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By The Wyoming LLC Attorney Team

May 28, 2022

Domestic Asset Protection Trust States

Asset Protection Trust


Set up a Domestic Asset Protection Trust (DAPT) in states that allow it to safeguard your wealth from creditors, lawsuits, and ensure future generations' financial health. DAPTs offer anonymity and legal estate planning benefits. Currently, 17 states permit DAPT formation, including Alaska, Delaware, and Wyoming. If you live in a non-DAPT state, you can still benefit from asset protection.

Savvy financial planning often involves passing on wealth to your heirs. What is the most effective way to meet your financial goal? The answer is setting up a Domestic Asset Protection Trust (DAPT) in a state that allows the formation of one.

If you want to protect your assets from creditors, as well as judgments issued for divorce and a civil case, establishing a DAPT represents the most effective strategy to accomplish your financial planning objective. Only a few states allow the creation of a DAPT, which means you might have to search for another state to enjoy asset protection benefits.

What Is a DAPT?

A DAPT is a type of Self-Settled Trust, which means it is an Irrevocable Trust that permits you to be named one of the beneficiaries. “Irrevocable” means neither you nor anyone else can change the terms of the Trust. The assets you decide to protect will remain protected throughout the lifespan of a DAPT.

A DAPT must possess the following characteristics:

  • Controlled by a trustee
  • Must have one state resident appointed trustee
  • Must conduct all administration tasks in the same state where you established the Trust
  • Two different people must fill the roles of trustee and settlor

Benefits of Setting Up a DAPT

Before you decide whether to set up a DAPT, take a little time to understand the benefits offered by this type of Trust.

Perfect Legal Strategy for Estate Planning

Establish a DAPT to protect your assets for future generations. Not only will a DAPT prevent creditors and lawsuit settlements from accessing your assets, but it also implements legal measures that ensure your heirs' financial health. For example, you can stipulate how a free-spending heir can spend the money tied up in a DAPT.


Establishing a DAPT does much more than provide you with asset protection. It also protects your privacy and the privacy of your heirs. A DAPT prevents public scrutiny from invading your privacy. Regardless of why you want privacy, setting up a DAPT is the most effective strategy to remain anonymous.

Domestic Asset Protection Trust States

At first, most states were reluctant to allow the formation of DAPTs. Public pressure combined with a few tweaks in DAPT laws has prompted a growing number of states to approve the formation of DAPTs. As of August 2021, 17 states allow the formation of a DAPT.

  • Alaska
  • Delaware
  • Hawaii
  • Michigan
  • Mississippi
  • Missouri
  • Nevada
  • New Hampshire
  • Ohio
  • Oklahoma
  • Rhode Island
  • South Dakota
  • Tennessee
  • Utah
  • Virginia
  • West Virginia
  • Wyoming

What If I Live in a Non-DAPT State?

The right question is, “What if my assets are in a non-DAPT state?” A DAPT protects your assets; it does not protect you. You will have a much easier time starting a DAPT in a state that allows the formation of DAPTs. For example, you could protect a cabin that you use as a second home in Wyoming.

Some legal experts argue that you cannot set up a DAPT unless you live in a state that allows it. Other legal experts maintain that it's possible to create a DAPT even if you live in a state that does not allow the formation of one. The answer lies somewhere in the middle, which is why you need to contact an experienced attorney for advice on your situation.

One thing is certain: If you set up a DAPT with at least one asset located in a non-DAPT state, it will be difficult for creditors and legal settlements to gain access to your asset. Many creditors and the administrators of lawsuit settlements do not want to spend the time or the money to track down assets.

Bottom Line

The benefits of setting up a DAPT extend beyond legal strategy for estate planning. It offers a perfect solution to pass on wealth to future generations while implementing measures to control how heirs access and utilize the assets. Additionally, the anonymity provided by a DAPT shields your privacy and that of your heirs, making it an effective strategy to remain discreet in financial matters.