Why individuals should consider a DAPT

On Behalf of | Aug 30, 2018 | Blog

Nevada residents and others who are creating their estate plans may want to consider including a domestic asset protection trust, or DAPT. These trusts offer a variety of benefits such as protection from creditors as well as privacy from those who may want to know the details of an estate plan. It can also be helpful for those who plan on transferring money to minors or to those who are immigrating to the United States.

Of course, it is important that the transfer of an asset into a DAPT isn’t seen as fraudulent. If that is the case, the transfer could be reversed. A transfer may be considered fraudulent if it is done with the intent of hindering a creditor. This applies to both current creditors and those who may become creditors in the future. However, it doesn’t apply to creditors that are deemed to be unforeseen.

Properly structuring the trust can make it easier to protect assets from creditors. Generally speaking, only about half of a person’s assets should go into such a trust. Furthermore, it should not be used for personal expenses unless there is no other option. It may be best to ensure that an individual does not appoint a family member or close friend as a trustee or to any other important role in administering the trust.

Using a trust may make it possible to protect assets from creditors before and after a person passes. Trusts may also make it harder for a beneficiary to squander his or her inheritance. Consulting with an attorney may make it easier to determine what kind of trust to choose and whether it should irrevocable or revocable in nature. In some cases, an individual may benefit from having a pour-over will to properly fund the trust.