Extremes To Which People Go In Order To Protect Assets

February 22, 2012

This blog generally contains serious reviews of various asset protection topics, including recent developments in the laws of Michigan and other states that are applicable to asset protection and strategies that debtors might consider to shield assets from their creditors. However, every once in awhile I will come upon an unusual, and in this case, a deeply disturbing story, which has little practical effect but which is very telling about the lengths people will go in order to protect their assets. Enter John Goodman, founder of the International Polo Club of Palm Beach.

The underpinnings of this story are quite tragic. According to the Palm Beach Post, Mr. Goodman was driving with a blood alcohol level two times above the legal limit when tested following an accident that resulted in the death of 23 year old Scott Patrick Wilson. Goodman allegedly had run a stop sign and crashed into Scott's car. Goodman faces a wrongful death action as well as a criminal case against him for vehicular homicide, DUI manslaughter and leaving the scene of a crime. Under sentencing guidelines he could face up to 30 years in prison.

Goodman had previously established a trust for his 2 minor children. Presumably, under the law governing fraudulent transfers, the funding of this trust should be immune from his potential judgment creditors, including the parents of Scott Wilson (as plaintiffs in a wrongful death claim) and the prison system which will ultimately attempt to collect from him for his incarceration expenses. Assuming Goodman established an irrevocable trust for his children he would typically have no access to the funds. However, Goodman figured out a way to gain access to the trust property. The Palm Beach Post reported that after the accident Goodman proceeded to adopt his longtime partner, 42 year old Heather Laruso Hutchins. The apparent goal of adopting his girlfriend was to make her eligible to participate in the trust he had created for his children thus giving him access to at least Heather's one third share of the trust property.

Of course a judgment creditor, or even Goodman's children themselves, may choose to attack the adoption as one that falls outside the intent and purpose of the statute. But the more interesting aspect of this very sad story is the lengths to which persons will go to salvage assets.