May 22, 2014. Before listing the preeminent states that allow Domestic Asset Protection Trusts, it would do some good to explain what one is. Known by the acronym DAPT, Domestic Asset Protection Trusts are implemented by people to protect themselves from future creditors. It is well known that a trust made by someone for another beneficiary can be established so that beneficiary’s creditors cannot get to the assets of the trust. The assets become essentially creditor proof, with some minor exceptions here and there. Historically, the same was not true when a person made a trust for themselves. A person could not create a trust, make themselves the beneficiary of the trust, and expect the assets to be protected from creditors.
Alaska changed that when it introduced the DAPT, which has since been adopted in some form or another by approximately 14 states. The DAPT statutes allow a grantor to create a trust for themselves. After creating the trust, there is a waiting period which is usually no more than two to four years, after which, the Trust is protected from the grantor’s creditors. The result is a trust that can make payments to support the grantor without exposing the assets to others. This unique arrangement has made the DAPT a favorite tool for the high-net worth and those that have greater exposure to high-dollar figure liability, such as surgeons.
To answer the question, where can you get a DAPT, there are a number of places, though South Dakota and Nevada are consistently regarded among the best states in which to establish one. For more comparisons, see this chart ranking the DAPT states as compiled by Steve Oshins HERE.
For more information about domestic asset protection trusts or estate planning, contact the Goosmann Trust Law Counsel at info@goosmannlaw.com or call 712-226-4000.
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