The Strange Case of Dr. Jekyll and Mr. Oshins – Chapter III (First-Tier Trust States)

By Steven J. Oshins, Esq., AEP (Distinguished)

Testing his theory that in every man dwells a good and an evil force, the reserved Dr. Jekyll develops a formula that separates the two, turning him into an argumentative estate planning attorney named Mr. Oshins who tells it like it is.  Dr. Jekyll soon realizes he is becoming addicted to his darker self as he unleashes his opinions on the estate planning industry.

In Chapter II, Dr. Jekyll tackled the issue of whether Foreign Asset Protection Trusts are better than Domestic Asset Protection Trusts.  In Chapter III, Dr. Jekyll tackles the issue of which states are the first-tier trust states?  As expected, Mr. Oshins will provide a different view of the issue than that of Dr. Jekyll.


This is actually very simple.  If you ask just about anyone, the first-tier trust states are obviously Alaska, Delaware, Nevada and South Dakota.  This has been the case for many years and these four states are almost always mentioned as the cream of the crop.

It is nearly universally accepted that the top-tier trust states should be strong Dynasty Trust states and strong Domestic Asset Protection Trust states, they should have flexible Decanting statutes and they must have no fiduciary state income tax.  Each of the big four states — Alaska, Delaware, Nevada and South Dakota — falls into this definition.  You can’t go wrong using any of these states to situs your trusts.

I am also quite sure that Mr. Oshins will disagree with me on this, but you can’t argue with the majority.  These are the top four states.  Period.

I have read Mr. Oshins’ articles over the years and therefore can anticipate that he will not include Delaware in his list of first-tier states.  This is an over-reaction to the Garretson v. Garretson case from 1973 which held that a marital support claimant was not considered a creditor for purposes of spendthrift trust protection of a Delaware third-party trust.  Although Delaware gets a bad rap for having that case on its books, it is important to note that it is very rare that this would apply given that there has only been one such case in more than forty years, although admittedly it is likely that there are a number of settlements that never made it through the court.  Also, Mr. Oshins tends not to mention that a skilled draftsman can draft around this case by making the trust fully discretionary with an independent trustee serving as the distribution trustee.


The first-tier states are Alaska, Nevada, South Dakota and Tennessee.  Nobody would argue with Alaska, Nevada and South Dakota, but the inclusion of Tennessee would surprise most people.  The primary reasons that Tennessee doesn’t get mentioned in the first tier by trust practitioners are likely that there is little marketing there and that their favorable laws are somewhat new.


I rank Tennessee #3 in all three of the most important trust state attributes — Dynasty Trusts, Domestic Asset Protection Trusts and Decanting — right behind Nevada and South Dakota which are nearly identical in all material trust attributes and are easily head and shoulders above the rest of the states.

Tennessee allows a 360-year Dynasty Trust and protects the assets of a third-party Dynasty Trust from all types of creditors, including divorcing spouses.  It has a short two-year statute of limitations period statute for its Domestic Asset Protection Trusts.  Finally, its Decanting statutes allow nearly all of the flexibilities found in Nevada and South Dakota which have the most flexible Decanting statutes, including no requirement that the trustee give the beneficiaries a copy of the trusts when Decanting.

After Tennessee, I would rank Alaska next and then if I were forced to add a fifth state to the first tier, then I would add Ohio next.


Delaware is likely the #6 state, at least in my opinion.  It has many of the same qualifications as the first-tier states except that it has a few holes in the law that move it down to the second-tier.  Specifically, Delaware has gone more than 40 years with the well-known Garretson v. Garretson case on its books.  The Garretson case held that a divorcing spouse is not considered a creditor for purposes of a support claim against a third-party spendthrift trust.

The Garretson case was magnified twice over the past year.  First, in the Kloiber divorce case last year, Beth Kloiber was able to use the Garretson case to successfully access part of Daniel Kloiber’s Delaware Dynasty Trust via a very large settlement whereby a separate trust was broken off for her benefit.  Then more recently, the Delaware Supreme Court in Mennen v. Fiduciary Trust International of Delaware had the perfect opportunity to create new law and override Garretson, but yet spent much of the written decision describing and analyzing the Garretson case and distinguishing the Garretson case as a situation where a spouse isn’t considered a creditor for purposes of a spendthrift provision versus the Mennen fact pattern where the holders of a judgment tried to convince the Court to create a “persistent wrongdoer” exception to the spendthrift protection of a Delaware trust (but the Court refused to do so).  Overall, the Mennen case was an excellent case for Delaware trusts, but the Court chose not to create a precedent of overriding the Garretson decision.

I do want to note that it is very easy to draft a Delaware Dynasty Trust as a fully discretionary trust which avoids the Garretson issues.  So a skilled attorney can draft that type of trust in Delaware in such a way that the trust is definitely of “first-tier” quality, along with Nevada, South Dakota and Alaska.  However, most trusts are NOT drafted as fully discretionary trusts and therefore pull Delaware down to the second tier.  In other words, it can depend upon the drafting attorney.

And with that, Mr. Oshins transformed back into Dr. Jekyll.


Advanced estate planning often utilizes the advantages of another state’s more favorable trust laws, whether to obtain great tax benefits, greater creditor protection or for many other reasons.  Dr. Jekyll has taken the high road and listed as the first-tier states the obvious big four states – Alaska, Delaware, Nevada and South Dakota.

Mr. Oshins, as argumentative and feisty as ever, has boldly claimed that the traditional big four states are not necessarily the top four states.  Mr. Oshins claims that Delaware does not belong in the first tier.  Instead, Mr. Oshins claims that Tennessee is the worthy recipient of first-tier status and that if he had to add a fifth state it would be Ohio.

The claims made by both Dr. Jekyll and Mr. Oshins are opinions only and each of them is entitled to his own opinion, even if the other doesn’t agree.


teleconferenceSteve has presented many information-packed teleconferences with The Ultimate Estate Planner which you can now purchase in our On-Demand library and get instant access to the handout materials and audio recordings. To view all of Steve’s past programs, click here.


Steven J. OshSteven-Oshins43721143ins, 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 or at his firm’s website,


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