What is a domestic asset protection trust?

In 2017, Michigan became the 17th state to adopt a law that enables residents and property owners to establish domestic asset protection trusts. For those with a lot to lose, a DAPT can help protect a lot of their assets from being lost.

At Vandervoort, Christ & Fisher, we understand your wish to protect your assets. Our team is experienced in guiding clients through the ins and outs of estate planning and asset protection, including the use of a DAPT. 

Forbes explains that DAPT trusts are a tool for safeguarding a portion of your personal wealth from creditors should you face a lawsuit. By appointing an independent trustee, he or she can say no to the use of trust assets to pay a claim or settlement. A DAPT is a self-settled trust that is irrevocable, and allows you to name yourself as a beneficiary, with access to funds in the account.

Resources you would typically place in a DAPT include cash, securities, real estate and limited liability companies, along with boats, aircraft and other recreational assets. Additional items can include business assets such as equipment, inventory and intellectual property. An important feature to include in the formation of a DAPT is a spendthrift clause to limit transfer of a beneficiary’s interest before the trustee distributes the property.

Additional benefits of a DAPT include savings on income tax when the trust is established in a state that does not have income tax, such as Nevada. The Michigan DAPT law also limits creditors to two years in which to challenge the transfer of assets to the fund.

For more information about estate planning and asset protection, visit our webpage.

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