By Amy Heaslet, Executive Vice President/General Counsel, Tennessee Bankers Association
As we begin a new year, we also begin a new state legislative session. With this being the second session of the 111th General Assembly, bills not defeated or passed will be carried over from last year.
At the outset of the session, our priorities are passing legislation to update banking laws, enhance trust laws, and modestly increase the homestead exemption; and defeating legislation to remove lenders’ lien priority on construction loans.
At the forefront of our agenda is legislation to update and amend some of Tennessee’s banking laws that have been on the books for quite some time. Our proposed changes will delete outdated requirements regarding branching; reduce the length of time to retain records of shareholder and board minutes from permanently to seven years; and clarify a joint account holder’s ability to remove another account holder.
We will also present legislation to update our trust laws. Over the years, Tennessee has established itself as one of the leading trust jurisdictions, but we cannot let our guard down. On an annual basis, we now re-evaluate Tennessee’s trust laws, compare them to other leading states, and make improvements where necessary.
Our legislation this year will make several technical corrections, update the decanting statute to allow for remainder beneficiaries to become current permissible beneficiaries, and clarify that nonjudicial settlement agreements can be used to established directed trusts. We will also clarify a trustee’s statutory duty to inform and report to beneficiaries; authorize courts to seal trust records in order to keep disputes among family members and/or beneficiaries private; and eliminate the requirement for signing a new affidavit when making additions to asset protection trusts.
Through this annual legislative effort to maintain strength in our trust laws comes a great opportunity to educate legislators on the economic impact and potential that exists within Tennessee’s trust industry. As reported recently by Commissioner Gonzales, trust assets under management in Tennessee have increased to $125 billion from $25 billion just 5 years ago. With that increase, comes new trust companies and new opportunities for all involved in financial services.
Another priority issue—one that arose for us in the Fall—is a carry-over issue from last year brought by subcontractors who are seeing delays in the length of time it takes to receive payment on construction projects. After negotiations this summer between the subcontractors and general contractors and others involved in the industry—but without the input from TBA—the groups proposed removal of lenders’ lien priority and, instead, putting lender liens on parity with contractor liens.
To put it simply, their proposal—if put into law—would wreak havoc on construction lending and a lender’s reasonable expectation of repayment.
We met with representatives from the construction industry and expressed these concerns to them, and we will continue to remain involved in discussions to ensure any final legislative proposal will not adversely affect banks and a robust construction lending market.
Topping off TBA’s initial priority issues list, we will be pushing for a modest increase in the homestead exemption up to $35,000. Last year, we spent considerable time opposing legislative efforts by the home builders for a significant increase of more than $100,000. Ultimately, their legislation was deferred until 2020. During visits with legislators, one thing become clear—it was time for an increase. To respond to that demand, and rather than follow the home builders’ lead, we will pursue our own legislation this year so we can control the end result.
We start the session with a full plate and look forward to engaging with our members to achieve success on each of these issues and others as they develop throughout the session. TBA’s legislative track record is one of the best in the business, and much of that is owed to the engagement of bankers and their relationships with their legislators.
I ask that you stay engaged and informed on legislative issues to help us continue to be successful advocates for the banking industry. To do so, you can read the legislative updates in our weekly newsletter, This Week, and participate in our bi-weekly conference calls, which began January 17, and are held every other Friday during session. To learn more, email me at aheaslet@TNBankers.org