By Phillip B. Rarick, Esq., Miami Trust Attorney
A Domestic Asset Protection Trust or DAPT is an exceptionally strong structure for protecting family assets. However, a Hybrid DAPT, developed by Nevada attorney Steve Oshins, can add another layer of protection that will make the DAPT even more imposing and difficult to attack by a creditor.
What is a DAPT?
A DAPT is a popular asset protection entity that properly structured and created in a timely fashion – before creditors are knocking at the door – will place a powerful shield over your assets. Specifically, the DAPT is an irrevocable trust that contains your detailed, legally binding instructions to care for you and your loved ones. You can indirectly control the management of the assets through a Trust Protector whom you can remove for any reason.
This DAPT shield will be exceptionally difficult to penetrate by a creditor. There are approximately 14 states that have passed legislation providing for DAPT’s. (Florida is not one of these states). Although these laws have been on the books for about 15 years, not one DAPT has been tested all the way through the court system. The most likely explanation for this is that most creditors believe, if tested, the DAPT will work to protect the assets.
What is a Hybrid DAPT
A DAPT located in a state with strong legislation favoring DAPT’s is a strong asset protection structure by itself. As mentioned above, they have an excellent track record for protecting assets. However, Steve Oshins, a highly respected attorney in Nevada, has introduced a significant improvement over traditional DAPT’s called a Hybrid DAPT. The Hybrid strategy makes one key change in the traditional DAPT: the trustmaker or settlor is not an initial discretionary beneficiary, but rather a person who can be added later to the trust as a beneficiary. The Trust can be set up initially for the trustmaker’s spouse and/or children. If the Trustmaker is not married, there may be other options to consider. To read Mr. Oshins’ article on the Hybrid DAPT click here: Hybrid DAPT.
There are at least five states that have excellent DAPT laws: Nevada, South Dakota, Alaska, Ohio, and Delaware. Thanks to the work of Mr. Oshins, who helped draft the state legislation, Nevada likely has the strongest laws for DAPT’s. See Mr. Oshins’ state law comparisons by clicking here: DAPT State Rankings. The key features of the Nevada law are as follows: no state income tax, two year statute of limitations, no spousal child support exception for creditors, no preexisting torts exception, and no Affidavit of Solvency is required.
1. By itself, a Nevada Domestic Asset Protection Trust or DAPT can provide a strong shield to protect your assets if structured properly and created in a timely fashion.
2. An even more powerful shield can be created using a Nevada Hybrid DAPT, where the Trustmaker is not an initial discretionary beneficiary, but rather can be added later as such.
For more information or to schedule a consultation, contact attorney Phillip B. Rarick, Miami Trust Attorney, at firstname.lastname@example.org or call 305-556-5209.
Printed with permission from Steve Oshins and the Law Offices of Oshins & Associates, LLC.
The information on this blog is of a general nature and is not intended to answer any individual’s legal questions. Do not rely on information presented herein to address your individual legal concerns. If you have a legal question about your individual facts and circumstances, you should consult an attorney that is experienced in Florida estate planning and asset protection law. Your receipt of information from this website or blog does not create an attorney-client relationship and the legal privileges inherent therein.