Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Saturday, May 17, 2014

Domestic Asset Protection Trust: The New Prenup


While a prenuptial agreement may work to protect your assets in a divorce, they are not rock-solid contracts, and usually are contested.  There are more effective ways to retain your separate assets in a marriage and through divorce that will not cost you thousands, and does not require a prenup. 

A domestic asset protection trust (DAPT) is an advanced asset protection strategy that many wealthy individuals are using to safeguard their assets from creditors.  A DAPT can also be an effective way to shield assets in a divorce.  Unlike a traditional revocable living trust, a DAPT is an irrevocable trust, allowing the trust creator to be a discretionary beneficiary while the trust assets are still protected from creator’s/beneficiary’s creditors. 

While the DAPT offers great benefits, there are drawbacks.  Only a handful of states (15 total) have allowed this structure.  However, even if you do not live in one of the states you can still take advantage of their laws.  One of the best states to consider is Nevada since they allow “no exception creditors,” whereas other states allow certain creditors to attach to your assets.  Furthermore, not all assets are suitable for a DAPT.  The best assets to transfer to a DAPT would be cash, stocks, bonds, mutual funds and other non-real assets.  

See Robert Pagliarini, How To Protect Yourself In A Divorce Using A Domestic Asset Protection Trust, Forbes, May 15, 2014. 


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Great resource and content on your blog! Thank you for including my column...

Posted by: Robert Pagliarini | May 20, 2014 8:34:24 AM

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