What is a domestic self-settled trust?

A domestic self-settled trust is an asset protection tool used in the District of Columbia to limit potential liabilities. It is a trust that is created by an individual for their own benefit and for their own protection. The trust is funded primarily with the individual’s own assets or property, which may include stocks, real estate, and other investments. The person setting up the trust is known as the settlor and they can also be the beneficiary. Once the trust is established, the settlor relinquishes control of the assets placed in the trust and they are no longer considered the owner of them. This puts a “wall” between the assets and the settlor’s creditors, which prevents them from being accessed by creditors. The trustee, and not the settlor, has control of the trust’s assets and can only disburse them for the intended purpose or according to the trust’s terms and conditions. Domestic self-settled trusts are also advantageous due to their tax benefits. The trust is normally structured in such a way that the settlor will not be taxed on the income and distribution of the trust’s assets, which helps to protect the settlor’s estate. In District of Columbia, domestic self-settled trusts are a popular asset protection tool among individuals and families. They are relatively easy to set up, do not require a large outlay of capital, and can be customized to fit the needs of the parent and the beneficiaries.

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What is a domestic self-settled trust?

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