Moving From a Community Property State to Tennessee
I occasionally update estate planning documents for clients who move to Tennessee from a community property state. There are 9 community property states, including Texas, California, Arizona, Washington, Idaho, Louisiana, Nevada, New Mexico, and Wisconsin. The other 41 states are known as common law states.
I am currently updating estate planning documents for clients who recently moved from Arizona to Tennessee. As is so often the case with clients in community property states, these clients utilized a joint revocable trust as a centerpiece of their estate plan. I am amending their joint revocable trust so that it qualifies as a Tennessee Community Property Trust.
The assets that were in the trust at the time of the move were already community property. The amendment was not needed to qualify the prior assets as community property. However, additional assets that my clients acquire would not otherwise qualify as community property. By qualifying the trust as a Tennessee Community Property Trust, the additional assets will also qualify for community property benefits.
When clients do not already have a joint revocable trust at the time of their move, they have 2 choices for preserving the community property status of their assets acquired while married in the community property state. They can either create a Tennessee Community Property Trust and transfer the assets to the trust or they can sign a Community Property Agreement which documents the community property assets at the time of the move. The trust has the advantage of creating community property status for later acquired assets.
Community property is a valuable benefit that should be maintained when moving to a common law state. A Tennessee Community Property Trust is the preferred method for preserving this benefit.
