Tennessee Named Fourth Best State In Dynasty Trust Rankings
Steve Oshins, an attorney in Nevada, has compiled the first annual ranking of the best states for the creation of Dynasty Trusts. He ranks Tennessee as the fourth best state. Ironically, our high ranking is a tribute to our laws other than our rule against perpetuities. Approximately 20 states have totally repealed their rule against perpetuities, which means that trusts established under the laws of these states can last forever. Tennessee allows a trust to last for a maximum of 360 years. Certain trust companies located in these other states claim that Tennessee is a bad state for dynasty trusts, because a trust can only last 360 years. I have never talked to a client who cared whether the trust had to end after 360 years. Ask yourself this question: Do you even know the names of any of your relatives who were alive in the year 1652?
One of the reasons that Tennessee scores well despite our 360 year rule is because of our good spendthrift trust laws that protect assets from spouses of beneficiaries in the event of a divorce. This is not the case in a lot of other states. I think Mr. Oshins accurately determined that protecting trust assets in the event of divorce is substantially more important than being able to extend the life of a trust for more than 360 years. If assets are lost in a divorce, the trust is not going to last 360 years anyway.