Tennessee asset protection: a strong charging order for a partnership, a hole for a solo owner written into the statute, and one of the best entireties shields in the country

Tennessee’s asset protection is strong in a way that depends entirely on a detail owners often overlook: how many members the LLC has. For a multi-member LLC, Tennessee is one of the better states in the country. Its charging order is the sole and exclusive remedy a creditor can use, and unlike many states, the LLC statute contains no foreclosure provision at all, so a creditor is limited to the distributions the company chooses to make. For a single-member LLC, the same statute opens a hole: it lets a sole member freely transfer governance rights to anyone, and a Tennessee bankruptcy court held that this means a trustee takes a solo owner’s entire LLC, control included.

The personal side is where Tennessee is quietly excellent. It has one of the strongest tenancy-by-the-entireties regimes in the country, covering personal property as well as real, unlimited in amount, and preservable inside a joint trust. That, not the modest homestead, is where a married couple’s protection lives. Take the pieces in order.

The charging order that is strong for a partnership

Start with what a personal creditor gets against your Tennessee LLC stake. The general mechanics are on the charging order protection page. Tennessee’s multi-member protection is genuinely strong.

Tennessee’s charging order is the sole and exclusive remedy, and the LLC statute contains no foreclosure provision, so a creditor of a multi-member LLC is limited to distributions.

T.C.A. § 48-249-509 gives a judgment creditor a charging order against the member’s financial rights, states that the creditor then has only the rights of a transferee of those financial rights, and calls this the sole and exclusive remedy against the debtor’s membership interest. Just as important is what the statute omits: foreclosure. Tennessee’s partnership charging-order statute expressly allows a court to foreclose an interest, but the LLC statute does not, so a creditor cannot force a sale of the interest. That leaves the creditor with the right to receive distributions if and when the company makes them, no management rights, and no power to force a distribution, which is a weak enough position that creditors routinely settle. For a multi-member Tennessee LLC, that is real protection, on par with the stronger states.

The single-member hole the legislature wrote in

Now the exception, and it is unusually clean because it is in the statute rather than in a court’s gloss.

Tennessee’s statute lets a single member freely transfer governance rights, so when a sole owner files bankruptcy, the trustee takes the whole LLC, control and all.

T.C.A. § 48-249-508(b)(2) says that in a single-member LLC, the sole member may freely transfer governance rights or the entire membership interest to anyone at any time. A Tennessee bankruptcy court took that provision to its logical conclusion: because a sole member can hand over governance rights without anyone’s consent, when that member files bankruptcy the entire interest, financial and governance both, becomes property of the estate, and the trustee steps into the member’s shoes with full control over the company and its assets. So the strong charging-order protection does not reach a single-member Tennessee LLC in bankruptcy, and the weakness is not a judicial interpretation that might be revisited, it is the plain text of the statute. The single-member LLC page covers this soft spot generally; Tennessee is a state where the legislature codified it.

A genuine second member with real capital closes the hole, because the free-transfer rule applies only to a single-member LLC.

The fix follows directly from the text. Section 48-249-508(b)(2) applies to a single-member LLC. Add a real second member with a genuine stake, and the free-transfer rule no longer applies, the charging order’s sole-and-exclusive protection governs, and a creditor is back to distributions only. As always, the second member has to be real, with actual capital and a real economic interest, because a token member added to dodge a known creditor is vulnerable to fraudulent-transfer attack.

The entireties that carry the personal shield

For a married couple, Tennessee offers one of the strongest protections in the country, and it is where the real personal defense sits.

Tennessee recognizes tenancy by the entireties in personal property as well as real, unlimited in amount, so a creditor of one spouse cannot reach entireties property at all.

Tennessee recognizes tenancy by the entireties broadly, covering personal property, not just real estate, which puts it with Virginia and Florida in the top tier. The protection is unlimited: only a creditor of both spouses together, the marital unit, can reach entireties property, so a judgment against one spouse alone cannot touch it. Tennessee also lets a couple transfer entireties property into a joint revocable living trust and keep the creditor protection, a planning tool most states do not offer. And because a Tennessee LLC membership interest is personal property, a jointly held interest can in principle be entireties property, shielded from one spouse’s creditor, which pairs powerfully with the strong multi-member charging order. The entireties page covers the doctrine and its limits.

The homestead, modest even after its increase

The reason entireties matters so much is that the homestead does little here.

Tennessee’s homestead exemption is $35,000 for an individual and $52,500 for a couple, raised from a historically tiny figure but still modest.

For years Tennessee had one of the lowest homestead exemptions in the country, $5,000 for an individual and $7,500 for a couple. It has been raised to $35,000 and $52,500, with higher tiers for owners with a minor child or who are elderly; confirm the current figures. That is a real improvement, but still modest next to the big-exemption states, so a Tennessee homeowner cannot lean on the homestead the way a Florida or Texas owner can. For a married couple, the protection runs through entireties instead. Veil piercing uses Tennessee’s demanding instrumentality factors, drawn from cases like Continental Bankers and the Allen line, so a cleanly run company keeps its shield; the general doctrine is on the piercing the veil page. Tennessee does offer a self-settled asset protection trust, the Tennessee investment services trust, as a separate planning tool, and the courts page explains why where a judgment is enforced can matter as much as where the law is strong.

The bottom line

Tennessee’s charging order is the sole and exclusive remedy under T.C.A. § 48-249-509, with no foreclosure in the LLC statute, so a multi-member LLC is well protected.

The same act lets a single member freely transfer governance rights under § 48-249-508, so a bankruptcy trustee takes a solo LLC whole, a weakness written into the statute rather than read into it.

A genuine second member with real capital closes the hole, because the free-transfer rule applies only to a single-member LLC.

Tennessee recognizes tenancy by the entireties in personal property as well as real, unlimited and preservable in a joint trust, one of the strongest marital shields in the country.

The homestead is modest even after its increase to $35,000 and $52,500, so the married-couple protection comes from entireties, not the dollar exemption.

Protection in Tennessee rewards a genuine multi-member structure and a married couple holding as entireties, and it offers a single owner in bankruptcy less than the strong charging order suggests.

What this page does not cover

This page is about how creditors reach you in Tennessee. How Tennessee splits a membership interest into governance rights and financial rights, and the three ways to manage the company, are on the governance page. The franchise and excise tax, the family and obligated-member exemptions, and the series LLC are on the structure and cost page. The per-member filing fees and the April deadline are on the filing page.

Last verified August 2026.