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WARNING!
READ THIS BEFORE PROCEEDING WITH ANY OTHER ASSET PROTECTION PROGRAM
Our law firm provides second opinions concerning your current asset protection/estate planning structure.
Check Out Our Legal Tips!
2012 - ASSET PROTECTION STRUCTURES - DO THEY WORK?
In the recent Cook Islands asset protection trust cases of Henry v. Rizzolo, 2011 WL 2975539, and Gun Bo, LLC v. Cork, 2011 WL 2119030, the courts ruled that the creditors could collect against the debtors and, in essence, also from the Cook Islands trust on the grounds that the assets transferred to such trusts were in violation of established fraudulent conveyance law.
Certain naysayers (i.e., self-proclaimed "gurus") are now claiming that the recent cases of In re Smith, 437 B.R. 817, a Cook Island based trust, and Brattley v. Mortensen, D. Alaska, No. A09-9036-DMD, an Alaska trust, reveal that asset protection trusts do not work. In the Smith case, a judgment in the amount of $3,969,576 had already been entered against him prior to his establishment of his asset protection trust, thus the transfer of Smith's assets constituted a fraudulent conveyance in clear violation of long-established law, and, the creditor filed a successful involuntary bankruptcy collection suit in order to collect the outstanding debt.
In the Mortensen case, the facts are even worse in that he utilized a template to draft his own trust agreement, which he then had reviewed by a non-asset protection attorney, and then named his brother and a personal friend as co-trustees. In support of ists fraudulent conveyance determination, the court noted that Mortensen was well "under water" when he made his property transfers to the trust, that he was "not a credible witness", and that he used the real estate transferred to the trust "but did not regulary pay rent". In rebuttle to the naysayers and in support of the Bankruptcy Judges adverse decision, five highly qualified and experienced asset protection attorneys (John E. Sullivan, III, Mark Merric, Robert D. Gillen, Alexander A. Bove, Jr. and Richard W. Nenno) defended the bankruptcy decision, and the viability of properly drafted and operated asset protection trusts, in a lengthy and well-documented article published in the December 2011 issue of Trusts & Estates magazine.
All four of the above-cited cases reveal that waiting until you are in financial trouble before establishing an asset protection structure will cause the structure to fail based upon the decades old fraudulent conveyance statutes, both state and federal.
However, when an asset protection structure is properly created using highly qualified and experienced attorneys, such as the above noted Sullivan and Merric (both of whom are advisors to the Casper P. Connolly law firm), and is properly operated, then the structure will withstand creditor litigation. In the case of U.S. v. Raymond Grant and Arlen Grant, 2008 U.S. Dist LEXUS 51332, a final judgment in the amount of $36,280,930 was entered in favor of the I.R.S. against the Grants. The Grants were ordered to repatriate their assets but they were unable to do so. The creditor petitioned the Court to hold Mrs. Grant (the survivor) in contempt for failure to comply. Evidence submitted to the Court revealed that Mrs. Grant was unable to comply with such Order and the petition was dismissed.
Our law firm has maintained for 17 or more years, domestic and offshore asset protection trusts do provide extensive protection for a major portion of an individual's assets, provided that: (1) the structure is timely implemented; (2) the documents are drafted by a highly qualified and experienced Asset Protection Attorney; (3) the structure is properly implemented in one of the few viable asset protection jurisdictions; (4) the structure is properly operated at all times; and (5) the structure has independent trustees and a viable protector.
 Keeping You Informed on Important Legal Trends That Could Adversly Affect Your Asset Protection and Estate Planning Structure
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