Domestic Asset Protection Trust (DAPT)
What is it?
A DAPT is a self-settled irrevocable trust where the grantor is also a beneficiary—something traditionally not allowed. Certain states (Nevada, South Dakota, Delaware, and others) permit DAPTs, allowing the grantor to transfer assets to the trust, protect them from future creditors, and still receive discretionary distributions. The grantor is both the one who creates the trust and a potential beneficiary.
Why is it important?
DAPTs offer the strongest domestic asset protection available. Unlike standard irrevocable trusts where the grantor cannot be a beneficiary, DAPTs allow you to protect assets while retaining access. This is ideal for professionals with high lawsuit exposure (doctors, business owners, real estate developers). After the state's statute of limitations (typically 2-4 years), transferred assets are generally unreachable by future creditors.
Example Language
The Grantor establishes this Trust under the laws of Nevada, naming an independent Nevada trustee. The Grantor is a discretionary beneficiary and may receive distributions for health, education, maintenance, and support. Assets transferred to this Trust are protected from the Grantor's future creditors after the expiration of the applicable statute of limitations.