Threats to estate planning structures

Mario A. Mata (Partner at Cantey Hanger, LLP) recently published his article entitled Piercing of Spendthrift Trusts, Family Limited Partnerships, and Other Threats to Estate Planning Structures as part of the ABA’s Section of Real Property, Probate and Trust Law
19th Annual Spring Estate Planning Symposia.

Here is a summary of his article:

Several recent developments, which have nothing to do with estate planning, may have a significant effect on the clients of estate planning practitioners.  Three particular areas of law which should be of particular concern to estate planning practitioners involve the following recent developments (which the author discusses in detail):

• Recent successful attacks on testamentary and other spendthrift trusts by creditors, divorce courts, bankruptcy trustees and the IRS, a trend that has gained momentum because of recent amendments to the status of a beneficiary’s creditors under the Uniform Trust Code and the Restatement of Trusts, 3d.
• Recent successful attacks on family limited partnerships and family limited liability companies by bankruptcy trustees who have succeeded in ignoring the governing documents and even state law by becoming full voting partners or members upon the bankruptcy filing by what is usually a bankrupt family member.
• The Bankruptcy Abuse Prevention and Consumer Act of 2005.