2)), with the consent of all the beneficiaries under the governing instrument, may, without application to any court and either before or after the funding of the trust, amend the governing instrument to conform to §§ 170(f), 642(c)(5), 664, 2055(e), and 2522(c) of the Internal Revenue Code of 1954 (26 U.S.C. §§ 170(f), 642(c)(5), 664, 2055(e), and 2522(c)), to the extent applicable, by executing a written amendment to the trust for that purpose. Consent shall not be required as to individual beneficiaries not living at the time of amendment or as to charitable beneficiaries not named or not in existence at the time of amendment. The possibility of beneficial interests arising after the amendment of the governing instruments shall not defeat the ability to amend. In the case of an individual beneficiary not competent to give consent, the consent of the beneficiary's guardian or conservator, if any, or the consent of a guardian ad litem appointed by a court of competent jurisdiction, shall be treated as the consent of the beneficiary. A copy of the proposed amendment, executed by the trustee and consented to by all beneficiaries whose consent is required under this subdivision (b)(1), shall be delivered in person or by registered mail to the attorney general and reporter. The attorney general and reporter may, within sixty (60) days after receipt of the proposed amendment, indicate by registered mail to the trustee any specific objections to the proposed amendment, in which event subdivision (b)(2) shall apply if the attorney general and reporter does not withdraw the objections. In the case of any amendment to a trust created by will or to a trust created by inter vivos instrument, unless otherwise provided, the amendment shall be deemed to apply as of the date of death of the decedent or as of the date of gift.
- (2) In the event that all of the trustees and beneficiaries under the governing instrument do not consent to the amendment, or in the event there are no named beneficiaries, any court of competent jurisdiction shall have the power to amend the governing instrument in accordance with subdivision (b)(1) upon petition of the trustee or any beneficiary and upon a subsequent finding by the court that the testator's or the grantor's intention would not be defeated by the amendment. A copy of the petition shall be delivered in person or by registered mail to the attorney general and reporter.
- (3) Unless otherwise expressly provided in the governing instrument, any devise, bequest or transfer in a testamentary or inter vivos trust for religious, educational, charitable or benevolent uses to be determined by the trustee or any other person shall be made only to organizations and for purposes within the meaning of §§ 170(c), 2055(a), and 2522(a) of the Internal Revenue Code of 1954 (26 U.S.C. §§ 170(c), 2055(a), and 2522(a)).
- (4) This section also applies to executors and administrators of estates of decedents whose wills create trusts described in subdivision (b)(1).
- (c) All references to sections of the Internal Revenue Code of 1954 refer to the Internal Revenue Code of 1954 as it exists on August 31, 1972. All references to the Internal Revenue Code of 1954 in subdivisions (b)(1) and (3) refer to the Internal Revenue Code of 1954 as it exists on June 4, 1975.
- (d) This section applies in the case of all decedents dying after December 31, 1969, and in the case of all irrevocable inter vivos trusts created after July 31, 1969.
History (2)
- Acts 1975, ch. 329, § 1
- T.C.A., § 35-1006.
§ 35-9-107. Reformation of trusts to comply with tax regulations. - (a) It is the purpose of this section to permit and authorize the reformation of certain inter vivos and testamentary charitable remainder trusts created prior to and after December 10, 1998, to comply with applicable federal tax regulations regarding qualifying payments to noncharitable beneficiaries. Such reformations shall be permitted and authorized upon the unanimous written consent of all living individual grantors, living individual beneficiaries, charitable remainder beneficiaries named or otherwise provided for in the trust agreement, and the trustee, with the concurrence of the attorney general and reporter. The attorney general and reporter shall perform such acts as, in the attorney general and reporter's opinion, will effectuate this declaration of purpose.
- (b)
- (1) Notwithstanding any provision to the contrary in the governing instrument or in any other law of this state, the trustee of any charitable remainder trust described in § 1.664-3(a)(1)(i)(b) of the Internal Revenue Code Regulations (26 CFR 1.664-3(a)(1)(i)(b)), as currently adopted, or as may be subsequently amended, may, without application to any court and either before or after the funding of such trust, reform the trust to meet the definition of a charitable remainder unitrust described in § 1.664-3(a)(1)(i)(c) of the Internal Revenue Code Regulations (26 CFR 1.664-3(a)(1)(i)(c)), as currently adopted, or as may be subsequently amended. In order to effectuate this reformation, the trustee shall obtain the written consent of all living grantors, living beneficiaries, charitable beneficiaries named or otherwise provided for in the trust agreement, and the trustee, together with the written concurrence of the attorney general and reporter. If the charitable beneficiary is to be determined by a person having discretion to select or name the charitable beneficiary at the time the trust terminates, the consent of that person shall be required. Consent shall not be required as to individual beneficiaries or grantors not living at the time of reformation or as to charitable remainder beneficiaries not named or not in existence at the time of reformation.
- (2) The possibility of beneficial interests arising after the reformation of the trust instrument shall not defeat the ability to reform the trust pursuant to this section. In the case of an individual beneficiary or grantor not competent to give consent, the consent of that beneficiary's or grantor's guardian or conservator, if any, or the consent of a guardian ad litem appointed by a court of competent jurisdiction, shall be treated as the consent of the beneficiary or grantor. A copy of the proposed reformation, executed by the trustee and consented to by all living grantors, living beneficiaries, and charitable beneficiaries named or otherwise provided for in the trust agreement, shall be delivered to the attorney general and reporter. The attorney general and reporter shall, within thirty (30) days after receipt, either concur with the proposed reformation or state any specific objections to the proposed reformation in writing and delivered to the trustee by registered mail. If the attorney general and reporter state objections and those objections are not resolved to the attorney general's and reporter's satisfaction or the attorney general and reporter does not withdraw the objections, subdivision (b)(3) shall apply.
- (3) In the event that all of the living grantors, living beneficiaries, and charitable remainder beneficiaries do not consent to the reformation, any court of competent jurisdiction shall have the power to reform the governing instrument in accordance with subdivision (b)(1) upon petition by the trustee or any beneficiary. A copy of the petition shall be delivered in person or by registered mail to the attorney general and reporter.
§ 35-9-108. Information or actions that cannot be required. - (a) For the purposes of this section, “private foundation” has the same meaning ascribed to “private foundation” in § 509(a) of the Internal Revenue Code of 1986 (26 U.S.C. § 509(a)), as amended.
- (b) No private foundation shall be required by a department, agency, board, or other entity of state or local government to:
- (1) Disclose the race, religion, gender, national origin, socioeconomic status, age, ethnicity, disability, marital status, or sexual orientation of:
- (A) The foundation's employees, officers, directors, trustees, or contributors, without the prior written consent of the individual or individuals in question; or
- (B) Any individual, or of the employees, officers, directors, trustees, members, or owners of any entity, that has received monetary or in-kind contributions or grants from, or contracted with, the foundation, without the prior written consent of the individual or individuals in question;
- (2) Hire, appoint, or elect an individual of any particular race, religion, gender, national origin, socioeconomic status, age, ethnicity, disability, marital status, or sexual orientation as an employee, officer, director, or trustee of the foundation;
- (3) Disqualify, remove, or prohibit service of an individual as an officer, director, or trustee of the foundation based upon such individual's familial relationship to other officers, directors, or trustees of the foundation or a contributor to the foundation;
- (4) Hire, appoint, or elect an individual as an officer, director, or trustee of the foundation who does not share a familial relationship with the other officers, directors, or trustees of the foundation or with a contributor to the foundation; or
- (5) Except as a lawful condition or requirement on the expenditure of particular funds imposed by the contributor or grantor of such funds, distribute the foundation's funds to, or contract with, any individual or entity based upon the:
- (A) Race, religion, gender, national origin, socioeconomic status, age, ethnicity, disability, marital status, or sexual orientation of the individual or of the employees, officers, directors, trustees, members, or owners of the entity; or
- (B) Populations, locales, or communities served by the individual or entity.
Chapter 11 Fundraising for Catastrophic Illnesses § 35-11-101. Funds placed in trust — Trustee. - (a) All funds raised to meet the medical or related expenses of a named individual suffering from a catastrophic illness shall be placed in trust with a bank or trust company organized and doing business under the laws of any state or territory of the United States, including the District of Columbia, and authorized to do business in this state. The trustee of this trust shall be either an individual, or a bank or trust company. The funds placed with a bank or trust company shall be considered to be held in trust, and the bank or trust company considered a trustee, as those terms are used in this chapter, if the bank or trust company maintains the funds in its name as custodian for the benefit of the injured individual, and limits disbursements to those for which the funds are raised or that are permitted by §§ 35-11-103 and 35-11-105.
- (b) As used in this chapter, “catastrophic illness” includes organ transplants.
History (2)
- Acts 1989, ch. 386, § 1
- 2007, ch. 430, § 2.
§ 35-11-102. Trust relationship prerequisite to accepting contributions — Beneficiaries. - (a) Before accepting any contributions for such fundraising activities, the organizer or promoter shall enter into a trust relationship with a bank or trust company or shall establish a trust in the name of an individual, “ [name of beneficiary] trust, trustee”, or words to the same effect; provided, that if in violation of this chapter contributions are accepted prior to entering into the trust relationship, then those contributions shall be placed in trust immediately upon establishment of the required trust relationship.
- (b) The beneficiary of the trust shall be the named individual for whom the funds are being raised.
- (c) Contingent beneficiaries shall be selected as provided in § 35-11-103.
- (d) On the establishment of a trust for purposes regulated by this chapter, the trustee shall file written notice of the establishment of the trust on forms prescribed by the secretary of state with the division of charitable solicitation in the office of the secretary of state. No person or entity may solicit funds on behalf of an individual with a catastrophic illness that is subject to this chapter prior to the filing of this notice with the division. For any trust regulated under this chapter on July 1, 2007, the notice shall be filed on or before August 1, 2007.
- (e) A trustee, other than a bank or trust company acting as trustee, shall file an accounting of the trust with the division of charitable solicitations each year on the anniversary of the establishment of the trust.
History (2)
- Acts 1989, ch. 386, § 1
- 2007, ch. 430, §§ 3, 6.
§ 35-11-103. Transfer of remaining funds — Contingent beneficiaries. - (a) If the expenses of the illness of the beneficiary are less than the funds held in trust or the beneficiary dies before the funds held in trust are depleted, any remaining balance shall be transferred to the contingent beneficiary.
