Amends TCA Title 31; Title 34; Title 35 and Title 45.
This bill revises present law regarding disclaiming an interest in property.<br /> <br /> PRESENT LAW<br /> <br /> Under present law, the following persons may disclaim all or part of the property, powers or interest in property:<br /> <br /> (1) The donee of a gift, whether outright or in trust;<br /> (2) A recipient of property from a decedent's estate;<br /> (3) A recipient of property on the exercise of a power of appointment;<br /> (4) A recipient of property resulting from another person's disclaimer;<br /> (5) A recipient of property resulting from any other type of gratuitous transfer;<br /> (6) A fiduciary holding powers as a fiduciary; or<br /> (7) A beneficiary designated in a pay-on-death account, an insurance policy, an individual retirement account, an annuity, a retirement plan, whether qualified or not, or any other type of deferred compensation arrangement.<br /> <br /> To be effective the disclaimer must be an irrevocable and unqualified refusal by a person to accept an interest in property or to retain fiduciary powers but only if:<br /> <br /> (1) The refusal is in writing. Present law details what information the writing must contain; <br /> (2) The writing is received by the transferor of the interest and, if the subject of the disclaimer is realty, is filed in the county register's office and, if the disclaimer involves an interest in a decedent's estate, is filed with the court in which the decedent's estate proceedings are or would be pending;<br /> (3) The person has not accepted the interest or any of its benefits or exercised the power; and<br /> (4) As a result of the refusal, the interest passes without any direction on the part of the person making the disclaimer and passes either to the spouse of the transferor or to a person other than the person making the disclaimer.<br /> <br /> Unless the decedent has otherwise indicated by will, the interest disclaimed passes to those persons who would take under present law as if the person disclaiming had predeceased the decedent. Unless the donor of a gift or the creator of power has otherwise indicated in the document evidencing the gift or creating the power, the interest disclaimed passes to the donor or creator of the power. In every case the disclaimer relates back for all purposes to the date of death of the decedent, the date of the gift or the date of death of the donee of a power, as the case may be. If the disclaimer is of a fiduciary power, the power will either be exercisable by some other fiduciary or void.<br /> <br /> Present law sets out in detail the actions that result in a person being barred from disclaiming property.<br /> <br /> THIS BILL<br /> <br /> This bill rewrites the above provisions and establishes the following in regard to disclaiming interest, which will apply to disclaimers of any interest in or power over property, whenever created.<br /> <br /> This bill provides that a person may disclaim, in whole or part, any interest in or power over property, including a power of appointment. A person may disclaim the interest or power even if its creator imposed a spendthrift provision or similar restriction on transfer or a restriction or limitation on the right to disclaim. This bill further provides that except to the extent a fiduciary's right to disclaim is expressly restricted or limited by state law or by the instrument creating the fiduciary relationship, a fiduciary may disclaim, in whole or part, any interest in or power over property, including a power of appointment, whether acting in a personal or representative capacity. <br /> <br /> Under this bill, to be effective, the disclaimer must: <br /> <br /> (1) Be in a writing;<br /> (2) Declare the disclaimer, and the extent thereof;<br /> (3) Describe the interest or power disclaimed; and<br /> (4) Be signed either by the person making the disclaimer or some person subscribing the name of the person making the disclaimer, in the person's presence and by such person's express direction in the presence of two or more witnesses competent to witness a will.<br /> <br /> This bill sets out in detail:<br /> <br /> (1) When a disclaimer becomes irrevocable;<br /> (2) When the disclaimer takes effect;<br /> (3) To whom the disclaimed interest passes;<br /> (4) Provisions governing a disclaimer by a trustee, disclaimer of power of appointment, and disclaimer of power held in fiduciary capacity;<br /> (5) Delivery of a disclaimer, including, specifically, to whom the disclaimer must be delivered (which varies depending on the type of interest);<br /> (6) When disclaimer is barred or limited. For example, a disclaimer is barred by a written waiver of the right to disclaim or if the disclaimant accepts the interest sought to be disclaimed; and<br /> (7) The recording of a disclaimer. With limited exception, failure to file, record, or register the disclaimer does not affect its validity as between the disclaimant and persons to whom the property interest or power passes by reason of the disclaimer.