Monday, June 20, 2016
Jonathan Gopman, Michael Sneeringer, & Alan Gassman recently published an Article entitled, West Virginia Passes Asset Protection Trust – Trust Legislation Effective June 8, 2016 – Here Comes the Mountainair Trust, Wealth Strategies Journal (May 16, 2016). Provided below is a summary of the Article:
West Virginia became the 16th state in the United States to establish a public policy and statutes enabling its citizens and persons residing outside of West Virginia to establish an irrevocable trust that can benefit the grantor without being subject to creditors of the grantor when appropriate circumstances apply. Unlike the handful of jurisdictions that have established legislation that invites those from outside the state to have the strongest protection available for transfers to trusts, West Virginia’s statute requires that there be no creditors existing that would be expected to be able to pursue the assets of the trust upon funding, and requires an extensive affidavit to be executed when any contribution is made to the trust that such contribution does not constitute a fraudulent transfer or other inappropriate arrangement.
Notwithstanding the conservative nature of the statute, the authors commend West Virginia’s new policy allowing its citizens and others to establish trust arrangements that will permit assets to be protected from the claims of creditors in situations where other exemptions and strategic forms of ownership that might be utilized would be more expensive, restrictive and inconsistent with investment, retirement and family planning objectives or needs. This statute also potentially provides West Virginia residents who have or will establish asset protection trusts in other jurisdictions to have some confidence that their local law may be applied in a challenge to such a trust structure in a supportive manner if the requirements of the West Virginia statutes are met (or close thereto). Clients who have trusted relatives or close friends in West Virginia who are establishing trusts well before problems are expected to occur may consider this state to be an appropriate situs, and use of the situs can help to prove that there are no expected creditor challenges at the time such a trust is established.
This article provides a summary of the new asset protection trust law in West Virginia and also discusses certain issues that the authors believe will need to be addressed quickly and corrected in subsequent legislation by the legislature in West of Virginia.