The number and size of lawsuits brought against wealthy individuals increases every year. With this increase comes an increasing need for people to protect their assets. A limited number of states allow you to create Domestic Asset Protection Trusts for yourself. Yet many doctors, business owners, corporate executives and other high net worth individuals still have not taken advantage of this opportunity. These states have laws similar to laws in offshore jurisdictions that have existed for years, yet the costs to establish and maintain DAPTs are less than the costs of an offshore asset protection trust.
Residents of states other than Domestic Asset Protection Trusts states do not have the same degree of certainty of protection that residents of Domestic Asset Protection Trusts states do. However, the majority of planners believe that non-residents will also receive the intended asset protection benefits. Nevertheless residents of non-DAPT states should also consider the Offshore APT. or a Migratory DAPT (M-DAPT), see below. At a minimum, a potential creditor will think twice before trying to sue given that recovering assets from either of these types of asset protection trusts is an uphill battle.
This Technique Makes the Most Sense for Those who Fit the Following Profile: |
- They want Asset Protection.
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- They want to be a Beneficiary. This is the only type of domestic trust that allows this.
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- They want a Short Statute of Limitations. They want Nevada DAPT laws two year statute of limitations on attacking the transfer to the trust.
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- Gift Tax Reason. They want to utilize their $5m gift tax exemption before it reverts to $1m but they are concerned that if their economic fortunes drastically change, they may need access to the funds given away.
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- Non-DAPT State Residents. We recommend drafting these Domestic Asset Protection Trusts with the decanting provisions that allow them to move offshore in the future if it is appropriate for the client.
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The goal in using a DAPT, is to remove your ownership over your assets. Whoever legally owns assets can lose them to a creditor. By establishing a DAPT, you create a legal owner (the DAPT). The only way for a creditor to attack the trust is to claim fraudulent conveyance. Of course, this can be easily avoided if a trust is established before you have any known creditors or judgments. |
| DAPT Plus LLC For Control |
Because no one wants to lose control over their assets, another entity, such as an LLC is often used in conjunction with a DAPT so you can have the legal right to control the assets transferred into the LLC owned by the DAPT. This way you can legally remove ownership over your assets without losing control of them. This renders the assets lawsuit proof. |
Migratory Domestic Asset Protection Trusts (M-DAPTs) |
The M-DAPT is very similar to the DAPT, with a primary distinction. The M-DAPT has provisions that allow it to decant to an offshore jurisdiction at a future date. M-DAPTs areideal for someone who wants the additional protection of Offshore Asset Protection Trusts, but does not wish to establish one at the present time. The M-DAPT can be established in the United States and later transferred to an offshore jurisdiction such as Belize, Nevis or the Cook Islands. The decanting provision states that the assets in the DAPT can be transferred to an offshore trust in the future. This gives you an opportunity for stronger asset protection down the line. |
While the DAPTs Mimic offshore asset protection trusts, they do not afford the same level of protection. |
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The U.S. court has jurisdiction over DAPTs whereas they no longer have jurisdiction over Offshore Asset Protection Trusts, and |
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- The DAPT is new. There are no court precedents that would give you certainty that they would be upheld.
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- Offshore Asset Protection Trusts are the strongest asset protection tool available, and should not be overlooked simply because there is a domestic alternative. It for this reason we strongly recommend that clients in non-DAPT states form M-DAPTs.
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For Technical Information About Domestic Asset Protection Trusts (DAPTs),
Please Click the Below Link to My Book.
Chapter 4, §4:290
Secure Your Financial Future Now! Call Us Today 1-818-906-0126
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In Our Basic Asset Protection Plan, With Exceptions: |
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- Your Safe Assets are Transferred to an FLP
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- Your Home and Vacation Home are Transferred to a QPRT
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- Your Business is Transferred to an LLC
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- Your Rental or Commercial Real Estate is Transferred to an LLC
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- All Interests in these Entities are Held by Your Living Trust.
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In our Intermediate Asset Protection Plan, With Exceptions: |
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- All Interests in the Above Entities are Held by Your DAPT
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- PITs are Set Up for Your Children
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