Article on Self-Settled Trusts for Non-Resident Settlors

Thomas E. Greene III recently published an Article entitled, Structuring Self-Settled Trusts for Non-Resident Settlors, Trusts & Estates (Nov. 2016). Provided below is an abstract of the Article:

A self-settled discretionary spendthrift (SSDS) trust is an irrevocable trust in which the settlor is allowed to designate himself a discretionary beneficiary or be so named later. The settlor may achieve a range of benefits, including the potential to access the trust’s assets, while certain creditors may have greater difficulty seizing the trust’s assets.

It’s not uncommon to read about a planner and her client who, faced with financial stress, have been motivated out of desperation to create an SSDS trust that was bound to fail. Typically, there’s a “Hail Mary” fraudulent transfer attempt, with the trustee domiciled in the SSDS trust state, but, little else existing to connect the trust to the trust state. In response, some courts have searched for ways to render equitable relief, muddying the waters for well-designed plans. It’s important to differentiate the good plans from the bad, so practitioners can have a fact-based guideline when seeking legitimate benefits for their clients who don’t live in an SSDS trust-enabled state.