Merry Is Merry Again.

Date : July 10, 2008

An update on the saga of Merry Morris.

You may remember her from previous newsletters. She is the mom who sold custody of her children to her husband as part of a divorce settlement. The clause, which in my mind should be invalid as it is against public policy, supposedly gave her husband, Leland Morris, custody of her two children in exchange for an extra $1.5 million. There was one catch: If she challenged any part of the divorce settlement, she would have to pay that money back.

Merry put her proceeds into a Cook Islands Asset Protection Trust then proceeded to violate the agreement by challenging the divorce settlement. Circuit Judge Jeffrey Colbath ordered her to repay the $1.5 million and cover Leland Morris' attorney fees, a total of approximately $2.5 million. She refused. The Judge then held her in contempt and a warrant for her arrest was issued.
Merry then did a Wesley Snipes and fled, apparently going on the lam in California. In January, Merry was put in the slammer for violating the judge’s order. He, like the rest of the world including yours truly, did not believe that Merry could not get the funds.
Earlier this month, Merry was released from jail when her trustee agreed to put $1 million in a trust fund for her estranged teenage children. Her ex waived the additional $1.5 million he was owed, provided she does not violate the terms of the settlement agreement that severely limits her contact with her children.

So, the bottom line is that Merry is now free and only $1 million rather than $2.5 million poorer.

Was this a triumph of another ill-conceived Asset Protection Plan or a failure?

Of course, Merry’s trustee will claim that she had no power to order the payment of money to her children and that the payment to a trust for the children was just an intelligent exercise of the Trustee’s discretion.

RUBBISH.

He paid the money to get his client out of the slammer.

This case and the subsequent payment clearly demonstrate that Merry had power and that the Judge was correct to hold her in contempt for failing to make the ordered payment to her husband.

This is Asset Protection gone bad. Merry set up an Asset Protection Plan and abused it. This type of behavior gets you thrown in jail…deservedly. If she didn’t have two children so the trustee had a way to make a payment to legitimate beneficiaries and if her ex hadn’t been reasonable enough to waive the additional $1.5 million he is owed, she would still be in jail… perhaps for many years.

This case raises many more issues than it closes. It is clear that if you decide to sell custody of your children, assuming that is even possible, you had better abide by the agreement. Certainly hiding behind a hastily and ill-conceived Asset Protection Trust will not be bought by the judge or anybody else with an ounce of sense.

Please, when you do your planning realize that there are no quick fixes. Do your planning when the financial seas are calm, and don’t plan on using your plan as an insurance policy to allow you to breach your contracts.

I suspect her kids are better off.

Have a healthy and protected week.

Rob Lambert

ABOUT THIS EDITOR:

Rob Lambert, Founder and former law professor is considered to be foremost expert on tax compliant asset protection structures. A contributing editor to Lexus Nexus debtor creditors series of law books Rob's passion is implement client wealth plans that stand the test of time and hold up under duress.

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