By 2007, as the real estate markets were starting to sink, Donald and one of his business partners, Robert Terhune (Robert), began to worry about certain of their real estate projects and their commitments to each other. When Robert threatened to set up an asset protection trust to stiff Donald, Donald’s attorney made it clear to Robert that Donald would consider the setting up of such a trust to be a fraudulent transfer as to Donald as Robert’s potential creditor.
If done right, asset protection is an expected result of proper legal planning. But if done wrong, asset protection can be misused as a means to deceive lawful creditors. Make note, this type of planning is no “game” to be won by trickery.
The case of Waldron v. Huber is illustrative of the latter.
To say Waldron v. Huber is a complex case would be a gross understatement. The Huber case included Alaska LLCs, Washington properties, a failing partnership, and a Domestic Asset Protection Trust (DAPT). A recent Forbes article, titled “Domestic Asset Protection Trust Blows Up Bigger Than Alaska In Huber Case,” provides an accurate description of the outcome.
Bottom line: in Huber, the courts found the legal planning to be too-good-to-be-true. The comprehensive analysis of the case by the Forbes article is instructive, highlighting certain considerations before electing to deploy a DAPT as part of your asset protection planning.
Reference: Forbes (May 22, 2013) “Domestic Asset Protection Trust Blows Up Bigger Than Alaska In Huber Case”