In re Rensin Case Analysis

In In re Rensin, 600 B.R. 870 (Bankr. S.D. Fla. 2019), the bankruptcy court ruled that a debtor could keep the $15,000 a month his annuity paid him directly, even though the trustee of his own offshore trust had bought the contract. The payment right was Rensin’s personal property, never part of the trust, and Florida’s fraudulent conversion statute reaches only an act by the debtor—the Belize trustee made the purchases.

Almost everything else went against Joseph Rensin. The court refused to apply Belize law, held that creditors could have attached every trust asset from the trust’s inception, and denied his homestead exemption because he bought the Florida home to hinder those creditors. In a separate case, the FTC had already won a ruling making his $13.4 million debt nondischargeable.

How an Offshore Trust Ended Up Holding Nothing but Two Annuities

Joseph Rensin created the Joren Trust in November 2001 under Cook Islands law, funding this offshore trust with $9 million from an earlier business sale. The trust was irrevocable, contained spendthrift provisions, and named Rensin as both settlor and primary beneficiary. Distributions were the trustee’s decision alone: Rensin could request money but not require it, and the only power he held over the trustee’s identity was too remote to matter. The FTC had no claim against him then; BlueHippo, the company whose customers later became his creditors, did not yet exist.

During 2008 and 2009, BlueHippo took more than $14 million from over 50,000 customers who never received a product. The Federal Trade Commission pursued Rensin personally for contempt of a consent order. In April 2016, a New York federal court entered a $13.4 million judgment against him. During the litigation, Rensin requested and received 14 trust distributions totaling roughly $8.7 million, which went to legal fees, settlements with BlueHippo’s creditors, and a new business that failed.

In December 2014, a Belize company replaced the Cook Islands trustee, and the trust’s governing law changed to Belize. In December 2015, Rensin sent $350,000 through his attorney to the trustee, which used the money to buy a deferred variable annuity. The same month, the trustee spent everything else in the trust on a $1.7 million fixed annuity paying Rensin $15,000 a month for life. The only evidence on the point showed that Rensin objected to the purchases.

Rensin filed chapter 7 in Florida in February 2017. He claimed the annuity payments exempt, plus a bank account holding $79,014 in annuity proceeds. He also claimed a $160,375 homestead exemption, capped at that amount because he bought the home less than 1,215 days before filing. He had paid roughly $940,000 for the Florida home, all of it proceeds from a Maryland house he never occupied. The chapter 7 trustee sued to reach the annuities, the account, and the homestead; the FTC joined her objections to the exemptions.

What the Court Decided in In re Rensin

Judge Erik Kimball ruled on the trustee’s and Rensin’s cross-motions for partial summary judgment in May 2019, granting each side part of what it sought.

First, Florida law governed the trust despite its Belize choice-of-law clause. Florida enforces contractual choice of law unless it offends the state’s public policy, and Florida courts will not enforce a self-settled spendthrift trust built to defeat creditors. The court refused to enforce what it called “an asset protection trust designed to offend his creditors,” ruling that applying Belize law would be “contrary to Florida public policy.” 600 B.R. at 880.

Second, creditors could reach every asset of the trust. When a trust is irrevocable, Florida’s trust code lets the settlor’s creditors reach “the maximum amount that can be distributed to or for the settlor’s benefit.” The trustee here could distribute the entire trust to Rensin. The court therefore held that “from inception of the Joren Trust, Mr. Rensin’s creditors could attach any and all assets of the trust.” 600 B.R. at 881. The spendthrift clause protected nothing.

That ruling stayed on paper. Because the Belize trustee was never made a defendant, the court could not enter enforceable relief against any trust asset.

Third, the annuity payments stayed exempt. Florida law protects annuity payments made to a Florida citizen or resident. The chapter 7 trustee argued the exemption failed because the Belize trust owned the contracts, and courts had split on whether the statute requires a Florida owner. The court followed the majority view: the statute’s residence requirement attaches to the proceeds, so the exemption protects any payee who lives in Florida, whoever owns the contract. Rensin lived in Florida, and his payment rights were exempt. 600 B.R. at 882.

Fourth, the homestead exemption was denied. Federal bankruptcy law reduces a homestead exemption when the debtor buys the home with nonexempt money in the ten years before filing, intending to hinder, delay, or defraud a creditor. Rensin bought the Florida home weeks after a federal appeals court signaled that his judgment would be about $14 million, using money from a house he never occupied. The court found the evidence of intent “overwhelming” (600 B.R. at 889), denied the exemption, and ordered turnover of the home sale proceeds.

Why Section 222.30 Did Not Reach the Annuities

Section 222.30 of the Florida Statutes makes it a fraudulent asset conversion when a debtor changes nonexempt assets into exempt form intending to hinder, delay, or defraud a creditor. It carries the same intent language that runs through Florida’s fraudulent transfer case law, and the chapter 7 trustee presented a full badges-of-fraud analysis of the annuity purchases.