- (b) When the trust is established, the named beneficiary shall select the manner in which a contingent beneficiary shall be named. If the named beneficiary is a minor or is incompetent, the parent or guardian shall select the manner in which a contingent beneficiary shall be named. The selection of the contingent beneficiary shall be made as follows:
- (1) An institution involved in research to find a cure for a catastrophic illness shall be named;
- (2) An individual, if known, who suffers from a catastrophic illness and is in need of financial help for valid reimbursable medical expenses, as defined in § 35-11-105, shall be named; or
- (3) The trustee shall be authorized to select:
- (A) An institution involved in research to find a cure for a catastrophic illness; or
- (B) An individual who suffers from a catastrophic illness whether the name of such individual is known at the death of the named beneficiary or comes to the attention of the trustee within one (1) year after the death of the named beneficiary. The selection of this individual by the trustee is not limited to an individual for whom a trust has been established at the bank or trust company. If an individual beneficiary cannot be named within one (1) year, the option in subdivision (b)(3)(A) shall automatically occur.
- (c) Modification of the selection of the contingent beneficiary may be made before the death of the named beneficiary or before the disbursement of funds to the selected contingent beneficiary.
- (d) The transfer to a contingent beneficiary shall occur as quickly as is reasonably feasible.
§ 35-11-104. Payment and deposit of contributions. - (a) All contributions for funds raised in accordance with this chapter made by check shall be made payable to the bank or trust company or the trust established by this chapter.
- (b) All cash contributions shall be deposited as quickly as is reasonably feasible to the trust.
History (2)
- Acts 1989, ch. 386, § 3
- 2007, ch. 430, § 4.
§ 35-11-105. Disbursement of funds — Valid reimbursable medical expenses. - (a) Funds shall be disbursed by the trustee upon the presentation of a statement for valid reimbursable medical expenses incurred by the named individual for the treatment of the catastrophic illness and for the payment of reasonable solicitation costs and expenses, when appropriate, incurred by the organizer, promoter or solicitor.
- (b) “Valid reimbursable medical expenses” are those deductible medical expenses described in the Internal Revenue Code (U.S.C. title 26).
History (2)
- Acts 1989, ch. 386, § 3
- 2007, ch. 430, § 5.
§ 35-11-107. Civil penalties — Appeal. - In addition to any other penalty or remedy available under law, the secretary of state or the designee of the secretary may assess a civil penalty, pursuant to § 48-101-514, against any person or entity that violates a provision of this chapter. The person or entity against whom the penalty is assessed shall have appeal rights pursuant to § 48-101-514.
§ 35-11-108. Right to inspect records for trusts. - The secretary of state or the secretary's designee shall have the right to inspect the records for trusts established under this part, subject to title 45, chapter 10 and the Federal Right to Financial Privacy Act (12 U.S.C. § 3401 et seq.)
§ 35-11-109. Subpoena power. - The secretary of state or the secretary's designee shall have the right to issue subpoenas to obtain records relevant to a solicitation or a trust established under this part, subject to title 45, chapter 10 and the Federal Right to Financial Privacy Act (12 U.S.C. § 3401 et seq.)
§ 35-11-110. Rules and regulations. - The secretary of state may adopt rules and regulations to carry out this chapter in accordance with the Uniform Administrative Procedures Act, compiled in title 4, chapter 5.
History (1)
- Acts 2007, ch. 430, § 10.
§ 35-11-111. Unlawful fundraising. - (a) It is an offense for any fundraising to occur for the purposes described in §§ 35-11-101 and 35-11-102 in violation of this chapter.
- (b) It is an offense for trust funds raised for the purposes described in §§ 35-11-101 and 35-11-102 to be distributed in violation of this chapter.
- (c) A violation of subsection (a) or (b) is a Class B misdemeanor.
History (2)
- Acts 1989, ch. 386, § 4
- 2007, ch. 430, § 1.
§ 35-11-112. Exemptions. - (a)
- (1) This chapter shall not apply to any nonprofit corporation that is:
- (A) Incorporated under the laws of Tennessee;
- (B) Exempt from federal income taxation under 26 U.S.C. § 501(c)(3); and
- (C) Requested by a patient or a patient's family to raise funds for an organ transplant for a specific individual.
- (2) Any funds remaining in a particular account shall revert to the general fund of the corporation to be used to assist other similarly situated persons.
- (b)
- (1) This chapter shall not apply to any nonprofit corporation that:
- (A) Is incorporated under the laws of Tennessee and is exempt from federal income taxation under 26 U.S.C. § 501(c)(3); and
- (B) Solicits and accepts contributions of funds for the purpose of providing minors suffering from a catastrophic illness with nonmedical gifts or benefits to fulfill a desire or wish of the minor.
- (2) A portion of such funds may be used to provide appropriate adult supervision if required by the gift.
- (3) Any such funds raised for a particular minor and unexpended shall revert to the general fund of the corporation to be used to provide gifts or benefits for a similar minor.
History (1)
- Acts 1989, ch. 386, §§ 5, 6.
Chapter 13 Charitable Beneficiaries § 35-13-101. Short title. - This chapter shall be known and may be cited as the “Tennessee Charitable Beneficiaries Act of 1997.”
§ 35-13-102. Purpose — Chapter definitions. - (a) This chapter declares that the public policy of this state, as declared in its cases and statutes, favors gifts to charity that improve the general welfare through acts of philanthropy.
- (b) As used in this chapter, unless the context otherwise requires:
- (1) “Attorney general and reporter” means the attorney general and reporter of Tennessee or the attorney general and reporter's designee;
- (2) “Charitable beneficiary” means the United States, any state that is part of the United States, or any political subdivision of a state, the District of Columbia, any corporation, trust, fraternal society or other organization described in §§ 170(b)(1)(A), 170(c), 2055(a) and 2522(a) of the Internal Revenue Code (26 U.S.C. §§ 170(b)(1)(A), 170(c), 2055(a) and 2522(a)), that is exempt from taxation under § 501(c)(3) of the Internal Revenue Code (26 U.S.C. §§ 170(b)(1)(A), 170(c), 2055(a) and 2522(a)), or any church, synagogue, other religious organization, or any other organization, entity or association to which a gift would be deductible under §§ 170(b)(1)(A), 170(c), 2055(a) and 2522(a) of the Internal Revenue Code;
- (3) “Charitable gift” means any gift clearly intended for charitable purposes;
- (4) “Charitable purpose” means any purpose generally considered charitable at common law, or for any charitable purpose under any section of Tennessee Code Annotated, or for any purpose described in §§ 170(b)(1)(A), 170(c), 2055(a) and 2522(a) of the Internal Revenue Code. A reference to the applicable section or sections of Tennessee Code Annotated or the Internal Revenue Code sufficiently describes the charitable purposes of the gift;
- (5) “Court” means the chancery court or other court exercising equity jurisdiction or a probate court of record;
- (6) “Discretionary charitable gift” means a charitable gift that has indefinite beneficiaries, objects, purposes or subjects;
- (7) “Donor” means the person making the lifetime or testamentary charitable gift;
- (8) “Gift instrument” means a will, deed, grant, conveyance, trust agreement, memorandum, writing or other governing document that creates the charitable gift;
- (9) “Internal Revenue Code” means the Internal Revenue Code of 1986 (U.S.C. title 26); and
- (10) “Tax-exempt” means that the organization, trust or beneficiary referred to is one that is described in § 501(c)(3) of the Internal Revenue Code.
- (c) The words “humane,” “beneficial,” “beneficent,” “worthy,” “philanthropic,” “humanitarian” or their derivatives or similar language in the gift instrument shall be presumed to be synonyms for “charitable” as used in this chapter, unless expressly indicated not to be charitable by the context in which they are used.
§ 35-13-105. Discretionary charitable gifts. - When the donor makes a discretionary charitable gift the following provisions apply:
- (1) The person to whom discretion is given shall choose the charitable beneficiaries and charitable purposes within a reasonable time after having accepted the duty to select the beneficiaries or purposes of the discretionary charitable gift;
- (2) If a donor makes a testamentary discretionary charitable gift not in trust and does not expressly designate the person to select the charitable beneficiaries or the charitable purposes, the personal representative of the donor's estate shall select the beneficiaries or the charitable purposes, or both, of the gift;
- (3) If a donor makes a testamentary discretionary charitable gift in trust and does not expressly designate the person to select the charitable beneficiaries or the charitable purposes, the trustee shall select the charitable beneficiaries or the charitable purposes, or both, of the gift and, if appropriate, shall establish a trust or charitable corporation or other legal entity to implement the discretionary charitable gift;
- (4) If the court receives notice that the person having the discretion is not ready, willing or able to perform the selection duties within a reasonable time or to establish the trust or other organization, the court shall select the person to exercise the discretion. If the discretionary gift is in trust, the court may exercise the power granted under the Uniform Trust Code, compiled in chapter 15 of this title.
§ 35-13-107. Change in tax-exempt status of beneficiary. - IF:
- (1) a gift made to a trust is to take effect at a date later than the date of the gift instrument; and
- (2) when the gift instrument is executed, the gift to the trust would qualify for a charitable deduction under the Internal Revenue Code (26 U.S.C.), if the gift were then effective; and
- (3) the trust, or beneficiary of the trust, loses its tax-exempt status before the gift takes effect; THEN
- the donor shall be presumed to have intended that the trust should be tax-exempt when the gift was to take effect, unless the donor clearly indicated in the gift instrument that the designated beneficiary should receive the gift even if the gift is not eligible for the charitable deduction. The court has jurisdiction to reform the trust by selecting another tax-exempt beneficiary, or to select another tax-exempt trust, and to select one (1) or more charitable purposes of the gift.
§ 35-13-109. Validity where no trustee. - No trust to which a charitable gift or a discretionary charitable gift is or has been made shall fail for lack of a trustee. If there is no trustee, the title to any trust property intended for a charitable purpose shall vest in the clerk of the court that has jurisdiction and venue of the trust as determined under § 35-13-110 until the court either appoints a trustee or orders distribution of the gift.
§ 35-13-110. Attorney general and reporter to be party to court actions affecting gifts — Court approval of disposition. - (a) In all court actions directly affecting the amount, administration or disposition of a charitable gift or a discretionary charitable gift, the court may require that the attorney general and reporter be made a party to represent the charitable beneficiaries, potential charitable beneficiaries and all citizens of the state in all legal matters pertaining to the amount, administration and disposition of a charitable gift or discretionary charitable gift. The attorney general and reporter may sue and be sued, and, insofar as the suit against the attorney general and reporter is against the state, the state expressly consents to be sued. The attorney general and reporter may designate a district attorney general to prosecute or defend any court action.
