Exciting Developments at Jeffrey M. Verdon Law Group, LLP

Dear Clients, Colleagues, and Friends,

It is with great pride that we share our maiden article as an ongoing contributor to Kiplinger's Wealth Creation column. This piece, "Delaware Trust? You May Want to Consider Nevada Instead," deals with a court decision which shocked the trust & estates professional community because until now Delaware Trusts were considered virtually "bullet-proof." No one saw this coming. Congratulations to my good friend, Steve Oshins, Esq., being the first to shine light on this surprising development. Nevada appears to be the better domestic jurisdiction for support trust and asset protection trust planning. Click Here

Our upcoming Kiplinger column deals with a case involving Johnny Depp's lawsuit against his business manager and how he found himself in the unenviable position of having to sue him for $30M+. Stay tuned...

The firm continues to add quality professionals to its team. We are pleased to announce Dustin Nichols, Esq. has joined the firm as Of Counsel and in charge of the new Exemption Planning and Private Retirement Trust Division. Dustin Nichols is a distinguished faculty member and presenter for Lorman Education Services, a leading authority on exemption planning, complex estate planning, and integrated domestic and foreign asset protection planning. As a thought leader in comprehensive estate planning and asset protection planning, Dustin brings over 25 years of experience as an author and expert on the creation and implementation of Private Retirement Trusts ("PRTs") in the State of California. In fact, Dustin is one of the founders and inventors of California's administrative support service for the execution of California PRT. Dustin's book, "Asset Protection Strategies and Forms", is published by James Publishing. Click Here

Dustin's extensive experience in exemption planning will be available to aid our clients to be first in taking advantage of some of the unique and little known exemptions offered in CA, such as the Private Retirement Trust, the best protection that very few Californians have utilized or even heard of. Dustin will split his time between the Newport Beach and Redwood City offices.

We are also pleased to share the news that Ms. Jenny Wang, CPA, JD/LLM in taxation, will be joining our firm as a Senior Tax and Trusts & Estates Associate in April. Jenny earned her undergraduate degrees in Business Administration and Economics from University of California, Berkeley, and brings a wealth of experience in representing taxpayers before the IRS and Tax Court and international tax planning while at Grant Thornton. She was admitted to the CA bar in 2013. She will be working in the income tax planning, estate planning and asset protection group. Jenny also speaks two dialects of Chinese and will be assisting foreign nationals who seek to immigrate to the United States and perform the appropriate planning before seeking their green cards and other immigration status.

Delaware Dynasty and Asset Protection Trusts, A Paper Tiger?

Dear Clients, Colleagues, and Friends,

Sam built a fortune from furniture manufacturing. When he sold his successful business for a huge sum ten years ago, his one goal was to ensure his son would never have to struggle the same way he did - through a disastrous lawsuit and a financially ruinous divorce.

Sam established a Delaware Dynasty Trust (DDT) to protect his son against future creditors and potentially vengeful ex-wives. Trusting Delaware's reputation as a top-ranked U.S. trust jurisdiction, Sam believed the trust would ensure his son's long-term financial wellbeing. What he didn't count on was the 2014 Kloiber v. Kloiber case, which involved a long-standing exception to Delaware self-settled asset protection trust law exposing DDTs and Delaware Asset Protection Trusts (DAPTs) to penetration by ambitious and determined ex-spouses.

In 2002, Daniel Kloiber's father established a DDT. The trust was drafted as a "support trust" for the benefit of Daniel, his wife and his descendants, and over the years accumulated roughly $310 million in assets. When son, Daniel divorced in 2014, his ex-wife demanded a piece of this trust using precedent set in the 1973 Garretson v. Garretson case. Garreston established that divorcing spouses can invade support trusts because a divorcing spouse seeking maintenance from her ex is considered an" exception creditor" under Delaware law. Spendthrift language like the so-called HEMS standard for health, education, maintenance and support exposed the Kloiber DDT's assets to Daniel's divorcing spouse rather than protecting against it. Under this precedent, the original DDT's assets were severed to create a new trust for his ex, rendering the protections afforded by vaunted Delaware Trust law feckless.

This is Delaware law's dirty little secret, and it's a hole a Mack truck could drive through. Dangerously, this is an exception about which most trustors are unaware.

So Sam has a problem. He created a DDT drafted as a "support trust" for the benefit of his son, and his son's wife (as long as they remained married) and his descendants in Delaware. He now knows that the language used in the trust can be penetrated by a future ex-wife. What can Sam do to fix it?

Nevada trust experts advise the safest way to create a dynasty trust is to draft it as a discretionary trust in a no-exception creditor state like Nevada, in which only the trustees have the sole authority to distribute trust income and corpus to beneficiaries. Unlike Delaware, Nevada does not have an "exception creditor" exemption for alimony and child support claims. So, although Sam already established a DDT for the benefit of his son, his trustee may relocate the entire trust to Nevada for superior protection, eliminating the ex-spouse creditor exception under Delaware trust law.

Sam does this and rests easy knowing that whatever challenges his son faces throughout life, fighting for the assets in his trust against a vengeful ex-spouse will not be one of them.

If you have already established a domestic DDT or DAPT, check with your trust expert to determine if it can be penetrated by an exception creditor. If so, consider redomiciling your trust to Nevada for greater protection.

For more information about DDT and DAPT's or other issues pertaining to this subject, contact the Jeffrey M. Verdon Law Group, LLP, Jeff@jmvlaw.com, (949) 333-8150.