Tennessee's Marital Asset Protection ("MAP") Trust
In Tennessee, when a married couple owns an asset together, they
are presumed to own it as "tenants by the entirety." This type of
ownership provides several advantages:
1. The asset automatically passes at the first spouse’s death to
the surviving spouse, avoiding probate.
2. While both spouses live, there is creditor protection as an
individual spouse's creditor cannot seize that spouse's
interest in assets held as tenants by the entirety. The creditor
of an individual spouse’s only remedy is to attach, which is to
seize property to satisfy a judgment, that spouse’s
survivorship interest in the asset. Only a creditor of both
spouses may attach the asset while both spouses are living.
Tennessee Code Annotated § 35-15-510 enables married clients to
transfer property to a joint trust—the Marital Asset Protection Trust
(MAP Trust)—and obtain the same asset protection as property held
as tenancy by the entirety. This was previously unavailable with the
use of revocable trusts.
The MAP Trust protects any assets that a married couple owned as
tenants by the entirety before they were transferred to the trust, if it
meets the following requirements:
1. Must be revocable by either spouse acting alone or both
spouses acting together;
2. Both spouses must be permissible current beneficiaries while living;
3. The trust instrument, deed, or instrument of conveyance must reference the statute as applying
to the property and its proceeds.
Specifically, the statute provides that while the spouses are married, the trust assets “shall have the
same immunity from the claims of their separate creditors as would exist if the husband and wife had
continued to hold the property or its proceeds as tenants by the entirety.” This means that even if a
creditor gets a judgement on one spouse, the creditor’s only remedy is to attach that spouse’s
survivorship rights in his or her half of the trust. Note that this protection only applies while the parties
are married and does not apply to their joint creditors. For example, if both spouses have signed a
bank loan, the assets will not be exempt from that bank.
The benefit of a MAP Trust over traditional tenants by the entirety ownership is that upon the first
spouse’s death, the assets in a MAP Trust can remain protected from creditors if left in the trust and if
the surviving spouse does not have the power to unilaterally withdraw the assets from the trust. Without
such a trust, the creditor protection provided by traditional tenants by the entirety ownership is lost at
the first spouse’s death, leaving the surviving spouse more vulnerable to creditors.
If you have any questions about Tennessee’s MAP Trust, or estate planning
in general, please contact