Structuring Self-Settled Trusts for Non-Resident Settlors

Structuring Self-Settled Trusts for Non-Resident Settlors

Seek significant benefits for your clients who don’t live in SSDS trust-enabled states

A self-settled discretionary spendthrift (SSDS) trust is an irrevocable trust in which the settlor is allowed to designate himself a discretionary beneficiary or be so named later. The settlor may achieve a range of benefits, including the potential to access the trust’s assets, while certain creditors may have greater difficulty seizing the trust’s assets.

It’s not uncommon to read about a planner and her client who, faced with financial stress, have been moti-vated out of desperation to create an SSDS trust that was bound to fail. Typically, there’s a “Hail Mary” fraudulent transfer attempt, with the trustee domiciled in the SSDS trust state, but little else existing to connect the trust to the trust state. In response, some courts have searched for ways to render equitable relief, muddying the waters for well-designed plans. It’s important to differentiate the good plans from the bad, so practitioners can have a fact-based guideline when seeking legitimate benefits for their clients who don’t live in an SSDS trust-enabled state.

Legal Sustainability

To date, no court has adjudicated whether a creditor may reach the assets of a properly designed and imple-mented domestic SSDS trust. However, quoting a com-mentary by St. Louis University School of Law Professor Bradley E.S. Fogel:

… the long and short of this discussion is … the only means of enforcing a judgment against such a … trust may be to attack the creation of the trust as a fraudulent transfer. Whether or not the post-transfer creditor will be successful will likely depend on whether the particular creditor was a contemplated creditor at the time of the transfer.1

There are compelling protection and non-protection reasons for a non-resident settlor engaged in trust plan-ning to consider an SSDS trust, including privacy, fear of a future financial reversal, potential tax benefits, fear of an unfounded claim, flexibility to modify the trust if circumstances change and avoidance of intra-family quarrels. While the legal sustainability of a properly structured and implemented SSDS trust with a non-res-ident settlor remains untested in court, a preponderance of the evidence and scholarly comments point toward the trust’s survival. From a practical viewpoint, a trust structured like the Model Trust below will have proven its worth if it provides real benefits to the settlor and either: (1) is sustained, or (2) if a dispute arises, leads to an attractive settlement.2

If a non-resident settlor creates an SSDS trust in a state with authorizing statutes, will the trust survive a court challenge? The answer to the question is “it depends,” but this seemingly inconclusive answer is significant, because it implies accurately that there’s a reasonable set of circumstances from which to con-clude that a non-resident settlor may transfer assets to a self-settled trust formed in a state authorizing such trusts and, on court challenge, the trust will survive, if the trust is properly structured.3 Let’s review the ele-ments of a well-constructed SSDS trust and examine its survivability, if challenged, in court.

Model Trust

There are now 16 states with statutes permitting self-set-tled trusts.4 These laws vary, sometimes considerably, as do the trust laws of the states where a non-resident set-tlor may be domiciled. This lack of uniform standards poses a challenge in attempting to provide actionable information to practitioners; therefore, I’ll set forth a Model Trust drawn from the laws of leading SSDS trust jurisdictions (trust states),5 as those states’ laws and pol-icies relate to non-resident settlors. The Model Trust has the following facts and provisions:

  • The trust designates the trust state of formation as the governing jurisdiction;
  • The trust instrument cites estate planning, taxation and other advantages as reasons for creating the trust;
  • Trust administration, such as filing tax returns, is performed by an independent corporate trustee with substantial SSDS trust experience domiciled in the trust state and having no substantive contacts with the non-resident settlor’s home state;
  • The trust is irrevocable;
  • The settlor has no present or foreseeable creditor or judgment claims;
  • The settlor’s spouse and two children are primary trust beneficiaries, with the trustee having absolute spendthrift discretion to make distributions to them or payments on their behalf, subject to the direction of the trust distribution advisor;
  • At trust formation, the settlor names a trust protector with the power to replace the trustee and trust advisors and add or remove trust beneficiaries who are descen-dants of the settlor’s parents, which includes the settlor;
  • The settlor controls neither the trust protector nor any of the trust advisors, and there are no pre-arrangements. Beneficiary interests are non-transferable and meet standard spendthrift trust requirements;
  • The trust generally prohibits payments to the settlor’s creditors;
  • The trust forms a limited liability company (LLC) that’s funded by transfers of securities and cash from various settlor accounts;
  • A portion of the trust’s assets are held in cash in an independent bank in the trust state;
  • Only a minority portion of the settlor’s estate assets are transferred into the trust;
  • The trust advisors are LLCs organized in the trust state; and
  • Trust legal work is performed by special trust counsel in the trust state and by the settlor’s personal counsel.

