Monthly Update for Administration of Trusts and Asset Management

June, 2025



 

ASSET PROECTION TRUST  

Last month we mentioned we’d discuss how a grantor can protect his or her assets by the use of a unique trust and the pros and cons of such trust.  There are many different strategies attorneys use for asset protection but because of limited space in this article, we are discussing two of those strategies.
 
OKLAHOMA FAMILY WEALTH PRESERVATION TRUST

The Oklahoma Family Wealth Preservation Trust was effective as of June 9, 2004.  It is very unique in that it is the only asset protection trust in the United States that is revocable..

The permissible “qualified beneficiaries” can be:

1. The lineal ancestors and lineal descendants of the grantor or the grantor’s spouse, including adopted lineal descendants if they were under the age of eighteen (18) at the time of the adoption.

2. The spouse of the grantor.

3. A non-profit organization qualified under the provisions of the Internal Revenue Code of 1986, 26 U.S.C., Section 501(c)(3).

4. A trust settled for the sole benefit of one or more qualified beneficiaries.

The trustees have to be:

1. An Oklahoma-based bank.

2. An Oklahoma-based trust company.

There is no cap on the value of how much can be put into the trust. However, the grantor is not eligible to be a beneficiary.

OKLAHOMA QUALIFIED DISPOSITIONS TRUST

This option is brand new and was just effective as of November 1, 2024. It is an irrevocable trust. 

The Act does not define beneficiaries but does not specifically exclude the transferor or grantor from being a beneficiary. The Act allows the transferor to have the use of the principal and income; thus, implies the transferor may be the beneficiary. It is reasonable to assume other typical familial beneficiaries are acceptable as well. There is a $10,000,000 cap on the funding of this trust.

The trustees can be:

1. A “qualified person" which is defined as an individual Oklahoma permanent resident, who is not grantor, not related to the grantor, or “subordinate” to the grantor as defined by Section 672(c) of the Internal Revenue Code of 1986, 26 U.S.C., Section 672(c).

2. An Oklahoma-based trust company.

3. An Oklahoma-based bank.

This option is brand new and was just effective as of November 1, 2024. It is an irrevocable trust.

The Act does not define beneficiaries but does not specifically exclude the transferor or grantor from being a beneficiary. The Act allows the transferor to have the use of the principal and income; thus, implies the transferor may be the beneficiary. It is reasonable to assume other typical familial beneficiaries are acceptable as well. There is a $10,000,000 cap on the funding of this trust.

CONCERNS

A concern with the new 2024 Oklahoma Qualified Dispositions Trust is the cap on the amount that can be protected. But the primary concern is the trust must be irrevocable. It is common for grantors to want to change the beneficiary(s) as the years pass and circumstances change, and this trust does not permit amendments or revocation of the trust.

While there are no reported or published appellate decisions, some attorneys have expressed concerns the 2004 Wealth Preservation Trust may be unconstitutional because of the unique feature of the trust being revocable.

CONCLUSION

Both of these trusts are commonly used as asset protection estate planning tools.  They are generally considered by higher net worth individuals or individuals in high- risk professions such as the medical field and those whose professions involve inherent risks.

HERE TO HELP

While we are not attorneys, we are here to help answer any questions these topics might have generated but, as always, please consult your attorney if you have an interest in adding one of these strategies to your estate plan.

WealthTrust Oklahoma is the Oklahoma Trust representative office of National Advisors Trust Company. We are independent and hold a federal charter.  In addition to trust administration services, we offer investment management services through our firm, WTO Advisors.

Alyssa Kaiser, CTFA, has over 31 years of experience in the trust, investment, and banking industries and is President of WealthTrust Oklahoma and WTO Advisors.  Alyssa may be contacted at: (405) 241-1600, or by email at Alyssa@WealthTrustOk.com.