Tennessee § 35-15-1105 - Dominion and control over a trust.

§ 35-15-1105. Dominion and control over a trust.

In the event a person challenges a settlor's or a beneficiary's influence over a trust, none of the following factors, alone or in combination, shall enter into a determination that dominion and control over a trust exists: The settlor or a beneficiary is serving as a trustee, a trust advisor, a trust protector or other fiduciary as described in § 35-15-508; The settlor or a beneficiary holds an unrestricted power to remove or replace a trustee, a trust advisor, a trust protector or other fiduciary; The settlor or a beneficiary is a trust administrator, a general partner of a partnership, a manager of a limited liability company, an officer of a corporation, or holds any other managerial function relative to any type of entity specified in this subdivision (3), or relative to any other type of entity not so specified, and part or all of the trust property consists of an interest in such entity; A person related by blood or adoption to the settlor or a beneficiary is appointed as a trustee, a trust advisor, a trust protector or other fiduciary; The settlor's or a beneficiary's agent, accountant, attorney, financial advisor, or friend is appointed as a trustee, a trust advisor, a trust protector or other fiduciary; A business associate is appointed as a trustee, a trust advisor, a trust protector or other fiduciary; A beneficiary holds any power of appointment over any or all of the trust property; The settlor holds a power to substitute property of equivalent value for property held by the trust, regardless of whether such power is: Held in a fiduciary or nonfiduciary capacity; Exercisable with or without the approval of any person in a fiduciary capacity; or Exercisable with or without the approval of any person having an interest adverse to such settlor; A trustee, a trust advisor, a trust protector or other fiduciary has the power to loan trust property to the settlor for less than a full and adequate rate of interest or without adequate security; Any language relative to the power to make any distribution provides for any discretion relative to such distribution; The trust has only one beneficiary eligible for current distributions; or The beneficiary is serving as a cotrustee, or as a trust advisor or trust protector under part 12, or as any other fiduciary. Acts 2013, ch. 390, § 52. Compiler's Notes. Acts 2013, ch. 390, § 52 provided that: (a) Absent clear and convincing evidence, no settlor of an irrevocable trust may be deemed to be the alter ego of a trustee of such trust.” None of the following factors, by themselves or in combination, may be considered sufficient evidence for a court to conclude that the settlor controls a trustee, or is the alter ego of a trustee of such trust: Any combination of the factors listed in § 35-15-1105 regarding dominion and control over a trust; Isolated occurrences where the settlor has signed checks, made disbursements, or executed other documents related to such trust as a trustee, a trust advisor or a trust protector, when in fact the settlor was not such a trustee, trust advisor or trust protector; Making any requests for distributions on behalf of beneficiaries; or Making any requests to the trustee to hold, purchase, or sell any trust property. Section Comment. Unless provided otherwise hereinafter, any reference to “section,” “subsection” or “subdivision” means all, or such portion of, T.C.A. § 35-15-1105 . The Uniform Trust Code has no similar provision to this section. A finding that the influence of a settlor or a beneficiary of a trust rises to the level of dominion and control over such trust can cause multiple significant issues, including but not limited to taxation, as well as a trust’s level of spendthrift and discretionary trust protection and the effect of exercising discretion in general. Therefore, in keeping with the Tennessee trust statutes’ emphasis on freedom of disposition and settlor’s intent, this section makes it exceedingly difficult to sustain that the a settlor’s or beneficiary’s influence over a trust gives either such person dominion and control over such trust.