<br /> <br /> This bill also revises and adds to present law provisions governing guardianships and conservatorships and the Uniform Trust Code, as follows:<br /> <br /> (1) This bill adds that in a proceeding to determine letters of guardianship or conservatorship, the court is vested with the authority to direct any fund or part of the fund decreed to belong to a minor or person with a disability, or in which there is recovery in favor of a minor or person with a disability, into a trust created under the Tennessee Uniform Trust Code with such fiduciary appointed upon order of the court;<br /> (2) Present law provides that a fiduciary is limited in its investments to the investments permitted by the present law. This bill specifies that this provision does not apply if estate funds or property is transferred to a trust created pursuant to the Tennessee Uniform Trust Code;<br /> (3) This bill adds that if funds are transferred to a trust, the fiduciary and trust protector are relieved of requirements under present law where trust assets, investments, and their financial nature require public disclosure or filing upon public record;<br /> (4) This bill revises the present law provisions under the Uniform Trust Code in regard to when a charitable organization or the attorney general is treated as a qualified beneficiary;<br /> (5) This bill adds under the Uniform Trust Code that if the trustee resigns, is removed, or dies or upon the termination of the trust, a qualified beneficiary or the successor trustee may petition the court to require the trustee or the trustee's personal representative to appear before the court for a final accounting. Alternatively, the trustee or the trustee's personal representative may petition the court to approve a final accounting relieving the trustee from liability for the period covered by the final accounting, if the qualified beneficiaries have refused to otherwise release the trustee within 30 days or cannot be reasonably located to request such release. The settlement period begins from the acceptance of the trusteeship by the trustee or the end of the period covered by the last accounting. This bill sets out in detail information to be included in the petition and other provisions governing such a situation;<br /> (6) This bill adds that a provision in a trust requiring the arbitration of disputes, other than disputes of the validity of all or a part of a trust between or among the beneficiaries and a fiduciary under the trust, or any combination of such person or entities, is enforceable;<br /> (7) This bill revises the provisions governing: representation by a holder of a power of appointment; and modification or termination of noncharitable irrevocable trust by consent; <br /> (8) This bill adds provisions excluding certain entities from the provisions of TCA Title 45 governing banks and financial institutions. Under this bill, a corporation or limited liability company excluded from title 45 if:<br /> (A) The entity is established for the exclusive purpose of acting as a trust protector or trust advisor, or any combination of such purposes;<br /> (B) The entity is acting in such capacity under the terms of a trust under which a Tennessee trust company, a Tennessee bank with trust powers, or a national bank with trust powers and with a physical presence in this state is serving as a trustee;<br /> (C) The entity is not engaged in trust company business as a private trust company or with the general public as a public trust company;<br /> (D) The entity does not hold itself out as being in the business of acting as a fiduciary for hire as either a public or private trust company;<br /> (E) The entity files an annual report with the secretary of state and provides a copy to the department of financial institutions;<br /> (F) The entity agrees to be subject to examination by the department at the discretion of the commissioner; and<br /> (G) The entity does not use the word "trust" or "trustee" in the entity's name in any manner.<br /> <br /> This bill sets out in detail other provisions governing such exempt special purposes entities.<br /> <br /> ON APRIL 22, 2019, THE HOUSE ADOPTED AMENDMENTS #1 AND #2 AND PASSED HOUSE BILL 676, AS AMENDED.<br /> <br /> AMENDMENT #1 revises various provisions of this bill, including the following:<br /> <br /> (1) Removes this bill's requirement that a disclaimer be filed with a court having jurisdiction to appoint the personal representative;<br /> (2) Revises this bill's provisions described above in the bill summary under THIS BILL, in the second item (5), to instead add under the Uniform Trust Code that if the trustee resigns, is removed, or upon the full or partial termination of the trust, a qualified beneficiary or successor trustee may petition the court to require the trustee transferring or distributing the trust to appear before the court for a final accounting. However, a successor trustee will not have any obligation to petition the court to require the final accounting. The trustee transferring or distributing the