Amends TCA Title 35.

This bill revises various provisions governing trusts, including the provisions: (1) Governing what is considered "money received in partial liquidation" in regard to the requirement of a trustee to allocate receipts from an entity to a principal, including money received in total or partial liquidation of an entity; (2) Regarding governing law. This amendment deletes "administration" from the present law provision that states "the validity, construction and administration of a trust are determined by the law of the jurisdiction designated in the terms of the trust instrument, which is called a state jurisdiction provision"; (3) Governing the place of administration. This bill specifies that except as otherwise expressly provided in a state jurisdiction provision that is valid and controlling under other applicable law or by court order addressing the applicable law for trust administration, the laws of this state govern the administration of a trust while the trust is administered in this state; This bill also revises the present law provision that states the terms of trust designating which jurisdiction's laws apply are valid if certain conditions are met, to instead make the provision applicable to the law "controlling the administration" of the trust; (4) Dictating what matters may be resolved by a nonjudicial settlement agreement to add to the list: the resignation, appointment, and establishment of the powers of trust protectors or trust advisors; and the approval of an investment decision, delegation, policy, plan, or program; (5) Regarding the period of time that a trust created for a noncharitable purpose may be enforced, to increase the period from 90 years to 360 years; (6) Governing the immunity from claims of creditors of property held by spouses as tenants by the entirety that is subsequently conveyed as tenants by the entirety to a trustee. Present law provides that after such a conveyance, the property transferred is no longer held by the husband and wife as tenants by the entirety. This bill revises this provision to instead provide that after such a conveyance, the property transferred will be tenancy by the entirety property held by the spouses; (7) Regarding a trustee's duty to inform and report to require a trustee, during the time that a beneficiary is represented by another, such as a fiduciary or parent, to send the trustee's report to the representative of the beneficiary. This bill also revises the existing exception to the duty to report when a party with the power to do so direct that certain reporting does not have to occur. This bill adds detail to the application of and requirements for that exception; (8) Governing a trustee who has the power to invade a trust appointing all or part of the principal of a 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 in certain circumstances (See Section 12 of the bill for details); (9) Dictating when a qualified disposition is deemed to have been made. This bill specifies that 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. Under this bill, 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; (10) Requiring recordkeeping and identification of trust property to add that for all purposes of the Tennessee Uniform Trust Code, if a trust is apportioned into separate shares for one or more beneficiaries, then the apportioned separate shares must be treated as separate trusts even though the share may be comingled with other separate shares of the trust for investment and tax reporting purposes; (11) Governing creditor's claims against a settlor to add that a person is not considered the settlor or deemed settlor of an irrevocable inter vivos trust if the person is a beneficiary with respect to property that was contributed to the trust by the person's spouse, regardless of whether or when the person was a settlor of an irrevocable inter vivos trust for the benefit of the person's spouse. Here "person's spouse" means the individual to whom the person was married at the time the irrevocable inter vivos trust was created, regardless of a subsequent dissolution of the marriage; (12) Directing the trustee to make certain disbursements from the principal to specify. Present law directs the trustee to make disbursements from income to the extent that they are not disbursements for the execution and settlement of the settlor's estate: (A) 1/2 of the regular compensation of the trustee and of any person providing investment advisory or custodial services to the trustee; and (B) 1/2 of all expenses for accountings, judicial proceedings, or other matters that involve both the income and remainder interests. Present law requires the trustee to make the remaining 1/2 of the disbursements described in (12)(A) and (12)(B) above from principal. This bill adds that if in the judgment of the trustee, the charging of a part or all of that portion of the compensation described under (12)(A) to principal is impracticable because of the lack of sufficient principal cash and readily marketable intangible personal property, or inadvisable because of the nature of the assets, then that part or all of the compensation must be paid out of income so long as the adjustment does not violate the trustee's present law limitations on adjustments under the Uniform Principal and Income Act. The decision of the trustee to pay a larger portion or all of the compensation out of income will be conclusive, and the income of the trust will not be entitled to reimbursement from principal at any subsequent time or times; (13) Regarding protection of certain interests and powers of appointment to add that regardless of whether a trust contains a spendthrift provision, a creditor or assignee is prohibited from reaching property transferred pursuant to a power of appointment exercised by a decedent unless the power of appointment was actually exercised in favor of the decedent or the decedent's estate; (14) Governing the creation of a trust to add that a passive trust is not terminable because it is passive, notwithstanding the present law requirement that the trustee must have duties to perform; and (15) Regarding restrictions on actions, remedies, and claims by reducing relevant present law time periods related to extinguishment of creditor's claims from two years to 18 months. This bill also adds to the definition of a "person" in both the Tennessee Investment Services Act and the Tennessee Uniform Trust Code by including the civil law equivalent of a trust, including a fideicomiso or equivalent, or a foundation of the equivalent; This bill will take effect October 1, 2021. ON APRIL 14, 2021, THE HOUSE ADOPTED AMENDMENT #1 AND PASSED HOUSE BILL 1186, AS AMENDED. AMENDMENT #1 changes the effective date of this bill from October 1, 2021, to July 1, 2021, except for items (1)-(7) below, which will take effect on January 1, 2022. This amendment adds the following provisions for the purposes of registering a trust with the secretary of state: (1) The trustee of a trust that has the trust's principal place of administration in this state may register the trust with the secretary of state. For purposes of this provision, a trust is considered to have the trust's principal place of administration in this state if one of the trustees has its principal place of business in this state or is a resident of this state and the trust meets the requirements described in the present law provision providing whether the terms of a trust's state jurisdiction provision is valid and controlling; (2) Registration is accomplished by filing a statement with the secretary of state that includes certain information and a fee as detailed by this amendment; (3) If a trust has been registered elsewhere, registration in this state is ineffective until either the earlier registration is released by the jurisdiction where prior registration occurred or an instrument executed by the trustee and all current beneficiaries is filed with the registration in this state; (4) The registration is confidential and not subject to public inspection; (5) Notwithstanding item (4) above, the settlor, a trustee, trust advisor, or trust protector for the trust may obtain a certified copy of the registration upon filing a request with the secretary of state that includes a signed attestation that they are the settlor or a currently serving trustee, trust advisor, or trust protector, and paying a filing fee of $100 payable to the secretary of state. If the requesting person is not listed in the initial registration, such as in the case of a newly appointed trustee, trust advisor, or trust protector, then the requesting party must provide documentation evidencing the requesting party's appointment; (6) The registration may be canceled by a signed request of the trustee, attesting to current service as a trustee, accompanied by: documentary evidence of subsequent registration of the trust in a different jurisdiction; or an acknowledged instrument executed by all current beneficiaries agreeing to the cancellation; and (7) The secretary of state may designate required forms and methods for filing a registration, requesting a certified copy of a registration, and cancelling a registration.