Wealth Preservation Act Recently Passed by Legislature

October 6, 2004 -- In May of this year, the Oklahoma Legislature passed the Family Wealth Preservation Trust Act (the "Act") which provides that an individual grantor may transfer up to $1,000,000 in assets to an Oklahoma Preservation Trust and have those assets protected from the grantor's future creditors. The Act is relevant to the economic welfare of the State because it is intended to encourage the investment of capital in Oklahoma since the Preservation Trust can only contain "Oklahoma Assets". Alaska, Nevada, Rhode Island, Delaware, Missouri and Utah have similar laws.

Many people may have not been made aware of the Act since it was issued during the time of Oklahoma tort reform which received much more notice in the press. "The benefits of the Act to individuals, families, and the State provide new and interesting planning opportunities", stated Mark H. Price, business law and estate planning professional with Andrews Davis law firm. "While one should keep in mind that this is new legislation and there are many unanswered questions, it still signifies that the legislature is committed to economic investment in our State and is providing additional estate planning options to our citizens. Subsequent legislative action and court decisions will provide answers to the issues raised; however, we are working with clients now to help realize and maximize the benefits of the Act".

The Oklahoma law is important in that it allows an individual to create a trust with his own assets and have those assets protected from his future creditors. In the past, an individual grantor could transfer assets to another beneficiary, but the trust assets were only protected from the beneficiary's future creditors.

The grantor of an Oklahoma Preservation Trust need not be an Oklahoma resident. However, each individual may form only one Preservation Trust. Unlike the other states, which require an irrevocable trust, the Preservation Trust may be either irrevocable or revocable. The Act requires that the trustee of the Preservation Trust must be at all times either an Oklahoma bank or Oklahoma trust company. In addition, the trust must contain only "Oklahoma Assets", be paid to "Qualified Beneficiaries", and recite in its terms that the trust income is subject to Oklahoma income taxes.

"Oklahoma Assets" are defined in the Act as: (1) stocks, bonds or debentures issued by an "Oklahoma-based company" (Oklahoma corporation, limited liability company, limited partnership, or limited liability partnership); (2) bonds or other obligations issued by the state, county, municipality or other governmental agency; (3) bank accounts or certificates of deposit in an Oklahoma bank; and (4) Oklahoma real estate.

"Qualified Beneficiaries" are the spouse, natural children and grandchildren, descendants of a deceased natural child or grandchild, and public charities. Adopted children are included within the definition, if adopted prior to age 18, but oddly enough, adopted grandchildren are not.

"We believe that a Preservation Trust may become an essential part of estate planning, particularly when one is dealing with Oklahoma residents", said Lynn Holloman, estate planning attorney with Andrews Davis.

About Andrews Davis

Based in Oklahoma City, Andrews Davis is a law firm with over six decades experience serving local, national, and international clients. With excellence and integrity, Andrews Davis is a solution-oriented business partner for their clients. The firm prides itself on delivering timely and relevant legal advice with the highest levels of professionalism and accountability.

Contact Andrews Davis today at (405) 272-9241 for a complete understanding of the Family Wealth Preservation Act and its impact on you or your business. Mark H. Price (mhprice@andrewsdavis.com) and Lynn O. Holloman (loholloman@ andrewsdavis.com) are attorneys with Andrews Davis. For more general information about Andrews Davis, please visit the web site at www.andrewsdavis.com.

Legal Notice

As an important note, this press release is not intended to be legal advice, and should not be relied upon as legal advice. Please contact your legal counsel for legal opinions.