Public Policy Interests of Domestic Asset Protection TrustsPublic Policy Interests of Domestic Asset Protection Trusts

Self-settled discretionary spendthrift trusts, also called domestic asset protection trusts (DAPTs), are irrevocable trusts in which the settlor is designated a discretionary beneficiary. In general, DAPT structures offer settlors emergency access to trust assets, while making it more difficult for certain creditors to seize the assets. Other benefits include ensuring privacy, possible tax savings, flexibility to modify the trust if family circumstances change and the avoidance of intrafamily quarrels. Importantly, residents of states that haven’t enacted DAPT legislation may also take advantage of the potential benefits of DAPTs by designating, as the trust’s governing law, the law of a state that recognizes DAPTs. To help ensure that s...