- (b) It is unlawful to settle any litigation concerning the validity of a charitable gift or discretionary charitable gift without first obtaining the approval of the court. The court shall approve a settlement only after determining that the interest of the people of the state, as true beneficiaries of any charitable gift, has been served.
§ 35-13-111. Venue of court action. - (a) If the gift instrument is a will and the estate is in administration, or if the gift under a will is not in trust, the venue of any court action is in the county in which the donor's will was or is being administered.
- (b) If the gift instrument is an inter-vivos trust or a testamentary trust under a fully administered will, venue of any court action shall be in any county in which a trustee resides, or is located if not an individual, or in which a majority of the beneficiaries, or potential beneficiaries, reside or are located.
- (c) If neither subsection (a) nor (b) applies, venue is in Davidson County, in a court of competent jurisdiction; provided, that the court may transfer the court action to a more convenient forum.
- (d) With the consent of the court in which an action is pending, the parties may waive the venue provisions of subsections (a), (b) and (c).
§ 35-13-112. Trust in violation of state or federal law. - If the department of revenue makes a written determination that the operation of a charitable trust violates § 35-9-101 or if the Internal Revenue Service makes such a written determination with respect to the corresponding provisions of the Internal Revenue Code (U.S.C. title 26), and provides the written determination to the trustee, the trustee shall furnish a copy of the determination to the attorney general and reporter, and any other person may notify the attorney general and reporter of the determination. The attorney general and reporter may take any action that is deemed necessary to protect the interest of the people of the state.
Chapter 16 Tennessee Investment Services Act of 2007 § 35-16-102. Chapter definitions. - As used in this chapter, unless the context otherwise requires:
- (1) “Claim” means a right to payment, whether or not the right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured;
- (2) “Creditor” means, with respect to a transferor, a person who has a claim;
- (3) “Debt” means liability on a claim;
- (4) “Disposition” means a transfer, conveyance or assignment of property, including a change in the legal ownership of property occurring upon the substitution of one (1) trustee for another or the addition of one (1) or more new trustees. “Disposition” also includes the exercise of a power so as to cause a transfer of property to a trustee or trustees, but shall not include the release or relinquishment of an interest in property that, until the release or relinquishment, was the subject of a qualified disposition;
- (5) “Investment advisor” means a person given authority by the terms of an investment services trust to direct, consent to or disapprove a transferor's actual or proposed investment decisions, distribution decisions or other decisions of the transferor;
- (6) “Investment decision” means the retention, purchase, sale, exchange, tender or other transaction affecting the ownership of or rights in investments;
- (7) “Investment services trust” means an instrument appointing a qualified trustee or qualified trustees for the property that is the subject of a disposition, which instrument:
- (A) Expressly incorporates the law of this state to govern the validity, construction and administration of the trust;
- (B) Is irrevocable; and
- (C) Provides that the interest of the transferor or other beneficiary in the trust property or the income from the trust property may not be transferred, assigned, pledged or mortgaged, whether voluntarily or involuntarily, before the qualified trustee or qualified trustees actually distribute the property or income from the property to the beneficiary;
- (8) “Person” means an individual; corporation; business trust; estate; trust or civil law equivalent of a trust, including a fideicomiso or equivalent, or a foundation of the equivalent; partnership; limited liability company; association; joint venture; government; governmental subdivision, agency, or instrumentality; public corporation; or any other legal or commercial entity;
- (9) “Property” includes real property, personal property, and interests in real or personal property;
- (10) “Qualified affidavit” means a sworn affidavit signed by the transferor before a disposition of assets to an investment services trust that meets the requirements of § 35-16-103. In the event of a disposition by a transferor who is a trustee, the affidavit shall be signed by the transferor who made the original disposition to the trustee, or a predecessor trustee, in a form that meets the requirements of subdivisions (7)(B) and (C) and shall state facts as of the time of the original disposition;
- (11) “Qualified disposition” means a disposition by or from a transferor with or without consideration, to an investment services trust;
- (12) “Qualified trustee” means a person who:
- (A) In the case of a natural person, is a resident of this state, or, in all other cases, is authorized by the law of this state to act as a trustee and whose activities are subject to supervision by the Tennessee department of financial institutions, the federal deposit insurance corporation, the comptroller of the currency, or the office of thrift supervision or any successor to them;
- (B) Maintains or arranges for custody in this state of some or all of the property that is the subject of the qualified disposition, maintains records for the investment services trust on an exclusive or nonexclusive basis, prepares or arranges for the preparation of required income tax returns for the investment services trust, or otherwise materially participates in the administration of the investment services trust; and
- (C) Is not the transferor;
- (13) “Spouse” or “former spouse” means only persons to whom the transferor was legally married at, or before, the time the qualified disposition is made;
- (14) “Transferor” means a person who, directly or indirectly, makes a disposition or causes a disposition to be made in such person's capacity:
- (A) As an owner of property;
- (B) As a holder of a power of appointment that authorizes the holder to appoint in favor of the holder, the holder's creditors, the holder's estate or the creditors of the holder's estate; or
- (C) As a trustee; and
- (15) Unless the context or a provision contained in this chapter provides otherwise, throughout this chapter, any form of the word “trustee,” whether singular or plural means “trustee, cotrustee or any other fiduciary” as fiduciary is defined at § 35-15-103 relative to any power or duty held by such fiduciary that could otherwise be held by a trustee, to the extent that such fiduciary is holding such a power or duty and is not an excluded fiduciary as defined at § 35-15-103 relative to that power or duty.
History (5)
- Acts 2007, ch. 144, § 2
- 2008, ch. 1010, § 1
- 2010, ch. 725, § 13
- 2013, ch. 390, § 44
- 2021, ch. 420, §§ 13, 14.
§ 35-16-103. Qualified affidavit requirements. - A qualified affidavit shall state that:
- (1) The transferor has full right, title, and authority to transfer the assets to the trust;
- (2) The transfer of the assets to the trust will not render the transferor insolvent;
- (3) The transferor does not intend to defraud a creditor by transferring the assets to the trust;
- (4) The transferor does not have any pending or threatened court actions against the transferor, except for those court actions identified by the transferor on an attachment to the affidavit;
- (5) The transferor is not involved in any administrative proceedings, except for those administrative proceedings identified on an attachment to the affidavit;
- (6) The transferor does not contemplate filing for relief under the federal bankruptcy code; and
- (7) The assets being transferred to the trust were not derived from unlawful activities.
§ 35-16-104. Restrictions on actions, remedies and claims. - (a) Notwithstanding any law to the contrary, no action of any kind, including, but not limited to, an action to enforce a judgment entered by a court or other body having adjudicative authority, shall be brought at law or in equity for an attachment or other provisional remedy against property that is the subject of a qualified disposition to an investment services trust or for the avoidance of a qualified disposition to an investment services trust, unless the action is brought pursuant to the Uniform Fraudulent Transfer Act, compiled in title 66, chapter 3, part 3, and, in the case of a creditor whose claim arose after a qualified disposition, unless the qualified disposition was also made with actual intent to defraud such creditor.
- (b)
- (1) Notwithstanding § 66-3-310, a creditor's claim under subsection (a) shall be extinguished:
- (A) If the person is a creditor when the qualified disposition to an investment services trust is made, unless the action is commenced within the later of eighteen (18) months after the qualified disposition is made or six (6) months after the person discovers or reasonably should have discovered the qualified disposition; or
- (B) If the person becomes a creditor after the qualified disposition to an investment services trust is made, unless the action is commenced within eighteen (18) months after the qualified disposition is made.
- (2) If subdivision (b)(1) applies:
- (A) A person shall be deemed to have discovered the existence of a qualified disposition to an investment services trust at the time any public record is made of any transfer of property relative to such qualified disposition, including but not limited to, the conveyance of real property that is recorded in the office of the county register of deeds of the county in which the property is located or the filing of a financing statement under title 47, chapter 9, or the equivalent recording or filing of either with the appropriate person or official under the laws of a jurisdiction other than this state; and
- (B) No creditor shall bring an action with respect to property that is the subject of a qualified disposition unless that creditor proves by clear and convincing evidence that the settlor's transfer of such property was made with the intent to defraud that specific creditor.
- (c) For purposes of this chapter, a qualified disposition that is made by means of a disposition by a transferor who is a trustee shall be deemed to have been made as of the time, whether before, on or after July 1, 2007, the property that is the subject of the qualified disposition was originally transferred to the transferor acting in the capacity of trustee, or any predecessor trustee, in a form that meets the requirements of § 35-16-102(7)(B) and (C). The transferor's execution of a qualified affidavit creates a rebuttable presumption that the assets disclosed in the affidavit were transferred to the trust on the date of execution of the affidavit. The transferor bears the burden of proving by a preponderance of the evidence the date of transfer of any asset that is not listed on a qualified affidavit.
- (d) Notwithstanding any law to the contrary, a creditor, including a creditor whose claim arose before or after a qualified disposition, or any other person shall have only the rights with respect to a qualified disposition that are provided in this section and § 35-16-106, and neither a creditor nor any other person shall have any claim or cause of action against the trustee, or an advisor of an investment services trust, or against any person involved in the counseling, drafting, preparation, execution or funding of an investment services trust. For purposes of this section, counseling, drafting, preparation, execution or funding of an investment services trust includes the counseling, drafting, preparation, execution and funding of a limited partnership or a limited liability company if interests in the limited partnership or limited liability company are subsequently transferred to the investment services trust.
- (e) Notwithstanding any law to the contrary, no action of any kind, including, but not limited to, an action to enforce a judgment entered by a court or other body having adjudicative authority, shall be brought at law or in equity against a trustee or an advisor of an investment services trust, or against any person involved in the counseling, drafting, preparation, execution or funding of an investment services trust, if, as of the date such action is brought, an action by a creditor with respect to the investment services trust would be barred under this section.
- (f) In circumstances where more than one (1) qualified disposition is made by means of the same investment services trust, then:
- (1) The making of a subsequent qualified disposition shall be disregarded in determining whether a creditor's claim with respect to a prior qualified disposition is extinguished as provided in subsection (b); and
- (2) Any distribution to a beneficiary shall be deemed to have been made from the latest qualified disposition.
- (g) If, in any action brought against an investment services trust, a court takes any action whereby the court declines to apply the law of this state in determining the effect of a spendthrift provision of the trust, the trustee of the trust shall immediately upon the court's action and without the further order of any court, cease in all respects to be trustee of the trust and a successor trustee shall succeed as trustee in accordance with the terms of the trust or, if the trust does not provide for a successor trustee and the trust would otherwise be without a trustee, a court of this state, upon the application of any beneficiary of the trust, shall appoint a successor trustee upon the terms and conditions it determines to be consistent with the purposes of the trust and this chapter. Upon the trustee's ceasing to be trustee, the trustee shall have no power or authority other than to convey the trust property to the successor trustee named in the trust in accordance with this section.
