The Supreme Court of Alaska issued a ruling on March 2, 2018, denying Alaska courts the exclusive jurisdiction purportedly granted by the Alaska asset protection statute. This holding is consistent with a ruling by the Delaware Court of Chancery in 2014. Based on these cases, it appears that one state’s asset protection statute cannot, by attempting to reserve exclusive jurisdiction for its own state’s courts, limit the jurisdiction of courts in other states.
The Alaska case, Toni 1 Trust by its Trustee, Donald Tangwall v. Wacker, 2018 WL 1125033 (2018), arose out of a dispute in Montana. The Tangwalls filed suit against the Wackers in Montana state court, and the Wackers counterclaimed against the Tangwalls. The Tangwalls conveyed two parcels of property to an Alaska asset protection trust prior to the entry of the last of several judgments against them. The Wackers brought fraudulent transfer claims against the Tangwalls in Montana state court and won judgments in their favor on these claims.
The Tangwall family filed suit in Alaska state court, arguing that the Alaska asset protection statute grants Alaska courts exclusive jurisdiction over fraudulent transfer claims against an Alaska asset protection trust. The Alaska Superior Court dismissed the claim, and the Alaska Supreme Court agreed, ruling that the Alaska asset protection statute cannot deny the Montana court jurisdiction with respect to a dispute over which it would otherwise have proper jurisdiction.
In 2014, the Court of Chancery of Delaware issued a similar ruling. In IMO Daniel Kloiber Dynasty Trust u/a/d December 20, 2002, 98 A.3d 924 (2014), that court ruled that the Delaware asset protection statute cannot limit the jurisdiction of other states’ courts over disputes involving Delaware asset protection trusts.
Many domestic asset protection statutes attempt to restrict jurisdiction over trusts created pursuant to those statutes. These cases represent a trend toward recognizing that other states may properly have jurisdiction over issues involving domestic asset protection trusts. However, they do not impact the substantive provisions of the asset protection statutes. As a result, domestic asset protection planning is still viable.