Thursday, May 22, 2014
A domestic asset protection trust (DAPT) is an excellent tool to utilize if you are interested in protecting your assets. A DAPT allows the settlor to be a discretionary beneficiary of the trust, while simultaneously assuring protection of trust assets from claims of the creditors. Since the trust is irrevocable, it cannot be changed or modified by the settlor.
DAPTs vary from state to state, and a Nevada DAPT is appealing to many settlors. First, the statute of limitations for the seasoning period under Nevada law is two years. Before the assets are officially protected during the seasoning period, Nevada statute provides the creditor needs to prove by clear and convincing evidence that the transfer of property to the DAPT was fraudulent or violates a legal obligation owed to the creditor under a contract or court order. This is a difficult burden of proof for the creditor to overcome. This is what makes the Nevada statute so desirable.
In order to protect yourself, “DAPT planning should be done before any storm clouds have gathered—when the skies are completely clear.”
See Robert Pagliarini, How to Use a Nevada Asset Protection Trust to Safeguard Your Assets, Forbes, May 21, 2014.