- (h) An investment services trust shall be subject to this section whether or not the transferor retains any or all of the powers and rights described in § 35-16-111 or serves as an investment advisor pursuant to § 35-16-109.
- (i)
- (1) Notwithstanding subsection (a) or (b) to the contrary, the limitations on actions by creditors in law or equity shall not apply and such creditors' claims shall not be extinguished if the transferor is indebted on account of an agreement, judgment or order of a court for the payment of one (1) of the following:
- (A) Past due child support;
- (B) Past due alimony in solido of a spouse or former spouse;
- (C) Past due alimony or support of a spouse or former spouse; or
- (D) A written agreement, judgment or order of a court for division of marital property of a spouse or former spouse, but only to the extent of such debt, legally mandated interest and the reasonable cost of collection.
- (2)
- (A) A claim provided under this subsection (i) shall be asserted against a trustee only:
- (i) Upon a final nonappealable determination of a Tennessee court or a fully domesticated, final nonappealable order of a court of another state as defined by § 35-15-103 that such debt is past due; and
- (ii) After the court has determined that the claimant has made reasonable attempts to collect the debt from any other sources of the transferor or that such attempts would be futile.
- (B) Nothing in this subdivision (i)(2) shall be construed to prohibit the court from making the findings required in subdivisions (i)(2)(A)(i) and (ii) in the same proceeding and order.
- (j) Subsection (i) shall not apply to any claim for forced heirship, legitime or elective share.
- (k) In addition to subsection (j), to the extent subsection (j) applies to the laws of any foreign country:
- (1) For all purposes under this chapter, the effect of the laws of any foreign country shall be the same as provided in § 35-15-107(b)(3) and (4); and
- (2) Subsection (a) applies in addition to all other provisions of this chapter.
History (5)
- Acts 2007, ch. 144, § 4
- 2008, ch. 1010, § 2
- 2010, ch. 725, §§ 14-16
- 2013, ch. 390, §§ 45-47
- 2021, ch. 420, §§ 15, 21.
§ 35-16-105. Powers and rights of transferor. - A transferor shall have only the powers and rights conferred by the investment services trust. The powers and rights conferred by the investment services trust upon the transferor are personal powers and rights that may not be exercised by a creditor or any other person, except as expressly permitted by the trust. Except as permitted by §§ 35-16-109 and 35-16-111, the transferor shall have no rights or authority with respect to the corpus of the investment services trust or the income from the trust, and any agreement or understanding purporting to grant or permit the retention of any greater rights or authority shall be void.
History (2)
- Acts 2007, ch. 144, § 5
- 2010, ch. 725, § 17.
§ 35-16-106. Avoidance of qualified dispositions. - (a) A qualified disposition to an investment services trust shall be avoided only to the extent necessary to satisfy the transferor's debt to the creditor at whose instance the disposition had been avoided, together with costs, including attorneys' fees, that the court may allow.
- (b) In the event any qualified disposition shall be avoided as provided in subsection (a), then:
- (1) If the court is satisfied that a qualified trustee has not acted in bad faith in accepting or administering the property that is the subject of the qualified disposition:
- (A) The qualified trustee shall have a first and paramount lien against the property that is the subject of the qualified disposition in an amount equal to the entire cost, including attorneys' fees, properly incurred by the qualified trustee in the defense of the action or proceedings to avoid the qualified disposition;
- (B) The qualified disposition shall be avoided subject to the proper fees, costs, preexisting rights, claims and interests of the qualified trustee and of any predecessor qualified trustee that has not acted in bad faith; and
- (C) For purposes of this subdivision (b)(1), it shall be presumed that the qualified trustee did not act in bad faith merely by accepting the property; and
- (2) If the court is satisfied that a beneficiary of an investment services trust has not acted in bad faith, the avoidance of the qualified disposition shall be subject to the right of the beneficiary to retain any distribution made upon the exercise of a trust power or discretion vested in the qualified trustee or qualified trustees of the investment services trust, which power or discretion was properly exercised prior to the creditor's commencement of an action to avoid the qualified disposition. For purposes of this subdivision (b)(2), it shall be presumed that the beneficiary, including a beneficiary who is also a transferor of the trust, did not act in bad faith merely by creating the trust or by accepting a distribution made in accordance with the terms of the trust.
- (c) A disposition by a trustee that is not a qualified trustee to a trustee that is a qualified trustee shall not be treated as other than a qualified disposition solely because the trust instrument fails to meet the requirements of § 35-16-102(7)(A).
- (d) In the case of a disposition to more than one (1) trustee, a disposition that is otherwise a qualified disposition shall not be treated as other than a qualified disposition solely because not all of the recipient trustees are qualified trustees.
§ 35-16-107. Spendthrift provisions. - A spendthrift provision as described in § 35-16-102(7)(C) shall be deemed to be a restriction on the transfer of the transferor's beneficial interest in the trust that is enforceable under applicable nonbankruptcy law within the meaning of § 541(c)(2) of the Bankruptcy Code (11 U.S.C. § 541(c)(2)), or any successor provision.
§ 35-16-108. Qualified trustees and advisors. - (a) For purposes of this chapter, neither the transferor nor any other natural person who is a nonresident of this state nor an entity that is not authorized by the law of this state to act as a trustee or whose activities are not subject to supervision as provided in § 35-16-102(12)(A) shall be considered a qualified trustee; however, nothing in this chapter shall preclude a transferor from appointing one (1) or more advisors, including, but not limited to:
- (1) Advisors who have authority under the terms of the trust instrument to remove and appoint qualified trustees or trust advisors;
- (2) Advisors who have authority under the terms of the trust instrument to direct, consent to or disapprove distributions from the trust; and
- (3) Investment advisors, whether or not the advisors would meet the requirements imposed by § 35-16-102(12).
- (b) For purposes of subsection (a), “advisor” includes a trust “protector” or any other person who, in addition to a qualified trustee, holds one (1) or more trust powers.
§ 35-16-110. Successor trustees. - In the event that a qualified trustee of an investment services trust ceases to meet the requirements of § 35-16-102(12)(A), and there remains no trustee that meets the requirements, the qualified trustee shall be deemed to have resigned as of the time of that cessation, and thereupon the successor qualified trustee provided for in the investment services trust shall become a qualified trustee of the investment services trust, or in the absence of any successor qualified trustee provided for in the investment services trust, then a court of this state shall, upon application of any interested party, appoint a successor qualified trustee.
History (1)
- Acts 2007, ch. 144, § 10.
§ 35-16-111. Revocability of trusts. - An investment services trust shall not be deemed revocable on account of its inclusion of one (1) or more of the following:
- (1) A transferor's power to veto a distribution from the trust;
- (2) A power of appointment, other than a power to appoint to the transferor, the transferor's creditors, the transferor's estate or the creditors of the transferor's estate, either exercisable by written instrument of the transferor during the transferor's life or exercisable by will or other written instrument of the transferor effective upon the transferor's death; provided, however, that a trust provision effecting a transfer by reason of the transferor's death to the transferor's estate, another trust, either established during the transferor's lifetime or at the transferor's death, or pursuant to the transferor's last will and testament or other testamentary instrument, is not a power to appoint to the transferor, the transferor's creditors, the transferor's estate, or the creditors of the transferor's estate;
- (3) The transferor's potential or actual receipt of income, including rights to the income retained in the trust;
- (4) The transferor's potential or actual receipt of income or principal from a charitable remainder unitrust or charitable remainder annuity trust as those terms are defined in § 664 of the Internal Revenue Code of 1986 (26 U.S.C. § 664), and any successor provision;
- (5) The transferor's receipt each year of an amount specified in the trust, the amount not to exceed five percent (5%) of the initial value of the trust or its value determined from time to time pursuant to the trust;
- (6) The transferor's potential or actual receipt or use of principal if the potential or actual receipt or use of principal would be the result of a qualified trustee's or qualified trustees' acting:
- (A) In the qualified trustee's or qualified trustees' discretion. For purposes of this section, a qualified trustee is presumed to have discretion with respect to the distribution of principal unless the discretion is expressly denied to the trustee by the terms of the trust;
- (B) Pursuant to a standard that governs the distribution of principal and does not confer upon the transferor a power to consume, invade or appropriate property for the benefit of the transferor, unless the power of the transferor is limited by an ascertainable standard relating to the health, education, support, or maintenance within the meaning of § 2041(b)(1)(A) or § 2514(c)(1) of the Internal Revenue Code of 1986 (26 U.S.C. § 2041(b)(1)(A) or 26 U.S.C. § 2514(c)(1)), as in effect on July 1, 2007, or as later amended; or
- (C) At the direction of an advisor described in § 35-16-108 who is acting:
- (i) In the advisor's discretion; or
- (ii) Pursuant to a standard that governs the distribution of principal and does not confer upon the transferor a power to consume, invade, or appropriate property for the benefit of the transferor, unless the power of the transferor is limited by an ascertainable standard relating to the health, education, support, or maintenance within the meaning of § 2041(b)(1)(A) or § 2514(c)(1) of the Internal Revenue Code of 1986 (26 U.S.C. § 2041(b)(1)(A) or 26 U.S.C. § 2514(c)(1)), as in effect on July 1, 2007, or as later amended;
- (7) The transferor's right to remove a trustee or advisor and to appoint a new trustee or advisor; provided, however, that the right shall not include the appointment of a person who is a related or subordinate party with respect to the transferor within the meaning of § 672(c) of the Internal Revenue Code of 1986 (26 U.S.C. § 672(c)), and any successor provision;
- (8) The transferor's potential or actual use of real property held under a qualified personal residence trust within the meaning of the term as described in § 2702(c) of the Internal Revenue Code of 1986 (26 U.S.C. § 2702(c)), and any successor provision;
- (9) The transferor's potential or actual receipt of income or principal to pay, in whole or in part, income taxes due on income of the trust if such potential or actual receipt of income or principal is pursuant to a provision in the trust instrument that expressly permits a distribution to the transferor as reimbursement for such taxes and if such distribution would be the result of a qualified trustee's or qualified trustees' acting:
- (A) In such qualified trustee's or qualified trustees' discretion or pursuant to a mandatory direction in the trust instrument; or
- (B) At the direction of an adviser described in § 35-16-108, who is acting in such adviser's discretion;
- (10) The ability, whether pursuant to direction in the investment services trust or discretion of a qualified trustee to pay, after the death of the transferor, all or any part of the debts of the transferor outstanding at the time of the transferor's death, the expenses of administering the transferor's estate, or any estate or inheritance tax imposed on or with respect to the transferor's estate; and
- (11) A qualified trustee's or qualified trustees' authority to make distributions to pay taxes in lieu of or in addition to the power to make a distribution for taxes pursuant to subdivision (3), (6), (9), or (10) by direct payment to the taxing authorities.
