When it comes to estate planning tools, more people are drawn towards domestic asset protection trusts nowadays. You worked hard for the assets that you have, so it makes sense that you would want to protect them from lawsuits or creditors. In the past, you may have set up an offshore account or a foreign asset protection trust. Now, you don’t necessarily have to do that. Here is what you need to know about establishing a DAPT.
What Is a Domestic Asset Protection Trust?
A domestic asset protection trust is a self-settled trust with an independent trustee. The person who creates the trust is the trustor or settlor. When it comes to a DAPT, you can still control your asset and protect it from lawsuits. While there are rules and regulations regarding how you can use a DAPT, they tend to be a great tool for those who need to protect their assets. The trustee will have an annual fee and you can dictate how the assets are held, invested or sold.
Where Can You Obtain an Asset Protection Trust?
Every state has different rules on DAPTs. To create a trust, the trustee has to be from the state where it will be established or the corporate fiduciary has to be in that state. When one state gets jurisdiction over a different DAPT, then their laws would apply. For example, if your trust owns property in a non-DAPT state, then the non-DAPT state could still seize the property. The trust would not apply because the state has jurisdiction.
You may be wondering how many states allow for DAPTs. There are currently 17 states in the U.S. that allow DAPTS.
These states are:
- Alaska
- Delaware
- Hawaii
- Michigan
- Mississippi
- Missouri
- Nevada
- New Hampshire
- Ohio
- Oklahoma
- Rhode Island
- South Dakota
- Tennessee
- Utah
- Virginia
- West Virginia
- Wyoming
If you live in a state that does not allow DAPTs, there is still an option available to you. If you have property in a DAPT state, for instance, but do not live in one, you could still establish the DAPT in the state with the property. What matters is that your property is protected.
In general, DAPTs can be well-designed and can protect your assets. It is up to you to decide how to protect your assets and whether a DAPT is right for you. To find out more about domestic asset protection trusts, consult with an estate planning lawyer as soon as possible.