Toni 1 Trust v. Wacker: Alaska DAPT Fails to Block Out-of-State Judgments

Will an Alaska Domestic Asset Protection Trust (DAPT) prevent out-of-state or federal courts from reaching assets transferred to it through fraudulent-transfer litigation?

In Toni 1 Trust v. Wacker, 413 P.3d 1199 (Alaska 2018), Donald Tangwall created the “Toni 1 Trust” under Alaska law and transferred Montana real property into it during ongoing litigation with creditors in Montana. The trust contained the typical self-settled spendthrift provisions authorized under Alaska Statute 34.40.110, which also states that Alaska courts have exclusive jurisdiction over fraudulent-transfer actions involving Alaska self-settled trusts. The Wackers—creditors holding Montana judgments against Tangwall—brought a fraudulent-transfer action in Montana to reach the trust assets. Tangwall argued that Alaska law barred Montana or federal courts from exercising jurisdiction and that the judgments were therefore void. He then sued in Alaska, asking the Alaska courts to declare the Montana and federal judgments unenforceable for lack of jurisdiction. The Alaska Superior Court dismissed the case, and Tangwall appealed to the Alaska Supreme Court.

The Alaska Supreme Court AFFIRMED the dismissal and squarely rejected the idea that Alaska’s DAPT statute could prevent other states or federal courts from hearing claims involving Alaska trusts.

The Court held:

1. AS 34.40.110(k)—which purported to grant exclusive jurisdiction to Alaska courts—cannot divest other states or federal courts of jurisdiction.
2. Relying on Tennessee Coal v. George, the Court ruled that one state cannot unilaterally restrict another’s court system by statute.
3. Federal bankruptcy jurisdiction likewise cannot be displaced by a state’s DAPT law; federal courts retain full authority to adjudicate fraudulent-transfer claims under federal law.
4. Therefore, the Montana and federal judgments against the Toni 1 Trust were valid and enforceable.

From an asset-protection perspective, this case is a severe blow to the supposed “exclusive-jurisdiction” safety net claimed by Alaska and other DAPT states. The Alaska Supreme Court itself—the very court expected to defend its home statute—acknowledged that Alaska’s DAPT law cannot stop other states or federal courts from applying their own fraudulent-transfer laws or exercising jurisdiction.
In practical terms, once a creditor obtains a judgment elsewhere, an Alaska DAPT offers no special shield. Courts outside Alaska (and federal bankruptcy courts) are free to disregard the Alaska statute and proceed against the trust property.

A DAPT cannot wall off assets from nationwide enforcement. No state legislature can legislate immunity from the U.S. Constitution’s Full Faith and Credit Clause or federal supremacy.

The Toni 1 Trust case proves that “exclusive jurisdiction” language in DAPT statutes is not strong enough once another court asserts jurisdiction. This case reinforces that domestic asset-protection structures fail when confronted with hostile courts or federal proceedings.

Bottom line: If true protection is desired, use a Foreign Asset Protection Trust (FAPT) or a Bridge Trust®, which automatically transitions offshore under stress—keeping assets beyond the reach of domestic courts that refuse to respect DAPT statutes.