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Requirements of the Alaska and Delaware Trusts

April 13, 2006

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By statute, both the Alaska and Delaware asset protection trusts require that the trust:

• must be irrevocable
• must have an independent trustee
• must not provide for mandatory distributions of income or principal (i.e., such distributions are subject to the discretion of the trustee)
• must have a spendthrift clause

These conditions are the standard requirements that must be met for any self-settled spendthrift trust. In addition, however, the statutes require that:

• the trustee must be an individual who is a resident of Alaska or Delaware, or a bank and trust company licensed in that state
• some or all of the trust assets must be located in the state (a bank account will suffice, so that the other assets can be invested by the trustee elsewhere)
• the trust documents and administration must be in the state
• certain creditors can reach the assets

With respect to this last requirement, significant differences exist between the Alaska and Delaware statutes. In short, the Alaska statute offers significantly better protection against the claims of creditors.

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