The attached article recognizes Tennessee as one of four Tier 2 trust states. The four Tier 1 states have only two favorable features that Tennessee does not match.
First, Tennessee imposes an income tax on dividends and interest received by a trust with Tennessee beneficiaries. This is no different than if the beneficiaries owned the assets directly. Therefore, this is not really a trust problem. Nevertheless, there are seven states in the United States that do not impose income taxes on their residents. Tennessee does not impose income taxes on trusts held for beneficiaries who are not Tennessee residents.
The other slight advantage for some states is the rule against perpetuities. Tennessee trusts must terminate after 360 years due to our state consitution. A few states allow trusts to last into perpetuity. The benefit of perpetual trusts is overrated. I have never had a client complain to me that 360 years is too short. More than one-half of the other states require trusts to end after approximately 90 years. The difference between 90 years and 360 years is material to a lot of my clients.
Our legislature has made a concerted effort to keep our trust laws at the forefront. In addition to our comprehensive Tennessee Uniform Trust Code, our laws permit asset protection trusts, decanting, community property trusts, unitrust conversions, directed trusts, equitable adjustments, and a long perpetuities period.