Domestic asset protection trusts have recently begun to enter the parlance of estate planning advisors. They are often brought up in discussions with high net worth clients. They are trusts which are meant to protect assets from creditors and are seen as being more palatable than their offshore counterparts. They have similar structures and purposes, but fewer drawbacks. However, there are still a few things for people to be aware of before making the leap.
Due to the many uncertainties surrounding DAPT's, often times creditors will be forced to spend significant amounts of money to litigate in territory which is unchartered. This means litigation will be expensive and risky with an uncertain outcome. Not everyone can afford a qualified asset protection attorney , or knows how to fight a well formulated asset protection strategy . This often provides ample deterrence and this is exactly why you're purchasing the trust. It's to send a signal to creditors that they are going to have to fight for their money and maybe even spend more than they'll ever recover.
This gives you the advantage. Alaska was the first state which allowed such trusts, anti-creditor to be specific. Since then the number of other states including Nevada Delaware and Wyoming have a enacted identical legislation. This legislation allows people to form a trust for their own benefit to protect against creditors. This is something no other states allow. These trusts create a shortened. Where in creditors may challenge the transfer and makes a much more difficult for them to prove the transfer was fraudulent. The structures are easy to set up but must meet certain criteria to be valid.
A DA PT must be:
-Have A Trustee
-Trustee Must be a resident in the trust’s jurisdiction
-Contain a spendthrift clause