Ch. 12: Spendthrift Trusts and Discretionary Trusts
Basic Concepts Synopsis: Discusses the major variants of trusts in the asset protection context.
Spendthrift Trusts Synopsis: Discussion of spendthrift trusts and certain statutory exceptions to spendthrift provisions.
Definition: Spendthrift Trusts -- A trust that includes certain language giving the trustee wide latitude to avoid making distributions to beneficiaries where the distribution would go to a creditor, or where the trustee fears the distribution would be wasted by the beneficiary.
Definition: Domestic Asset Protection Trust (DAPT) -- A self-settled spendthrift trust formed in a U.S. state that permits such forms of trust.
Definition: Discretionary Trusts -- A trust that allows the trustee the discretion to make or not make distributions of benefits to the beneficiary, and to make unequal distributions among all beneficiaries.
Powers of Appointment Synopsis: Discusses the federal gift and estate tax effect of Powers of Appointment (POA).
Dynasty Trusts Synopsis: Discusses the benefits of Dynasty Trusts for estate planning.
Definition: Dynasty Trust -- A trust formed in a jurisdiction that has either abolished the Rule Against Perpetuities (which limits the duration of trusts) or has statutorily expanded the Rule Against Perpetuities for a period in excess of 100 years.
Beneficiary-Controlled Trusts Synopsis: Discusses the disadvantages of Beneficiary-Controlled Trusts from an asset protection viewpoint, and possible methods of mitigating those problems.
Trusts and UFTA Synopsis: Discusses the implications of gifting to fund trusts and the fraudulent transfer laws.
The Trust Defined Synopsis: Discusses the basics of trusts, and their place as a dissociative method.
Definition: Trust -- A relationship whereby one party (trustee) is given assets by another (settlor) to hold for the benefit of a third party (beneficiary).
Estate Freezes Synopsis: Discusses the concept of the "estate freeze" and how the methods used for asset protection planning and estate planning are often incompatible.
Definition: Estate Freeze -- The process of transferring assets to either the children or a trust for the benefit of the children now, so that the future growth of those assets is with the children or their trust, and not within the parent's estate. The asset protection equivalent is known as an "asset freeze".
Mass-Marketing of Offshore Trusts Synopsis: Discusses Global Prosperity, the "Father of Asset Protection" and other scams and hucksterisms relating to foreign trusts.
Definition: Self-Settled Spendthrift Trust -- A trust formed for the benefit of the person who created the trust, with spendthrift provisions that attempt to disallow a creditor from invading the trust assets or forcing a distribution to the beneficiary that the creditor would then seize.
Trusts and Giving Up Control Synopsis: Discusses the problem of yielding control to make the asset protection effective with the possibility that such control once yielded might never be regained.
Living Trusts Synopsis: Discusses the reasons why living trusts provide little asset protection.
Definition: Living Trust -- A revocable grantor trust.
Sham Trusts Synopsis: Discusses the many defects of Pure Trusts and their progeny.
Definition: Pure Trust -- A sham trust sold by scam artists that purports to be free of government regulation or intervention because of the Contract Clause of the U.S. Constitution.
Additional information on Pure Trust scams can be found at:
