Nationally known estate planning and asset protection attorney Steve Oshins (www.oshins.com) is the creator of the Domestic Asset Protection Trust State Rankings Chart (which can be accessed at http://www.oshins.com/images/DAPT_Rankings.pdf) that he publishes each year and updates as the various states modify their laws. He recently did a mid-year update to reflect some significant changes made by some of the ranked states. We asked him to do an interview for The Nevada Trust Reporter to give us some details about the chart and the recent updates. The interview questions and answers are below.
Why did you decide to create the Domestic Asset Protection Trust State Rankings Chart a few years ago?
People are fascinated with rankings. You see this in the sports world where fans seem obsessed at times with where their team is ranked. I wanted to bring that same excitement to the asset protection industry.
Rankings are subjective to a great extent, so I wanted to put together a concise chart which shows why the states are ranked a certain way. When I published and marketed the initial rankings, I was surprised how much discussion it generated, so I have tried my best to follow each state’s changes through the years to be as accurate as possible so the rankings chart would be respected as more than just a marketing piece.
For years, there has been a lot of competition among the leading asset protection jurisdictions and I have seen marketing pieces that are so inaccurate that I felt that the industry needed a chart that could fit on one page and could allow the planner and client to make an informed decision.
How do you respond to people who ask you whether the chart is subjective even though you are a Nevada attorney?
Ironically, I rarely get that question, probably because people just look at the chart and can make up their own mind since the chart has all of the material jurisdictional differences in chart format. The few times I have been asked whether it’s truly subjective, I like to joke that they should just “look at the chart — the chart doesn’t lie!” Nevada is so far ahead of all of the other states in the amount of protection it provides from creditors that this question hasn’t been a problem. Having the shortest statute of limitations period of all the states and being the only state without any exception creditors who can pierce through the trust, Nevada is the choice when the client wants the greatest protection. I don’t think that’s disputable.
Each year, I solicit national input on different listservs to make sure the chart is fair and balanced. Thousands of practitioners are able to provide comments that I will consider. I think the fact that I solicit these comments is a big reason why the chart has become so respected in the industry.
It was also very helpful that Forbes magazine published an article on Domestic Asset Protection Trusts in 2010 and made Nevada the only state with an A+ letter grade. The Forbes article has really helped solidify the rankings in my chart. As you know, I include the Forbes rankings in the chart since it helps show consistency. The Forbes article can be read at http://www.forbes.com/forbes/2010/0809/international-investing-asset-protection-trust-offshore-hide-money.html.
How do you currently rank the states?
The states are currently ranked as follows: 1. Nevada; 2. Alaska; 3. South Dakota; 4. Delaware; 5. Tennessee; 6(tie) Rhode Island and New Hampshire; 8. Hawaii; 9. Wyoming; 10. Utah; 11. Missouri; 12. Oklahoma; 13. Colorado. The details are in the chart at http://www.oshins.com/images/DAPT_Rankings.pdf.
What is the methodology you use in the rankings?
I put the most weight on the exception creditors that can pierce through that state’s asset protection trusts. The chart puts a special focus on whether a divorcing spouse can pierce through it and also whether a preexisting tort creditor can pierce through it. I also focus on the state’s statute of limitations period which is the waiting period before the assets are protected. The shorter the period, the better the state is ranked.
Why did you decide to do mid-year rankings this year, and what did you change?
I decided to do the mid-year rankings because I felt that South Dakota and Hawaii had both made substantial changes, effective July 1, 2011, and that the chart would be misleading if I waited until the next fiscal year to make the changes. I didn’t think it was fair to those two states.
South Dakota is a Tier 1 state, so it’s important to keep the information as current as possible. Specifically, South Dakota removed its preexisting tort creditor exception statute, thus separating it significantly from Delaware. I now believe that South Dakota is very close to Alaska and nearly moved South Dakota up to be tied with Alaska, but chose not to do so given a few items that I feel still make Alaska the #2 jurisdiction after Nevada.
Hawaii made the greatest leap in the mid-year rankings, but is still not close to being a Tier 1 state. I moved Hawaii from #12 to #8 which is a significant move in the rankings given the amount of competition among the states. Specifically, Hawaii got rid of its 1% entry fee that was scaring away potential business. It also got rid of some limitations in the types of assets that can be protected by a Hawaii Asset Protection Trust and also the percentage of the net worth that can be protected.
Although I didn’t move Delaware from its #4 ranking, I changed the Comments section in the chart to now say that Delaware is a Tier 2 state. Previously, I had referred to it as a bottom of Tier 1 state. This was a tough decision and I’m sure was unpopular with many people, but in my quest to provide the most balanced state rankings chart, I had to disregard the amount of marketing done and focus solely on the amount of protection provided by each state’s laws. Delaware gets a lot of business because of the marketing and the number of banks and trust companies with Delaware state charters, but it’s just too far behind the Big Three States – Nevada, Alaska and South Dakota, so I had to make what I believe to be a very unpopular decision. Interestingly, not one person has questioned me on my subjectivity in making this change.
* Steve Oshins was interviewed by Neil Schoenblum, Senior Trust Officer at Provident Trust Group. Mr. Schoenblum specializes in asset protection and trust law, particularly the advantages offered by Nevada. He can be contacted at (888) 855-9856 or by e-mailing firstname.lastname@example.org.