Domestic Asset Protection Trusts
Domestic Asset Protection Trusts Neutered by Bankruptcy Reform
The 2005 changes to the Bankruptcy Code have created a new 10-year limitations period for transfers to self-settled trusts which are meant to hinder, delay or defraud creditors. This effectively means that all transfers to domestic asset protection trusts will be suspect for the 10 years prior to the date that a bankruptcy petition is filed. Because of this, domestic asset protection trusts should not be considered for asset protection planning and, indeed, in most circumstances it might be malpractice per se for an advisor to form a DAPT for his client if asset protection is a concern.
The Domestic Asset Protection Trust (DAPT) is variously known as an Alaska Trust, Delaware Trust, or Nevada Trust, since those states have been in the lead in authoring rather blatantly anti-creditor legislation that allows self-settled spendthrift trusts. However, in our Analysis section, we examine the possible flaws inherent in DAPT structures -- defects so serious that we wonder whether these trusts should be re-named the "Defective Asset Protection Trust".
Analysis of Domestic Asset Protection Trusts (DAPTs)
The domestic variant of the offshore trust, has come into great favor as the alternative for the failed FAPT, and is perhaps the most obviously flawed asset protection tool, ever...
Domestic Asset Protection Trust Statutes
These Statutes Are Currently Untested By Case Law
Alaska Asset Protection Trust Statute
Delaware Asset Protection Trust Statute
Nevada Asset Protection Trust Statute
Domestic Asset Protection Trust Cases
Catherine D. Temple v. Robert M. Temple, et al. (Ohio App. 01/13/2005)
Robert M. Temple v. Commissioner of Internal Revenue (U.S. Tax Court 11/01/2000) (pdf)
In re Enfield, 133 B.R. 515 (Bkrtcy WDMo 1991) -- Creditors are allowed to invade Missouri self-settled spendthrift trust despite statute. (pdf version)
The 2005 changes to the Bankruptcy Code have created a new 10-year limitations period for transfers to self-settled trusts which are meant to hinder, delay or defraud creditors. This effectively means that all transfers to domestic asset protection trusts will be suspect for the 10 years prior to the date that a bankruptcy petition is filed. Because of this, domestic asset protection trusts should not be considered for asset protection planning and, indeed, in most circumstances it might be malpractice per se for an advisor to form a DAPT for his client if asset protection is a concern.
The Domestic Asset Protection Trust (DAPT) is variously known as an Alaska Trust, Delaware Trust, or Nevada Trust, since those states have been in the lead in authoring rather blatantly anti-creditor legislation that allows self-settled spendthrift trusts. However, in our Analysis section, we examine the possible flaws inherent in DAPT structures -- defects so serious that we wonder whether these trusts should be re-named the "Defective Asset Protection Trust".
Analysis of Domestic Asset Protection Trusts (DAPTs)
The domestic variant of the offshore trust, has come into great favor as the alternative for the failed FAPT, and is perhaps the most obviously flawed asset protection tool, ever...
Domestic Asset Protection Trust Statutes
These Statutes Are Currently Untested By Case Law
Alaska Asset Protection Trust Statute
Delaware Asset Protection Trust Statute
Nevada Asset Protection Trust Statute
Domestic Asset Protection Trust Cases
Catherine D. Temple v. Robert M. Temple, et al. (Ohio App. 01/13/2005)
Robert M. Temple v. Commissioner of Internal Revenue (U.S. Tax Court 11/01/2000) (pdf)
In re Enfield, 133 B.R. 515 (Bkrtcy WDMo 1991) -- Creditors are allowed to invade Missouri self-settled spendthrift trust despite statute. (pdf version)
Labels: asset protection, asset protection trust, dapt, domestic asset protection trust, self-settled spendthrift trust, self-settled trust
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