History (4)
- Acts 2007, ch. 144, § 11
- 2010, ch. 725, § 19
- 2013, ch. 390, § 53
- 2022, ch. 877, § 10.
§ 35-16-112. Applicability. - This chapter applies to qualified dispositions to investment services trusts and dispositions by transferors who are trustees made on or after July 1, 2007.
History (1)
- Acts 2007, ch. 144, § 12.
Chapter 50 Miscellaneous Provisions § 35-50-101. Joint control of deposits by principal and surety is lawful. - It is lawful for any party of whom a bond, undertaking or other obligation is required to agree with the party's surety or sureties for the deposit of any or all moneys and assets for which the party and surety or sureties are or may be held responsible, with a bank, savings bank, safe deposit or trust company, authorized by law to do business as such, or with another depository; provided, that the other depository is approved by the court or a judge of the court, if the deposit is otherwise proper, for the safekeeping of the money or assets and in such manner as to prevent the withdrawal of the money or assets or any part of the money or assets, without the written consent of the surety or sureties, or an order of the court, or a judge of the court, made on such notice to the surety or sureties as the court or judge may direct; and provided further, that the agreement shall not in any manner release from or change the liability of the principal or sureties as established by the terms of the bond.
History (3)
- Acts 1941, ch. 10, § 1
- C. Supp. 1950, § 7806.1 (Williams, § 7810.1)
- T.C.A. (orig. ed.), § 35-601.
§ 35-50-102. Insurance trusts — Creation — Validity. - Any trust previously or subsequently established by the depositing with or transferring to a trustee of any life, accident or health insurance policies with proceeds assigned or otherwise made payable to the trustee, irrespective of whether the designation of policy beneficiary is revocable or irrevocable, or whether the insured reserves loan privileges, the right to receive the cash surrender values under any of the policies, the right to receive dividends, or any other or all benefits under any of the policies and/or avails the insured thereof, and irrespective also of whether or not the creator of the trust reserves to the creator the right to modify the trust or withdraw part or all of the property from the trust, shall be valid and legally effective as to all the property and the disposition of the property, except any that may have been affected by the exercise of any of the reserved rights, and it shall not be necessary to the validity of the trust that the instrument creating the trust be executed according to the formalities prescribed for the execution of wills.
History (2)
- Code 1932, § 9596
- T.C.A. (orig. ed.), § 35-602.
§ 35-50-103. Life insurance proceeds payable to trustee. - (a) Life insurance may be made payable to a trustee to be named as beneficiary in the policy, and the proceeds of that insurance shall be paid to the trustee and shall be held and disposed of by the trustee as provided in a trust agreement made by the insured during the insured's lifetime. It shall not be necessary to the validity of any such trust agreement or declaration of trust that it have a trust corpus other than the right of the trustee to receive the insurance proceeds as beneficiary.
- (b) A policy of life insurance may designate as beneficiary a trustee or trustees named by will, if the designation is made in accordance with the policy and the requirements of the insurance company. Upon probate of the will, the proceeds of such insurance shall be payable to the trustee or trustees to be held and disposed of under the terms of the will as they exist as of the date of the death of the testator and in the same manner as other testamentary trusts are administered; but if no qualified trustee makes claim to the proceeds from the insurance company within eighteen (18) months after the death of the insured, or if satisfactory evidence is furnished to the insurance company within the eighteen-month period showing that there is or will be no trustee to receive the proceeds, payment shall be made by the insurance company to the executors, administrators or assigns of the insured, unless otherwise provided by agreement with the insurance company during the lifetime of the insured.
- (c) The proceeds of the insurance as received by the trustee or trustees shall not be subject to debts of the insured.
- (d) Insurance proceeds so held in trust shall not be considered part of the insured's estate for administration purposes.
- (e) Insurance proceeds so held in trust may be commingled with any other assets that may properly come into the trust.
- (f) Nothing in this section shall affect the validity of any life insurance policy beneficiary designation previously made naming trustees of trusts established by living trust or by will.
History (2)
- Acts 1969, ch. 262, § 1
- T.C.A., § 35-620.
§ 35-50-104. Purchase of annuity contract. - (a) In order to relieve estates and trusts of the burden of an annuity, the chancery court, on petition of one (1) or more of the beneficiaries in remainder in the estate or trust, or any portion of the estate or trust, is empowered, when not in terms prohibited by the will or trust instrument, to decree the purchase, in behalf of the annuitant, of an annuity contract of some insurance company, or insurer, that will afford the accordant definite income, for the stated term of life, stipulated for the annuitant by the law, or provision of the will or trust.
- (b) The cost of the annuity contract shall be paid out of the funds of the estate or trust; provided, that the contract shall be purchased only from a company or insurer admitted to do business in the state; and provided further, that all persons in interest, including the trustee or other fiduciary, complainant or defendant, shall be parties to the petition, and that the annuitant shall consent to the purchase and to the release of the annuitant's claim upon the estate or trust; or the court in the annuitant's behalf, if the annuitant is a minor or incompetent.
- (c) The annuity contract shall be one issued by a company or insurer, selected by, or for as aforementioned, the annuitant and approved by the court.
- (d) Should any beneficiary of a remainder interest not concur, that person's interest in the estate or trust shall not be distributed until the death of the annuitant or expiration of the term stipulated, nor charged with any part of the cost of the contract. In that event, however, the beneficiary or beneficiaries of the remainder interest concurring shall be entitled to distribution of their respective interests, upon paying the cost of an annuity contract as will be productive of an income to the annuitant proportionate to their interest in the entire remainder estate, and paying all costs of the application.
- (e) Nothing in this section shall be construed to authorize the acceleration of distribution except where it appears to the court that the payment of an annuity, or its equivalent, is the sole remaining purpose of the trust's continuance.
History (3)
- Acts 1929, ch. 23, §§ 1, 2
- mod. Code 1932, §§ 8135-8138
- T.C.A. (orig. ed.), §§ 35-603 — 35-606.
§ 35-50-105. Fiduciaries may effect liability and accident insurance on property. - (a) All guardians, executors, administrators and trustees are authorized to effect liability and accident insurance, in such amount as may be reasonable and proper, on any or all real or personal property under their management and control.
- (b) Premiums paid on insurance effected according to subsection (a) shall be a proper charge against the estate under management or control, and shall be allowed as a credit on settlements made.
History (4)
- Acts 1925, ch. 24, §§ 1, 2
- Shan. Supp., §§ 3349a3, 3349a4
- Code 1932, §§ 6215, 6216
- T.C.A. (orig. ed.) §§ 35-607, 35-608.
§ 35-50-106. Trusts for employees' benefit — Rule against perpetuities. - No trust previously or subsequently created by an employer as a part of a pension, stock bonus, disability, death benefit, profit sharing or similar plan for the exclusive benefit of some or all of the employer's employees or their beneficiaries to which contributions are made by the employer or employees, or both employer and employees, for the purpose of distributing to the employees or their beneficiaries, the earnings or principal or both earnings and principal, of the trust, shall be deemed to be invalid by reason of any existing law or rule against perpetuities or suspension of the power of alienation; but the trust may continue for such time as may be necessary to accomplish the purposes for which it may be created. The income arising from any property held in trust may be permitted to accumulate for the length permitted by the instrument creating the trust, or, if no time is so specified, for the time the trustee or trustees deem necessary to accomplish the purposes of the trust.
History (2)
- Acts 1955, ch. 293, § 1
- T.C.A., § 35-609.
§ 35-50-107. Limitations on appointment of nonresident fiduciary. - (a)
- (1) Any person who is not a resident of this state or any corporation that is authorized to exercise fiduciary powers, but is not authorized to do business in this state and does not actually maintain an office in this state, shall not be appointed or allowed to serve as trustee of a corporate or personal trust, personal representative of an estate, guardian, conservator for an incompetent person, guardian for a minor or in any other fiduciary capacity, unless there is also appointed as a fiduciary to serve with such nonresident fiduciary, a person resident in this state or corporation authorized to do business in this state and that maintains an office in this state, except as provided in subdivision (a)(2). In the event the resident cofiduciary ceases for any reason to act, then a new resident cofiduciary shall be appointed.
- (2) The following nonresident persons or corporations may serve as fiduciaries, whether the appointment is by will, deed, trust agreement, court order or decree or otherwise:
- (A) Except as provided in subdivision (a)(2)(C), a bank or trust company organized and doing business under the laws of any state or territory of the United States, including the District of Columbia, other than this state, or a national bank or trust company, duly authorized so to act, may be appointed and may serve in this state as a fiduciary, when and to the extent that the state, territory or District of Columbia in which the bank or trust company is organized or has its principal place of business grants authority to serve in like fiduciary capacities to a bank or trust company organized and doing business under the laws of this state or a national bank or trust company having its principal office in this state;
- (B) Any resident or nonresident person may serve as a personal representative of the estate of a decedent;
- (C) Any corporation that is authorized to exercise fiduciary powers may serve as trustee of an inter vivos personal or corporate trust, regardless of the residence of the trustee;
- (D) Any person may serve as trustee of a trust, regardless of the residence of the trustee;
- (E) Any person may serve as the guardian of the person of a minor, regardless of the residence of the guardian;
- (F) Any person may serve as the conservator of the person of an incompetent person, regardless of the residence of the conservator;
- (G) Any person or corporation authorized to exercise fiduciary powers may serve as agent or attorney-in-fact under a power of attorney, regardless of the residence of the agent or attorney-in-fact; and
- (H) A trust company that is organized under the laws of another state as a bank, trust company or savings bank that:
- (i) Has an office in this state that is not its principal office, meets the definition of a trust institution under 12 U.S.C. § 1841(c)(2)(D), and is a direct or indirect subsidiary of a bank holding company that has a direct or indirect bank, trust company or savings bank subsidiary that has an office in this state in which deposits are accepted; or
- (ii) Has an office in this state that is not its principal office and accepts deposits at its office in this state.
