What is a domestic self-settled trust?

A domestic self-settled trust is a type of asset protection trust specifically designed to protect a person’s assets from creditors. This type of trust is a legal arrangement where the person who creates the trust, known as the settlor, funds the trust with his or her own assets and also serves as a beneficiary of the trust. This means that the settlor can benefit from the trust’s assets, but the settlor’s creditors and creditors of other beneficiaries are not allowed to access those assets. In the state of Virginia, a qualified self-settled trust (also known as a domestic asset protection trust) must satisfy certain criteria set out in the Virginia Code. The primary feature of the qualified self-settled trust is that the trust must be irrevocable. This means that once the trust is established, it cannot be revoked, changed, or amended. Additionally, the trust must have at least one qualified beneficiary, who is not also the settlor, and the trust must not be a sham or a disguise to attempt to hide assets from creditors. The purpose of a domestic self-settled trust is to protect the settlor’s assets from creditors and other forms of legal action. This type of trust can provide invaluable protection from creditors and can be used to organize and manage assets according to the settlor’s wishes. In Virginia, a domestic self-settled trust can also provide significant tax savings.

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What is a domestic self-settled trust?

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