By Steven J. Oshins, Esq., AEP (Distinguished)
In an official hearing, a “motion” is a formal proposal made to the group to take or not take an intended action. This article will put forth seven motions for consideration in the estate planning industry.
Motion #1: I hereby make a motion that from this day forward nobody shall continue to claim that Domestic Asset Protection Trusts don’t work.
Result- Motion Granted: It has been 20 years since the first Domestic Asset Protection Trust statute was enacted. In this period of time, to this date there still hasn’t been even one non-bankruptcy, non-fraudulent transfer case where a DAPT was attacked, the plaintiff won and then accessed the trust assets. After 20 years, it shall now no longer be permitted for anyone to claim that DAPTs don’t work…because they have worked!
Motion #2: I hereby make a motion that from this day forward Delaware shall no longer be listed among the first-tier trust jurisdictions.
Result- Motion Granted: For many years, Alaska, Delaware, Nevada and South Dakota have been the four trust jurisdictions listed in nearly everyone’s first tier. However, Delaware has had the Garretson v. Garretson case on its books since 1973, a case whereby the Delaware Court of Chancery ruled that a spouse is not a creditor for purposes of accessing a third-party spendthrift trust and which allowed a support creditor to access the trust. The Garretson threat recently became important in a high-profile divorce settlement whereby Beth Kloiber was able to favorably settle her divorce against Daniel Kloiber and reach an agreement whereby Daniel’s Delaware Dynasty Trust was divided into a trust for Daniel and a trust for Beth. The details of the asset division were sealed by the court, although a deed showing that Beth received a $30 million Florida mansion surfaced on the internet. This Delaware problem puts Delaware behind Alaska, Nevada and South Dakota, so from this day forward, all references to the first tier shall no longer include Delaware.
Motion #3: I hereby make a motion that from this day forward no state shall adopt a statute based in large part on a uniform law.
Result- Motion Denied: There are committees formed to create uniform laws under the rationale that it is better for states to have uniformity. There are often very intelligent, knowledgeable and experienced attorneys and law professors serving on these committees. However, the problem is that this generally leads to compromise. Compromise generally leads to finding a middle ground. The best, most flexible state laws are not based on a middle ground. Rather, they are based on which states allow for the greatest amount of flexibility. That almost never happens with a uniform law simply because of the necessity of compromise. Even though this is a near-fact, we deny this motion and will still continue to allow states to enact uniform laws. There will always be enough other jurisdictional options for the estate planner.
Motion #4: I hereby make a motion that from this day forward nobody shall ever again claim that buying permanent life insurance is a bad investment.
Result- Motion Granted: Because of so much false information and so much lack of understanding about how life insurance works, there are many people, including many estate and financial planning advisors who do not believe in the advantages of permanent life insurance. If those who don’t understand it were to see the generally high tax-free internal rate of return as an investment for the beneficiaries they would understand that it’s actually a very favorable asset class that can provide guarantees and can be a great source of revenue for the beneficiaries. Therefore, from this day forward, I hereby declare that no estate or financial planner shall ever again tell a client not to ever buy life insurance except where there are specific facts, such as cash flow issues or insurability or health issues that would make such a statement feasible.
Motion #5: I hereby make a motion that from this day forward nobody shall ever again draft a trust that makes mandatory distributions at staggered ages.
Result- Motion Denied: If this motion was only based on trusts that exceed $300,000 in value, then this motion likely would have been granted. However, for very small trusts, sometimes mandatory distributions are fine, simply because the added cost and complexity doesn’t pencil out. But for any sizable trust, it is incomprehensible why any trust would be drafted to make mandatory distributions such as one-third at age 25, one-half of the balance at age 30 and the balance at age 35. That simply forces the assets into the hands of a beneficiary who might have a future divorce or creditor problem rather than continuing to protect the assets inside the trust. However, given that this motion did not have a minimum trust value attached, it shall be denied, at least for now.
Motion #6: I hereby make a motion that from this day forward no estate planner should ever have a prospective client meeting and simply talk about a Revocable Trust without also mentioning an Asset Protection Trust.
Result- Motion Granted: Yes, we should talk to our prospective clients about forming a Revocable Trust. However, avoiding probate by using a Revocable Trust is not anywhere near as important as protecting the client’s assets from potential future creditors. If you can only choose one or the other — avoiding probate versus protecting assets from creditors — it is unlikely that many people would select avoiding probate. Therefore, it is a wonder why very few estate planners even mention asset protection planning in prospective client meetings. Thus, from this day forward, all estate planning meetings shall include a discussion about the value of forming an Asset Protection Trust.
Motion #7: I hereby make a motion that from this day forward Steve Oshins shall no longer make any motions.
Result- Motion Denied: Maybe one day there will be another newsletter article with more of Oshins’ Motions.
ABOUT THE AUTHOR
Steven J. Oshins, Esq., AEP (Distinguished) is an attorney at the Law Offices of Oshins & Associates, LLC in Las Vegas, Nevada, with clients throughout the United States. He is listed in The Best Lawyers in America®. He was inducted into the NAEPC Estate Planning Hall of Fame® in 2011 and was named one of the 24 Elite Estate Planning Attorneys in America by the Trust Advisor. He has authored many of the most valuable estate planning and asset protection laws that have been enacted in Nevada. He can be reached at 702-341-6000, ext. 2, at soshins@oshins.com or at his firm’s website, www.oshins.com.
OTHER ARTICLES IN THIS ISSUE
- TAX PLANNING: “Robert Keebler Podcast on the Death Tax Repeal Act of 2017” by Robert S. Keebler, CPA/PFS, MST, AEP (Distinguished), CGMA
- ESTATE PLANNING: “Trust Administration: Why it Should be a Part of Your Practice” by Kristin L. Yokomoto, J.D., LL.M. (Taxation)
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