Offshore Trust Case Law

This page analyzes the most important court decisions on offshore asset protection trusts.

What the Creditor Got in Each Case

American courts have ruled on offshore asset protection trusts in contempt proceedings, bankruptcies, divorces, and criminal prosecutions, and three of the same trusts were also before their own home courts.

Case	Court, year	What the creditor got
FTC v. Affordable Media	9th Cir. 1999	Civil contempt affirmed; the settlor-protectors held to remain in control
In re Lawrence	11th Cir. 2002	Turnover, contempt, and incarceration affirmed; the trust assets were never turned over
SEC v. Bilzerian	D.D.C. 2000	Civil contempt, then incarceration in 2001; about $547,000 recovered since then against a judgment alleged to exceed $180 million
In re Mastro	Bankr. W.D. Wash. 2011	Both trusts held void as to the settlor’s creditors as a matter of law
SEC v. Solow	S.D. Fla. 2010	Civil contempt; surrender to the U.S. Marshal ordered; affirmed
In re Coker	Bankr. M.D. Fla. 2000	Civil contempt; purge or surrender to the U.S. Marshal
In re Allen	3d Cir. 2014	The $6 million in the Cook Islands trust held property of the defrauded company’s estate
Chadwick v. Janecka	3d Cir. 2002	Continued civil confinement upheld on habeas; released in 2009 after more than fourteen years
United States v. Grant	S.D. Fla. 2008, 2013	Contempt denied in 2008; contempt and an injunction over distributions in 2013, vacated that December on joint motion
In re Rensin	Bankr. S.D. Fla. 2018, 2019	A $13.4 million judgment held nondischargeable; Florida law applied to the Belize trust; turnover denied
In re Portnoy	Bankr. S.D.N.Y. 1996	New York law applied over the Jersey trust’s chosen law; the debtor’s summary judgment motion denied
In re Brooks	Bankr. D. Conn. 1998	Connecticut law applied; the stock certificates the debtor transferred to his wife held property of the estate
In re Smith	Bankr. N.D. Tex. 2009	Funds distributed from the Cook Islands trust held property of the bankruptcy estate
Rush University v. Sessions	Ill. 2012	The self-settled trust held void as to creditors; the trust assets reachable for a $1.5 million pledge
In re Huber	Bankr. W.D. Wash. 2013	Transfers to the Alaska trust void under Washington law and avoided under § 548(e)
Cork v. Gun Bo	D. Ariz. 2017	Bankruptcy discharge denied; affirmed
United States v. Brennan	3d Cir. 2003	Money-laundering and bankruptcy-fraud convictions and a 110-month sentence affirmed, resting on a separate Isle of Man dummy trust
SEC v. Brennan	2d Cir. 2000	Repatriation order vacated as a violation of the automatic stay
Fannie Mae v. Heather Apartments	Minn. Ct. App. 2011	Orders over the debtor’s interest in a domestic spendthrift trust reversed
Bank of America v. Weese	D. Md. 2002	Dismissal of the involuntary petition reversed; the creditors could amend and keep the filing date
Walker v. Weese	D. Md. 2002	The trustee’s claims to reach the Cook Islands trust held equitable; no jury; remanded for trial
Riechers v. Riechers	N.Y. App. Div. 1999	$2,178,865 awarded to the wife against the husband personally, half the trust’s 1994 value
Breitenstine v. Breitenstine	Wyo. 2003	Transfers to the Bahamas trust held fraudulent; the division affirmed with the in-rem portions struck
Cook Islands High Court (Riechers)	1997	Mareva injunction restraining the settlor and trustees from dealing with trust assets
High Court of St. Kitts and Nevis (Cardinal Trust)	1999	The bankruptcy trustee’s recovery action dismissed for failure to state a claim under Nevis law
Supreme Court of Belize (Joren Trust)	2017	The trustee ordered not to comply with any turnover order other than its own

Contempt Where the Settlor Kept Control

American courts held offshore trust settlors in contempt, or held their trusts void, where a specific power stayed in the settlor’s hands: a protector’s office, a power to appoint trustees, a family structure he directed, or a one-man advisory committee.

FTC v. Affordable Media, LLC, 179 F.3d 1228 (9th Cir. 1999). Leading case. After a temporary restraining order the Andersons notified their Cook Islands trustee, which declared an event of duress, removed them as co-trustees, and refused to repatriate. The Ninth Circuit held they stayed in control because, as protectors, their written certificate was conclusive on any event of duress and they could appoint trustees. A contemnor must show “categorically and in detail” why he cannot comply, a burden “particularly high” in the asset protection trust context because compliance may be “merely a charade.”

In re Lawrence, 279 F.3d 1294 (11th Cir. 2002). The Eleventh Circuit affirmed turnover, contempt, and incarceration orders against a settlor who settled his trust two months before a $20.4 million arbitration award. Impossibility failed on three grounds: he retained the power to appoint trustees who could reinstate him as beneficiary, which was de facto control; the impossibility was self-created; and he made no good-faith reasonable efforts. Under Florida law the 1993 Duress Amendment was void as to current and future creditors, “an aid to the settlor to evade contempt while merely feigning compliance.”

SEC v. Bilzerian, 112 F. Supp. 2d 12 (D.D.C. 2000). Bilzerian had “yet to pay one penny” of 1993 disgorgement orders exceeding $62 million; a 1995 Cook Islands trust sat “at the apex” of the family-company structure holding his assets. The court held him in contempt—no showing of inability “categorically and in detail,” no reasonable efforts, self-created inability—and a January 2001 order sent him to the U.S. Marshal when he missed purge conditions. The 2024 indictment alleges the judgment exceeds $180 million with interest, about $547,000 having been recovered since the 2001 receivership-order contempt.

United States v. Grant, No. 9:00-cv-08986 (S.D. Fla. 2013). The Jersey and Bermuda trustees had paid $506,630, no less than $355,556 of it principal, into Arline Grant’s children’s accounts; the court found she had demonstrated control by having those funds deposited. It held her in contempt on March 22, 2013, enjoined her that April to request trust income quarterly and turn over every distribution, and vacated both orders that December on the parties’ joint motion.

Rigby v. Mastro (In re Mastro), 465 B.R. 576 (Bankr. W.D. Wash. 2011). A Washington real estate developer was the one-man advisory committee that controlled the protector of his Belize LCY Trust, which in turn controlled the trustee. After trial the court found him in effective control and held that trust and his Irrevocable Trust void as to his creditors. The October 2008 transfers of his Medina residence, jewelry, a Rolls Royce, and roughly $1,000,000 funding a secret account were made for no consideration while he was insolvent, and the settlors kept using every asset.

Funding a Trust After Liability Attached

Courts held settlors in contempt for moving money offshore after a verdict, a judgment, or an injunction motion was already pending, and treated the resulting inability to pay as self-created.

SEC v. Solow, 682 F. Supp. 2d 1312 (S.D. Fla. 2010), aff’d, 396 F. App’x 635 (11th Cir. 2010). Leading case. Between the January 2008 verdict and the May 2008 judgment, Solow consented to a $5.2 million mortgage on the couple’s entireties beach house. The proceeds became a certificate of deposit held by his wife’s Cook Islands trust, an in-kind transfer that left the Solows no cash. The court held his inability to pay a $3.42 million disgorgement judgment self-created and ordered his surrender to the U.S. Marshal until he purged; the Eleventh Circuit affirmed.

American Insurance Co. v. Coker (In re Coker), 251 B.R. 902 (Bankr. M.D. Fla. 2000). The Cokers placed $225,000 the court found belonged to the plaintiff insurer into a Bahamas trust, consented to a turnover judgment, then pleaded irrevocability. They produced no trust document and no credible evidence of effort, so the court held them in civil contempt: purge or surrender to the U.S. Marshal. A trust, the court observed, “even though irrevocable, may often be terminated or modified by various measures,” including “participation of beneficiaries or appointment of a new trustee.”

In re Allen, 768 F.3d 274 (3d Cir. 2014). Daniel Allen moved $6 million into a Cook Islands trust during a continuance of the preliminary-injunction hearing, and the Florida bankruptcy court twice held him in contempt. After the transfer was found fraudulent and a $6 million judgment entered, the Third Circuit reversed the district court and held that funds a debtor recovers under § 550 are property of that debtor’s own estate under § 541(a)(3).

No Fixed Limit on Civil Confinement

A contemnor who can still comply may be confined indefinitely, and confinement must end only once it stops coercing, a line drawn on habeas review in one circuit and on direct appeal in another.

