Anti-Duress Provision

Typical Duress Clause example

1. Freedom from Outside Interference

The Settlor directs that this Settlement be administered consistent with its terms, free of judicial intervention and without order, approval, or other action of any court. To the extent any Person is granted the power hereunder to compel any act on the part of the Trustee, or has the authority to render advice to the Trustee, or to otherwise approve or compel any action or exercise any power which affects or will affect this Settlement, the Settlor, Trustee and/or Protector, is directed: (i) to accept or recognize only instructions or advice, or the effects of any approval or compelled action or the exercise of any power, which are given by or are the result of Persons acting of their own free will and not under compulsion of any legal process or like authority; and (ii) to ignore any advice or any directive, order, or like decree, or the results or effects thereof, of any court, administrative body or any tribunal whatsoever or of past Trustees or of any past or present Protector hereunder, or of any other Person, where (a) such has been instigated by directive, order, or like decree of any court, administrative body or other tribunal, or where (b) the Person attempting to compel the act, or attempting to exercise the authority to render advice, or otherwise attempting to compel any action or exercise any power which affects or will affect this Settlement, is not a Person either appointed or so authorized or the like pursuant to the terms and conditions of this Settlement.

Anti Duress Explained - Video Transcript

Today, we're going to take a look at a typical duress clause. This is a clause that’s found in almost every single asset protection trust you'll ever see. Whether the trust is kinetic or just a typical trust. It's often called freedom from outside interference. It seems to irritate judges less.

This is the clause that you need to be the most careful about. Why? Because this is the clause that pisses off the judges and before I even explain it in more detail, I’m just going to ask you to take a moment, let me read you the key parts.

The settlor, that’s normally my client, directs that the settlement be administered consistent with it's terms free of judicial intervention and without order, approval or other action of any court to the extent any person is granted the power hereunder to compel any act on the part of the trustee or has the authority to render advice to the trustee or to otherwise approve or compel any action or exercise any power which affects or will affect the settlement, the settlor, trustee and/or protector is directed. He’s directed to do two things.

What powers are a settlor given through a anti duress provision?

First, one little (i), to accept or recognize only instructions or advice or the effects of any approval or compelled action or the exercise of any power which are given by or are the result of persons acting on their own free will and not under compulsion of any legal process or like authority.

So, little (i), one little (i) says hey guys, we want you all the settlor, trustee and protector to ignore anything that isn't given from the free will as a result of a human being doing their job as expected and as retained, hired or contractually obligated.

So, basically only things on a person’s free will that are appropriate and two, two little (ii), to ignore any advice or any directive order or like decree or the results or effects thereof of any court, administrative body or any tribunal whatsoever or of past trustees or of any past or present protector hereunder or of any other person where one, see that little (i), such has been instigated by directive, order or like decree of any court, administrative body or other tribunal or where – and I’m going to move it up and center it a little bit, the person attempting to compel the act or attempting to exercise the authority to render advice or otherwise attempting to compel any action or exercise any power which affects or will affect the settlement is not a person either appointed or so authorized or the like pursuant to the terms and conditions of this settlement.

In plain English, that means that you are supposed to ignore any advice that is the result of judicial or governmental compulsion. Now, these are really powerful words. These are fighting words. You'll soon understand that this is like putting a chip on your shoulder and daring somebody to knock it off. This is the reason why.

You should make sure that you don’t get overaggressive when you do protection. You need to verify that you have enough money both before and after you protect yourself to meet your reasonably anticipated debts. That doesn’t mean if you're sued you can't go ahead and plan.

But if you're suit is worth say $100,000, leave some money unprotected. Leave some assets unprotected. Leave an old gas station. Leave some polluted land. Leave some money in another country but unprotected. You don’t have to put, you know, $100 bill on the table of your creditor’s lawyer but you do or you always should make sure you're not pig because pigs do get eaten.

Go watch the video called “pigs get eaten”, something like that but it's really true. This clause is usually important. It is honored by lawyers. It's honored by protectors. In the rest of the world it's considered normal practice to have lawyers function as protectors. Asset protection in this way is considered normal, ethical and responsible behavior by anybody with two nickels to rub together and I urge you to read this and put it away.

We'll be getting back to it more when we talk about going to red alert status, what to do when you're attacked and how this actually works in practice. Once we've gone through the structure and you have the entire structure in your head and we go to word games, this clause will make great sense to you. We're on to our next clause commonly known as a Cuba clause.

Posted in Typical provisions in asset protection trusts explained.