The violation of fraudulent transfer statutes is by far the most common defect of SSDS trusts that are invalidated.

Fraudulent Transfer Implications

In the example of a straightforward fraudulent transfer claim, a debtor or individual will have moved assets to a “captive” third party with the intent of: (1) shielding the assets from the debtor’s forced repayment to a creditor, or (2) making the assets unavailable to cover the indi-vidual’s financial exposure in the event a contemplated risky endeavor fails or creates losses. These claims speak to true fraudulent transfers and are outside the purview of SSDS trust law. Instead, SSDS trust law is concerned with interpreting the law of future creditors, which involves unanticipated events and obligations to unknown future creditors.

The violation of fraudulent transfer statutes is by far the most common defect of SSDS trusts that are invali-dated. The legal and moral imperative to prevent actual fraudulent transfers is unchallenged; however, neither the spirit nor the letter of the law is compromised if the Model Trust is created and the transfers are made at a time when the settlor has no current or foreseeable creditor or judgment problems.6 For practitioners, upfront due diligence is essential to avoiding a fraudu-lent transfer trap.

Paths to Sustaining an SSDS Trust

There are five paths leading to the survival of an SSDS trust following the tenets of the Model Trust. Likely, only one path need succeed for the trust to prevail:

1. A court in the settlor’s state of residence denies jurisdiction to the plaintiff after determining that the trust state has legal jurisdiction over the mat-ter due to the location of the trust and trust assets there and the trustee’s minimum contacts with the settlor’s home state. A creditor may obtain jurisdic-tion and a binding judgment over a warm-blooded non-resident settlor who’s formed an SSDS trust, but that judgment won’t allow him to attach the Model Trust trustee or assets because the assets are no longer “owned” by the settlor. To grant a binding judgment, the forum court must have jurisdiction over the out-of-state trustee and assets. This is the essence of the due process clause of the U.S. Constitution, which limits the exercise of a state court’s jurisdiction over non-resident defendants.

The first modern case of relevance articulating the contact required to establish jurisdictional reach was International Shoe Co. v. Washington.7 There, the U.S. Supreme Court opined that: “to establish that the forum court possesses personal jurisdiction over a nonresi-dent defendant, a plaintiff must allege and prove that the defendant has ‘minimum contacts’ with the forum state that are ‘continuous, purposeful, and systematic.’”8 Thirteen years later, the U.S. Supreme Court, in Hanson v. Denckla,9 considered International Shoe and went on to elucidate the jurisdictional principles that have become the foundation for factually distinguishing cases with different degrees of contact and for cases in which forum courts seek to obtain jurisdiction over non-resi-dent trustees.

In Hanson, the Supreme Court held that the Florida forum court lacked personal jurisdiction over the Delaware trustees. Quoting Hanson, “It is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the ben-efits and protections of its laws” (emphasis added).10 In Hanson, the court held the trustee’s acts in sending trust payments and documents into the jurisdiction where the settlor had taken up residence were insufficient as a matter of law to constitute the requisite minimum contacts.11 Faced with the Model Trust facts, a federal district court sitting in the settlor’s resident state also won’t have jurisdiction because a federal court only has the same personal jurisdiction as a state court in the state where the federal court sits.12

Even though the forum court will be unable to exercise jurisdiction over the trust itself, each asset cat-egory tends to present unique issues to consider before transferring a particular asset into the trust. Also, careful planners will want to minimize the risk that a future court may overreach its bounds. Structural options include:13

  • Establish the functions of the trust protector and other trust advisors inside one or more LLCs formed in the trust state.
  • Exclude real property from the trust assets (due to the risk of in rem jurisdiction claims).
  • Locate the cash and financial assets in the trust state.
  • Evaluate each LLC and/or privately held business interest to determine whether it practically may be located in the trust state.
  • If in doubt, consider funding the trust with only cash and financial assets.

A claim that SSDS trusts are unenforceable in the settlor’s home state court is inaccurate, as the issue will be contestable in many cases.

