Florida Estate Planning and Probate Law Blog focused on recent case law and planning ideas.

NEVADA v. DELAWARE FOR ASSET PROTECTION TRUST?

Delaware has promoted itself as the top jurisdiction for creating an asset protection trust. However, a 2014 court decision, Kloiber v. Kloiber, has put the creators of Delaware Asset Protection Trusts on notice of possibly choppy waters ahead. The case involved a Delaware Dynasty Trust (DDT) which had been established for a son, who later became embrioled in a divorce, his son’s spouse, and their descendants. At the time of the divorce, the trust’s assets totaled around $310 million. The settlement forced the trust to be severed, creating a separate trust for the wife which was funded with some of the original trust assets, and rendered the asset protection plan useless when the now ex-wife received assets intended solely for the son, his spouse, and his descendants. Individuals are now considering creating asset protection trusts in Nevada over Delaware because Nevada does not allow for claims from “exception creditors” (claims for alimony and spousal support from an ex-spouse).