Saturday, August 10, 2019
Nora Hood recently published a Note entitled, Domestic Asset Protection Trusts: A Debtor's Friend and Creditor's Foe, 13 Brook. J. Corp. Fin. & Com. L., 443-464 (2019). Provided below is an abstract of the Note.
In 1997, Alaska enacted the first law in the United States legalizing Domestic Asset Protection Trusts (DAPTs), also referred to as self-settled asset protection trusts, as valid legal entities. Under traditional trust law, a debtor cannot shield assets from creditors by placing them in a trust for his or her own benefit. Alaska's statute allowing DAPTs calls the traditional rule into question. This Note will examine use of DAPTs in the United States, including whether or not the recently amended Uniform Voidable Transaction Act would consider any transfer to a DAPT voidable per se, and discuss an approach that intends to prevent misuse of DAPTs to avoid liability.