2. Assume the local court bootstraps jurisdiction and renders a judgment invalidating the trust. Under the full faith and credit (FF&C) clause, the trust state’s strong public policy in favor of such trusts likely will cause its courts to deny enforcement of the non-res-ident settlor’s court judgment. Such a prospect may even discourage the plaintiff from filing the suit.Assuming that the state court claims jurisdiction over the trustee, how will the challenge proceed? The answer is “not well for the plaintiff.” Because the trust’s assets are located in the trust state, under the control of the trustee, the plaintiff ’s attorney must ask a court in the trust state to enforce the judgment under the mandate of the FF&C clause.14 In seeking to enforce its judgment, the plaintiff will be presented with significant barriers.

First, a prerequisite for enforcement under the FF&C clause is a valid judgment.15 Per Baker v. General Motors Corp.,16 Hanson and the other cases cited earlier, the trust state court can be expected to find that the state court doesn’t have the jurisdiction over the trustee that would enable it to issue a valid judgment. Second, the trust state court won’t be obliged to enforce the statutes of another state contrary to its own public policy. This principle is set forth in Restatement (Second) of Conflict of Laws (Restatement Second) Section 270, stating the doctrine that: “An inter vivos trust in movables is valid if valid under the law of the state designated by the settlor to govern the validity of the trust, provided that the application of its law does not violate a strong public policy of the state with which the trust has its most significant relationship.” The Model Trust is spe-cifically designed so that the trust state has the most sub-stantial relationship to the trust. In Baker, the Supreme Court examined and supported this Restatement Secondpublic policy exception for public acts (for example, statutes).17

Most commonly, SSDS trust assets transferred into an SSDS trust will be an incomplete gift and included in the settlor’s estate.

3. The settlor is able to avoid involuntary bank-ruptcy, leaving the plaintiff without a “winnable” jurisdiction in which to complain. Because neither the state court nor a federal district court will have grounds to obtain original jurisdiction over the Model Trust’s trustee or assets, a bankruptcy court will be the most likely venue for jurisdiction. Although the possibility of involuntary bankruptcy shouldn’t be ignored, if the set-tlor can avoid bankruptcy, the challenge may not reach a court, allowing the trust to survive.18 One practitioner has commented that “it is extremely unlikely that a … settlor will file for bankruptcy,” adding that, of the hun-dreds of SSDS trusts he’s prepared, not one client has gone through bankruptcy.19

4. A federal bankruptcy court validates the trust by applying the law of the trust state due to that state’s more substantial relationship to the trust than the local court, also based on Restatement Second Sec-tion 270. If the validity of the Model Trust is challenged in court and the case survives jurisdictional, FF&C clause and other procedural barriers, the sitting court, be it federal or state, will be left to choose the law of one of the two conflicting jurisdictions.

In the instance of a well-structured SSDS trust, like the Model Trust, in which no fraudulent transfer exists, precedent is for the bankruptcy courts to look to the Restatement Second to make a determination as to which state’s law will apply.20 A seminal 2013 bankruptcy case, In Re Huber21 dealt with an SSDS trust created under the law of a state different from the residence of the settlor. In Huber, the settlor was a Washington resident who created an Alaska SSDS trust administered by an Alaska trustee.

Applying Restatement Second Section 270(a), the court made a factual finding that Washington had the most substantial relationship to the trust by looking at three controlling (but not exclusive) factors for guid-ance:

  1. place of business or domicile of the trustee;
  2. location of trust assets; and
  3. domicile of settlor and beneficiaries.

The court also took note of the state of origin of the transferred assets, the location of the creditors and the attorney who prepared the trust. Finally, the court found that Washington had a strong public policy against self-settled trusts. Following these facts, the court chose the law of Washington, not Alaska, the state designated in the trust, and rooted its finding of trust invalidity on the ground that all of the relationship factors favored the settlor’s home state of Washington. In baseball, this would be called “batting 0 for 3.” Notwithstanding the bad facts, the case’s relevant precedent isn’t its holding; rather the case is significant because the court consid-ered the unique facts of the case to be the determinant of which state had the most substantial relationship to the trust for choice-of-law purposes.