- (b)
- (1) All fiduciaries appointed and serving under this section who are not residents of this state shall be subject to the jurisdiction of the courts of this state as to any action or claim for relief arising from any estate or trust within this state for which such nonresident person is acting as fiduciary in the manner described in §§ 20-2-214 — 20-2-219 or in any other manner or matter involving an estate or trust being administered in this state.
- (2) Any nonresident person, bank or trust company shall not act in any such capacities, until it has appointed in writing the secretary of state as its agent for service of process, upon whom all process in any suit or proceeding against it may be served in any action or proceeding relating to any trust, estate or matter within this state in respect of which such person, bank or trust company is acting in any such fiduciary capacity, and in the writing shall agree that any process against it, which shall be served upon the secretary of state, shall be of the same legal force and validity as if served on the person, bank or trust company. The appointment must identify the specific trust, estate, or person for which the fiduciary has been appointed, state the name and street address, including zip code, of the fiduciary and be accompanied by a ten dollar ($10.00) filing fee. This appointment shall continue so long as any liability remains outstanding against the person, bank or trust company pertaining to any such matters. Upon receipt of any such process, it is the duty of the secretary of state forthwith to forward the process by registered or certified mail to the person, bank or trust company at the address furnished in the writing. It shall be the responsibility of the nonresident personal representative to secure appointment of the secretary of state as agent for service of process and to provide the court with a copy of the receipt from the secretary of state.
- (c) Unless otherwise provided in the trust agreement or will or by § 30-1-201, the court having jurisdiction shall require the person, bank or trust company to give bond for the performance of the fiduciary relationship, in which case the statute in such cases shall apply. Even if bond is otherwise waived, the court may, in its discretion, require a nonresident person qualifying as personal representative according to subdivision (a)(2)(B) to furnish bond in an amount equal to the value of assets of the personal estate being removed from this state during the period of estate administration. In the case of intestate succession, no nonresident person qualifying as a personal representative according to subdivision (a)(2)(B) shall be eligible to serve in that capacity without giving bond, unless all heirs at law join in a petition authorizing the person to so serve.
- (d) Nothing contained in this section shall apply to trust agreements executed for the purpose of securing loans and guaranties thereof. No out-of-state or foreign corporate fiduciary shall have any more powers or privileges to conduct business or serve in a fiduciary capacity in this state than the laws of the state in which the foreign corporation is organized confer like powers upon corporations organized and doing business under the laws of this state or having their principal office in this state.
- (e) No lack of compliance with this section by any nonresident fiduciary acting as an attorney-in-fact under the power of attorney otherwise executed in accordance with the laws of this state shall be construed to affect the title to any real estate constituting the subject matter of the power of attorney.
History (15)
- Acts 1955, ch. 164, § 1
- 1957, ch. 52, § 1
- 1977, ch. 416, § 1
- T.C.A., § 35-610
- Acts 1985, ch. 140, § 32
- 1985, ch. 312, § 2
- 1988, ch. 854, § 15
- 1991, ch. 187, § 1
- 1993, ch. 453, § 1
- 1995, ch. 177, §§ 4-12
- 1996, ch. 768, § 2
- 1997, ch. 426, § 21
- 2000, ch. 730, § 1
- 2005, ch. 99, §§ 10-12
- 2016, ch. 809, § 7.
§ 35-50-108. Designation of beneficiaries of employee pension, stock bonus or investment plans. - (a) If a person, entitled to receive payment in money, securities, or other property under a pension, retirement, death benefit, stock bonus, profit-sharing or employees' savings and investment plan, system or trust, designates, as provided in this section, a payee or beneficiary to receive payment of the money, securities, or other property upon death of the person making the designation or to receive payment of the money, securities, or other property upon the death of any other person, the right of the person or persons so designated to receive payment in accordance with the designation, and the ownership of the money, securities or other property so received, shall not be defeated or impaired by any statute or rule of law governing the transfer of property by will or gift or on intestacy.
- (b) This section is applicable to a designation even though it is revocable or subject to change by the person who makes it, and even though the money, securities or other property under the designation are not yet payable at the time the designation is made or the money, securities or other property are subject to withdrawal, collection or assignment by the person making the designation.
- (c) A person entitled to receive payment includes:
- (1) An employee or participant in a pension, retirement, death benefit, stock bonus, profit-sharing or employees' savings and investment plan, system or trust; and
- (2) Any person entitled to receive payment by reason of a payee or beneficiary designation described in this section.
- (d) A designation of a beneficiary or payee to receive payment upon death either of the person making the designation or of any other person must be made in writing and signed by the person making the designation, and must be agreed to by the employer or be made in accordance with rules prescribed for the pension, retirement, death benefit, stock bonus, profit-sharing or employees' savings and investment plan, system or trust.
- (e) This section shall not alter, abridge or limit title 29, chapter 12; title 31, chapter 1; title 66, chapter 3; or title 67, chapter 8, parts 2-4.
History (2)
- Acts 1961, ch. 133, §§ 1-4
- T.C.A., §§ 35-611 — 35-614.
§ 35-50-109. Incorporation of § 35-50-110 in will or trust instrument. - (a) By a clearly expressed intention of the testator or settlor so to do contained in a will, or in an instrument in writing by which a trust estate is created inter vivos, the language contained in the introductory paragraph of § 35-50-110, and in any one (1) or more of subdivisions (1)-(33) of that section, may be, by appropriate reference made to that language, incorporated in the will or other written instrument, to be applicable either to the fiduciary authorized to administer the estate of the testator, or to the fiduciary authorized to administer a trust estate established or to be established pursuant to the terms of the will or other written instrument, or to both types of fiduciaries, with the same effect and subject to the same judicial interpretation and control in appropriate cases as though the language were set forth verbatim in the instrument; provided, that the language contained in § 35-50-110(1)-(4) is appropriate only with respect to powers to be vested in the one (1) or more executors of the estate of a decedent, and is available only for incorporation by reference in a will, as powers of the executor or executors of the will.
- (b)
- (1) “Estate,” as used in any subdivision of § 35-50-110, is construed to mean the estate of the decedent if by reference to the subdivision it has been made applicable to the executor or executors of a will, and is construed to mean the trust estate if by reference to the subdivision it has been made applicable to the trustee or trustees of such an estate.
- (2) As used in this section and § 35-50-110, “fiduciary,” and the masculine singular form of the pronoun referring to the fiduciary, are construed to mean the one (1) or more executors, whether male, female or corporate, of the estate of a decedent, or the one (1) or more trustees, whether male, female or corporate, of a testamentary or inter vivos trust estate, whichever in a particular case is appropriate.
- (c) Nothing contained in this section and § 35-50-110 shall be construed to limit the power of a court of competent jurisdiction to prohibit a fiduciary from taking any action, or to restrain a fiduciary in the taking of any action, notwithstanding the authorizations or powers vested in the fiduciary by any written instrument in which all or any part of § 35-50-110 is incorporated by reference.
History (3)
- Acts 1963, ch. 110, §§ 1, 2, 4
- T.C.A., §§ 35-616, 35-617, 35-619
- Acts 1991, ch. 182, § 1.
§ 35-50-110. Specifically enumerated fiduciary powers that may be incorporated by reference. - Without diminution or restriction of the powers vested in the fiduciary by law, or elsewhere in the instrument, and subject to all other provisions of the instrument, the fiduciary, without the necessity of procuring any judicial authorization, or approval, shall be vested with, and in the application of the fiduciary's best judgment and discretion in behalf of the beneficiaries of the instrument shall be authorized to exercise, the powers specifically enumerated in this section:
- (1) In behalf of the estate, to join the testator's or settlor's spouse (if living), or the personal representative of the estate of the testator's or settlor's spouse (if deceased), in the execution and filing of a joint income tax return to the United States, or to the state of Tennessee, or any other governmental taxing authority (or a joint gift tax return, if and when such a joint return is authorized by law), if the fiduciary, in the exercise of the fiduciary's best judgment, believes that action to be for the best interests of the estate, or will result in a benefit to the testator's or settlor's spouse (or the estate of the testator's or settlor's spouse) exceeding in amount any monetary loss to the estate that may be caused by the filing;
- (2) To continue, to the extent and so long as in the exercise of the fiduciary's best judgment it is advisable and for the best interests of the estate so to do, the operation or participation in the operation of any farming, manufacturing, mercantile and/or other business activity or enterprise in which at the time of death the testator or settlor is engaged, either alone or in unincorporated association with others;
- (3) In behalf of the estate, to perform any and all valid executory contracts to which at the time of the testator's or settlor's death the testator or settlor is a party, and that at the time of the testator's or settlor's death have not been fully performed by the testator or settlor, and to discharge all obligations of the estate arising under or by reason of such contracts;
- (4) Pending the administration of the estate, to permit any beneficiary or beneficiaries of the will to have the use, possession and enjoyment, without charge made for the use, possession and enjoyment, (and without the fiduciary thereby relinquishing control of the property), of any real property or tangible personal property of the estate which, upon completion of the administration of the estate, will be distributable to that beneficiary or beneficiaries when, if, and to the extent that, that action will not adversely affect the rights and interests of any creditor of the estate, and in the judgment of the fiduciary it is appropriate that the beneficiary or beneficiaries have the use and enjoyment of the property, notwithstanding that it may be subjected to depreciation in value by reason of the use. The exercise of this power will not constitute a distribution of the property with respect to which it is exercised; and, whether or not exercised, neither the power nor the exercise of the power shall be deemed a constructive or actual distribution of the property to which it relates;
- (5) During the fiduciary's administration of the estate, and subject to all the other provisions of the instrument, to receive and receipt for all of the assets of the estate, and to have exclusive possession and control of those assets;
- (6) By public or private sale or sales, and for the consideration, on the terms and subject to the conditions, if any, that in the judgment of the fiduciary are for the best interests of the estate and the beneficiaries of the estate, to sell, assign, transfer, convey, or exchange any real or personal property of the estate, or the estate's undivided interest in that property, or any specific part of or interest in that property, including, but not limited to, standing timber, rock, gravel, sand, growing crops, oil, gas and other minerals or mineral rights or interests, and to grant easements on real property of the estate, and to participate in the partition of real or personal property in which the estate has an undivided interest; and to accomplish any such transactions by contracts, endorsements, assignments, bills of sale, deeds or other appropriate written instruments executed and delivered by the fiduciary in behalf of the estate, and to acknowledge the execution of those instruments in the manner provided by law for the acknowledgment of the execution of deeds when such acknowledgments are required or appropriate;
- (7) For the consideration, on the terms and subject to the conditions, if any, that in the judgment of the fiduciary are for the best interests of the estate and the beneficiaries of the estate, to lease, for terms which may exceed the duration of the estate, any real or tangible personal property of the estate, or any specific parts of that property or interests in that property, including, but not limited to, oil, gas and other mineral leases; and to accomplish those leases by appropriate written instruments executed and delivered by the fiduciary in behalf of the estate, and acknowledge the execution of those instruments in the manner provided by law for the acknowledgment of the execution of deeds when such acknowledgments are required or appropriate;
