Amends TCA Title 35 and Title 48.

This bill revises various provisions governing trusts, including the following: (1) Removes the one-year limitation on a beneficiary commencing a proceeding against a trust advisor or trust protector for breach of trust (similar provisions exist in another present law provision, and that provision is retained); (2) Revises provisions governing information to be included in a petition for final accounting and who must be served; (3) Revises provisions governing actions for contesting the validity of a revocable trust, including provisions regarding the liability of a beneficiary who fails to return an improper distribution; (4) Revises the present law provision whereby, upon termination or partial termination of a trust, the trustee may send to the beneficiaries a proposal for distribution. This bill revises the provision to instead provide for, upon the occurrence of an event terminating or partially terminating a trust, or upon the trustee's removal or resignation, the trustee proceeding to distribute the trust property to the persons entitled to it within a reasonable period of time. This bill sets out in detail requirements regarding notice, distribution proposal, and discharge of fiduciary liability; (5) Adds that a communication between an attorney and a client acting as a trustee, trust advisor, or trust protector is privileged and protected from disclosure to the same extent as if the client was acting in his, her, or its individual capacity and was not acting as a trustee, trust advisor, or trust protector. This bill sets out in detail more provisions governing this privilege; (6) Specifies 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; (7) Revises the present law provision whereby a trustee who has authority to invade the principal of a trust to make distributions to, or for the benefit of, one or more proper objects of the exercise of the power, may instead, if certain requirements are met, exercise that authority by appointing all or part of the principal of the trust "in favor of a trustee of a trust under an instrument other than that under which the power to invade is created or under the same instrument" to instead provide for appointing all or part of the principal of the trust "in favor of a trustee of a second trust"; (8) Redefines "second trust." Present law defines the term as the trust to which assets are being distributed from the original trust. This bill defines the term as an original trust after modification or restatement, or a trust to which a distribution of property from an original trust is or may be made under present law; provided, that the exercise of the power to appoint principal to a second trust by restatement or modification of the original trust does not require the retitling of property titled to the original trust or a change in any payable on death or beneficiary designations to the original trust, even if the second trust is created by a fiduciary or other person as the nominal settlor; (9) Specifies that "entity" under the provisions governing a special purpose entity, means a corporation or limited liability company "organized in this state"; (10) Revises the actions that must be taken by a special purpose entity in order for the entity to be exempt from certain banking law; and (11) Revises the provisions whereby one or more shareholders may create a voting trust. Under this bill, one stockholder, or two or more stockholders by agreement, may in writing deposit capital stock of an original issue with or transfer capital stock to any person or entity authorized to act as trustee, for the purpose of vesting in the person or entity, who may be designated voting trustee, or voting trustees, the right to vote thereon for any period of time determined by such agreement, upon the terms and conditions stated in such agreement. This bill revises other provisions governing voting trusts. ON MARCH 17, 2022, THE SENATE ADOPTED AMENDMENT #1 AND PASSED SENATE BILL 2166, AS AMENDED. AMENDMENT #1 makes various changes and additions to this bill, as follows: (1) Adds, for purposes of the provisions described in (4) of the Bill Summary, that if the person entitled to the trust property is the trustee of another trust, or the successor trustee of the same trust, and there is a vacancy in the office of that trustee, then the otherwise applicable provisions of the Tennessee Uniform Trust Code apply; (2) Deletes the provisions described in (5) of the Bill Summary; (3) Deletes the present law requirement that a special purpose entity provide a copy of the annual report that it files with the secretary of state to the department of financial institutions; (4) Changes the period within which a special purpose entity must provide notice to the department and pay the $1,000 fee in order to be exempt from certain provisions of present law concerning banks and financial institutions from "within 30 days of beginning operations as a trust protector or trust advisor" to "on or before the date that is 60 days after the date on which the entity's initial formation documents are filed with the secretary of state". This amendment also changes some of the content requirements for such notice; (5) Deletes the present law requirement that a special purpose entity submit to the department an annual fee of $1,000, an updated list of the name of the corporate trustee for each separate trust for which such entity is engaged as a trust protector or trust advisor, and a certification concerning the status of the corporate trustee and special purpose entity; and (6) Adds that an entity that fails to meet any of the requirements to be a special purpose entity is not authorized to act as a special purpose entity in this state; provided, that an entity that meets all of the requirements other than the notice and fee requirements will be deemed to be a special purpose entity if the entity provides the notice and fee to the department on or before August 1, 2022.