Battley v. Mortensen (In re Mortensen) (Bankr. D. Alaska 2011)

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

How it is commonly cited

Three claims, all overstated: that the court found the settlor solvent and voided the trust anyway; that § 548(e) makes every DAPT transfer avoidable for ten years; and that the decision “struck down” the Alaska DAPT statute.

What the court actually held

All four elements of § 548(e) were met: a transfer to a self-settled trust, by the debtor, of which the debtor is a beneficiary, within ten years, made with actual intent to hinder, delay or defraud.

On Alaska’s safe harbor, AS 34.40.110(b)(1), which says a settlor’s expressed intent to protect assets from future creditors “is not evidence of an intent to defraud”, the court held a state evidentiary rule does not bind the federal § 548(e) inquiry. But it added the sentence the critics leave out: “However, it was not the only evidence upon which I based my decision.”

Actual intent was found from badges of fraud: substantially all of his property went into the trust; his credit-card debt was between roughly $49,700 and $85,000 at the time; his income in the preceding years ranged from about $3,200 to $32,800; his claimed “loan” had no promissory note and no repayment; he used the property afterward without regularly paying rent; and he “was not a credible witness.”

On the “solvent settlor” claim

The court declined to disturb its solvency finding, but only because it credited $100,000 his mother had paid him. In the same opinion it found he was “still ‘under water’” and that “his debts were already unmanageable when the property was transferred.” Describing this as a solvent settlor losing a properly funded trust is not a fair reading.

What actually happened

Judgment avoiding the debtor’s transfer of the Seldovia real property to the trust. A timing detail worth noting: Mortensen created the trust in early 2005, and § 548(e) was enacted later that year as part of BAPCPA. The court observed that his “timing was unfortunate.”

The planning lesson

The federal ten-year window swamps every state seasoning period. Nevada’s two years and Ohio’s eighteen months are real defenses against a state-court creditor and irrelevant to a bankruptcy trustee applying § 548(e). Any client who might file bankruptcy inside a decade should plan on that basis. Equally: § 548(e) is not strict liability. The trustee still has to prove actual intent, and a transfer made when the client was genuinely solvent, genuinely unthreatened, and documented as such is a materially different case from this one.

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.