Wilderness No More: Alaska as the New 'Offshore' Trust Jurisdiction

Abstract

Alaska has made two sweeping reforms to its trust laws in an effort to position itself as the most sophisticated "offshore" trust jurisdiction for wealthy U.S. citizens and non-U.S. persons holding substantial U.S. property or stock. This article describes Alaska's departure from the venerated (if misinterpreted) rule against perpetuities and illustrates how the new Alaska law effectively allows taxpayers to make their own decision about the level at which a trust will be taxed. This article also details Alaska's approach to self-settled spendthrift trusts. In certain circumstances, an existing or future creditor will be prevented from satisfying a claim out of a trust even to the extent of any interest retained by the grantor in the trust. The article concludes by comparing Alaska self-settled trusts to those in other offshore jurisdictions and suggests that Alaska may be the jurisdiction of choice for some taxpayers.