Trusts and trust administration are important tools, and are available for people looking to protect their assets. Recently, with the passage of a new trust law in Hawaii, attention has focused on the use of what are called Domestic Asset Protection Trusts (DAPT). The laws in Nevada and a handful of other states also provide for the creation of DAPT’s to be used as a beneficial financial planning tools, referred to as self-settled trusts.
The purpose of a DAPT is to protect the assets of the individual who created the trust from any potential creditors. In many DAPT’s, the trust creator is also the trust beneficiary. Thus, trust administration may involve defending claims against the trust by creditors of the beneficiary.
How successful are these trusts? If you live in Nevada and seek to create a trust for protection of assets, the trust may work very well. If the assets sought to be protected are in another state that does not recognize DAPT’s, the chances of that state enforcing an out-of-state DAPT are less likely.
DAPT’s are a relatively new phenomenon, following on the heels of Foreign Asset Protection Trusts (FAPT). FAPT’s were a popular trust administration tool until a series of cases, beginning in 1999, sentencing debtors to jail for not bringing their assets back into the U.S. to benefit existing creditors.
Nevertheless, DAPT’s are an important planning tool. One school of thought is that if you live in a state that provides for DAPT’s, creation of such a trust to protect assets from creditors seems a valuable opportunity. Trusts and trust administration are complicated areas of the law, governed by many rules and regulations and varying from state to state.
A Nevada attorney experienced in the creation and administration of trusts may offer support and assistance to an individual looking to preserve the assets he or she has accumulated by their own hard work.
Source: The Forbes, “Hawaii Updates Its Domestic Asset Protection Trust Legislation — Should You Care?,” Jay Adkisson, 23 July 2011