{"id":107,"date":"2011-11-22T15:28:05","date_gmt":"2011-11-22T15:28:05","guid":{"rendered":"http:\/\/www.caassetprotection.com\/blog\/?p=107"},"modified":"2023-02-01T18:00:35","modified_gmt":"2023-02-01T18:00:35","slug":"the-mortensen-case-what-went-wrong","status":"publish","type":"post","link":"\/blog\/the-mortensen-case-what-went-wrong\/","title":{"rendered":"The Mortensen Case: What Went Wrong?"},"content":{"rendered":"

Asset Protection Trusts can be very useful tools as a part of a well thought out, comprehensive asset protection plan.\u00a0\u00a0 In a recent blog, we took a look at DAPT trusts and the pro\u2019s and con\u2019s associated with this particular type of trust.<\/span><\/span><\/p>\n

An interesting case in which a domestic asset protection trust failed to protect assets in a bankruptcy case has been getting a lot of commentary amongst asset planning professionals of late.\u00a0 I\u2019m referring to the Mortensen case in Alaska, where DAPT\u2019s, or self settled spendthrift trusts, are allowed by state law.<\/span><\/span><\/p>\n

Tom Mortensen was an Alaska resident with a master\u2019s degree in Geology.\u00a0 In 1998 Mortensen and his wife were divorced.\u00a0 As part of the divorce settlement, Mortensen received approximately 1.25 acres of remote real property near Seldovia, Alaska.\u00a0 In 2005, Mortensen decided to draft his own asset protection trust using a template he found.\u00a0 He created a self settled Alaska Trust called \u2018The Mortensen Seldovia Trust (an Alaska Asset Preservation Trust) into which he transferred the Seldovia property and $80,000 in cash.\u00a0 In 2009, Mortensen filed for Chapter 7 bankruptcy and did not declare the assets in the Trust as part of the bankruptcy estate.<\/span><\/span><\/p>\n

When drafting an asset protection plan, one must be cognizant of both state and federal laws.\u00a0\u00a0 According to Alaska state statutes, an Alaska Trust has a 4-year statute of limitations, so in theory Mortensen\u2019s trust was well seasoned and should have held up in court.<\/span><\/span><\/p>\n

Unfortunately for Mortensen, revisions in the federal bankruptcy code in 2005 extended the statute of limitations to 10 years in cases where transfers into a trust seem motivated by attempts to avoid paying debts.\u00a0 In this case, the judge found that he transferred the property into the trust for the express purpose of avoiding paying his mounting debt, and applied the 10-year rule, overruling Alaska<\/a> state statute and allowing his creditors to recover from the trust.<\/span><\/span><\/p>\n

While DAPT trusts do give a certain degree of protection, the strongest protection is an offshore trust prepared by a skilled asset protection lawyer.<\/span><\/span><\/p>\n

Mortensen made the mistake of attempting to do his own planning, did not understand or follow the rules, and got himself into trouble.\u00a0 This case is a perfect example of why a skilled asset protection lawyer should be retained to draft a comprehensive asset protection plan for you.<\/span><\/span><\/p>\n

If you have questions regarding a trust or are considering asset protection planning, please contact our offices to begin preparing an individual asset protection strategy to address your individual needs.<\/span><\/span><\/p>\n

We have years of experience and understand the complexities of state and federal laws regarding asset protection. Don\u2019t leave yourself vulnerable to lawsuits and creditors.\u00a0 Contact us today<\/a>.<\/span><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Asset Protection Trusts can be very useful tools as a part of a well thought out, comprehensive asset protection plan.\u00a0\u00a0 In a recent blog, we took a look at DAPT trusts and the pro\u2019s and con\u2019s associated with this particular type of trust. An interesting case in which a domestic asset protection trust failed to… Read More »<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2,142],"tags":[162,167,3,168],"class_list":["post-107","post","type-post","status-publish","format-standard","hentry","category-asset-protection","category-real-property","tag-alaska-trust","tag-bankruptcy","tag-california-asset-protection","tag-dapt"],"aioseo_notices":[],"_links":{"self":[{"href":"http:\/\/www.caassetprotection.com\/blog\/wp-json\/wp\/v2\/posts\/107","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.caassetprotection.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.caassetprotection.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.caassetprotection.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.caassetprotection.com\/blog\/wp-json\/wp\/v2\/comments?post=107"}],"version-history":[{"count":1,"href":"http:\/\/www.caassetprotection.com\/blog\/wp-json\/wp\/v2\/posts\/107\/revisions"}],"predecessor-version":[{"id":603,"href":"http:\/\/www.caassetprotection.com\/blog\/wp-json\/wp\/v2\/posts\/107\/revisions\/603"}],"wp:attachment":[{"href":"http:\/\/www.caassetprotection.com\/blog\/wp-json\/wp\/v2\/media?parent=107"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.caassetprotection.com\/blog\/wp-json\/wp\/v2\/categories?post=107"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.caassetprotection.com\/blog\/wp-json\/wp\/v2\/tags?post=107"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}