Changes In Latitudes-What to do When Your Trustee Moves Away From Tennessee
Today, one of my clients called me because his Trustee is moving to Colorado. Five years ago, he established a Tennessee Investment Services Trust, a/k/a asset protection trust. The creditor protection provided by these trusts is dependent upon the Trustee being a Tennessee resident or trust company.Tennessee Community Property Trusts have the same requirement. You need a Tennessee trustee if you want to obtain the benefits provided by these trusts.When your Trustee of one of these two types of trusts moves away from Tennessee, you must change the Trustee to a Tennessee resident or trust company. You should first review the trust agreement to see if a successor trustee has already been designated. Assuming that a successor has been designated, the currently serving Trustee can resign and the successor can take over. It is customary for the successor to ask the beneficiaries to release the successor from the duty of investigating the actions of the prior Trustee.If no successor is designated in the trust agreement, then you will need to follow the procedures set forth in the trust agreement to appoint a successor. With asset protection trusts, you must appoint a Disinterested Trustee, i.e. a corporate Trustee or a Tennessee resident who is not a beneficiary or related to you. In the case of a Tennessee Community Property Trust, the Trustee does not have to be Disinterested.Most other types of trusts do not require a Tennessee trustee. However, be wary of a potential tax problem. Some states, such as California, impose state income taxes just because the Trustee resides in that state. You can avoid these taxes by appointing a different Trustee.I recommend that you call your trust attorney when your Trustee moves away from Tennessee.