The statute requires a “conversion by a debtor,” and the court held that a conversion “involves an intentional act with the power to follow through.” 600 B.R. at 883. There was no evidence that Rensin asked the trustee to buy the annuities; the only evidence was that he objected. Even a request would have changed nothing, because Rensin had no legal ability to require the trustee to use trust assets in any way.

Florida appellate law pointed the same way. In Miller v. Kresser, 34 So. 3d 172 (Fla. 4th DCA 2010), the Fourth District held that when a trust document gives the trustee complete discretion, a court need give no weight to the trustee’s past compliance with a beneficiary’s wishes. Because Rensin had no legal power to compel the purchases, no intent of his could turn the trustee’s independent act into a conversion by the debtor.

The dividing line is legal power, not practical influence. A trustee who has always done what a beneficiary asked is still independent under the statute if the trust documents leave the decision to the trustee alone. Even a debtor who requests the purchase has not converted anything, because a request carries no power to follow through. The statute demands both pieces: the debtor’s own intentional act and the legal ability to carry it out.

The court gave two further reasons. Rensin’s own $350,000 deposit into the trust converted nothing into exempt form, because no Florida exemption protects assets held in a trust like this one; the money remained as reachable inside the trust as outside it. And the trust gained no exemption when it bought the annuities, because the annuity exemption protects Florida residents and the trust resided in Belize. A conversion that never makes an asset exempt sits outside the statute.

Why No Turnover Order Reached the Trust in Belize

The chapter 7 trustee asked the court to compel Rensin to turn over the annuity funds and to declare all trust assets property of the bankruptcy estate. Both requests failed, each for a different reason.

The turnover claim failed because the annuity rights were exempt, and because Rensin had no legal right under the trust documents to cause the trustee to act. A court will not order a person to deliver property he has no right to obtain.

The court contrasted In re Lawrence, 251 B.R. 630 (S.D. Fla. 2000), aff’d, 279 F.3d 1294 (11th Cir. 2002), where the debtor could replace his offshore trustee at will. Those facts, the court said, mark “the outside edge of a court’s ability” to force a beneficiary to deliver property from a fully discretionary spendthrift trust. Rensin, who had “no legal ability to control any material aspect” of the trust’s administration, held no comparable power. 600 B.R. at 885.

The declaration that trust assets belonged to the estate failed on procedure. Under Florida law, the general rule makes the trustee of a trust an indispensable party in a suit affecting the trust, and the Belize trustee was never a defendant. The court dismissed that request without prejudice and gave the chapter 7 trustee sixty days to add the Belize trustee, noting that service abroad was possible under the Hague Convention.

By then the Supreme Court of Belize had ordered the trustee to obey no turnover order except its own. The bankruptcy court declined to treat that order as proof that joinder would be futile. The adversary proceeding instead ended with a final judgment in July 2019. No appeal was taken from any of these rulings, and the decision has never been disturbed on appeal.

The nondischargeability ruling was a separate case, FTC v. Rensin, 597 B.R. 177 (Bankr. S.D. Fla. 2018), which held the $13.4 million judgment excepted from discharge. Rensin appealed that one, and a federal district judge upheld it in July 2019.

What In re Rensin Means for Asset Protection Planning

Every legal protection written into the Joren Trust failed in court, and Rensin kept his annuity income anyway. The spendthrift clause, the governing-law clause, and the trust’s irrevocability all gave way to Florida public policy. What survived was the fact that Rensin genuinely could not make the trustee do anything.

A court can order turnover when the settlor retains a power like Lawrence’s right to replace his trustee at will. Where no such power exists, the Rensin court would not order the settlor to deliver property he had no right to obtain. Offshore trust litigation has punished settlors who kept control; Rensin gave control away and kept his income while losing every legal argument.

For Florida exemption planning, the decision draws a boundary around what the conversion statute can reach: it requires the debtor’s own intentional act, backed by the legal power to follow through. The annuity exemption turns on where the person receiving the payments lives, so a contract owned by a foreign trust can still produce exempt income for a Florida resident. No Florida appellate court has decided that point, and splitting ownership from the payment right hands a creditor an argument it would not otherwise have.

The same decision armed creditors: the reasoning that they could reach every trust asset from inception applies to any self-settled trust governed by Florida law—though reaching the assets still requires suing the trustee who holds them.

Under Havoco v. Hill, Florida’s constitution protects a homestead purchase even when the buyer intends to defeat creditors, but section 522(o) overrides that rule in bankruptcy, and Rensin surrendered the sale proceeds. His $13.4 million judgment survived the discharge. Within Florida asset protection case law, Rensin stands for the line between what a debtor controls and what a debtor merely receives.