DOMESTIC ASSET PROTECTION TRUSTS
DOMESTIC ASSET PROTECTION TRUSTS
Helping Clients Safeguard Everything They’ve Worked for From Creditors
When we’re growing up, few people have a solid understanding of the dangers their money faces. As we get older, this realization hits hard due to healthcare costs, creditor claims, potential litigation, and various other possible expenses. This can be a tough pill to swallow when you’ve worked hard for everything you’ve earned over the years. Fortunately, there are ways to safeguard your “nest egg” from potential harm. Domestic asset protection trusts in New Haven County may be able to keep creditors and other dangers at bay.
At Legacy Law Partners, PLLC, our experienced legal team works hard to secure favorable outcomes for our clients. In many cases, this means placing their personal and business assets into a trust — safely away from the reach of most creditors. While this may seem similar to hiding assets, state and federal law allow citizens to utilize domestic asset protection trusts to shield assets from creditors. However, there are some important things you should understand — which will make it clear why working with a law firm is advisable.
What Is a Domestic Asset Protection Trust?
A domestic asset protection trust (DAPT) is a type of irrevocable trust that protects assets from creditors while simultaneously allowing the creator of the trust (i.e., the grantor) to retain beneficial interests in it. These benefits remain because a DAPT is considered a self-settled trust. An individual can place personal assets inside of the trust that are then shielded from potential creditor claims. While this does not guarantee that trust assets will be 100% safeguarded, it does make them more difficult to access in the event of bankruptcy, lawsuits, and other financial liabilities.
While this may sound straightforward, it’s important to realize that there are complexities to the process. For instance, DAPT statutes create several types of trusts — some of which may prove more beneficial for your unique situation. In some situations, an offshore asset protection trust may provide more advantages than a domestic asset protection trust. Similarly, grantors may find that discretionary trusts are preferable to special needs trusts. Put simply, domestic asset protection trusts in New Haven County are incredibly complex and dynamic.
That’s why it’s advisable to have an experienced professional guide you through the legal system. At Legacy Law Partners, our team is here to help.
What Are the Benefits of a Domestic Asset Protection Trust?
When an asset resides in a DAPT, it has certain protections that non-trust money and assets do not have. While protection from creditors is certainly a major advantage, it’s hardly the only benefit available to those who have them. In fact, placing assets into a DAPT often results in positive outcomes that grantors may not anticipate:
- Retained control thanks to the self-settled nature of the trust
- Extreme flexibility regarding the types of assets that can be transferred into the trust
- Estate planning benefits — such as probate avoidance, family wealth preservation, and tax planning opportunities
- Increased privacy since trust administration has limited public disclosure to non-beneficiaries
- State-specific advantages that could make creating a DAPT in one state preferable to creation in another
Clearly, the benefits available can differ based on everything from when an asset is placed into the trust to the jurisdiction you file in. However, it’s important to note that these benefits sometimes do not come easily. If you’re considering protecting assets and property via domestic asset protection trusts, make sure you recognize that there are a few issues that could complicate matters.
What Important Issues Should You Consider?
- Irrevocable has consequences: Once assets are transferred into a DAPT, they typically cannot be reclaimed. The terms of the trust also usually can’t be modified. This ensures creditors cannot claim that you still have substantial control over the trust assets.
- Self-settled isn’t restrictive: While DAPTs are self-settled — meaning the grantor is a beneficiary — this does not mean you can’t designate other beneficiaries.
- State-specific statutes: Keep in mind that DAPTs are governed by state laws. Connecticut — along with states such as South Dakota, Tennessee, and Alaska — have passed laws allowing DAPT creation. Unfortunately, some other states have not.
- Exception creditors: Certain creditors — along with issues involving child support or a prenuptial agreement — may be exempt from DAPT protections.
Contact Our Trust Administration Lawyers in New Haven County Today
When you’re dealing with trust and estate issues, you need someone on your side who will protect your best interests. If you’re considering creating a trust, an experienced attorney can ensure you take all property steps to accomplish your underlying goals. And if you’re a friend or family member tasked with trust administration, legal professionals can guide you and help avoid potential issues and financial liabilities. People rarely consider the challenges faced by those they choose as trustees and administrators, but fortunately, you don’t have to face these challenges alone.
At Legacy Law Partners, PLLC, our team of legal professionals is here to help. Do you need assistance as a trustee? Do you want to make sure all estate taxes are properly covered, or that family members receive what they expect without disputes arising? No matter the situation you find yourself in, our New Haven County trust administration lawyers can assist you with these responsibilities. Few people have the time or energy required to administer a trust — particularly when the duty is thrust upon them unexpectedly or without regard to their own obligations and commitments.
