In estate planning, a powerful tool is the asset protection trust. This trust protects your assets from creditors. Now, in order to benefit from the trust, you have to make sure that you establish it correctly. With the help from counsel, you can make sure that the trust follows every letter of the law and establishes the protection that you need. Here is what you need to know about asset protection trusts and which states recognize them.
Asset Protection Trust Basics
If you want to protect your assets, then you want to think about an irrevocable trust for asset protection. In this case, you cannot control or change the terms of the trust. Instead, an assigned person manages the trust. The assets in the trust remain safe even if creditors file a lawsuit against you. If you would like to establish an asset protection trust, then you will be able to in states that allow for domestic asset protection trusts.
Asset Protection Trust States
Now, it’s important to note that not all states permit the creation of asset protection trusts. In order to establish one, you have to know which states allow them before you can consider it. Now, while the trusts are becoming more common, you can rely on more states recognizing their legal status, but you do have to be careful. One of the benefits of these trusts is that they are cheaper than foreign asset protection trusts.
The states that allow for DAPTs include:
- Alaska
- Delaware
- Utah
- Oklahoma
- Missouri
- South Dakota
- Tennessee
- Wyoming
- New Hampshire
- Hawaii
- Virginia
- Ohio
- Mississippi
- West Virginia
Each state has its own regulations that you have to follow in order for it to be valid. These trusts have not been tested throughout the US court system. Normally, creditors assume the DAPT will hold up and instead settles, rather than bringing the debtor to court.
If you have assets that you want to protect against creditors, then an asset protection trust might be the best bet for you. These trusts safeguard your possessions from lawsuits, judgments and creditors. These trusts have a legal identity of their own so you don’t have to worry about losing your assets when you’re in debt. This is a very flexible way to keep your assets safe. Now, keep in mind that trusts come with complicated regulations that attorneys handle the best. If you’re considering putting your assets in a trust, then you should contact an estate planning lawyer today to work out the specifics.