Chadwick v. Janecka, 312 F.3d 597 (3d Cir. 2002). Leading case. Chadwick moved $2.5 million through a Gibraltar partnership during his divorce, refused a 1994 return order, and was jailed from 1995 until July 2009, when the confinement had lost its coercive effect; no offshore trust was involved. On habeas review under AEDPA, the Third Circuit held no clearly established Supreme Court law barred confinement while the state courts found he could comply. The ruling binds only the Third Circuit; no Supreme Court decision sets a duration limit for a contemnor able to comply.

In re Lawrence, 279 F.3d 1294 (11th Cir. 2002). The Eleventh Circuit affirmed and instructed the bankruptcy court to reconsider the incarceration at reasonable intervals, because a civil contempt sanction that has lost its coercive effect becomes punitive and the judge must then order release. Lawrence was jailed in September 2000 under a $10,000 daily fine and released roughly six years later; the trust assets were never turned over.

Present Inability to Comply

Two courts declined to compel a settlor who was then unable to comply: one after documented but failed repatriation efforts, one because the trust documents gave him no legal power over the trustee.

United States v. Grant, No. 9:00-cv-08986 (S.D. Fla. May 27, 2008). Raymond Grant created trusts in Jersey and Bermuda in 1983 and 1984; a 2003 tax judgment exceeding $36 million followed, and a December 22, 2005 order directed Arline Grant to appoint a domestic trustee or repatriate the assets. The court refused a contempt citation because she was then unable to comply despite failed efforts to repatriate the funds. That ruling rested on present inability and documented effort; in 2013 the court held she had “sufficient power to repatriate the corpus.”

In re Rensin, 600 B.R. 870 (Bankr. S.D. Fla. 2019). The court, granting and denying both sides’ summary judgment motions in part, refused turnover because Joseph Rensin had “no legal ability to control any material aspect” of the Joren Trust’s administration. An earlier decision, In re Rensin, 597 B.R. 177 (Bankr. S.D. Fla. 2018), had held the FTC’s $13,400,627.60 judgment nondischargeable, so the debt survived the bankruptcy. The $15,000 monthly annuity payments were his personal contract right, paid by the issuer under contracts the Joren trustee had bought, and were exempt under Florida’s annuity statute.

Choice of Law in Bankruptcy

Bankruptcy courts have applied the law of the debtor’s own state to offshore asset protection trusts, rather than the law the deed chose, in decisions from New York, Connecticut, Florida, and Texas.

Marine Midland Bank v. Portnoy (In re Portnoy), 201 B.R. 685 (Bankr. S.D.N.Y. 1996). Leading case. Portnoy moved virtually all his assets into a Jersey trust in August 1989, his loan guarantee about to be called. Denying his summary judgment motion, the court held that applying Jersey’s law “would offend strong New York and federal bankruptcy policies,” New York having “the weightier concern” in whether his retained rights were property he should have scheduled. Under New York law a self-settled discretionary trust leaves creditors able to reach the maximum the trustee could pay the settlor.

Sattin v. Brooks (In re Brooks), 217 B.R. 98 (Bankr. D. Conn. 1998). Granting the Chapter 11 trustee summary judgment, the court held that Connecticut law governed the spendthrift clauses of Bermuda and Jersey trusts the debtor had funded through his wife. The stock certificates he transferred to her were property of the estate, and Bermuda and Jersey, the court inferred, “were chosen because self-settled trusts were permitted in those countries.”

In re Smith, 415 B.R. 222 (Bankr. N.D. Tex. 2009). Funds distributed from a Texas debtor’s Cook Islands trust, of which he was both settlor and beneficiary, were property of the bankruptcy estate, because under Texas law a spendthrift provision does not protect trust property where the settlor is also a beneficiary. The court relied on Portnoy, Brooks, and Affordable Media.

In re Rensin, 600 B.R. 870 (Bankr. S.D. Fla. 2019). Florida law governed the Belize-situs Joren Trust because enforcing a self-settled spendthrift asset protection trust under Belize law offends Florida public policy, and § 736.0505(1)(b) let creditors attach all trust assets from inception.

In re Lawrence, 279 F.3d 1294 (11th Cir. 2002). The ruling that Florida law governed the trust despite its Mauritius choice-of-law clause, and that the trust was estate property, came in as a discovery-sanction default judgment; the Eleventh Circuit held it “not subject to collateral attack” and did not review it.

Self-Settled Trusts Void as to Creditors

Where the settlor was also a beneficiary and the trustee could hand him everything, courts held the arrangement void against his creditors without any finding of fraud.

