Under the Tennessee Uniform Trust Code, a revocable trust lets the settlor amend or revoke it at any time and retains control over trust property, but that property stays reachable by the settlor's creditors. An irrevocable trust requires the settlor to permanently give up control, which limits flexibility but can provide significant creditor protection and tax benefits. The right choice depends on how much control you need to keep versus how much protection you want.
Trusts: what are they, and do you need one? This article explains the key differences between revocable and irrevocable trusts under Tennessee law.
Tennessee law governs the creation, modification, and revocation of trusts through the Tennessee Uniform Trust Code. Unless the terms of a trust expressly provide that it is irrevocable, the settlor may revoke or amend it — this default rule applies to trusts created under instruments executed on or after July 1, 2004.
The capacity required to create, amend, revoke, or add property to a revocable trust is the same as that required to make a will. A settlor may revoke or amend a revocable trust by substantially complying with a method provided in the trust’s own terms, or — if the trust doesn’t specify a method, or the method isn’t expressly exclusive — by a later will or codicil that expressly refers to the trust, or by any other method that shows clear and convincing evidence of the settlor’s intent.
While a trust is revocable and the settlor has capacity to revoke it, the beneficiaries’ rights are subject to the settlor’s control, and the trustee’s duties are owed exclusively to the settlor.
Creditor Protection
During the settlor’s lifetime, the property of a revocable trust is subject to claims of the settlor’s creditors. In contrast, a creditor or assignee of the settlor of an irrevocable trust may reach only the maximum amount that can be distributed to or for the settlor’s benefit — not the full trust corpus.
The Fundamental Difference: Retained Control
With a revocable trust, the settlor retains the power to modify, amend, or completely revoke the trust at any time during their lifetime, provided they have testamentary capacity. This flexibility allows the settlor to respond to changed circumstances — shifts in family dynamics, financial conditions, or estate planning goals. Because the settlor retains such extensive control, the law treats the trust property as still belonging to the settlor for most purposes during their lifetime.
An irrevocable trust, by contrast, requires the settlor to relinquish control over the trust property permanently. Once established and funded, it generally cannot be modified or terminated by the settlor alone. This loss of control has real implications: the trust property is no longer treated as belonging to the settlor, which can provide substantial creditor protection, but the settlor can’t easily respond to changed circumstances without court intervention or the consent of all beneficiaries. Irrevocable trusts also carry important tax implications worth discussing with a CPA.
Revocable and irrevocable trusts serve different estate planning purposes, and one, both, or neither may be right for your situation. At Henry & McCord, we help you make the best decisions for protecting and planning your legacy. During an initial consultation, we review your assets, potential complications, and your goals.
This article is a general summary for planning purposes and does not constitute legal advice for any specific estate. Contact us to discuss which options fit your circumstances.