MARITAL ASSET PROTECTION TRUSTS: How Married Couples in Tennessee Can Secure Their Assets Against Creditors
If you and your spouse are looking for a powerful method to protect your assets while planning for the future, Tennessee’s Marital Asset Protection Trust (MAP Trust) offers a compelling solution of which few states provide. As a Tennessee estate-planning attorney at the Law Office of Joshua S. Reed, I’m here to demystify how MAP Trusts work, why they matter, and how they can safeguard your family’s wealth from creditors.
What Is A “Marital Asset Protection Trust” In Tennessee?
At a glance, a MAP Trust is a Tennessee estate planning tool that lets married couples place property owned as tenancy-by-the-entirety (TBE) into a revocable trust while preserving TBE creditor protection.
Why this matters:
In Tennessee, a married couple’s interest in TBE property cannot be unilaterally transferred by a single spouse, as doing so would destroy the ownership interest possessed by the non-transferring spouse. See Bryant v. Bryant, 522 S.W.3d 392, 401 (citing Tindell, 37 S.W. at 1106). Accordingly, this protection can be incredibly useful in situations where one spouse has higher personal liability than the other. For example, if one spouse operates a business as a sole proprietor and gets sued in the course of such business, property held as TBE, such as a marital home, cannot be seized to satisfy a judgment against the defendant spouse since the order would only be against one of the spouses and not the other.
In the past, any creditor protection typically attributable to TBE property would be lost upon being transferred to a revocable trust, thus rendering such property no different than the assets normally reachable by creditors in a revocable trust. As a result, couples were forced to forgo many of the benefits that come with a revocable trust in order to preserve the TBE status of their property.
However, thanks to the current Tennessee Code Annotated § 35-15-510, married couples can now move pre-existing TBE property into a qualifying revocable trust without fear of doing so at the cost of their TBE creditor protection. Under T.C.A. § 35-15-510, Tennessee treats the TBE property transferred to a properly structured MAP Trust as if it continued to be held by the couple as tenants by the entirety. Meaning, you can now enjoy revocable trust benefits (organization, incapacity planning, probate avoidance) without forfeiting TBE protection.
The Tennessee Rule (And Its Fine Print)
To qualify under T.C.A. § 35-15-510, a MAP Trust must meet these criteria:
1. Held as Tenants by the Entirety Before Transfer: Only property previously held as tenancy by the entirety qualifies.
2. Trust Must Be Revocable by Either Spouse (while both are alive): One spouse or both spouses together must be able to revoke the trust.
3. Both Spouses Must Be Current Beneficiaries: While both are living, both spouses must be permissible beneficiaries under the trust.
4. Proper Statutory Reference: The trust document or deed must expressly state that T.C.A. § 35-15-510 applies to the property.
When these conditions are met, the trust property and its “proceeds” (a defined term that includes income, products, offspring, rents, and profits, among other items) remain immune from the separate creditors of either spouse during the marriage.
Two important limits:
Joint debts (obligations owed by both spouses) are not shielded. The statute only protects against separate creditors.
Divorce ends the TBE/TBE-in-trust protection. Upon divorce, the TBE estate splits, and the statutory immunity no longer applies.
What Creditors Can Still Reach TBE Property Even With A MAP Trust?
Federal tax liens. The U.S. Supreme Court held that a federal tax lien can attach to a spouse’s TBE interest; using a MAP Trust will typically not defeat federal tax collection. See United States v. Craft, 535 U.S. 274 (2002).
Existing fraudulent-transfer exposure. If assets are moved in response to a specific creditor or lawsuit, Tennessee’s Uniform Fraudulent Transfer Act provides avoidance remedies against the transferor. Proper timing is crucial!
Who Can Benefit From A Tennessee MAP Trust And What Are The Advantages?
1. Strategic Creditor Protection
Professional clients (e.g., physicians, business owners) are well aware that even successful careers carry risks like lawsuits or potential judgments. A MAP Trust acts like a legal shield: creditors of one spouse cannot penetrate if requirements are met.