trust may also petition the court to approve a final accounting relieving the trustee from liability for the period of its administration. This amendment also revises the final accounting period to begin from the latest of: the date of acceptance of the trusteeship by the trustee; or the end of the period since an accounting was last approved by the court;<br /> (3) Removes this bill's provision that would have added that a provision in a trust requiring the arbitration of disputes, other than disputes of the validity of all or a part of a trust between or among the beneficiaries and a fiduciary under the trust, or any combination of such person or entities, is enforceable;<br /> (4) Adds that prior to delivering the trust property within the trustee's possession to the co-trustee, successor trustee, or other person entitled to it, a trustee who has resigned or been removed will have the right and authority to petition the court for approval of its accountings and a release and discharge from all liability related to such trust as allowed under this bill;<br /> (5) Deletes the present law provision whereby a release by a beneficiary of a trustee from liability for breach of trust is invalid to the extent: it was induced by improper conduct of the trustee; or the beneficiary, at the time of the release, did not know of the beneficiary's rights or of the material facts relating to the breach. This amendment instead provides that a qualified beneficiary or trustee may petition the court for a final accounting covering a resigning or removed trustee's period of administration or the period since an accounting was last approved by the court as allowed under this bill;<br /> (6) Adds that no beneficiary, trustee, trust advisor, or trust protector may commence a proceeding against a trustee or former trustee for any matter covered by a final accounting approved by the court under this bill; and<br /> (7) Clarifies the exemption of special purpose entities under this bill from present law governing banks and revises various provisions of this bill regarding such special purpose entities, such as requiring that the entity agree to pay the department the actual expenses of the examination required under this bill.<br /> <br /> AMENDMENT #2 removes the provision that states that a disclaimer made under this bill is not a transfer, assignment, or release. <br /> <br />
This bill revises present law regarding disclaiming an interest in property.<br /> <br /> PRESENT LAW<br /> <br /> Under present law, the following persons may disclaim all or part of the property, powers or interest in property:<br /> <br /> (1) The donee of a gift, whether outright or in trust;<br /> (2) A recipient of property from a decedent's estate;<br /> (3) A recipient of property on the exercise of a power of appointment;<br /> (4) A recipient of property resulting from another person's disclaimer;<br /> (5) A recipient of property resulting from any other type of gratuitous transfer;<br /> (6) A fiduciary holding powers as a fiduciary; or<br /> (7) A beneficiary designated in a pay-on-death account, an insurance policy, an individual retirement account, an annuity, a retirement plan, whether qualified or not, or any other type of deferred compensation arrangement.<br /> <br /> To be effective the disclaimer must be an irrevocable and unqualified refusal by a person to accept an interest in property or to retain fiduciary powers but only if:<br /> <br /> (1) The refusal is in writing. Present law details what information the writing must contain; <br /> (2) The writing is received by the transferor of the interest and, if the subject of the disclaimer is realty, is filed in the county register's office and, if the disclaimer involves an interest in a decedent's estate, is filed with the court in which the decedent's estate proceedings are or would be pending;<br /> (3) The person has not accepted the interest or any of its benefits or exercised the power; and<br /> (4) As a result of the refusal, the interest passes without any direction on the part of the person making the disclaimer and passes either to the spouse of the transferor or to a person other than the person making the disclaimer.<br /> <br /> Unless the decedent has otherwise indicated by will, the interest disclaimed passes to those persons who would take under present law as if the person disclaiming had predeceased the decedent. Unless the donor of a gift or the creator of power has otherwise indicated in the document evidencing the gift or creating the power, the interest disclaimed passes to the donor or creator of the power. In every case the disclaimer relates back for all purposes to the date of death of the decedent, the date of the gift or the date of death of the donee of a power, as the case may be. If the disclaimer is of a fiduciary power, the power will either be exercisable by some other fiduciary or void.<br /> <br /> Present law sets out in detail the actions that result in a person being barred from disclaiming property.