In JPMorgan Chase Bank, N.A. v. Winget, the United States Court of Appeals for the Sixth Circuit addressed whether Larry Winget (Winget) could revoke the Larry J. Winget Living Trust (Trust) to make the assets unreachable to JPMorgan Chase (Chase). Winget appealed after the district court held that Winget’s revocation of the Trust was a constructively fraudulent transfer under the Michigan Uniform Fraudulent Transfer Act (MUFTA), Winget was unjustly enriched by distributions made from the LLCs in the Trust, and imposition of a constructive trust over the distributions was proper. The appellate court upheld the district court’s rulings except for certain amounts of the distributions that were determined to unjustly enrich Winget.


For 15 years, Chase has been trying to collect a nearly $500 million debt that Winget and the Trust guaranteed. Winget’s holding company, Venture, obtained a $450 million loan from Chase to buy a European company. That company eventually became insolvent, triggering default and acceleration clauses in the loan agreement. Chase required new collateral to prevent acceleration of the debt, so Winget agreed to guarantee the loan both in his individual capacity and as trustee of the Trust. The guarantee agreement limited Winget’s personal liability to $50 million but did not limit the Trust’s liability.

In 2003, Venture filed for bankruptcy thus triggering a default under the parties’ guaranty agreement. The debt became due, and Chase sued both Winget and Trust to recover. Winget paid $50 million and was released from liability in his individual capacity. The Trust has remained liable for the rest of the debt, which now exceeds $750 million.

Winget was the grantor, trustee, and sole beneficiary of the Trust, and the trust instrument gave him “the right at any time . . . to revoke or amend th[e] Trust” by his act alone. In 2014, nearly six years after Chase sued, Winget revoked the Trust and removed all the trust assets without the bank’s knowledge. In an earlier case between the same parties, the district court held that the Trust owed Chase approximately $425 million. The parties proceeded to actively litigate whether the trust assets could be used to satisfy the debt since the fact that the Trust no longer had any assets remained unbeknownst to anyone but Winget.

Winget finally revealed his revocation when he sought a declaratory judgement that would establish that, given the revocation, Chase has no further recourse against him or the assets that were once held in the Trust. Chase counterclaimed, arguing that the revocation was a constructively fraudulent transfer under MUFTA. The district court agreed with Chase and granted its motion for judgement on the pleadings.

Winget rescinded his revocation, retitling to the Trust all the property that it held at the time of the revocation. After Winget reinstated the Trust, the district court enjoined Winget from further interfering with the trust property. However, various LLCs that were held in the Trust at the time of revocation had distributed hundreds of millions of dollars in cash and promissory notes to Winget before he rescinded the revocation. When Chase discovered what Winget had done, it sued Winget for unjust enrichment.

Chase moved for a summary judgement and sought a constructive trust over the distributions. The district court granted Chase’s motion, concluded that Winget held the distributions in a constructive trust, and dismissed Winget’s action for a declaratory judgement. After the district court entered a final judgement on the fraudulent transfer claim, the unjust enrichment claim, and declaratory judgment, Winget appealed all three rulings.


A prerequisite to a fraudulent transfer claim is that a transfer in fact occurred. MUFTA defines a “transfer” as every mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with an asset or an interest in an asset. Thus, when a creditor has access to the assets, and a debtor takes action to fraudulently put those assets beyond the creditors reach, a creditor has a basis for relief.

Winget attempted to argue that there was no transfer because a debtor can only fraudulently transfer assets that the debtor actually owns. Despite referring to several cases in which the court analyzed a trust’s ability to hold property, his argument ultimately failed because ownership was irrelevant. MUFTA’s concept of a transfer does not turn on who owns the assets but instead on how a creditor’s access to the assets are affected. Before the revocation, the Trust had assets that Chase, in its capacity as a creditor, could take to fulfill the Trust’s debt. After the revocation, those assets were placed beyond Chase’s reach, and therefore, the court stated the revocation caused the Trust to effectively part with its assets. Thus, the court held that the revocation of the Trust was considered a transfer.

A transfer of assets is constructively fraudulent if: (1) the creditor’s claim arose before the transfer, (2) the debtor was insolvent at the time of transfer or became insolvent as a result of the transfer, and (3) the debtor did not receive a reasonably equivalent value in exchange for the transfer.

MUFTA defines a “claim” as the right to payment, whether or not the right is reduced to a judgment. Chase’s claim arose more than ten years before Winget’s 2014 revocation because the guaranty arising from the loan agreement became enforceable after Venture began bankruptcy proceedings in 2003. Thus, Chase’s claim arose before the transfer.

Under MUFTA, a debtor is insolvent if the sum of the debtor’s debts is greater than the sum of the debtor’s assets. When Winget revoked the Trust in its entirety, the Trust’s assets were zero. Since at that time it still owed money to Chase, the Trust was insolvent upon Winget’s revocation. Thus, the court found that the Trust was insolvent as a result of the transfer.