Section 548(e) of the Bankruptcy Code reaches back ten years, against § 548(a)(1)’s two. Four elements apply: the transfer went to a self-settled trust or similar device, the debtor made it, the debtor is a beneficiary, and the debtor acted with actual intent to hinder, delay or defraud a creditor. The ten-year window is what reached the Huber transfers, made roughly 29 months before the petition.

Rush University Medical Center v. Sessions, 2012 IL 112906, 980 N.E.2d 45 (Ill. 2012). Leading case. Sessions settled a trust under Cook Islands law holding a 99% limited partnership interest and Illinois real estate, and named himself protector with absolute power over trustees and every discretionary act. The Illinois Supreme Court held that the common law rule voiding self-settled spendthrift trusts as to creditors survived the Uniform Fraudulent Transfer Act and “operates irrespective of fraud,” so the hospital could reach the trust assets. The court applied Illinois law with no choice-of-law analysis.

Rigby v. Mastro (In re Mastro), 465 B.R. 576 (Bankr. W.D. Wash. 2011). Settled through the one-man advisory committee chain, the Irrevocable Trust and the LCY Trust were “self-settled trusts and, as such, void as to Mastro’s creditors as a matter of law.”

Sattin v. Brooks (In re Brooks), 217 B.R. 98 (Bankr. D. Conn. 1998). Trusts the debtor funded through his wife were self-settled, because the Restatement requires only that the settlor supply the consideration. A self-settled spendthrift trust is invalid to the extent of the settlor’s beneficial interest, and the couple’s tax and estate planning purpose was “not relevant.”

In re Huber, 493 B.R. 798 (Bankr. W.D. Wash. 2013). A Washington developer’s Alaska trust held his residence and interests in more than twenty-five entities, with a single $10,000 Alaska certificate of deposit; the court applied Washington law under Restatement § 270 despite the Alaska designation. The transfers were void under Washington’s statute against self-settled trusts and avoided under §§ 548(e)(1) and 544(b)(1); alter-ego and § 727 relief was denied.

Concealment from the Bankruptcy Court

Debtors who hid an offshore structure from the bankruptcy court lost the discharge or faced trial on the concealment, and one drew a 110-month sentence for hiding bearer bonds placed in a separate offshore dummy trust.

Cork v. Gun Bo, LLC (In re Cork), 566 B.R. 237 (D. Ariz. 2017). Leading case. John Cork and his wife moved $3.1 million to a Swiss account held by a Cook Islands trust he controlled while his creditor’s state-court suit was pending, and the state court found the transfers fraudulent. The district court affirmed the bankruptcy judge’s post-trial denial of discharge under §§ 727(a)(2)(A), (a)(2)(B) and (a)(4)(A), which rested on those transfers, post-petition transfers, and a sixteen-month failure to disclose a $2.3 million transfer.

United States v. Brennan, 326 F.3d 176 (3d Cir. 2003). Robert Brennan handed $3,975,000 in New York State and City bearer bonds to an Isle of Man adviser who created a “dummy” trust naming someone else as settlor, and he left the bonds off his bankruptcy petition, schedules, and operating reports. The Third Circuit affirmed convictions on four money-laundering and three bankruptcy-fraud counts, seven of thirteen, and the 110-month sentence. The counts rest on the bearer bonds and the dummy trust, a different structure from the Cardinal Trust that SEC v. Brennan concerned.

Marine Midland Bank v. Portnoy (In re Portnoy), 201 B.R. 685 (Bankr. S.D.N.Y. 1996). The § 727(a)(2)(A) concealment theory and the § 727(a)(4) false-oath theory survived the debtor’s summary judgment motion, the record raising an inference of concealment and of retained benefits.

Procedural Rulings on Creditor Remedies

Procedural rulings cut both ways for creditors of offshore trust settlors: the automatic stay barred a repatriation order that enforced a money judgment, and a court could not control distributions a beneficiary had not yet received.

SEC v. Brennan, 230 F.3d 65 (2d Cir. 2000). Brennan funded the Gibraltar Cardinal Trust with $5 million in municipal securities during the SEC’s 1994 civil trial; the trustee later moved it to Mauritius and then Nevis. After a roughly $75 million judgment he filed Chapter 11, and the district court ordered him to repatriate the trust assets. The Second Circuit vacated the order on an issue of first impression: the governmental-unit exception to the automatic stay lets the SEC obtain a money judgment but not enforce it, so the repatriation order violated the stay.

