To amend title 11 of the United States Code to limit the exemption for asset protection trusts.

March 14, 2005

Mr. EMANUEL (for himself, Mr. DELAHUNT, Mr. WATT, and Mr. CONYERS) introduced the following bill; which was referred to the Committee on the Judiciary

To amend title 11 of the United States Code to limit the exemption for asset protection trusts.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Billionaire's Loophole Elimination Act'.

SEC. 2. ASSET PROTECTION TRUSTS.

Section 548 of title 11, United States Code, is amended by adding at the end the following:

`(e)(1) The trustee may avoid a transfer of an interest of the debtor in property made by an individual debtor within 10 years before the date of the filing of the petition to an asset protection trust if the amount of the transfer or the aggregate amount of all transfers to the asset protection trust within such 10-year period exceeds $125,000, to the extent that the debtor's beneficial interest in the trust does not become property of the estate by reason of section 541(c)(2).

`(2) An asset protection trust is a trust settled by the debtor, in which the debtor has a direct or indirect beneficial interest or under which the trustee may distribute property to or for the benefit of the debtor, and as to which a restriction on the voluntary or involuntary transfer of the debtor's beneficial interest in the trust is enforceable under applicable nonbankruptcy law. For purposes of this subsection, the following are not asset protection trusts:

`(A) Retirement funds to the extent that those funds are in a fund or account that is exempt from taxation under section 401, 403, 408, 408A, 414, 457, or 501(a) of the Internal Revenue Code of 1986.

`(B) Charitable trusts.

`(C) Qualified trusts under section 529 of the Internal Revenue Code of 1986, and other educational trusts, funds, or accounts.'.

END