Court Limits a 'Self-Settling Trust or Similar Device' to an Express Trust

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In In re Porco Inc., the Bankruptcy Court for the Southern District of Illinois in a March 30 opinion addressed an issue of apparent first impression: whether a resulting or constructive trust is a "self-settling trust or similar device" subject to the trustee's avoidance power under § 548(e). In holding that the "similar device" clause is limited to express trusts, the court significantly limited the scope of a trustee's power to avoid and recover transfers by or on behalf of a debtor to a related third party.

Background of the Doctrine

Section 548(e) is composed of four elements that must all be met in order for the trustee to avoid transfers by the debtor made within 10 years before the debtor's bankruptcy petition is filed...

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Published In: Bankruptcy Updates, Civil Procedure Updates, General Business Updates, Commercial Real Estate Updates, Wills, Trusts, & Estate Planning Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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