Many people would agree that one of the most contentious issues at the time of divorce is property division, even though Tennessee laws mandate an equitable division of marital property. Thankfully, over the past few years, a number of new laws have been passed by the Tennessee legislature and those laws have provisions that enable spouses to deal with property division issues. In an earlier post, we talked about the Tennessee Community Property Trust Act and its pros and cons for married couples.
Another trust that many people may find beneficial when it comes to protecting their non-marital property in the event of a divorce is the Tennessee Investment Services Trust Act of 2007. According to the provisions of this act, a person, or transferor, may transfer all separate property into an Investment Services Trust in order to protect it from various financial issues that may arise at the time of property division.
An IST has some major advantages in the event of property division. For example, a prenuptial or postnuptial agreement requires both spouses to agree and sign a document. However, when it comes to an IST, a person can transfer non-marital assets into the trust unilaterally. Additionally, if an IST is able to meet certain criteria as set by Tennessee laws, it stays out of creditors’ reach except in unusual cases.
Over the past few years, trusts have gained significant popularity when it comes to asset protection at the time of property division. As a result, many people in Clarksville and the rest of Tennessee choose to transfer their assets into trusts such as TIST or TCPT. However, it is important to understand that transferring assets without a complete understanding of the situation may do more harm than good and; therefore, it may be a wise decision to retain an experienced attorney who can guide the person through the process.
Source: Tennessee Bar Association, “Divorce Planning in Tennessee: Pre-nuptial, Post-nuptial Agreements and Trusts,” Marlene Moses and Jessica Uitto, Dec. 21, 2010