- (8) In behalf of the estate, to borrow money; evidence those loans by promissory notes or other evidences of indebtedness signed by the fiduciary in the fiduciary's fiduciary capacity, to be binding upon the assets of the estate but not upon the fiduciary in the fiduciary's individual capacity; secure those loans by assigning or pledging personal property of the estate, or by mortgages or deeds of trust or other appropriate instruments imposing liens upon real property or tangible personal property of the estate; and repay those loans, including principal and interest due thereon;
- (9) In behalf of the estate, to borrow money from the fiduciary in the fiduciary's individual capacity and secure those loans in the same manner as though they were made by a third person;
- (10) To enter into contracts binding upon the estate, but not upon the fiduciary in the fiduciary's individual capacity, that are reasonably incident to the administration of the estate, and that the fiduciary in the exercise of the fiduciary's best judgment believes to be for the best interests of the estate;
- (11) To settle, by compromise or otherwise, claims or demands against the estate, or held in behalf of the estate;
- (12) To release and satisfy of record, in whole or in part, and enter of record credits upon, any mortgage or other lien constituting an asset of the estate;
- (13) To abandon and charge off as worthless, in whole or in part, claims or demands held by or in behalf of the estate that, in the judgment of the fiduciary, are in whole or in part uncollectible;
- (14) To pay taxes and excises lawfully chargeable against the assets of the estate that are in the possession or under the control of the fiduciary, including, but not limited to, ad valorem taxes upon real and personal property of the estate that became due and payable prior to the property coming into the hands of the fiduciary, or that become due and payable while the property remains in the fiduciary's possession or under the fiduciary's control; excluding, however, income taxes payable by distributees, assessed with respect to income that has been distributed by the fiduciary pursuant to the instrument;
- (15) To repair and maintain in good condition real and tangible personal property of the estate so long as the property remains in the possession or under the control of the fiduciary;
- (16) To invest liquid assets of the estate, and from time to time exchange or liquidate and reinvest such assets, pending distribution thereof, if and when such investments in the judgment of the fiduciary will not impede or delay distribution thereof pursuant to this instrument or as otherwise by law required, and in the judgment of the fiduciary are advisable and for the best interests of the estate and the beneficiaries thereof. In making such investments, the fiduciary shall be guided by the prudent investor rule, as authorized and defined in title 35, chapter 14; and the investments thus authorized shall be understood to include, but not to be limited to, loans secured by mortgages, or liens otherwise imposed, upon real or personal property;
- (17) Subject to the making and keeping of appropriate records with respect to the investments, which will at all times clearly identify the equitable rights and interests of the estate in the investments, to invest funds of the estate in undivided interests in negotiable or nonnegotiable securities, or other assets, the remaining undivided interests in which are held by the fiduciary in a fiduciary capacity for the use and benefit of other beneficiaries;
- (18) To retain investments that initially come into the hands of the fiduciary among the assets of the estate, without liability for loss or depreciation or diminution in value resulting from the retention, so long as in the judgment of the fiduciary it is not clearly for the best interests of the estate, and the distributees of the estate, that those investments be liquidated, although the investments may not be productive of income or otherwise may not be such as the fiduciary would be authorized to make;
- (19) At any time and from time to time, to keep all or any portion of the estate in liquid form, uninvested, for such time as the fiduciary may deem advisable, without liability for any loss of income occasioned by so doing;
- (20) To deposit funds of the trust in one (1) or more accounts carried by the fiduciary, in a clearly specified fiduciary capacity, in any one (1) or more banks and/or trust companies whose deposits are insured under the Federal Deposit Insurance Act as now constituted or as that act may be amended; and if the fiduciary is itself a bank or a trust company, and is otherwise qualified, the fiduciary may serve as the depository;
- (21) To deposit for safekeeping with any bank or trust company, including the fiduciary itself if the fiduciary is a bank or trust company, any negotiable or nonnegotiable securities or other documents constituting assets or records of the estate;
- (22) To bring and prosecute or defend actions at law or in equity for the protection of the assets or interests of the estate or for the protection or enforcement of the instrument;
- (23) To employ attorneys, accountants, investment managers and delegate investment authority to them or other persons whose services may be necessary or advisable, in the judgment of the fiduciary, to advise or assist the fiduciary in the discharge of the fiduciary's duties, or in the conduct of any business constituting an asset of the estate, or in the management, maintenance, improvement, preservation or protection of any property of the estate, or otherwise in the exercise of any powers vested in the fiduciary;
- (24) To procure and pay premiums on policies of insurance to protect the estate, or any of the assets of the estate, against liability for personal injuries or property damage, or against loss or damage by reason of fire, windstorm, collision, theft, embezzlement or other hazards against which such insurance is normally carried in connection with activities or on properties such as those with respect to which the fiduciary procures such insurance;
- (25) To allocate items of receipts or disbursements to either corpus or income of the estate, as the fiduciary in the exercise of the fiduciary's best judgment and discretion deems to be proper, without thereby doing violence to clearly established and generally recognized principles of accounting;
- (26) In behalf of the estate, to purchase or otherwise lawfully acquire real or personal property, or undivided interests in property, the ownership of which, in the judgment of the fiduciary, will be advantageous to the estate, and the beneficiary or beneficiaries of the estate;
- (27) To construct improvements on real property of the estate, or remove or otherwise dispose of improvements, when that action is in the judgment of the fiduciary advisable and for the best interests of the estate;
- (28) To exercise in person or by proxy, with or without a power of substitution vested in the proxy, all voting rights incident to the ownership of corporate stock or the other securities constituting assets of the estate; and exercise all other rights and privileges incident to the ownership of those securities, including, but not limited to, the right to sell, exchange, endorse or otherwise transfer the securities, consent to, or oppose, reorganizations, consolidations, mergers or other proposed corporate actions by the issuer of the securities, exercise or decline to exercise options to purchase additional shares or units of the securities or of related securities, and pay all assessments or other expenses necessary in the judgment of the fiduciary for the protection of the securities or of the value of the securities;
- (29) To employ any bank or trust company to serve as custodian of any securities constituting assets of the estate, and cause the securities (if they are nonassessable) to be registered in the name of the custodian or of its nominee, without disclosure that they are held in a fiduciary capacity; authorize the bank or trust company, as agent and in behalf of the fiduciary, to collect, receive and receipt for income derived from the securities, or the proceeds of sales, assignments or exchanges of the securities made by authority and under the direction of the fiduciary, and to remit to the fiduciary such income or other proceeds derived from the securities; and pay to the custodian reasonable and customary charges made by it for the performance of these services; provided, that any such action taken by the fiduciary shall not increase, decrease or otherwise affect the fiduciary's liability, responsibility or accountability with respect to the securities;
- (30) To register nonassessable securities constituting assets of the estate in the name of the fiduciary or of the fiduciary's nominee, without disclosure that the securities are held in a fiduciary capacity, or hold the securities unregistered or otherwise in such form that the title thereto will pass by delivery, without, in any such case, increasing, decreasing or otherwise affecting the fiduciary's liability, responsibility or accountability with respect to the securities;
- (31) In making distribution of capital assets of the estate to distributees of the estate under the instrument, except when otherwise required by other provisions of the instrument, to make the distribution in kind or in cash, or partially in kind and partially in cash, as the fiduciary finds to be most practicable and for the best interests of the distributees; distribute real property to two (2) or more distributees in division, or to partition real property for the purpose of distribution, as the fiduciary in the exercise of the fiduciary's best judgment finds to be most practicable and for the best interests of the distributees; and determine the value of capital assets for the purpose of making distribution of the assets if and when there is more than one (1) distributee of the assets, which determination shall be binding upon the distributees unless clearly capricious, erroneous and inequitable;
- (32)
- (A)
- (i) To inspect and monitor property to which the fiduciary takes legal title, including interests in sole proprietorships, partnerships, or corporations and any assets owned by such business enterprises, for the purpose of determining compliance with environmental laws affecting the property, and respond or take any other action necessary to prevent, abate or clean up, on behalf of the trust or estate as is necessary, before or after the initiation of enforcement action by any governmental body, any actual or threatened violation of any environmental laws affecting property held by the fiduciary relating to hazardous substances or environmental laws;
- (ii) To refuse to accept property in trust if the fiduciary determines that any property to be donated to a trust estate is contaminated by any hazardous substances, or the property is being used or has been used for any activities, directly or indirectly involving hazardous substances, that could result in liability to the trust or estate or otherwise impair the value of the assets held in the trust;
- (iii) To settle or compromise, at any time, any and all claims against the estate or trust that may be asserted by any governmental body or private party involving the alleged violation of any environmental laws affecting property held in the estate or trust;
- (iv) To disclaim any power granted by any document or any statute or rule of law that, in the sole discretion of the fiduciary, may cause the fiduciary to incur personal liability under any environmental laws; and
- (v) To decline to serve as fiduciary if the fiduciary reasonably believes that there is or may be a conflict of interest between it in its fiduciary capacity and in its individual capacity because of potential claims or liabilities that may be asserted against it on behalf of the estate or trust resulting from the type or condition of assets held therein;
- (B)
- (i) The fiduciary shall be entitled to charge the cost for any inspection, insurance, review, abatement, response or cleanup, or any other remedial action, as authorized in this subdivision (32), against the income or principal of the estate or trust and shall not be personally responsible for that cost. The fiduciary shall not be personally liable to any beneficiary or any other party for any decrease in value or exhaustion of assets in the estate or trust by reason of the fiduciary's compliance with any environmental laws, specifically including any reporting requirements under environmental laws;
- (ii) While acting in good faith and according to traditional fiduciary standards, the fiduciary shall not be considered an “owner,” “operator” or other party otherwise liable for violation of environmental laws unless the fiduciary has actually caused or contributed to the violation;
- (C) For the purposes of this subdivision (32), “hazardous substances” means any substance defined as hazardous or toxic or otherwise regulated by any federal, state or local law, rule or regulation relating to the protection of the environment or human health. Such laws are referred to in this subdivision (32) as “environmental laws”; and
- (33) To do any and all other things, not in violation of any other terms of the instrument, that, in the judgment of the fiduciary, are necessary or appropriate for the proper management, investment and distribution of the assets of the estate in accordance with the instrument, and in the fiduciary's judgment are for the best interests of the estate and its beneficiaries.
