Thirteen states have adopted statutes expressly authorizing the creation of self-settled spendthrift trusts that will protect the grantor’s assets from the claims of his or her creditors. It seems clear that, apart from certain federal bankruptcy situations, these trusts will be respected as valid spendthrift trusts by the courts of the state under whose laws they are created. Questions remain, however, about the efficacy of a self-settled spendthrift trust created, under the laws of a state that affords such trusts protection, by a resident of a state that expressly disapproves of the use of such trusts.

Download: Bankruptcy Court Rejects Out-of-State Domestic Asset Protection Trusts.