planning legislation designed to help Oklahoman’s preserve their assets in what is named the Oklahoma Family Preservation Trust. The statute is codified in the Oklahoma Statutes Title 31 sec. 10.
The act allows Oklahoman’s to create a Trust with its assets not to exceed 1 Million dollars in value. The Trust is either revocable or irrevocable at the trustors discretion and is a great method of protecting the grantor’s assets from creditors. The primary distinction between the Oklahoma Family Preservation Trust and many other States is that the Trust can be revocable unlike many other jurisdictions which require the trust to be set up as a spend thrift trust or irrevocable trust.
To set up the Trust you must be an individual and not a corporation or other limited partnership.The designated beneficiary of the Trust must be a Bank or Trust Company that is chartered in Oklahoma and is found within the State.The Grantor need not be an Oklahoma resident but only one Trust can be established per person. If the persons are married than they will each be entitled to have their own Trust. In the event the Wealth Trust is revocable and the Grantor revokes the trust the assets will revert back to him. This has important implications for Tax purposes and for transfers made while the Grantor was insolvent. In the second case where the Grantor is insolvent when the Trust is made the insolvency may violate rules found in the Bankruptcy Code regarding preferential transfers as voidable transfers.
The property of the Family Trust must be defined as Oklahoma assets and among other assets include bank accounts, Oklahoma Corporation or Partnership, stocks, bonds and other like assets located in Oklahoma. Their is some debate as to whether an out of state vacation home or retirement account will qualify as an Oklahoma assets but the flexibly of the Trust strongly indicates that they are in fact Oklahoma assets.
Asset Protection is the major benefit of the Trust. The Trust states that both the property of the Trust and any income derived from the Trust are exempt from creditor claims so long as the value of said assets in the Trust do not exceed 1 Million dollars. Once again even if the Trust is revocable no creditor through the courts can force the Trustor to revoke the Trust but again be careful of preferential transfers.