What is a domestic asset protection trust?
A domestic asset protection trust (DAPT) is a trust created under the laws of Washington State that allows individuals to protect their assets from creditors. DAPTs are unique in that they allow individuals to protect assets from future creditors, from those creditors that arise before the trust is created, and from those creditors that arise after the trust is created. DAPTs are created for the sole purpose of protecting assets from creditors. To create a DAPT, an individual will transfer their assets to a trust, and a trustee is appointed to manage the trust assets. The trustee may then use the assets in the trust according to the terms of the trust agreement. Assets transferred to the trust are protected from creditors since the assets are not held in the individual’s name. DAPTs are governed by Washington law and must comply with certain requirements in order to be valid. These requirements include the trust having a specific duration, the trust being revocable or irrevocable, and the trust having a separate taxpayer identification number. Additionally, the trust must be funded with assets before any creditors file a claim against the individual. DAPTs are a great way for individuals to protect their assets from creditors. They offer greater protection than other protection structures, such as a limited liability company, because creditors are barred from seizing assets from a DAPT. Furthermore, DAPTs provide more flexibility than other protection structures since the individual is allowed to revoke the trust at any time and reclaim assets from the trust.
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