A trustee's deed transfers interest in real property held in a living trust. A settlor (sometimes called a grantor) creates and funds the trust by transferring assets to another person, called the trustee (though these roles may be performed by the same person). The trustee administers the trust for the benefit of another party, called the beneficiary.

The requirements for a trust in Tennessee are that the settlor has a capacity to create a trust and indicates the intention to do so; the trust has a definite beneficiary; the trustee has duties to perform; and the same person is not the sole trustee and sole beneficiary (T.C.A. 35-15-402). A trust must have lawful purposes and its terms must be for the benefit of the trust beneficiaries ( 35-15-404).

The settlor of a living trust generally indicates the intention to create a trust by executing a trust instrument. This unrecorded document sets forth the terms of the trust, indicating how the settlor intends his assets to be administered (settlors of testamentary trusts, or testators, establish the trust's terms in their wills). The trust document also designates the trustee and his successors, if any, and identifies the trust's beneficiary.

Settlors may fund the trust with real property by executing a deed, titling the property in the name of the trustee on behalf of the trust. If the settlor wishes to convey the real estate from the trust as through sale, the trustee then executes a deed. The trustee's power to sell property held in the trust comes from T.C.A. 35-15-816, and is either fortified or restricted by any relevant powers outlined in the trust instrument.

The trustee's deed to convey real property held in a living trust is named after the executing grantor, rather than after the title warranty the grantor provides. In Tennessee, a trustee's deed is a type of special warranty deed, where warranty of title is limited to anyone claiming by, from, through, or under the grantor. This is a more limited warranty than a general warranty deed, in which the grantor promises to warrant and defend title against all claim. In offering a special warranty, the trustee does "not warrant against defects arising from conditions that existed before" he held title to the property.

The basic components of a trustee's deed are the same as any other deed conveying interest in real property in Tennessee. The document names all parties to the transaction and includes the property description, map and parcel numbers assigned to the property, a recitation of the derivation of title, and an oath of consideration stating the true value of the property conveyed. In addition, the trustee's deed references the trust and trust date, and may include a certification of trust under T.C.A. 35-15-1013 as an attachment to certify the trust's existence and the trustee's authority to enter into the transaction.

A trustee's deed should be acknowledged by the executing trustee in the presence of a notary public before it is recorded in the county in which the subject real property is located. Consult a lawyer in the preparation of a trustee's deed, and with any questions regarding living trusts in Tennessee.

(Tennessee TD Package includes form, guidelines, and completed example)

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