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Preservation trusts can protect family assets from creditors, Oklahoma City attorney says

Attorney Rollin Nash, of Oklahoma City, explains family preservation trusts.
by Paula Burkes Modified: October 2, 2013 at 7:00 pm •  Published: October 1, 2013
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Q&A with Rollin Nash Jr.

Preservation trusts shield

Person's assets from creditors

Q: Do living trusts protect the assets owned by the living trust from the creditors of the person or persons who create the trust?

A: No. Typical living trusts established for estate planning purposes don't protect the person (“grantor”) who created the trust.

Q: Are there any types of trusts that will protect a person's assets from creditors?

A: Yes. In 2004, the Oklahoma Legislature approved the “Family Wealth Preservation Trust Act,” which is still a relatively unknown law that permits establishing a “preservation trust.” Its primary purpose is to protect from the grantor's creditors assets of up to $1 million in total value placed in the preservation trust, plus growth earned thereon.

Q: It is common for the grantor of a living trust to also be the trustee and the primary beneficiary of the living trust. Is the grantor of a preservation trust also eligible to be a beneficiary and the trustee?

A: No. The grantor of a preservation trust isn't eligible to be a beneficiary. However, eligible beneficiaries include, but are not limited to, the grantor's spouse, children and grandchildren. A husband and wife each can establish their own preservation trust, designating their spouse to be the beneficiary, and effectively protect up to $2 million of assets, plus growth thereon. All preservation trusts must have a trustee that's either an Oklahoma-based bank, savings association or credit union that maintains a trust department, or a trust company that's either chartered in Oklahoma or has a national charter and maintains a physical place of business in Oklahoma.

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by Paula Burkes
Reporter
A 1981 journalism graduate of Oklahoma State University, Paula Burkes has more than 30 years experience writing and editing award-winning material for newspapers and healthcare, educational and telecommunications institutions in Tulsa, Oklahoma...
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