How to Dissolve a Living Trust in Tennessee
A Tennessee living trust can pass assets to the deceased's heirs without going through the six- to eight-month state probate process. By transferring property into the trust's name, it legally passes out of the settlor's (trust creator's) ownership, even though she can make herself trustee and continue to control the trust's assets. At her death, a designated successor trustee will manage or distribute the assets according to the deceased's prior instructions. Once the assets are gone, the trust dissolves, but it's possible for the trustee to do so before that time.
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Instructions
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Read the trust documents and identify the purpose of the trust. In Tennessee, the settlor can set up a trust to manage or distribute property to beneficiaries; to care for a pet; to give to charity; or for noncharitable purposes that don't violate the law. If you, as trustee, want to dissolve a trust, it will be easier if you can show that doing so harmonizes with the settlor's original goals.
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Go over the trust finances. In some cases, it might be easier to carry out the settlor's wishes by dissolving the trust. If the trust is worth less than $100,000, Tennessee law says it may be acceptable to dissolve the trust if you, as trustee, believe the administrative costs actually hurt the beneficiaries. Events the settlor couldn't have foreseen -- changes in the real estate market or the stock market, for example -- could also make it easier to carry out the settlor's goals for the trust by dissolving it.
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File with your local court to dissolve the trust. Present evidence that keeping property in the trust no longer serves the trustee's purposes. The court may decide to continue the trust; replace you as trustee; or agree with you. If the court approves dissolution, you will have to divide up the assets among the trust beneficiaries.
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Tips & Warnings
If the settlor creates an irrevocable living trust, you won't be able to dissolve it by yourself. Tennessee law says dissolving an irrevocable living trust requires the unanimous consent of all beneficiaries.
A trust dissolves automatically when it completes its purpose or if its purposes become unlawful or impossible to attain.
