Many times families we meet with for the first time tell us they thought their Revocable Trusts somehow protected all their assets against lawsuits or Medicaid recovery. There is usually an uncomfortable silence after I tell them their revocable trust is their alter ego and offers no asset protection whatsoever.
Generally only “Irrevocable Trusts” offer asset protection. You can establish irrevocable life insurance trusts, Medicaid pre-qualification trusts, irrevocable family trusts, and even charitable gifting trusts to accomplish your asset protection objectives.
Oklahoma, however, is unique in that the lawmakers have authorized a special kind of “revocable” trust that does offer asset protection. The “Family Wealth Preservation Trust Act of 2004” allows you to create a revocable asset protection trust if you meet the statutory requirements.
First, the Trustee must be a Trust company, Bank, Savings Association or Credit Union, not an individual. Second, the Trust cannot shelter more than $1 million (plus any growth once it is funded). Third, a majority of the Trust assets must be “Oklahoma Assets”. These include interests in Oklahoma companies, such as corporations or LLCs. This means you could set up an LLC and put your farm land, investments and oil and gas interests into it and so long as the value of the LLC constitutes more than 51% of the trust assets and the total value of the trust does not exceed $1 million, all these assets could be protected from creditors and bankruptcy trustees. Finally, the Act prohibits the courts from requiring a grantor or creator of the Trust to revoke or amend it. Yet the grantor retains the power to revoke or amend the Trust at any time if he or she deems it appropriate.
If you want to shelter and protect money for your family, yet still be able to change beneficiaries or other trust terms in the future, the Family Wealth Preservation Trust may be just the answer for you. If it sounds like this is the right option for you and your family, please call us at 405-843-6100 for a free consultation.
Jerry Shiles
Author, Attorney
Parman & Easterday
Since founding Parman & Easterday in 1985, Larry has led over 1,000 free, community-service education programs and helped more than 10,000 Oklahoma families go from putting off their estate plan to getting it done. His goal for every client is the same: to become the person their family calls "the one who took care of everything."
Larry is the author of three books: The Straight Shooter's Guide to Estate Planning; Estate Planning Basics; and Guiding Those Left Behind in Oklahoma. He served as Oklahoma's Secretary of State and Secretary of Commerce, and his firm is the only member of the American Academy of Estate Planning Attorneys in the state.
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