Casual observers have seen Huber as a blow to self-settled trusts, but they’ve misunderstood. It’s the opposite. By basing choice-of-law “validity” on the named “significant relationship” factors, the court de facto has provided a virtual safe harbor for structuring an SSDS trust sustainable in bankruptcy. By compari-son, the Model Trust isn’t a fraudulent transfer, doesn’t involve real estate and meets all the Huber “substantial relationship” factors, except for the impossible: the res-idence of the settlor and her family beneficiaries. And, this latter issue was specifically addressed in Hanson, in which the court labeled as a “non-sequitur” the urging of the plaintiff “that, because the settlor and most of the appointees and beneficiaries were domiciled in Florida, the [forum] court of that State should be able to exercise personal jurisdiction over the nonresident trustees.”22

In its ruling, the Huber court noted that Washington “has a strong public policy” against self-settled trusts; however, this factor is of no import with regard to the Model Trust because the court considered Washington public policy only because it had the most substantial relationship to the trust matter. The Model Trust sce-nario is easily distinguished: The trust state has the most substantial relationship to the trust and doesn’t have a “strong public policy” against SSDS trusts.

5. A federal bankruptcy court or state court determines the trust’s protection provisions are enforceable against a creditor, based on Restatement Second Section 273. In an insightful commentary,23 estate-planning attorney Barry S. Engel carefully examines the court’s decision in Huber, concluding that the court misapplied Restatement Second Sec- tion 270 and, instead, should have relied on Restatement Second Section 273. His argument is that the court resolved the wrong question. Restatement Second Section 270 speaks to the validity of the trust, but validity isn’t the issue, as trusts are inherently valid contracts (for example, revocable trusts and individual retirement account trusts are also self-settled trusts). Rather, the relevant question is “whether the [valid] trust will be enforceable as against the creditors of that person.”24

The title of Restatement Second Section 273, “Restraints on Alienation of Beneficiaries’ Interests,” is prima facie evidence of the incisiveness of Engel’s argument. Paraphrased, Section 273 states that whether the creditor may be assigned a beneficiary’s interest is determined by the governing law designated in the trust, “and otherwise,” by the law of the state where the administration of the trust is most substantially relat-ed. The words “and otherwise” are crucial, because in this context, they can only be interpreted to mean the state law designated to govern the trust will prevail in enforcement cases, and only if there’s no designation will substantial relationship factors even come into play. Taking Engel’s argument to its natural conclusion, the terms of a trust instrument designating the trust state’s law to govern, when combined with the trust state’s laws enforcing the trust’s provisions against creditors, present a difficult to refute argument demanding that the court enforce the trust’s terms.

Non-resident Settlor State Courts

A great deal of confusion about the sustainability of SSDS trusts has been caused by commentators mistak-enly focused on the law of the settlor’s home state, as if these states’ laws were the gravamen of the matter. In fact, due to jurisdictional limitations, FF&C clause issues and the “substantial relationship” choice-of-law balanc-ing that must take place in federal bankruptcy court, the number of trust challenges that can be expected to be resolved in state courts is relatively small; of course, these trusts are no less important to the planners and their clients.

Thus far, it’s helped advance my syllogism to pre-sume that the common law and statutes of non-SSDS trust states prohibit such trusts, but this presumption has been merely a scrivener’s device. A claim that SSDS trusts are unenforceable in the settlor’s home state court is inaccurate, as the issue will be contestable in many cases. Although generalizations are difficult due to the wide variance in state laws, we can make a few observa-tions about the state law prohibitions.

The state laws tend to take two forms: (1) Some states have adopted a statute designed to override the state’s model code-based trust conflicts-of-law statute by invalidating spendthrift trusts with the settlor as a ben-eficiary. For defendants, this may be the most difficult state prohibition to overcome; and (2) Other states have precedent for the aged common law self-settled trust rule, which essentially holds that SSDS trusts are invalid because they’re against public policy. In such cases, the defendant must convince the court that changing times have compromised the rule. Elsewhere, I and others have pointed out that the oft-cited quotation “for reasons of public policy” isn’t a reason at all.25 Although a sub-stantive discussion of public policy is beyond the scope of this article, deeper examinations of the public policy issues have demonstrated persuasively that proper SSDS trusts merit the support of public policy.26

The defendant’s strongest counterargument will be in states that have adopted a model code version of Restatement Second Section 273 (discussed above), which can be applied to the case at hand. And, in all cases, a state law prohibition won’t aid the plaintiff if the SSDS trust is located in a favorable trust state and properly established.

Federal Transfer Taxes

Most commonly, SSDS trust assets transferred into an SSDS trust will be an incomplete gift and included in the settlor’s estate. However, in some cases, planners will want the trust gift to be a completed gift and the value of the gift excluded from the transferor’s gross estate. Generally, the trust state statutes will allow SSDS trust drafters the option of including or exclud-ing the gift from the estate of the settlor. Private Letter Ruling 200944002 (July 2009) specifically supports exclusion, if the settlor and the trust are domiciled in the same state.

