July 15, 2020

Volume X, Number 197

July 15, 2020

Subscribe to Latest Legal News and Analysis

July 14, 2020

Subscribe to Latest Legal News and Analysis

July 13, 2020

Subscribe to Latest Legal News and Analysis

Domestic Self-Settled Trusts in Delaware - TrustCo Bank v. Matthews

A recent Delaware case, TrustCo Bank v. Matthews, involved a Delaware self-settled trust created to protect the assets that the Grantor/debtor transferred to the Trust from creditors. The Delaware court agreed that the creditor could not access those Trust assets. This case is significant because not only did the Delaware court agree that the Trust assets were protected from creditors, but the Grantor/debtor of the Trust was a Florida resident. Even though there was a judgment against the Grantor, Delaware law and its protection applied, rather than Florida law.

This provides support for those U.S. citizens desiring to protect assets from creditors without the complexity or cost of offshore asset protection trusts. There has always been a concern that Delaware self-settled trusts (or trusts created in Nevada or Alaska or Virginia or other states where self-settled trusts are allowed) were vulnerable to the claims of creditors if the debtor and the assets did not reside in the state where the trust was created. But the Matthews case provides support for debtors, regardless of their residence.

© 2020 Odin, Feldman & Pittleman, P.C.National Law Review, Volume VI, Number 34


About this Author

John P. Dedon, Tax, Estate Planning, Attorney, Odin Feldman Pittleman, Law Firm

John Dedon is a tax lawyer with a talent for explaining the complexities of tax law in lay terms.  Working in the estate planning, asset protection and business areas for almost 30 years, John helps clients preserve assets and plan for the future with traditional planning tools, including Trusts (dynasty trusts, intentionally defective trusts, grantor retained annuity trusts), LLC and partnership entities, and cutting edge concepts such as cryonic preservation trusts.  John also works extensively in the charitable area, creating public and private charities, remainder and lead trusts...