Policy, Logic, and Persuasion in the Evolving Realm of Trust Asset Protection

The concept of using legal structures to protect property from those who might otherwise have some claim to it is an idea with deep roots. The trust device is one such legal structure, and its evolution as an asset protection device has not been without controversy. The recent and noticeable break with the traditional denial of self-settled trust protections is one such area of modern controversy, but not the only notable recent development. The self-setted asset protection trust movement is accompanied by the recent completion of two major law reform projects. The drafting and recommendation for state adoption of a Uniform Trust Code is one such project. The Restatement (Third) of Trusts is the second. Taken together, these developments have recently affected and will undoubtedly continue to influence the evolution of trust asset protection. This Article considers these developments and their potential impact on the future course of trust asset protection. Among the observations presented is the idea that the UTC holds a significant place in the development of trust asset protection - not so much because of the conclusions its drafters reached as to particular rules, but more because of the express invitation the UTC presents to state legislatures to ponder their own trust protections and corresponding placement in the modern asset protection community. Finally, this article provides insights into both the current and evolving status of trust asset protection by relating the noted reform projects to several trust protection developments seen in the last decade or so. That exploration proceeds from a recognition of interest group politics as related to the UTC movement. The discussion progresses to an evaluation of potential ideological influences on the future course of trust asset protections. Along the way, consideration is given to the federal influences on that course. Those influences are at least in part derived from the potential repeal of estate and generation-skipping transfer taxes, recent bankruptcy reform legislation, and the status of the federal/state Medicaid program. Among the observations presented is the idea that these ideological and federal concerns push in multiple directions, often at the same time and in a conflicting manner, with a very uncertain but potentially significant effect on the future evolution of trust asset protection