A trust is an arrangement under which one person, called a trustee, holds legal title to property for another person, called a beneficiary. You can be the trustee of your own living trust, keeping full control over all property held in trust.
A "living trust" (also called an "inter vivos" trust by lawyers who can't give up Latin) is simply a trust you create while you're alive, rather than one that is created at your death under the terms of your will. The beneficiaries you name in your living trust receive the trust property when you die.
In contrast to revocable trusts, irrevocable trusts cannot be revoked or modified after they are signed. Irrevocable trusts can be useful tools for specific goals, like reducing taxes, but they require giving up ownership and control of trust property.
The main advantage of making a living trust is to spare your family the expense and delay of probate court proceedings after your death. But do you really need a trust?
Tennessee does not use the Uniform Probate Code, which simplifies the probate process, so it may be a good idea for you to make a living trust to avoid Tennessee's complex probate process.
Tennessee has a simplified probate process for small estates (under $50,000). Tenn. Code Ann. § § 30-4-102 and following. If your net worth will be under this amount when you die, the probate process will be straightforward and relatively inexpensive, so you may not need to worry about avoiding probate with a living trust.
Yes, you always need a will. A will provides a backup plan for any property that doesn't make it into your trust. For example, if you acquire new property and don't add it to your trust before you die, that property won't pass under the terms of the trust document. You can use a will to name someone to inherit property that you haven't left to a particular person or entity in your trust.
If you don't have a will, any property that isn't transferred by your living trust or other method (such as joint tenancy) will go to your closest relatives as determined by Tennessee state law.
Probably not. Most people do not need to worry about estate taxes because the federal estate tax is levied only on estates worth close to $12 million. Tennessee stopped collecting a state estate tax on deaths occurring on or after January 1, 2016.
If your estate is close to $12 million, you may be able to use a more complicated trust (such as an AB trust) to reduce or avoid federal estate taxes.
To make a living trust in Tennessee, you:
You can use Quicken WillMaker & Trust to make a living trust using your computer. It has a simple interview format that allows you to complete the trust at your own pace, and it gives you lots of legal and practical help along the way. Based on your responses, the program produces a living trust document customized for you and your situation. With Quicken WillMaker & Trust, you can also make a will, powers of attorney, health care directives, and many other useful documents. Use it just for yourself or for your entire family.
For more on Tennessee estate planning issues, see Tennessee Estate Planning on Nolo.com.