For SSDS trusts with a non-resident settlor, there’s been no specific revenue rulings; however, noted estate-planning attorneys Gideon Rothschild, Douglas I. Blattmachr, Mitchell M. Gans and Jonathan G. Blattmachr, in one of their articles, posit that the settlor’s residence being in another state won’t alter the result.27 Quoting the authors, “In both Ltr. Ruls. 9837007 and 2009944002, the grantor was an Alaskan. However, it does not seem that the conclusions reached would be different if the grantor were domiciled in another state.”28 The authors found Estate of German,29 in which Mrs. German, the grantor, was a Floridian, but the trust was created and administered under the laws of Maryland, to be on point. “The Court makes it clear that the question of whether the trust would be includ-ed in Mrs. German’s estate turned on ‘the extent of the defendant’s rights with respect to the trust income and assets under Maryland law, not Florida law’ … Ltr. Rul. 2009944002 seems completely consistent with the official position of the IRS.”30

Planners wishing to take a wait-and-see position on exclusion can use other approaches to accomplish large estate tax planning, such as taking advantage of various grantor trust techniques, for example, intentionally defective grantor trusts. Notably, for a couple transfer-ring less than $10 million, depending on their overall estate-planning goals, the gross estate inclusion limita-tion shouldn’t lead to exposure to incremental taxation, if the couple’s gift tax exclusion remains adequate to cover the transfer.

A unique issue is presented with SSDS trusts because, in order not to create a nexus that could jeopardize the trust’s carefully crafted asset protection, it’s unwise to allow the settlor to retain the standard trust powers that would ensure an incomplete gift. The issue is addressed by Internal Revenue Code Sections 2038(a)(1) and 2036(a)(2), providing that whether the creation of an SSDS trust will be a completed gift or subject to estate tax at the settlor’s death will turn on the somewhat narrow question of whether creditors are able to attach the trust assets. Pertinent cases and rulings indicate that the settlor won’t make a com-pleted gift, nor obtain estate tax exclusion, if she retains the power to enable the creditors “backdoor” access to the gift by incurring debt and thereby “relegating” creditors to trust assets.31 However, the leading SSDS trust states have largely eliminated this problem through the enactment of statutory language specifically preventing creditors from reach-ing trust assets to satisfy the settlor’s debts.

—This article contains excerpts from “LISI Asset Protection Planning Newsletter #328” (Aug. 17, 2016) with express permission.

