In re Lawrence, 279 F.3d 1294 (11th Cir. 2002)

Reviewed by Elizabeth A. Tresp, JD, LL.M., trust & probate litigator · Updated August 2026

How it is commonly cited

“Lawrence set up an offshore trust and went to jail, so offshore trusts do not work.” A second, subtler misuse: “the bankruptcy court held that a self-settled offshore trust destroys your discharge.”

What the courts actually held

The 1998 discharge denial was a discovery sanction. The bankruptcy court entered default judgment on eighteen counts under 11 U.S.C. §§ 727(a)(2)(A), (a)(3), (a)(4)(A), (a)(4)(D) and (a)(5) as a Rule 37 sanction, finding Lawrence’s interrogatory answers “evasive and incomplete” and that he had been “shockingly less than candid.” It was not a merits ruling that offshore trusts void a discharge.

The Eleventh Circuit’s real rule is self-created impossibility. The panel first held the retained-control finding was not clearly erroneous, Lawrence kept powers to remove and appoint trustees and to add or exclude beneficiaries, and his testimony was found not credible. Then it gave an independent, alternative ground:

The court rejected the argument that creating the trust before litigation began made a difference, because it found he “created this Trust in an obvious attempt to shelter his funds from an expected adverse arbitration award.” Foreseeability, not filing, is the line.

The half nobody quotes

The panel also held that “when civil contempt sanctions lose their coercive effect, they become punitive and violate the contemnor’s due process rights,” and that “although incarceration for civil contempt may continue indefinitely, it cannot last forever.” It directed the bankruptcy court to reconsider the incarceration at reasonable intervals, and said that if the judge concludes Lawrence “will steadfastly refuse” to comply, “the judge will be obligated to release Lawrence.”

What actually happened

The contempt order was entered September 8, 1999; incarceration was ordered October 5, 1999, with a $10,000 per day fine. He remained incarcerated as of January 2002. Figures circulating for total time served and for his release date are not established by these opinions and we do not repeat them.

The planning lesson

Two, and they compound. First, retained powers to remove trustees and to add or exclude beneficiaries are control, and control defeats impossibility. Second, and more important: the trust was funded in the face of an expected adverse award. There is no version of asset protection that works when the claim is already visible on the horizon. Timing is the whole game.

Why this matters for your plan

Reading the cases is not an academic exercise. Every one of these decisions turned on something a planner controls: when the structure was created, how much control the settlor kept, whether the governing-law choice was backed by real contacts, and whether the client told the truth on the record. We build to the way these disputes are actually litigated, because Elizabeth litigates them. To discuss how your situation maps onto this body of law, call (858) 755-6672.