2. Estate Planning with Continuity
In the event of a spouse’s death, unlike TBE property held outside of a MAP Trust, the surviving spouse does not lose asset protection, provided the trust maintains the required structure and the surviving spouse cannot unilaterally withdraw. See T.C.A. § 35-15-510. This maintains both asset security and estate planning goals.
3. Flexibility and Control
As a revocable trust, you can modify or revoke it while both spouses are still living. This provides nimble estate planning without sacrificing creditor safeguards.
Implementation Checklist (Best Practices)
Design & Drafting
Confirm which assets are truly TBE (deeds, account agreements); do not assume.
Draft a joint revocable trust that: (i) makes both spouses current beneficiaries; (ii) is revocable by one spouse or both spouses together; and (iii) expressly references T.C.A. § 35-15-510.
Coordinate distribution, spendthrift, and other Trust clauses in compliance with the Tennessee Uniform Trust Code.
Funding
Execute TBE-to-trust deeds and account retitling for only those assets that are currently TBE. (Assets that were not TBE before transfer won’t gain TBE immunity by moving to the trust.)
Track and segregate “proceeds” (rents, income, sale proceeds) so they remain within the statutory definition tied to the protected asset.
Ongoing maintenance
Avoid commingling protected proceeds with non-TBE funds that could muddy tracing.
Review annually for changes in debts, titling, and tax exposure.
Common Pitfalls
Transferring the wrong assets. Only property that was TBE before the trust transfer keeps immunity; separate or sole-titled assets will not be saved by the MAP trust label.
Leaving out the statutory citation. Failing to reference T.C.A. § 35-15-510 in the deed/trust risks losing the protection.
Post-claim transfers. Moving assets after a claim arises invites a fraudulent transfer challenge. Plan early.
Assuming protection against taxes or joint creditors. MAP Trusts do not block federal tax liens or joint obligations.
FAQs
· Is a MAP Trust the same as a prenuptial agreement?
- No. A MAP Trust preserves TBE creditor protection for existing TBE assets inside a revocable trust. A prenup addresses property rights between spouses, not creditor immunity. (Click here if you want to learn How to Secure Your Assets Before Getting Married)
· Can we add non-TBE property to our MAP Trust?
- You can add it to the revocable trust for estate planning purposes, but it won’t gain TBE-style creditor protection. For additional shielding, consider a Tennessee Investment Services Trust (subject to the Tennessee Investment Services Act of 2007 and its timing/affidavit rules).
· What if one of us is sued?
- If the claim or debt is only against one spouse, properly funded MAP-protected assets are generally immune while you’re married. However, if the claim or debt is joint, they are not.
· Do standard revocable trusts provide this protection?
- No. By default, revocable trust assets are reachable by the grantors’ creditors (T.C.A. § 35-15-505). The only way to preserve TBE immunity in a revocable trust is to meet the requirements of T.C.A. § 35-15-510.
Final Thoughts:
Your Trusted Knoxville & Farragut, Tennessee Estate Planning Attorney
As your friendly neighborhood estate planning attorney, I aim to craft tools that deliver both legal firepower and peace of mind. The MAP Trust stands out in Tennessee law as a sophisticated, yet accessible, safeguard for married couples that are keen on protecting assets for themselves and their heirs.
Ready to safeguard what you’ve built?
If your situation involves probate planning, creditor concerns, professional or business risk, or legacy preservation, the Law Office of Joshua S. Reed will help you evaluate whether a MAP Trust (and companion structures) makes sense for you before a claim ever appears.
Don’t wait—contact the Law Office of Joshua S. Reed today for a FREE consultation! Let’s walk through your options together and secure your tomorrow with clarity and confidence.
This post is for informational purposes only and is not legal or tax advice. Every situation is fact-specific; please consult counsel about your facts and timing.