CTC’s President, Cynthia D.M. Brown’s, Article Published by Steve Leimberg re: Creating a Delaware Asset Protection Trust

November 17, 2014

Cynthia D.M. Brown, Esquire article on the Delaware Qualified Dispositions in Trust Act was published in Steve Leimberg’s Asset Protection Planning Email Newsletter – #263. Her co-author was Michael M. Gordon, Esquire. Cynthia D.M. Brown is the President of Commonwealth Trust Company and a member of its Board of Directors. Cindy has written and spoken on many topics relating to tax, estate planning, asset protection planning, probate and trust administration which can be found at this link: Cynthia Brown

What follows is a summary of the relevant issues to consider when drafting a Delaware asset protection trust under the Delaware Qualified Dispositions in Trust Act, 12 Del. C. § 3570, et. seq., (the “Act”). Included are the requirements for creating a trust (a Delaware asset protection Trust) under the Act, prohibited powers which the grantor may not retain under the Act, permissible powers which the grantor may retain under the Act and who may defeat a Delaware asset protection trust.

“15 states, such as Delaware, permit the creation of full-blown self-settled asset protection trusts. Besides the 15, at least 10 other states allow some form of an asset protection trust, including inter vivos QTIP trusts.  The proliferation of domestic asset protection trusts leaves attorneys inquiring about the laws in each asset protection state and the benefits of creating such a trust in one state versus another. Questions frequently asked are:

-What is an inter vivos QTIP trust and how can it help my clients?

-Will domestic self-settled asset protection trusts benefit my clients?

-Do the costs of creating a trust in one state for creditor protection or taxation benefits really outweigh the creation of such a trust in another?

-Is the trust really protected from creditors?

-Can the trust be used to avoid the income tax in the grantor’s state of residence?

-Can a same-sex couple benefit from the use of these trusts?

-Is using an offshore trust better?”

Download the full article from Leimberg Information Services, Inc. through the following link:  Creating a Delaware Asset Protection Trust.

Commonwealth Trust Company is pleased to provide this article as a guide. Commonwealth Trust Company is not engaged in the practice of law and is not providing legal advice by the provision of these materials. Commonwealth Trust Company recommends that clients seek the opinion of their attorney regarding the specific legal and tax issues addressed in this article.