Domestic Asset Protection Trust Attorney
A Domestic Asset Protection Trust is a particular class of trust that is established for the sole purpose of protecting assets from creditors and/or civil judgements. It is structured basically the same as other trusts, in that a grantor establishes and funds the trust with assets for certain named beneficiaries, and names trustee to manage the trust assets, all under the charter of the trust.
As any asset protection attorney can explain, as with all types of trusts, the assets placed within the trust cannot be taxed, used in the calculation of the grantor’s estate or harmed by creditors or lawsuits. The assets are not owned by the grantor any longer; they are considered to be “owned” by the trust itself. The trustee is the only person with control over the assets, and his or her duties and limits are spelled out in the trust.
The difference in a domestic asset protection trust arises in that it is a “self-settled” trust, meaning that the grantor can also name him or herself as a beneficiary of the trust. The trustee still exercises control over the distribution of the trust’s assets, but the grantor who funded the trust also enjoys the benefits of the assets as a beneficiary.
All trusts are governed by state laws, and several states allow domestic asset protection trusts, and have even passed laws that encourage grantors to establish domestic asset protection trusts in their state to encourage investment. This type of trust, known as a DAPT, is a popular form of asset protection trust that allows a grantor to have his or her cake and eat it, too.