Asset Protection Litigation

Asset protection methodologies have been utilized for several decades by high income/high net worth individuals and families. Asset protection structures typically include a schematic of irrevocable trusts on top with layers of subsidiary entities cascading downward from the trust level. Despite the irrevocable nature of the trusts, the tax planning typically permits the income to be passed through to the primary beneficiaries’ income tax returns without being taxed at the higher effective rates imposed upon irrevocable trusts.

From the standpoint of the beneficiaries of such asset protection trusts, these asset protection structures permit these beneficiaries to maintain substantial lifestyles without having to be concerned about meeting their normal financial obligations to business creditors, particularly business creditors who have already obtained substantial judgments against these beneficiaries.

From the standpoint of the judgment creditors of the beneficiaries of such asset protection trusts, this leads to the anomaly of creditors finding that they are ostensibly stopped in their tracks with regard to collecting from their judgment debtors despite the fact that such judgment debtors have luxurious lifestyles and ready access to the benefits of an extensive array of financial and nonfinancial assets encapsulated within these asset protection structures.

The attorneys of the Rose Law Group are highly experienced in defending the interests and expectancy of the parties to asset protection trusts against adverse judgment creditors. In the same vein, the attorneys of the Rose Law Group are also highly experienced in prosecuting the rights of judgment creditors against parties to such asset protection trusts.

The potential litigation issues arising from asset protection trusts are dependent upon the unique factual matrix of each case. Each unique factual matrix triggers the need for a screen of multiple factors. These factors include, but are not limited to, (1) the timing of the creation of the asset protection trust and the sources of the property used to fund such trusts; (2) the vetting of the formation documents; (3) an analysis of whether or not the trust is being properly administered by the designated trustee(s) under the terms of the trust agreement and applicable controlling trust law; (4) an analysis of exposure to fraudulent transfer challenges and/or alter ego challenges; and (5) an analysis of subtle nuances as to control which can in certain instances undermine the defensibility of irrevocable trusts.

Asset protection litigation can lead to very complex litigation scenarios because of both the dollar amounts involved and the intention of asset protection planners to make it as difficult as possible for creditors of the settlor and the beneficiaries to invade the “safe harbors” created by such asset protection trusts. The Rose Law Group asset protection litigation team members bring extensive experience in sophisticated debtor-creditor law, trust law and asset protection law to serve the needs of clients who find themselves in the situation of having to litigate in this complex and constantly evolving area of the law.

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In The News

Supreme Court rules ruling deals major setback to Prop 208, ruling vital provisions are unconstitutional. Sends case back to trial court.

(Disclosure: Rose Law Group represents Ann Siner of My Sister’s Closet and Judge John Buttrick in their litigation efforts against 208.) By Jeremy Duda | AZ Mirror The Arizona Supreme Court refused to block a voter-approved tax hike on the state’s top earners, rejecting a challenge brought by Republican lawmakers and a local business, who argued that the tax violated

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Arizona Supreme Court likely sinks Proposition 208; Rose Law Group partner Logan Elia comments

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Jordan Rose, founder and president of Rose Law Group, highlights why the Valley should be Samsung’s top choice

Arizona land department again postpones auctions for property eyed by Samsung By Corina Vanek | Phoenix Business Journal For a fourth time, two Arizona State Land Department auctions for land that had been under consideration as a potential site for a new Samsung factory were adjourned after no bidders placed bids. The appraisals on both parcels were set to expire

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