In re Rensin: Foreign Trust Assets Beyond the Reach of US Federal Court

A 2019 Bankruptcy Court decision confirms the resilience of foreign trusts, particularly those established in Belize, when the trust grantor is made the subject of legal proceedings in the United States. The 2019 case of In re Rensin, 600 B.R. 870 (S.D. Fla. 2019), highlights the importance of appointing an independent trustee in a jurisdiction with strong asset protection trust laws.


In December 2018, the FTC obtained a judgment against Joseph Rensin for $13.4 million, asserting that Rensin had defrauded more than 50,000 retail customers of more than $14 million. Earlier, back in 2001 and before Rensin had engaged in any suspect business, Rensin had established an offshore self-settled asset protection trust for himself, naming himself as a beneficiary of the trust. Under the terms of the trust agreement, Rensin enjoyed a a testamentary power of appointment over trust assets at his death. However, Rensin had no power to demand distributions during his lifetime.

While litigating his case with the FTC, Rensin requested and received 14 separate distributions from his trust. Some of those distributions went to pay his legal fees and to fund settlements with creditors of his company. Other distributions were used to fund a new business.

In 2014, Rensin changed the jurisdiction of his trust from the Cook Islands to Belize, designating a Belize trustee to take charge of his trust. While Rensin’s creditors argued that Rensin exerted control over the trust by causing the trust to be migrated to Belize, the Bankruptcy Court did not agree on this point.

On two separate occasions in 2015, the Belize trustee used trust assets to purchase two annuities: A fixed annuity with payments that began immediately, and a deferred variable annuity which had not yet “annuitized” and for which regular payments had not started at the time of the bankruptcy litigation.

Analyzing the Trust Assets

Rensin sought to protect his trust and its rights to the annuity payments in the Bankruptcy Court, whereas the creditors sought to have the Bankruptcy Court compel Rensin to repatriate his trust assets. The Bankruptcy Court therefore had to first decide which law to apply when analyzing the trust and claims to trust assets. Because the Bankruptcy Court was situated in Florida, which has a strong state law policy against self-settled asset protection trusts, the court concluded that Florida law — and not Belize law — would be applied to evaluate the claims against Rensin’s Belize trust.

The next question for the Bankruptcy Court was whether there was any limit to the extent by which Rensin’s creditors could make a claim against assets of the Belize trust. Under the Uniform Trust Act, codified in Florida, a creditor may reach the maximum amount that may be distributed to the debtor-grantor under the terms of the trust agreement. Fla. Stat. § 736.0505(1)(b).  Because Rensin was a discretionary beneficiary capable of enjoying the entire corpus of the trust, the Bankruptcy Court determined that — under Florida law — the creditors could reach the entire corpus of the trust.

The Bankruptcy Court then turned its attention to the two types of annuities held by Rensin’s trust. Under the terms of the fixed annuity, Rensin was entitled to regular annuity payments; the trust was a beneficiary entitled to the remainder of the annuity contract at Rensin’s death. As to the variable annuity, however, while Rensin had the opportunity to become a present beneficiary with a right to periodic payments, he had not yet availed himself of such payments, and the trust retained the power to surrender the variable annuity for its account value. Because the Belize trustee had not been joined as a defendant in the litigation, the Bankruptcy Court declined to exercise jurisdiction over the variable annuity.

Florida exempts annuity payments from the reach of creditors. Florida Statutes § 222.14. Even though the Belize trust was the title owner of the annuity contract, Florida law was deemed to apply to exempt the fixed annuity payments in Rensin’s case. Therefore, his creditors could not reach the payments being being collected by Rensin on the fixed annuity. The creditors argued that another Florida statute, Florida Statutes § 222.30, permits a claim where the debtor converts non-exempt assets (such as cash) into exempt assets (such as the annuity payments). However, the Bankruptcy Court pointed out that Rensin himself did not make the conversion; he simply transferred funds to the Belize trustee, who purchased the fixed annuity. Therefore, the Bankruptcy Court concluded that Florida Statutes § 222.30 could not be applied to claw back the fixed annuity payments when Rensin himself did not effect the conversion.

No Remitting of Trust Assets

The creditors then sought to obtain a court order instructing Rensin to cause the Belize trustee to remit the trust assets to satisfy their claims. The Bankruptcy Court rejected this request on the basis that Rensin did not have any authority under the trust agreement to direct the Belize trustee to remit assets, citing Miller v. Kresser, 34 So.3d 172, 175-76 (Fla. 4th DCA 2010). 

Rensin further argued that the Court cannot enter a declaratory judgment against the Belize trustee where the trustee has not been joined as a party to the litigation. The creditors pointed to the seminal case of In re Lawrence, 251 B.R. 630 (S.D. Fla. 2000), aff’d, 279 F.3d 1294 (11th Cir. 2002), in which the court found that the debtor had actual legal power over the trust: The settlor in Lawrence had the right to replace the trustee at will. However, the Bankruptcy Court observed that Lawrence illustrates “the outside edge of a court’s ability to order a trust beneficiary to cause property to be delivered from an otherwise fully discretionary spendthrift trust.” Rensin’s situation was distinguishable because he had no such rights over the trust.

Failure to Join the Belize Trustee Fatal to Creditor Action

The Bankruptcy Court cited the general rule under Florida law that a trustee is an indispensable party in a lawsuit such as was brought by Rensin’s creditors, citing Trueman Fertilizer Co. v. Allison,81 So.2d 734, 738 (Fla. 1955) (en banc). The court concluded that the creditors could not obtain any relief regarding assets of the Rensin’s trust without joining the Belize trustee to the case. Further, the court declined to assert personal jurisdiction over the Belize trustee. First, the court noted the limits under the U.S. Constitution concerning personal jurisdiction, finding that it was highly doubtful that the Belize trustee had sufficient contacts with the United States so as to be subject to personal jurisdiction. Second, the Bankruptcy Court was not moved by an order of the Supreme Court of Belize, which had directed the trustee to only follow orders of the Belize Supreme Court. The Bankruptcy Court pointed out the possibility that the Supreme Court of Belize might order the trustee to abide by an order of the U.S. Bankruptcy Court. While this is not possible under the Belize Trusts Act, no mention was made of this point by the creditors or the Bankruptcy Court.

Next Steps

The Bankruptcy Court concluded by offering the creditors the opportunity to try and join the Belize trustee to the U.S. court proceedings. Whether the creditors attempt this remains to be seen, but Belize trust law makes clear that any such ruling would be unenforceable in Belize. Specifically, paragraph (6) of Section 7 of the Belize Trusts Act provides that a Belize court shall not recognize the validity of any claim against trust property pursuant to the law of another jurisdiction or the order of a court of another jurisdiction in respect to claims of creditors in an insolvency. Paragraph (7) of Section 7 further disallows application of fraudulent transfer law against a Belize trust. While Rensin’s creditors could certainly try and join the Belize trustee as a party to their lawsuit in U.S. court, it is highly improbable that the creditors will achieve any recovery against the trustee.