February 11, 2012
From the Buffalo News:
KeyCorp’s private banking unit has formed a new trust company subsidiary in Delaware, enabling the bank’s wealthy clients — including in Buffalo — to receive services and benefits of that state’s favorable asset protection laws.
Key Private Bank said it has formed Key National Trust Company of Delaware to provide trust services for customers seeking “asset protection, tax savings and flexibility” under Delaware law.
The state’s trust laws provide some extra protections for assets against seizure by creditors, offer more flexibility and guarantees for the client, and allow for preservation of wealth from generation to generation using trusts that do not have time limits.
. . .
“Building Key Private Bank’s capabilities to provide an array of trust services has been a strategic objective for the firm,” said Catherine O’Malley Kearney, Key’s director of trust administration. “We have taken significant steps to expand our presence and offer trust services for business owners, professionals, and other wealthy individuals who can benefit from Delaware’s favorable personal trust laws.”
It isn’t surprising that a bank chooses to base a trust fiduciary in Delaware, the undisputed headquarters of most US banks with a national presence. But their pick is not in their customers’ best interest.
A recent decision from an Alaska federal district judge has put a relatively-recent asset protection technique’s usefulness in question. The technique is the domestic asset protection trust, or DAPT.
In general, I shy away from using DAPTs for a few reasons:
- They aren’t recognized in New York, nor in a majority of states (although, they are increasingly being adopted);
- They aren’t recognized in a majority of states because the very idea around which a DAPT is organized is repugnant to the public policy of those states;
- They make protection potentially non-portable from state-to-state; and
- They are a method of “in your face” asset protection in my opinion, which puts a plan behind the eight-ball needlessly.
Alaska is one state whose legislature does allow DAPTs, however, and it was therefore something of a shock for Mr. Mortensen when his bankruptcy petition tore through his “asset preservation trust” using a clawback provision. Details below the fold.
March 26, 2011
To explain why there is a need for asset protection attorneys in Buffalo, I would like to discuss one of the most booming Buffalo industries.
It isn’t healthcare, financial services, or higher education.
It is debt collection.
Buffalo is nationally known as a debt collection hub. A 48 Hours special documented illegal tactics used by one debt collector, which led to restitution and barring the owners of some firms from the industry. At that time–2010–the industry employed 5,200 Western New Yorkers at 120 firms in Erie and Niagara counties. Same article: “Buffalo has also become known nationally as a home to some of the industry’s worst practices.”
Asset protection planning is the legal version of making armor against debt collectors. Buffalo already has several legal service providers offering credit counseling, including some that are volunteer such as the Bar Association of Erie County’s Volunteer Lawyer’s Project. It also has providers for personal bankruptcy. They are able to fight the battle against the debt collector.
Asset protection planning, however, creates a shield around your assets and you. This is likely to discourage creditors from even trying to collect due to the legal hurdles they would have to overcome, convincing them to choose an easier target. Asset protection planning is about avoiding the fight in the first place.