Utah and Asset Protection Trusts

Deacon G. Haymond, a senior staff member of the Journal of Law & Family Studies at the University of Utah S.J. Quinney College of Law, has recently published an article entitled Offshore Asset Protection Trusts are Making Waves in Utah, 6 J.L. & Fam. Stud. 397 (2004), which discusses the Utah legislation effective in 2004 which authorizes self-settled spendthrift trusts.

Here is an excerpt from the conclusion of Mr. Haymond’s article:

APT’s protect settlors’ interests from being seized by creditors, making them attractive to wealthy professionals. APT’s primary function remains the shielding of assets against future creditors. However, if investors are working with tangible assets, these trusts can also make an excellent wealth preservation method with tax benefits. Creditors’ burden of proof for challenge remains high, but is still present with exceptions for settlor control, fraud, tail periods, and valid judgments. Though scholars still debate the soundness of APT’s, their real test for legality will be in the years to come, after courts have rendered rulings on their validity. By then, the three-year tail period for many Utah APT’s may have passed and invite serious creditor challenge. Judgments nationwide may by then have tested the full-faith or bankruptcy code issues. While waiting for these court decisions, Utah will continue to offer APT’s to investors interested in protecting assets. The dream of all Americans is financial security for themselves and their loved ones. For the wealthy, Utah APT’s provide a level of protection not allowed by forty-five other states in the nation. Perhaps now the dream will be to obtain the capital necessary to afford the type of protections offered by Utah APT’s.