Skip to content
Call Now To Schedule An Asset Protection Analysis: (800) 231-7112

The concept on irrevocably seems simple.  Irrevocable means any action which once done, cannot be undone.  For example, once you jump off a bridge, you are off.  There is no undoing it and reversing yourself up (unless you have a bungee cord).

When it comes to the legal world the term has a much more nuanced interpretation.  This is particularly true when it comes to its most popular use – Irrevocable Trusts.

As a starting point, creating an Irrevocable Trust is just like jumping off a bridge, once you do it then you cannot revoke it.  Sometimes this means that its purpose and its terms are fixed in concrete – no changes allowed at all.  However, not always.

It is possible to create a trust which is irrevocable, which means you cannot revoke the trust itself, but which still leaves some flexibility as to its terms, including who the beneficiaries are, how the assets may be distributed and even conditions under which certain action can or may be taken. In other words, you can attach a bungee cord to portions of the trust so that they can even be modified later.

In today’s world this type of “flexible irrevocability” is far more common than the “set in concrete” versions.  And this makes sense, why not leave some flexibility in your planning to give future trustees options for situations which don’t exist today.

In general U.S. courts respect Trusts, particularly irrevocable trusts.  And virtually all “Asset Protection” trusts are in one form or another irrevocable.  They are also designed to attempt to balance control and access of trust assets with protection, which means designing in a lot of flexibility.

For example, let’s look at Spendthrift Provisions.  An example of a popular Spendthrift Provision  is one which would provide for access to the trust assets by the settlor directly as long as no creditors are involved and then providing for no access to the funds if there is a creditor involved. In fact this is the basis for virtually all of the Domestic Asset Protection Trust (DAPT) statutes which have been popping up.   This type of provision is both legal and extremely effective, with one caveat.

The caveat is that it only works if the courts respect the provision and the trust itself.  There is a huge difference between a technically correct provision which should work in a law school text book example, and a real world trust which works in front of a judge.  And when it comes to U.S. courts and U.S. judges, there are a lot of variations in interpretation of these spendthrift provisions, especially when it comes to Asset Protection Trusts.

For example, in a 2012 case from California (Kilker vs. Stillman) at trial Stillman (defendant) testified that the primary purpose of setting up a Nevada Asset Protection Trust was to protect his assets since “soil engineers frequently get sued”.  Surprisingly, the court found that under the California Uniform Fraudulent Transfer Act (CUFTA) the transfer would be considered a fraudulent conveyance.  This was true even though at the time of the funding of the Trust there was no claim made against the Settlor.  The court analyzed present and future creditors and found that the Kilkers were “reasonable foreseeable” as creditors.  This reasonably foreseeable thus qualified them as “creditors” for the court and hence protected under CUFTA – at least in California.

The result as that a seemingly valid and timely use of an irrevocable trust, validly set up under the laws of Nevada just did work in front of a California court.  And Mr. Stillman is far from alone as there is a growing body of case law which has had similar holdings when Domestic Asset Protection Trusts have been challenged.

So is there a way to use an irrevocable trust, and incorporate solid spendthrift provisions that will allow you access to your own money, while excluding creditors – and yet remove the risk of a U.S. court tossing your trust away?  Yes, by using a trust which ultimately can be moved outside of the U.S. and away from the U.S. courts, we remove the single most uncertain aspect of enforcement of your trust.  By choosing an offshore jurisdiction which provides for a statutory environment and a clear case history, you can obtain a much more certain result.

Taking control of your own financial, estate and asset protection planning is critical to your peace of mind. Let us help you gain that peace of mind.

One of The Nation's Leading Asset Protection Attorneys

This Post Has 0 Comments

Leave a Reply

Your email address will not be published. Required fields are marked *

Pashmina Lalchandani

CEO & Co-Founder, Bar & Cocoa / Owner, Flow Simple
December 9, 2010, Douglass was a client of Pashmina’s

I’ve known Doug in many contexts, as a friend, as a client and as a business partner and he impresses me on all levels. He’s dependable, smart, generous and I wouldn’t hesitate recommending him and his law firm to anyone.
He’s the best and most ethical lawyers providing asset protection with rock solid strategies to give you peace of mind about your wealth. Straight forward, and straight talk. Doug is exactly the lawyer I want on my side. If I send someone to Doug, I know they’ll thank me for it!

Social & Solar Entrepreneur, Pan Afrikan Theorist, Translator/Interpreter,
Founder & Visionary Leader @ Afrikanpride.
March 12, 2011, Marlon E. D. J. worked with Douglass but at different companies

Doug is one of the most powerful thinker i have came across. During the short time that i have known Doug he has been a great source of inspiration. He has a simplistic yet effective and accurate way to analyze anything you bring to his attention, and then by asking you key questions he gets you to see the light at the end of the tunnel. Besides being extremely bright, he is a genuine and caring individual which is why I feel fortunate to know him. I can say without a doubt that he his the person you would want to talk to if you were in need of a person with his expertise.
Most of the lawyers out there will probably meet your needs, but if you are looking for someone to exceed your expectations and give you that wow factor, look no more he is the person for the job.

Patricia Salter

Associate Dentist at Smileology
December 1, 2010, Patricia was a client of Douglass’

I have been a client of Douglas Lodmell’s since 2001. My main concern was asset protection in this litigious society. I can sleep alot better at night knowing I have the instruments in place to protect the fruits of my labor, and that they will not end up in the hands of a slick trial attorney.

Corporate Transparency Act

Stay compliant with the Corporate Transparency Act.
Report your business entities easily through FinCEN’s streamlined process.

Contact Us Today to Schedule an Asset Protection Analysis.

800-231-7112

Back To Top