Barrett Legacy Estate Solutions

What is a Domestic Asset Protection Trust?

A domestic asset protection trust (DAPT) is one strategy you can use to protect your money and property. You give some of your property to this trust, which is irrevocable and thus cannot be changed. The trustee can potentially make distributions to you, thereby allowing you to continue enjoying some benefits of the trust property.

However, the trustee in most cases needs to be an independent trustee (someone who is not related or subordinate to you or any other beneficiary and who will not inherit anything). The goals of a DAPT are to allow you to fund the trust with your own money and property, maintain an interest in the trust as a beneficiary, and protect that money and property from your future creditors.

DAPTs work on the legal principle that someone cannot take away from you something you no longer own. When you transfer property into a DAPT, you are actually making a gift of it to the trustee (the person or entity you choose to manage, invest, and use the accounts and property) on behalf of the irrevocable trust.

The laws governing DAPTs are continuously evolving and very state-specific, so it is important that you work with an experienced estate planning attorney.