Trust and Estate Counsel

Tennessee Estate Planning Law

Insight and commentary on estate planning issues impacting affluent residents of Tennessee

Tennessee Wills May Be Modified By A Court For Tax Purposes

Tennessee has enacted a new law that will allow Courts to modify the terms of a Will to achieve the decedent’s probable tax objectives. Because the decedent will not be available, the Court will have to rely upon guidance from the decedent in the Will or another document and/or testimony from the decedent’s estate planning attorney and/or other advisors who were aware of the decedent’s tax objectives.

Courts will prefer to rely upon written guidance from the decedent. Therefore, I plan to add a new paragraph to Wills that I draft stating “I want my family to pay the least amount of federal and state, estate, inheritance, income and generation-skipping transfer taxes.” This provision will need to be modified for testators who do not mind paying higher taxes when it allows them to better accomplish their objectives.

When the decedent does not provide guidance of his or her tax intentions in the Will or another document, the Court will have to rely upon testimony from the decedent’s advisors and/or family members. I can envision cases where this works well. I also anticipate more difficult cases where determining the decedent’s intent will be more problematic for the Court.

The new law will become effective July 1, 2010. However, the Court is allowed to provide that the modification has retroactive effect.

The new law only applies to Wills and not revocable trusts. However, the Tennessee Uniform Trust Code already contains provisions that allow a Court to modify the terms of a trust to achieve the Settlor’s tax objectives. T.C.A. § 35-15-416.