Jarvis Law Office

More States Allowing Asset Protection Trusts

Michigan recently became the 17th state to allow controversial asset protection trusts, according to Forbes in "Michigan Debuts The Latest State Asset Protection Trust."

Short of filing for bankruptcy, which requires that you have no assets, asset protection trusts are the best protection against creditors. They aren’t always popular, especially with creditors.

Asset protection trusts allow someone to transfer their assets into a trust that is controlled by an independent trustee. That trustee can then refuse to pay any creditors with trust assets.

To make this a little more fair for “current” creditors, suits against trust assets are allowed within a statute of limitations. These trusts are controversial enough when talking about institutional creditors, but they become even more controversial when they are used to shield assets from family law courts, which some states allow. These trusts allow people to protect assets from a spouse in a divorce.

Most states do have an exception for child support, but not all do.

Reference: Forbes (February 10, 2017) "Michigan Debuts The Latest State Asset Protection Trust."

NBA Team Focus of Estate Battle in Oklahoma

When oilman Aubrey McClendon, who owned a 20% stake in the Oklahoma City Thunder NBA franchise, passed away it was learned his complicated web of companies had diminished in value and it wasn't going to be easy to pay his creditors, according to a Business Insider report "The case of a dead oil and gas mogul takes an unexpected turn, and it involves the Oklahoma City Thunder."

At the time of his death McClendon owned a 20% stake in the Oklahoma City Thunder NBA franchise. Because of the decreased value of McClendon's business interests some of his creditors believe that the basketball team ownership stake might be the estate's most valuable asset. This has caused them to intervene in the estate case.

The creditors fear that the estate will sell the ownership stake to McClendon's widow at less than market value and they are asking the court to make sure that does not happen. Attorneys for the estate suggest that the creditors are jumping the gun as the stake has not been sold yet and any sale would have to meet with the approval of the NBA.

Reference: Business Insider (May 28, 2016) "The case of a dead oil and gas mogul takes an unexpected turn, and it involves the Oklahoma City Thunder."