Many people think of domestic asset protection trusts as little more than tools to legally get away with fraudulently protecting assets from creditors. However, the trusts have more uses than that.
One of the most frustrating things for creditors is when a debtor has more than enough assets to pay back the debt, but the creditors cannot get to those assets because the debtor has shielded them. One way this is done is by creating a trust known as a domestic asset protection trust.
In states where these trusts are allowed, creditors cannot touch the assets in the trusts unless those assets were purposely put in the trust to commit fraud against creditors. This aspect of the trusts has given them a bad reputation for many people.
They think of these trusts as nothing more than a way to commit legally allowed fraud and not pay debts. That is not a charitable view, because domestic asset protection trusts have other purposes, as Wealth Management recently discussed in "The Many Benefits of DAPTS."
Domestic asset protection trusts can also be used as a preventive tool to protect the assets of heirs. This is especially useful tool if the trust beneficiaries are young and not particularly good at handling wealth.
The trusts are also useful for planning before getting married or for people planning to immigrate into the U.S. They are a good tax planning tool and offer some degree of privacy.
Do not be put off by the creditor protection aspect of domestic asset protection trusts. They have several uses from which you can benefit.
For more information about estate planning in Orlando, FL (and throughout the rest of Central Florida), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.
Reference: Wealth Management (Jan. 12, 2018) "The Many Benefits of DAPTS."
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