Fannie Mae v. Heather Apartments Ltd. Partnership, 799 N.W.2d 638 (Minn. Ct. App. 2011). After an August 2007 Oklahoma judgment of $7,579,928.10, the debtor moved corporate interests worth roughly $8 million into a Cook Islands trust two or three months before an October 2008 deposition. The appealed orders, however, concerned his interest in a domestic spendthrift trust his father created in 1983; the court reversed, holding that a court may not dictate, before a spendthrift beneficiary receives proceeds, what he may do with them.

Bank of America, N.A. v. Weese, 277 B.R. 241 (D. Md. 2002). Banks owed more than $25 million filed a joint involuntary petition against a husband and wife who had allegedly moved millions into a Cook Islands trust; the bankruptcy court dismissed it because two debtors are not a “person” under § 303(a). The district court reversed: the defect was not jurisdictional, and the creditors could amend to drop one spouse and keep the original filing date.

Walker v. Weese, 286 B.R. 294 (D. Md. 2002). The Chapter 11 trustee sued to declare the Cook Islands trust’s assets estate property, compel turnover, set aside Elizabeth Weese’s resignation as protector, and void a co-trustee’s removal; the Weeses sought a jury trial. The court held every claim equitable, so no Seventh Amendment jury right attached, and remanded for trial.

Offshore Trusts in Divorce

Divorce courts reached the settlor spouse personally rather than the trust corpus: New York disclaimed jurisdiction over the corpus and awarded its value against the husband, and Wyoming struck the in-rem portions of a division built on the concealed wealth.

Riechers v. Riechers, 178 Misc. 2d 170, 679 N.Y.S.2d 233 (Sup. Ct. Westchester County 1998), modified, 267 A.D.2d 445, 701 N.Y.S.2d 113 (2d Dep’t 1999). Leading case. A urologist settled a Cook Islands trust in 1992; the trial court held it had no jurisdiction over the corpus but in personam jurisdiction over him. It awarded the wife half the trust’s December 1994 value, “marital property is marital property, irrespective of its location”; the Appellate Division raised the award to $2,178,865, and she entered a $3,052,853.20 judgment. The corpus was worth $5,463,154 in November 1997.

Breitenstine v. Breitenstine, 2003 WY 16, 62 P.3d 587 (Wyo. 2003). The husband secretly created a Bahamas trust after a first separation, named a long-time friend as protector, and stood to reclaim the assets in 2005. The Wyoming Supreme Court affirmed the findings that the transfers were fraudulent conveyances and the property division built on the concealed wealth, with modification: it struck the in-rem portions of the judgment. “Many badges of fraud,” the court said, “can be found in the very form of the family trust.”

Rulings of the Offshore Courts

The trusts’ own courts restrained a trustee at a creditor’s request, shielded a trustee from a foreign turnover order, and threw out a bankruptcy trustee’s recovery action, three orders with three results.

Cook Islands High Court, Riechers, order of October 23, 1997. As quoted in Riechers, 178 Misc. 2d at 173, the High Court of the Cook Islands granted the wife a Mareva injunction against Dr. Riechers and the trustees, Southpac Trust International Inc. and Louis Meltzer. The order barred them “until trial or further order” from dealing with the trust assets and from “removing or substituting any beneficiary of the Trust.”

High Court of St. Kitts and Nevis, July 28, 1999 (the Cardinal Trust). As SEC v. Brennan, 230 F.3d at 69, recites, Brennan’s bankruptcy trustee sued in the High Court of St. Kitts and Nevis, the Cardinal Trust’s situs, to recover the trust assets. On July 28, 1999, that court dismissed the action for failure to state a claim under Nevis law.

Supreme Court of Belize, August 2017 (the Joren Trust). The Supreme Court of Belize ordered the Joren trustee not to comply with any turnover order other than its own, as Rensin, 600 B.R. at 876, recites.

Walker v. Weese, 286 B.R. 294 (D. Md. 2002). Footnote 3 records that “another proceeding, to determine whether the transfers to the Trust are avoidable, is taking place in the High Court of the Cook Islands.”

A domestic asset protection trust leaves the trust assets themselves within a United States court’s reach, as In re Huber and Toni 1 Trust v. Wacker show, while the offshore cases became contempt fights because the assets stayed out of reach. The domestic decisions are collected on the domestic asset protection trust case law page, the two structures are compared on the offshore trust vs. domestic trust page, and what a creditor does after judgment is on the Cook Islands trust litigation pages.