For Nevada residents who want a head start on estate planning but still want to have access to their wealth, a domestic asset protection trust may be something to consider. The DAPT is an irrevocable trust that lets the creator retain a number of powers over funds and wealth. The DAPT also offers protection against creditors.
The DAPT is irrevocable, which means it cannot be removed once it's in place. Though the creator and any trust partners may have some power to make changes within the trust, the trust itself holds for the designated period, making it essential that individuals understand estate planning needs prior to entering a DAPT.
One reason to engage in a DAPT is to protect wealth from future financial situations. Assets within a trust cannot be touched by creditors except in certain situations. Funds within a DAPT are not fully protected for two years. During the first two years of the trust, if a creditor can show that the trust was created as an act of fraud or in bad faith, then the creditor may gain access to the wealth. Specifically, the creditor would need to show that the trust was created as a way to avoid paying those owed.
Outside of such a situation, creditors and others could not gain access to money held in a trust, which protects it for future generations. A DAPT also allows disbursement of trust funds in regulated ways, letting individuals fund retirement years or ensure financial security of young children or heirs.
Estate planning documents can be complex regardless of the amount of wealth you've accrued. Seeking education about all your options helps ensure your future as well as the financial stability of heirs.
Source: Forbes, "How To Use a Nevada Asset Protection Trust To Safeguard Your Assets" Robert Pagliarini, May. 21, 2014