TITLE

Alaska Trusts Provide Asset Protection at an Affordable Cost

AUTHOR(S)
Shoemaker, David B.
PUB. DATE
August 1998
SOURCE
Journal of Financial Planning;Aug1998, Vol. 11 Issue 4, p82
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
The paper focuses on Alaska trusts, a new planning option that can virtually eliminate the drawbacks of asset protection planning. Before 1997, it was not possible to form a self-settled trust in the U.S. that provided protection from the trustor's creditors. In 1997, Alaska enacted a statute that provides asset protection for self-settled trusts. One of the primary legal disadvantages of a foreign trust is that U.S. courts are not required to give full faith and credit to the laws of jurisdictions outside the U.S. Because the assets of an Alaska trust are beyond the reach of the trustor's creditors, it should be possible to exclude the assets of an Alaska trust from the trustor's federal gross estate. If so, in addition to asset protection, Alaska trusts present many estate planning possibilities. Clients of moderate wealth are generally more concerned with control and preservation of assets for their possible future needs than with reduction of their estate taxes. The trust assets deposited in Alaska must be administered by a trustee in Alaska who is a qualified person. At the time of the transfer to the trust, the trustor was not in default by 30 or more days in making a payment due under a child support judgment or order. For a person who becomes a creditor after the creation of the trust, the statute of limitations is four years after the transfer to the trust. An Alaska trust should include provisions to indemnify the trustees and pay litigation costs in advance of a final resolution of claims against the trust. Total formation costs for an Alaska trust typically will be approximately $20,000.
ACCESSION #
988346

 

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