Endnotes

  1. Bradley E.S. Fogel, “Scylla and Charybdis Attack: Using Trusts for Medicaid Plan-ning and Non-Medicaid Asset Protection,” 35 ACTEC J. 45, 47 (Summer 2009)
  2. Steven J. Oshins, “The Hybrid Domestic Asset Protection Trust: A Third Par-ty Trust That Can Turn Into a Self-Settled Trust: Does a DAPT Work?” www.oshins.com (2013).
  3. Some commentators argue that the greatest threat to self-settled discretion-ary spendthrift (SSDS) trusts may lie in renderings by courts with a limited knowledge of trust law and a crowded calendar. Both plaintiffs and defen-dants will be wise to anticipate the appellate court process. In all cases, the plaintiff’s legal team will need to weigh this prospect against the potential benefits.
  4. See Steven J. Oshins, “7th Annual Domestic Asset Protection Trust State Rank-ings Chart” (April 2016) (States by rank: Nevada, South Dakota, Tennessee, Ohio, Delaware, Missouri, Alaska, Wyoming, Rhode Island, New Hampshire, Hawaii, Utah, Virginia, Oklahoma, Mississippi, West Virginia). Note: Colorado has limited elements of an SSDS trust (Colo. Rev. Stat. Sections 38-10-111), but doesn’t meet ranking qualifications.
  5. References to “trust state” or “SSDS trust” law generally apply to Alaska, Delaware, Nevada and South Dakota.
  6. See, e.g., Schreyer v. Scott, 134 U.S. 405, 409 (1890); Fleet Nat’l Bank v. Booth, 2001 Mass. Super. LEXIS 94 (Super. Ct. 2001); Shamrock, Inc. v. FDIC, 629 N.E.2d 344, 349 (Mass. App. Ct. 1994); In re Earle, 307 Bankr. 276 (Bankr. S.D. Ala. 2002); In re Bergman, 293 Bankr. 580 (Bankr. W.D.N.Y. 2003). But see United States v. Tingey, 716 F.3d 1295 (10th Cir. 2013), aff’g sub nom. United States v. Brown, 2011 BL 261591 (D. Utah 2011). See citations in Richard W. Nenno and John E. Sullivan III, Tax Management Portfolio, Domestic Asset Protection Trusts (Portfolio 868).
  7. International Shoe Co. v. Washington, 326 U.S. 310 (1945).
  8. Ibid.
  9. Hanson v. Denckla, 357 U.S. 235 (1958).
  10. Ibid.
  11. See, e.g., more recent cases supporting Hanson: Rose v. FirStar Bank, 819 A.2d 1247 (R.I. 2003); In the Matter of Estate of Ducey, 787 P.2d 749 (1990); see Restatement (Second) of Conflict of Laws Section 104, cmt. a; see Wilkes v. Phoenix Home Life Mut. Ins. Co., 902 A.2d 366, 382 (Pa. 2006); Estate of Waitzman, 507 So.2d 24, 25 (Miss. 1987); Underwriters Nat. Assurance Co. v. North Carolina Life & Accident & Health Ins. Guaranty Assn. 455 U.S. 691, 705 (1982).
  12. Federal Rules of Civil Procedure 4(k)(1) and (2) (serving a summons estab-lishes personal jurisdiction only over a defendant who’s subject to general jurisdiction in the court where the district court is located, unless the claim arises under federal law (for example, bankruptcy)).
  13. For a discussion of planning options, see Thomas E. Greene III, “Well-Craft-ed Self-Settled Trusts Formed by Nonresident Settlors Will Withstand Legal Challenge,” LISI Asset Protection Newsletter #328 (August 2016) at www.leimbergservices.com.
  14. U.S. Constitution art. IV, Section 1.
  15. Baker v. General Motors Corp., 522 U.S. 222, 233 (1998); Hanson, supra note 9.
  16. Baker, ibid.
  17. Ibid.
  18. See David G. Shaftel and David H. Bundy, “Part I. Domestic Asset Protection Trusts Created by Nonresident Settlors,” Estate Planning (April 2005).
  19. Supra note 2.
  20. See, e.g., In re Huber, 201 B.R. 685 (Bankr. W.D. Wash. May 17, 2013).
  21. Ibid.
  22. Hanson, supra note 9.
  23. Barry S. Engel, www.barryengel.com/asset-protection-developments/is-in-re-huber-important-to-anyone-other-than-mr-huber.
  24. Ibid.
  25. See Greene, supra note 13; see Adam J. Hirsch, “Fear Not the Asset Protection Trust,” Cardozo Law Review, Vol. 27:6 (January 2006)
  26. Ibid.
  27. See Gideon Rothschild, Douglas J. Blattmachr, Mitchell M. Gans, and Jonathan G. Blattmachr, “IRS Rules Self-Settled Alaska Trust Will Not be in Grantor’s Estate,” Estate Planning, Vol. 37/no. 1 (January 2010).
  28. Ibid.
  29. German Estate v. United States, 85-1 USTC par. 13,610 (Cl. Ct. 1985).
  30. Ibid.
  31. Paxton Estate v. Comm’r., 86 T.C. 785 (1986); Outwin v. Comm’r., 76 T.C. 153 (1981); Vander Weele v. Comm’r., 27 T.C. 340 (1956), aff’d, 254 F.2d 895 (6th Cir.1958); Paolozzi v. Comm’r., 23 T.C. 182 (1954); German Estate, supra note 29; Revenue Ruling 2004-64; Rev. Rul. 77-378, 347; Rev. Rul. 76-103; Private Letter Ruling 200944002; Technical Advice Memorandum 199917001; PLRs 9837007 (1998), 9332006 (1993); General Counsel Memorandum 35112 (Nov. 13, 1972). For summaries of most of these cases and rulings, see Charles D. Fox IV and Michael J. Huft, “Asset Protection and Dynasty Trusts,” 37 Real Prop., Prob. & Tr. J. 287, 331–35 (Summer 2002).

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“Untitled (African Rhythm, Our Heritage),” by Wadsworth Jarrell, sold for $97,500 at Swann Auction Galleries’ African-American Fine Art sale in New York City on Oct. 6, 2016. Jarrell was inspired by the everyday life of African Americans in Chicago and the sights and sounds of Jazz music. A honeymoon to the Caribbean also influenced his use of color.

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