<br /> <br /> THIS BILL<br /> <br /> This bill rewrites the above provisions and establishes the following in regard to disclaiming interest, which will apply to disclaimers of any interest in or power over property, whenever created.<br /> <br /> This bill provides that a person may disclaim, in whole or part, any interest in or power over property, including a power of appointment. A person may disclaim the interest or power even if its creator imposed a spendthrift provision or similar restriction on transfer or a restriction or limitation on the right to disclaim. This bill further provides that except to the extent a fiduciary's right to disclaim is expressly restricted or limited by state law or by the instrument creating the fiduciary relationship, a fiduciary may disclaim, in whole or part, any interest in or power over property, including a power of appointment, whether acting in a personal or representative capacity. <br /> <br /> Under this bill, to be effective, the disclaimer must: <br /> <br /> (1) Be in a writing;<br /> (2) Declare the disclaimer, and the extent thereof;<br /> (3) Describe the interest or power disclaimed; and<br /> (4) Be signed either by the person making the disclaimer or some person subscribing the name of the person making the disclaimer, in the person's presence and by such person's express direction in the presence of two or more witnesses competent to witness a will.<br /> <br /> This bill sets out in detail:<br /> <br /> (1) When a disclaimer becomes irrevocable;<br /> (2) When the disclaimer takes effect;<br /> (3) To whom the disclaimed interest passes;<br /> (4) Provisions governing a disclaimer by a trustee, disclaimer of power of appointment, and disclaimer of power held in fiduciary capacity;<br /> (5) Delivery of a disclaimer, including, specifically, to whom the disclaimer must be delivered (which varies depending on the type of interest);<br /> (6) When disclaimer is barred or limited. For example, a disclaimer is barred by a written waiver of the right to disclaim or if the disclaimant accepts the interest sought to be disclaimed; and<br /> (7) The recording of a disclaimer. With limited exception, failure to file, record, or register the disclaimer does not affect its validity as between the disclaimant and persons to whom the property interest or power passes by reason of the disclaimer.<br /> <br /> This bill also revises and adds to present law provisions governing guardianships and conservatorships and the Uniform Trust Code, as follows:<br /> <br /> (1) This bill adds that in a proceeding to determine letters of guardianship or conservatorship, the court is vested with the authority to direct any fund or part of the fund decreed to belong to a minor or person with a disability, or in which there is recovery in favor of a minor or person with a disability, into a trust created under the Tennessee Uniform Trust Code with such fiduciary appointed upon order of the court;<br /> (2) Present law provides that a fiduciary is limited in its investments to the investments permitted by the present law. This bill specifies that this provision does not apply if estate funds or property is transferred to a trust created pursuant to the Tennessee Uniform Trust Code;<br /> (3) This bill adds that if funds are transferred to a trust, the fiduciary and trust protector are relieved of requirements under present law where trust assets, investments, and their financial nature require public disclosure or filing upon public record;<br /> (4) This bill revises the present law provisions under the Uniform Trust Code in regard to when a charitable organization or the attorney general is treated as a qualified beneficiary;<br /> (5) This bill adds under the Uniform Trust Code that if the trustee resigns, is removed, or dies or upon the termination of the trust, a qualified beneficiary or the successor trustee may petition the court to require the trustee or the trustee's personal representative to appear before the court for a final accounting. Alternatively, the trustee or the trustee's personal representative may petition the court to approve a final accounting relieving the trustee from liability for the period covered by the final accounting, if the qualified beneficiaries have refused to otherwise release the trustee within 30 days or cannot be reasonably located to request such release. The settlement period begins from the acceptance of the trusteeship by the trustee or the end of the period covered by the last accounting. This bill sets out in detail information to be included in the petition and other provisions governing such a situation;<br /> (6) This bill adds that a provision in a trust requiring the arbitration of disputes, other than disputes of the validity of all or a part of a trust between or among the beneficiaries and a fiduciary under the trust, or any combination of such person or entities, is enforceable;<br /> (7) This bill revises the provisions governing: representation by a holder of a power of appointment; and modification or termination of noncharitable irrevocable trust by