(debtor was real estate developer that resided in WA and suffered in the housing market downturn in 2008; debtor established self-settled asset protection trust in mid-late 2008 that adopted Alaska law as governing law; debtor's son named as trustee and trust provided for discretionary distributions for benefit of debtor, his children, grandchildren and step-children; debtor transferred approximately 78 percent of his assets to trust; trustee made substantial distributions to debtor and did not refuse requests for distributions; debtor filed bankruptcy in early 2011 and trustee moved to set aside trust as invalid and transfers to trust as fraudulent transfers; AK law allowed self-settled trusts, but WA did not; based on numerous factors, court determined that WA law applied to trust; as such, transfers to trust void as matter of law and were fraudulent under 11 U.S.C. Sec. 548(e)(1) (sufficient badges of fraud present) and WA Uniform Fraudulent Transfers Act; court's opinion follows Kilker v. Stillman, No. G045813, 2012 Cal. App. Unpub. LEXIS 8542 (Cal. Ct. App. Nov. 26, 2012), and Rush University Medical Center v. Sessions, 980 N.E.2d 45 (Ill. 2012); cases illustrate how difficult it can be for non-resident to use that state's self-settled spendthrift trust statute when settlor sued in domiciliary state).
In re Huber, 493 B.R. 798 (Bankr. W.D. Wash. 2013)
Date of decision:
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