A trust can be an important part of an individual’s estate plan in Tennessee, but if the person does not fund the trust, it could be worthless. Assets that are not in the trust will generally have to go through the probate process.
There are some exceptions. For example, life insurance policies and other assets that pass via beneficiary will not go through probate. However, this could still have unintended consequences. If a person owns property with another as joint tenants with right of survivorship but intends for their share of the property to go to someone other than the co-owner, this might not happen. The result could be that some people are inadvertently disinherited. Furthermore, beneficiaries of other assets may not have access to asset protection, tax benefits and other advantages that a trust would offer. The situation may become particularly complicated for an individual who owns property in multiple states. In that situation, probate may need to be opened in every state where there is property.
Beneficiaries who are minors cannot own property, so if children’s assets are not placed in a trust, an adult may have to go through the courts to be appointed conservator. This same process may need to happen if the trust creator becomes incapacitated. A trust would allow the successor trustee to step in.
Individuals who are creating an estate plan or adding a trust to an existing estate plan may want to work with an attorney. One option might be to create what is known as a pour-over will that moves assets into the trust upon a person’s death. However, even with a pour-over will, individuals should fund the trust while still alive so that they can maximize its usefulness. For example, a trust gives an individual the opportunity to specify how distributions are made.