The Role of Domestic Asset Protection Trusts in Estate Planning

What are Domestic Asset Protection Trusts (DAPT)?

A domestic asset protection trust (DAPT) is an irrevocable self-funded trust set up to protect your assets from creditors. There are other benefits to including a domestic asset protection trust (DAPT) in your estate plan that your asset protection attorney can discuss with you in detail.

There are many different ways a DAPT might be funded. Typical assets that people include are:

• Cash
• Securities
• LLCs (Limited Liability Companies)
• Business Assets
• Real Estate
• Recreational Assets like personal aircraft or boats.

Planning for Your Tomorrow, Today

Asset protection keeps your hard-earned assets from creditors and potential litigation. Wise financial planning has many aspects that involve multiple layers, such as:

• Domestic Asset Protection Trusts (DAPT)
• LLCs (or Limited Liability Companies)
• Insurance, such as an umbrella or malpractice policy
• Alternate dispute resolution
• Prenuptial agreements
• Retirement plans like 401Ks or IRAs
• Homestead Exemptions
• Offshore Trusts

As a wise elder in the community, you know that financial planning becomes even more critical as you age. Only through careful planning can your entire estate remain protected for your loved ones after your passing.

Why Should You Safeguard Your Assets from creditors?

When creditors attack your assets, it compounds the loss your loved ones are battling. It is vital to safeguard yourself and your family against these potential losses through financial planning. With proper forethought, asset protection will ensure your property is preserved.

What Are Common Ways to Protect Assets against Creditors or Litigation?

There are many ways to protect yourself and your assets against creditors or litigation. The dedicated team of asset protection lawyers at The Law Offices of Ericson, Scalise & Mangan will explain all your options to help you choose the best plan to protect your assets for your loved ones. Some options to consider are:

• Domestic Asset Protection Trusts (DAPT)—These trusts are available in many states within the US and are built explicitly for asset protection. They allow you to pass your accumulated wealth to your beneficiaries after you pass. Domestic Asset Protection Trusts are irrevocable trusts. It is essential to know that irrevocable trusts can’t be changed or altered once created. Your attorney can help you determine what type of trust is right for you
• Limited Liability Companies (LLCs)- LLCs are like band-aids for your assets. The LLCs can protect your assets from business creditors if something happens and the business venture goes south. With an LLC on top of your assets, your business creditors cannot seize your personal bank accounts, cars, or home to pay for business debt
• Umbrella Policies- Umbrella policies supplement liability insurance coverage you purchase through either a homeowners or auto policy. These policies work in tandem to provide you with extra coverage over your assets to protect them should you become embroiled in civil litigation. Your lawyer can discuss if an umbrella policy might help your case. Asset protection can be complex, and planning is necessary to explore all aspects thoroughly.
• Malpractice Insurance Policies—Healthcare professionals involved in litigation may be protected by malpractice insurance. These policies safeguard their assets during litigation.
• Life Insurance Policies- In most situations, life insurance policies are exempt from seizure by creditors. Your lawyers can discuss with you whether your policy qualifies under this rule.
• Alternate Dispute Resolution- Sometimes, litigation can be avoided through dispute resolution. Dispute resolution can protect your assets as well as your reputation
• Prenuptial Agreements—Prenuptial agreements are signed before marriage. While some consider them a sign of distrust, they can also be a wise way to protect current and future assets should an acrimonious divorce occur and the relationship sour.
• Retirement Plans—In nearly all situations, retirement plans, including IRAs and 401k plans, are protected from seizure. The only exception is if you owe back taxes or alimony, in which case those amounts may be taken.
  Homestead Exemptions- Some states allow for a homestead exemption that protects some of the value of your home. There are usually caps on the amount you can claim for this exemption. Your lawyer will help you determine if this exemption suits your situation.
• Offshore Trusts—In rare situations, offshore trusts may be used for asset protection. This is uncommon and should be discussed in detail with your attorney.

Can an Asset Protection Attorney Help Me?

In this digital age, many people believe hiring an asset protection attorney is prohibitive when they can fill out forms online. However, asset protection attorneys are trained and have access to do so much more for you than you could hope to achieve on your own. Building a robust case should you face litigation takes a savvy team of legal professionals. A lawyer can:

• Develop strategies suited to your case
• Custom tailor a legal resolution
• Assess plea offers and potential trial outcomes
• Serve as a buffer between you and the prosecution team
• Guide you seamlessly through every step of the process
• Ensure all trusts are set up correctly and managed legally.

When Should I Call an Asset Protection Attorney?

Losing assets to creditors after your death is a final blow your loved ones don’t need to suffer. Proper financial planning now will protect them from this added grief. Estate planning is the best gift you can give your loved ones upon the sad occasion of your passing. At The Law Offices of Ericson, Scalise & Mangan, we build personal relationships with clients and provide constant compassionate support throughout the legal process. Be proactive, and take the first step. Call 860-854-3809 for a detailed consultation.