consent; <br /> (8) This bill adds provisions excluding certain entities from the provisions of TCA Title 45 governing banks and financial institutions. Under this bill, a corporation or limited liability company excluded from title 45 if:<br /> (A) The entity is established for the exclusive purpose of acting as a trust protector or trust advisor, or any combination of such purposes;<br /> (B) The entity is acting in such capacity under the terms of a trust under which a Tennessee trust company, a Tennessee bank with trust powers, or a national bank with trust powers and with a physical presence in this state is serving as a trustee;<br /> (C) The entity is not engaged in trust company business as a private trust company or with the general public as a public trust company;<br /> (D) The entity does not hold itself out as being in the business of acting as a fiduciary for hire as either a public or private trust company;<br /> (E) The entity files an annual report with the secretary of state and provides a copy to the department of financial institutions;<br /> (F) The entity agrees to be subject to examination by the department at the discretion of the commissioner; and<br /> (G) The entity does not use the word "trust" or "trustee" in the entity's name in any manner.<br /> <br /> This bill sets out in detail other provisions governing such exempt special purposes entities.<br /> <br /> ON APRIL 22, 2019, THE HOUSE ADOPTED AMENDMENTS #1 AND #2 AND PASSED HOUSE BILL 676, AS AMENDED.<br /> <br /> AMENDMENT #1 revises various provisions of this bill, including the following:<br /> <br /> (1) Removes this bill's requirement that a disclaimer be filed with a court having jurisdiction to appoint the personal representative;<br /> (2) Revises this bill's provisions described above in the bill summary under THIS BILL, in the second item (5), to instead add under the Uniform Trust Code that if the trustee resigns, is removed, or upon the full or partial termination of the trust, a qualified beneficiary or successor trustee may petition the court to require the trustee transferring or distributing the trust to appear before the court for a final accounting. However, a successor trustee will not have any obligation to petition the court to require the final accounting. The trustee transferring or distributing the trust may also petition the court to approve a final accounting relieving the trustee from liability for the period of its administration. This amendment also revises the final accounting period to begin from the latest of: the date of acceptance of the trusteeship by the trustee; or the end of the period since an accounting was last approved by the court;<br /> (3) Removes this bill's provision that would have added that a provision in a trust requiring the arbitration of disputes, other than disputes of the validity of all or a part of a trust between or among the beneficiaries and a fiduciary under the trust, or any combination of such person or entities, is enforceable;<br /> (4) Adds that prior to delivering the trust property within the trustee's possession to the co-trustee, successor trustee, or other person entitled to it, a trustee who has resigned or been removed will have the right and authority to petition the court for approval of its accountings and a release and discharge from all liability related to such trust as allowed under this bill;<br /> (5) Deletes the present law provision whereby a release by a beneficiary of a trustee from liability for breach of trust is invalid to the extent: it was induced by improper conduct of the trustee; or the beneficiary, at the time of the release, did not know of the beneficiary's rights or of the material facts relating to the breach. This amendment instead provides that a qualified beneficiary or trustee may petition the court for a final accounting covering a resigning or removed trustee's period of administration or the period since an accounting was last approved by the court as allowed under this bill;<br /> (6) Adds that no beneficiary, trustee, trust advisor, or trust protector may commence a proceeding against a trustee or former trustee for any matter covered by a final accounting approved by the court under this bill; and<br /> (7) Clarifies the exemption of special purpose entities under this bill from present law governing banks and revises various provisions of this bill regarding such special purpose entities, such as requiring that the entity agree to pay the department the actual expenses of the examination required under this bill.<br /> <br /> AMENDMENT #2 removes the provision that states that a disclaimer made under this bill is not a transfer, assignment, or release. <br /> <br />
Track Tennessee Legislation Like a Pro
Join hundreds of professionals using LegisGo to stay ahead of legislative changes.
Instant Alerts
Get notified when bills you track move through the legislature
AI Summaries
Understand complex legislation in seconds with AI-powered analysis
Full Access
All 132 legislators, committee schedules, and voting records