In re Portnoy, 201 B.R. 685 (Bankr. S.D.N.Y. 1996)

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

What the court actually held

The court also held it did not need jurisdiction over the trust itself: “what is sought is not the enforcement of some right under the trust, but, rather, a determination of whether by concealing his interest in that trust the debtor thereby forfeited his right to a discharge.” Genuine issues of material fact precluded summary judgment on the § 727(a)(2)(A) concealment claim, the § 727(a)(4)(A) false-oath claim, and the § 523(a)(6) claim.

The facts that drove it

Portnoy transferred virtually all his assets into an irrevocable Jersey trust at a time when he knew his personal guarantee of his company’s debt was about to be called. During the motion itself, he successfully directed the trustee to pay from trust assets for a Jersey-law opinion about his U.S. discharge. The court noticed: “If Portnoy is only a mere beneficiary as he so emphatically contends, why are the trust and other beneficiaries blindly footing the costs of issues arising in his personal United States bankruptcy case?”

How it is commonly miscited

• Described as a final judgment denying discharge. It is a denial of the debtor’s summary judgment motion.
• Cited for “offshore trusts are void.” The holding is about choice of law, not validity.
• Cited without the timing. This is a transfer made in the face of a known, imminent claim. It says nothing about pre-claim planning.

The planning lesson

Two. The governing-law clause is not self-executing, it is a claim a court will test, and Huber shows how. And behaviour after funding matters as much as the document: directing the trustee, or letting the trust pay your personal legal bills, is evidence of the control you claim not to have.

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.