What is the primary goal of a domestic asset protection trust?

A Domestic Asset Protection Trust is a particular kind of irrevocable trust created to provide protection against creditor claims, where the settlor himself is one of the discretionary beneficiaries. Protecting personal assets from future legal claims, lawsuits, and creditors while maintaining partial access to or benefit from the principal is the very essence of a DAPT.

The basic principle of a DAPT is that the settlor puts assets into the trust, then gives up legal title and management of the assets. The settlor is always a potential distributee according to the discretion of the trustee. Since the laws are identified in each state, the jurisdiction of the trust must be one of these states with the existing possibility of creating a DAPT, such as Nevada, Alaska, or Delaware.

The DAPT helps the assets to be shielded against the claims of divorce, business debts, and litigation. Still, the protection has a limit because almost all states have introduced a statute of limitation for creditors to contest the transfers to the trust in a particular period, usually between 1 to 4 years from the date of transfer. DAPTS are being used in estate planning for the purpose of securing wealth; during the time of its creation, decent judgment is highly required regarding the legal risks and benefits associated with it.

One Pacific Trust will counsel and advise each client on the specifics associated with a DAPT, ensuring that their assets are protected, but also in concert with the client's overall long-range estate planning goals.