Kloiber case recap:
Does a Delaware Dynasty Trust still work?
Yes, but only if it’s a fully discretionary trust. Do not ever draft a Delaware trust with health, education, maintenance and support distribution language since that is susceptible to the Garretson v. Garretson/Kloiber v. Kloiber problem given that a “support trust” must rely on a spendthrift provision to protect its assets and Delaware law doesn’t treat the divorcing spouse as a creditor.
You can avoid this problem altogether by using Nevada, South Dakota or Alaska law, each of which does not have statutory case law subjecting a support trust to divorcing spouses. But Delaware law works just fine if the scrivener drafts the trust as a discretionary trust.