History (4)
- Acts 1963, ch. 110, § 3
- T.C.A., § 35-618
- Acts 1991, ch. 182, § 2
- 1999, ch. 491, § 9.
§ 35-50-111. Fiduciary bond on interest. - Whenever a fiduciary, as defined in § 35-2-102, is required by law to execute a bond for assets placed with a financial institution in the form of a bank, trust company or savings and loan association, and the fiduciary agrees with the institution not to withdraw the principal of the assets, the bond required of the fiduciary shall be for the amount of the interest. No bond adjustment is necessary if the principal, or a portion of the principal, is withdrawn with court approval. The authorization for elimination of bond on the principal so deposited with the financial institution shall not apply unless the agreement by the fiduciary with the institution is approved by the court charged with administering the funds or the estate of the minor, and unless the agreement is filed in and enforced by the court.
History (2)
- Acts 1976, ch. 675, § 2
- T.C.A., § 35-621.
§ 35-50-112. Impairment of marital deduction prohibited. - No executor, trustee or other fiduciary may take, or refuse to take, any action, or make or retain any investment, the result of which would defeat an otherwise available marital deduction under the Internal Revenue Code (26 U.S.C.), or under the laws of this state, if the obvious and expressed intent of the testator or settlor was to take advantage of this deduction. After May 23, 1977, this section applies to all acts or investments, by all executors, trustees or other fiduciaries, as to all wills and trusts, whenever these instruments were executed or created.
History (3)
- Acts 1977, ch. 336, §§ 1, 2
- T.C.A., § 35-622
- Acts 1985, ch. 140, § 33.
§ 35-50-113. Powers exercisable by majority — Liability. - (a) Unless it is otherwise provided by an instrument under which the fiduciaries are acting, or an amendment of the instrument, or by court order, any power vested in three (3) or more fiduciaries, other than the power to remove a fiduciary, may be exercised by a majority of those fiduciaries; but no fiduciary who has not joined in exercising a power shall be liable to the beneficiaries or to others for the consequences of that exercise, nor shall a dissenting fiduciary be liable for the consequences of an act in which that fiduciary joins at the direction of the majority fiduciaries, if the fiduciary expressed the dissent in writing to the cofiduciaries at or before the time of the joinder.
- (b) Nothing in this section excuses a cofiduciary from liability for inactivity in the administration of the estate or trust nor for failure to attempt to prevent a breach of trust.
- (c) As used in this section, “fiduciary” is construed to mean the one (1) or more personal representatives, whether male, female or corporate, of a testamentary estate.
- (d) This section is effective with regard to all estates and trusts under administration on or after April 8, 1985, regardless of the date of the instruments under which administration is being carried out or when administration began.
History (3)
- Acts 1985, ch. 154, § 1
- 2004, ch. 537, § 106
- T.C.A. § 35-50-114.
§ 35-50-120. Blind trust. - (a) A trust shall be considered a “blind trust” if the trust is created to benefit an individual, the individual's spouse or any dependent child and is under the management and control of a trustee who is a bank or trust company authorized to exercise fiduciary powers, a licensed attorney or a broker who:
- (1) Is independent of and not associated with any party interested in the trust;
- (2) Is not or has not been an employee of any interested party or any organization affiliated with any interested party, and is not a partner of, or involved in any joint venture or other investment with any interested party; and
- (3) Is not a relative of any party.
- (b) There shall be no communications direct or indirect between the trustee and an interested party with respect to the trust unless the communication is in writing, except for communications that solely consist of requests for distributions of cash or other unspecified assets of the trust. The written communications shall be limited to the general financial interest and needs of the interested party including, but not limited to, an interest in maximizing income or long-term capital gain.
- (c) The interested parties shall make no effort to obtain information with respect to the holdings of the trust, including obtaining a copy of any trust tax return filed or any information relating to the trust, except as may be needed by the interested parties in order to file tax returns.
- (d) Any trustee of a trust as provided in this section for an interested party that is required to make disclosures under title 8, chapter 50, part 5, shall make to the best of the trustee's knowledge such disclosures as are required or be subject to the penalties provided in § 8-50-505.
- (e) This section does not apply to any “blind trust” or other trust or financial arrangement or agreement having the same effect or status as a “blind trust” in existence prior to May 12, 1988. All such trusts, arrangements or agreements shall continue to operate in accordance with the terms and conditions under which they were created.
§ 35-50-121. Delayed receipt of trust corpus. - Any trust agreement or declaration of trust may be valid even if no corpus is delivered to the trustee at the time of execution of the instrument if the trustee has the right to receive corpus at a later time or times from the trustor, the trustor's estate or other persons or sources.
§ 35-50-122. Generation-skipping tax — Definitions. - (a) As used in this section, unless the context otherwise requires:
- (1) “Generation-skipping tax” means the generation-skipping transfer tax imposed by chapter 13 of the Internal Revenue Code (26 U.S.C. §§ 2601 et seq.);
- (2) “Internal Revenue Code” means the Internal Revenue Code of 1986 and successor provisions and codifications of that Code;
- (3) “Trust” means any express trust, with additions, wherever and however created, or any separate share of a trust, and includes any arrangement, other than an estate, that, although not a trust, has substantially the same effect as a trust; and
- (4) “Trustee” means an original, additional or successor trustee, whether or not appointed or confirmed by a court, and, in the case of an arrangement that is not a trust but is treated as a trust for purposes of the generation-skipping tax, includes the person in actual or constructive possession of the property subject to the arrangement.
- (b) A trustee is authorized, but not required, to divide any trust into two (2) or more separate trusts, of equal or unequal value, in order to create one (1) or more trusts entirely exempt from the generation-skipping tax and one (1) or more trusts entirely subject to the generation-skipping tax. Other terms and provisions of both trusts will remain substantially identical in all respects to the original trust.
- (c) The purpose of this section is to authorize a trustee to take appropriate action to preclude or minimize to the extent possible the imposition of the generation-skipping tax, and this section shall be broadly construed to carry out this purpose.
- (d) A trustee may exercise the authority granted in this section without prior approval or leave of any court.
- (e) Any trustee who in good faith acts or fails to act shall not be liable to any person for taking or failing to take any action authorized by this section.
- (f) This section applies to any trust that may be subject to chapter 13 of the Internal Revenue Code.
History (3)
- Acts 1991, ch. 192, § 1
- 1997, ch. 407, § 7
- 2004, ch. 866, § 8.
§ 35-50-124. Limited power of trustee — Beneficiary — Application. - (a)
- (1) Due to the potential conflict of interest that exists between a trustee who is a beneficiary and other beneficiaries of the trust, any power conferred upon a trustee, other than the settlor of a revocable or amendable trust:
- (A) To make discretionary distributions of either principal or income to or for the benefit of the trustee, except to provide for that trustee's health, education, maintenance, or support as described under Internal Revenue Code §§ 2041 and 2514 (26 U.S.C. §§ 2041 and 2514);
- (B) To make discretionary allocations of receipts or expenses as between principal and income, unless the trustee acts in a fiduciary capacity whereby the trustee has no power to enlarge or shift any beneficial interest except as an incidental consequence of the discharge of the trustee's fiduciary duties;
- (C) To make discretionary distributions of either principal or income to satisfy any legal support obligations of the trustee; or
- (D) To exercise any other power, including the right to remove or to replace any trustee, so as to cause the powers enumerated in subdivision (a)(1)(A), (a)(1)(B) or (a)(1)(C) to be exercised on behalf of, or for the benefit of, a beneficiary who is also a trustee,
- cannot be exercised by that trustee.
- (2) Any of the foregoing proscribed powers that are conferred upon two (2) or more trustees may be exercised by the trustees who are not so disqualified. If there is no trustee qualified to exercise the power and the document creating the trust does not include authority for the appointment of an independent trustee, any party in interest, as defined in subsection (c), may apply to a court of competent jurisdiction to appoint an independent trustee and the power may be exercised by the independent trustee appointed by the court.
- (b) This section applies to any trust unless application of the statute would cause the loss of a marital or charitable deduction or loss of generation skipping transfer tax exemption or the terms of the trust either:
- (1) Refer specifically to this section and provide expressly to the contrary;
- (2) Clearly indicate an intent by the settlor of the trust or testator of a will to grant the trustee who is also a beneficiary the power in question to accomplish a particular beneficial tax result; or
- (3) Contain language similarly limiting the powers of a trustee who is also a beneficiary.
- (c) For the purpose of subsection (a) or (b):
- (1) If the trust is revocable or amendable and the settlor is not incapacitated, the party in interest is the settlor;
- (2) If the trust is revocable or amendable and the settlor is incapacitated, the party in interest is the settlor's legal representative under applicable law or the settlor's donee under the durable power of attorney that is sufficient to grant such authority;
- (3) If the trust is not revocable or amendable, the parties in interest are:
- (A) Each trustee then serving;
- (B) Each income beneficiary then in existence or, if any such beneficiary has not attained majority or is otherwise incapacitated, the beneficiary's natural guardian or other legal representative under applicable law or the beneficiary's donee under a durable power of attorney that is sufficient to grant such authority; and
- (C) Each remainder beneficiary then in existence or, if any such remainder beneficiary has not attained majority or is otherwise incapacitated, the beneficiary's natural guardian or other legal representative under applicable law or the beneficiary's donee under a durable power of attorney that is sufficient to grant such authority.
- (d) A person who has the right to remove or replace a trustee does not possess nor may that person be deemed to possess, by virtue of having that right, the powers of the trustee that is subject to removal or to replacement.
History (2)
- Acts 1997, ch. 439, § 1
- 2000, ch. 893, §§ 1-4.
§ 35-50-125. Release of personal health information to determine capacity. - Where it is necessary, under the terms of a trust to determine the mental or physical incapacity of a patient, a healthcare provider may release personal health information to a licensed physician or licensed attorney at law if the physician or attorney at law signs and furnishes the healthcare provider with an affidavit that the release of information is necessary to determine the mental or physical incapacity of the patient, or of the settlor, or of the donor, or of the trustee, or of the agent or other fiduciary under a trust that was signed by the patient where incapacity causes the document to come into effect, discontinues its effect or calls for a change in a fiduciary acting under the document.
History (2)
- Acts 2004, ch. 866, § 9
- T.C.A. § 35-50-127.
2024 Tennessee Code Unannotated