I need some clarification on the above case. A few weeks ago, the Palm Beach Post reported on a case, Leland Morris vs Merry Morris. The short version of the case is that as part of a divorce agreement, Mr. Morris gave Mrs. Morris an extra $1.5M if she promised not to contest any portion of the divorce agreement. She then took the money and put it in a Cook Island FAPT, and then contested a portion of the divorce settlement (the visitation rights). Her ex husband then asked the court to make her give back the $1.5M, plus court costs. Apparently, her Cook Island FAPT trustee decided not to give back the money. Now she is on the run trying to stay out of jail. I can't verify any of the above information (I got it all from reading the news paper). Does anybody know what the real story is?

There doesn't appear to be much information out there specifically related to the offshore trust. I found several sites and articles discussing the case. Not surprisingly, some are very sympathetic to Ms. Morris and note that the court is penalizing her by ordering her to pay over the money (without further noting that she had the money at some point - they make it sound like the court is just ordering her to pay $1.5 million for spite). You can find more background information here http://victimsoflaw.net/MerryMorris_Florida.htm and here http://www.floridasupremecourt.org/decisions/2006/sc05-1166.pdf and here http://www.ca11.uscourts.gov/unpub/ops/200613809.pdf, but none of these really address the trust.

The Palm Beach Post article (http://www.palmbeachpost.com/pbcsouth/content/local_news/epaper/2006/11/13/m1a_morris_1113.html) had more information than any other site. More interesting to me were all of the comments and posts that visitors to that article posted; there was a lot of insight in them.

The following is an excerpt from the Palm Beach Post article...
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Contrary to the claims of Leland, his attorney and more than a dozen judges, Merry insists she didn't move the money offshore to keep it out of her husband's reach.

She describes the trust she created in the Cook Islands as a kind of benevolent uncle who pays her bills and sends her money when she needs it. "I'm not real good with money and I'm not real smart with investments," she said.

Once the irrevocable trust was created, she claims, she had no control over the cash. She can't force the trustee to pay the $1.8 million claim because it doesn't recognize foreign judgments, she says.

A letter from SouthPac Trust Ltd. to Merry's attorney says as much: "While we appreciate your client is within and bound by the orders of the above court, the trust is not."

Colbath didn't buy it.

He was the first of many judges to take such a view. He held her in contempt of court for failing to repay the money and issued a warrant for her arrest.
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Since she really could not get the money out of the trust, how could the judge hold her in comtempt??

That is what is known as the "doctrine of disbelief" (with credit to Jay Adkisson, who I believe coined the phrase). The judge doesn't believe that a rational person would put their own money off limits. The judge believes that while she (and the trustee) are telling him that it is impossible for the trustee to repatriate the money at her direction, if she is sincere enough, asks enough times, begs, whatever, that the trustee really will repatriate the money. If, therefore, she theoretically has the ability to direct the trustee to repatriate the money and refuses to do it, she is in contempt.

I don't think SouthPac will give her the money back under any circumstance. Not giving it to her is pretty much the linchpin of their business.

This is where some would point out how well foreign asset protection trusts work, as the court order exists and the money is still safe. Others (nod again to Jay Adkisson) would say this points out what a problem they can be, as she is faced with going to jail. I won't express an opinion, other than to say that to the extent the money is still in the Cook Islands, it worked (even if she does end up in jail).

To me, the most important question, is what, if anything, could she have done to convince the judge that she can't get the money? Are debtors prisnons going to be coming back in vogue?? Would she have been better off if she got the money in cash and had a video tape of her burning the money $100 at a time? Do the courts have any obligation to determine if she is telling the truth and she really can't get the money??

Lawrence is going on his SEVENTH year in prison, and he still claims that he has absolutely no power to repatriate the trust assets -- and the judge still doesn't believe it.

Totally predictable result here. The husband is probably laughing his tail off at how her stunt backfired and saying, "There IS justice in the world."

And I think the judge is wrong in that case. Contempt is only valid as long as it carries a coercive effect. I think it pretty clear that Lawrence does not care that he is in jail and that the contempt order is not going to coerce him to do anything.

If Ms. Morris ends up in jail I am sure that many will point to it as an example of foreign trusts not working. As I said before, hers will still be working to the extent that the assets are still protected. Additionally, I think this is a case where the person placing the assets offshore had it in mind that she was going to do something that would clearly result in an order to return the funds (per the contract) to Mr. Morris. It's obvious that she moved the assets offshore in the hopes that she would be able to save them from the breach of the contract. Not the most sympathetic facts.

I hope that Douglas is right, and the judge is wrong. But the argument that she put the money in a FAPT in order to be unable to repatriate the funds could be made no matter what the circumstances are. Why else would anybody include an "anti duress" clause in the trust documents?

Can we assume that her timing (putting the money into a FAPT after the $1.5M bonus agreement not to contest anything) was her fatal flaw?

There was a recent case where after 7.5 years in jail, the debtor finally decided to disclose the existence of assets and the creditor was paid 100 cents on the dollar, so Lawrence is still a few months shy of the record. The irony is that he may not actually have the ability to access the trust assets, but the courts (all the way to the SCOTUS) couldn't seem to care less.

Jay, in Lawrence, didn't he voluntarily declare bankruptcy, and if so, didn't that put him at the whim of the bankruptcy courts? Are there a lot of cases like Lawrence??