Post Judgment Collections against Epstein trust with $578 million
This week there was an article in Bloomberg (https://www.bloomberg.com/news/articles/2019-08-19/epstein-created-trust-with-577-million-days-before-his-suicide?utm_campaign=news&utm_medium=bd&utm_source=applenews ) discussing how Jeffrey Epstein transferred all his assets into a trust. The amount he transferred into the allegedly $578,000,000. (see chart below for asset list)
So how does this affect the recovery of women that he allegedly assaulted?
Is this money protected from their future judgments?
Can funding an irrevocable trust shield assets from judgments?
First, this discussion is going to be based on North Carolina law. The trust in the Epstein case supposedly involves trusts established in the Virgin Islands.
General Rule: Irrevocable Trusts properly and timely created can protect assets inside the trust from judgments against the trust beneficiaries. There are requirements to do this, but any decent trust drafter can create these protections which are known as Spendthrift Clauses.
Exception to General Rule: Fraudulent Conveyance: If you create a trust knowing that you are doing so to avoid known and likely judgments, you are making a fraudulent conveyance.
Definition of Fraudulent Conveyance or Fraudulent Transfer: “a transfer of property, the goal of which is to defraud a creditor, or hinder or delay the creditor, or to put such property beyond the reach of the creditor. A conveyance made with the intent to avoid a debt or duty incumbent on the transferor.”
The Fraudulent Transfer is codified in N.C.G.S. Chapter §39-23.1 et seq.
Here are some of the factors to determine whether a debtor has made a fraudulent conveyance (per NCGS §39-23.4):
(1) The transfer or obligation was to an insider;
(2) The debtor retained possession or control of the property transferred after the transfer;
(3) The transfer or obligation was disclosed or concealed;
(4) Before the transfer was made or obligation was incurred, the debtor had been sued or threatened with suit;
(5) The transfer was of substantially all the debtor's assets;
(6) The debtor absconded;
(7) The debtor removed or concealed assets;
(8) The value of the consideration received by the debtor was reasonably equivalent to the value of the asset transferred or the amount of the obligation incurred;
(9) The debtor was insolvent or became insolvent shortly after the transfer was made or the obligation was incurred;
(10) The transfer occurred shortly before or shortly after a substantial debt was incurred;
(11) The debtor transferred the essential assets of the business to a lienor that transferred the assets to an insider of the debtor;
(12) The debtor made the transfer or incurred the obligation without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor reasonably should have believed that the debtor would incur debts beyond the debtor's ability to pay as they became due; and
(13) The debtor transferred the assets in the course of legitimate estate or tax planning.
So applying these factors to Mr. Epstein’s actions, the above sections appear to be in play (4), (5), (9), (10), and (12).
If this case were being collected in North Carolina, signs point to this being a fraudulent transfer. Thus, judgment creditors would have a high likelihood of recovering against Mr. Epstein’s trust.
Kirk Sanders has even recovered judgments from irrevocable trusts on behalf of judgment creditors. Past success is not an indicator of success in future cases.
Call 336-768-1515 if you have a judment debtor who has assets.