By its nature, a revocable trust can never receive reasonably equivalent value when it is revoked since it ceases to exist afterward. Furthermore, reasonably equivalent value is determined from the standpoint of creditors. From Chase’s perspective, the revocation depleted the Trust, and in exchange, the Trust received nothing from which it could pay the outstanding debt. Thus, the court found that the Trust did not receive reasonably equivalent value in exchange for the transfer. Because Chase’s claim arose before the revocation, the Trust was insolvent as a result of the revocation, and the Trust did not receive reasonably equivalent value in exchange for the revocation, the court held that the revocation was a constructively fraudulent transfer.

To maintain an unjust enrichment claim under Michigan law, the court observed that a plaintiff must show (1) the defendant received a benefit from the plaintiff that (2) resulted in an inequity to the plaintiff. The court concluded that as a result of Winget’s revocation, Winget received the benefit of distributions from the LLCs membership interests. After Winget’s revocation, Chase could no longer receive these distributions that it would have received with charging orders, and thus, the court found that Winget’s revocation resulted in inequity to Chase. The court held that Winget was unjustly enriched by his revocation; however, he proceeded to dispute his liability for portions of the distributions.

Winget denied that he was unjustly enriched by the promissory notes since the promissory notes reflected debt that the LLCs already owed to him and such debt predated the amended final judgment. The timing of the debt that the promissory notes represented determined if Winget was unjustly enriched by them since Chase’s right to the LLCs’ distributions arose once the amended final judgment was issued. The promissory notes contained integration clauses that prohibited the inclusion of anything beyond the language of the promissory notes themselves. The language provided that the promissory notes were effective as of June 29, 2017 (nearly two years after the amended final judgement was issued) and did not mention an earlier agreement. The court found that there was no evidence that the notes reflected a debt that existed before the amended final judgement. Therefore, the court held that Chase was entitled to all distributions when the promissory notes were executed, and Winget was unjustly enriched by them.

Winget also argued that the Trust was not party to the loans or the promissory notes between himself and the LLCs, and therefore, the Trust had no right to them. His argument failed because of factual inconsistencies underlying his arguments. He claimed that the promissory notes were issued to reflect debt already owed to him because he was the LLCs’ member entitled to distributions that he loaned back to fund the LLCs’ operations. However, Winget was not a member of the LLCs until he revoked the Trust. Before Winget’s revocation, the Trust would have been the LLCs’ member and the party who made loans to the LLCs. Even though Winget revoked the Trust before the notes were memorialized, the court found that the revocation was fraudulent and thus ineffective. Therefore, the court held that the Trust was the party to whom the LLCs should have issued the promissory notes, and Chase would have been entitled to them under the charging orders. Again, Winget’s argument against Chase’s entitlement to the promissory notes failed, and accordingly, the court found that Winget was unjustly enriched for these amounts.

Winget next argued that he was not unjustly enriched by the portion of distributions that he used to pay the LLCs’ federal income taxes (about $79 million). The LLCs elected to be “pass-through” entities for federal income tax purposes. “Pass-through” entity members are required to report their allocable share of the LLCs’ income on their personal tax returns and are taxed at their individual income tax rates. The Trust was the member of the LLCs before the Trust was revoked. Accordingly, whoever was liable for the taxes on the LLCs’ income was liable for the Trust’s taxes. The court stated the grantor of a revocable trust typically remains liable for the income tax of the trust only so long as his power to revoke is “exercisable.” Winget was the grantor of the Trust, but his power to revoke was not exercisable because his ability to revoke was limited by the Trust’s obligation to repay Chase. The court noted that the determination that Winget’s revocation was a constructively fraudulent transfer emphasized that Winget’s right to revoke was not exercisable. Because Winget’s right to revoke was not exercisable, Winget was not personally liable for the Trust’s taxes. Therefore, the court concluded it was appropriate for the Trust’s taxes to be paid out of the Trust’s assets, and such amounts paid did not unjustly enrich Winget.

Under Michigan law, a constructive trust may be imposed when necessary to do equity or to prevent unjust enrichment. Constructive trusts are imposed when the property at issue was obtained through fraud, misrepresentation, concealment, undue influence, or another circumstance that makes it unconscionable for the defendant to retain and enjoy the property. The court found that Winget obtained the promissory notes and cash distributions only because of his fraudulent revocation. Furthermore, Winget represented to the court that he returned the Trust property to the exact condition it was in immediately before the Trust was revoked. Yet he kept the cash distributions and promissory notes for himself. The court concluded that such behavior was concealment. Since fraudulent and concealing acts are reasons to impose a constructive trust, the court held that imposing one for the promissory notes and cash distributions obtained by Winget was proper.


Winget countered with a variety of arguments, but the appellate court ultimately concluded that his revocation met all three elements of a fraudulent transfer, and Chase was entitled to judgment on the pleadings. Although the appellate court upheld that Winget was unjustly enriched by the promissory notes and most of the cash distributions, it determined that Winget was not unjustly enriched by the amount of cash distributions used to pay the LLCs’ income taxes, and held that the district court should have excluded the $79 million from Chase’s relief. Finally, the appellate court agreed that the district court did not abuse its discretion by imposing a constructive trust for the promissory notes and cash distributions obtained by Winget.

This article first appeared in the December 2022 Edition of the Estate Planning Journal.