What is a Domestic Asset Protection Trust?

A domestic asset protection trust, also know as DAPT, is a type of trust that protects an estate’s assets from lawsuits, creditors and other legal action. These types of trusts were first established by Alaska in 1996 and have spread to 17 other states since. The trust maker’s creditors cannot access assets contained in this type of trust.  As the trust creator, you transfer ownership of selected assets into the irrevocable trust. By having the assets owned by a trust, you are protecting yourself from creditors; however, you may also lose the ability to manage them yourself. A beneficiary is named to benefit from the assets.

DAPTs are irrevocable, meaning the grantor can’t make changes to the trust after it’s created; however the grantor can also be the beneficiary. DAPTs can be comprised of cash, securities, real estate, business assets and other assets. They can protect you from legal action, a settlement or even in a divorce.

How Does a Hybrid DAPT Work? Depending on your assets and state you live can determine what type of trust you are able to use. Different states have different laws and a trustee must reside in the state where the DAPT is established and the trust must be administered in that state. It can get tricky and confusing. In order to protect yourself and your work, a lawyer is a great resource to help you get the protection you need. They can answer your questions and guide you to what type of trust will be more beneficial to you. You shouldn’t work hard to loose everything due to a stupid mistake or confusion. Everything you worked hard for should be protected and accounted for.

Still have questions? Do your research online, talk to friends or family and reach out to a lawyer for a consultation. If you don’t ask, you can’t get help!