Move over Florida, Texas is coming for you. Jake Stribling, an estate planning graduate student at Texas Tech University School of Law, says it's time for Texas to show its teeth and offer the rich, the famous and the worthy bulletproof asset protection trusts.
Stribling recently published a law article entitled, Texas We Trust: The Need to Bring Domestic Asset Protection Trusts to Texas. This 21-page beauty lays out a compelling case for Texas to become America’s next new trust haven for domestic asset protection trusts.
Asset protection trusts or DAPTs have become part of the legal fabric of the America corporate culture by allowing wealthy individuals and families to self settle trusts to protect assets from creditors.
The trust owns the assets. The individual still benefits.
Nineteen states now permit DAPTs: Alaska, Delaware, Hawaii, Michigan, Mississippi, Missouri, Nevada, New Hampshire, Ohio, Oklahoma, Rhode Island, South Dakota, Tennessee, Utah, Virginia, West Virginia, Connecticut, Indiana and Wyoming. But a few stand out for particularly good protection.
Trust laws enabling DAPTs are not available everywhere, and Steve Oshins, an attorney with Las Vegas, Nevada-based Oshins & Associates, LLC, says that not all jurisdictions are equally supportive.
“The two top states for DAPTs are Nevada and South Dakota, in that order,” he says.
“There are a few other states that are relatively close, but I can’t see any justification to go anywhere but to one of the top two states. Tennessee and Ohio seem to be the next best states, yet they hardly get mentioned among planners. Alaska and Delaware are the other two states that get a lot of the DAPT business.”
Stribling’s article gained attention thanks to an editorial published in Wills, Trusts & Estates Prof Blog, run by Texas Tech Univ. School of Law Professor Gerry W. Beyer.
Beyer’s blog tells us “Many states have adopted domestic asset protection trusts into law and experiencing widespread success. In order to continue this trend of bringing assets back into the U.S., more than seventeen states must follow suit. Texas, being a large and prosperous state with a booming economy, can benefit itself and the nation by choosing to legalize domestic asset protection trusts.”
Oshins, who charts the capabilities and weaknesses of the DAPT states, says, “Jake’s thesis is that Texas should adopt strong DAPT statutes in order to keep assets in Texas. Estate planners in other states should take Jake’s lead and follow his example.”
“Regardless of the weights listed in my DAPT State Rankings Chart, the most important factors are (1) that the state hasn’t adopted the Uniform Voidable Transactions Act, (2) that it doesn’t require a new affidavit of solvency for every new transfer and (3) that there be a clear and convincing standard for fraudulent transfers.”
“Since most of the estate planning industry relies on the accuracy of my annual Chart, I take a lot of pride in making sure the industry as a whole believes that I have given proper weight to the most important factors.”
“Because Texas has no state income tax, if its legislature listens to Jake and becomes more proactive in trying to retain trust business by adopting DAPT legislation, Texas would have a great chance of making a big splash on my chart.”
