How Does a Domestic Asset Protection Trust Work?

Do you want a Domestic Asset Protection Trust? Look no further, Wood Law Group will handle the legal factors to Keep your wealth safe and secure. Contact us today.

Introduction to Asset Protection Trust

An asset protection trust is a beneficial estate planning tool. It helps people seeking to protect assets and their legacy from creditors and taxes. It is an example of an irrevocable trust. This means that you cannot modify or amend it without the beneficiary’s permission.

These trusts are distinct from other types because they serve as an asset protection strategy. There are two types of asset protection trusts. They are domestic asset protection trusts (DAPT) and foreign asset protection trusts.

You may need to hire a Las Vegas asset protection attorney to establish an asset protection trust. Your attorney may be able to shed light on the other options available to you.

The following are critical considerations for establishing a domestic asset protection trust.

What Are Domestic Asset Protection Trusts?

A domestic asset protection trust (DAPT) is established and managed by a fiduciary in the same state as the settlor. If you are in the United States, this refers to a trust established and administered in one of the states.

These legal instruments are established in jurisdictions where such trusts are permitted by law. They are established to shield assets. They may also prevent asset seizure from judgment creditors during court proceedings.

DAPTs are a type of self-settled trust (also known as a spendthrift trust). This means that a settlor (creator) of a trust is also the beneficiary of the trust.

If you are in a DAPT state such as Nevada, you can establish a Nevada asset protection trust to safeguard your assets against future creditor actions and certain kinds of litigation. You can transfer a variety of assets, including cash, real estate, securities, and business interests (company assets), using a DAPT.


Characteristics of a DAPT

  • The DAPT must be irrevocable and discretionary (under the control of a trustee).
  • There must be at least one resident trustee appointed to the DAPT.
  • You are required to administer the trust in the respective state.
  • Two distinct individuals must fulfill the responsibilities of the settlor and trustee. One individual cannot satisfy both positions.

Benefits of an Asset Protection Trust

An asset protection trust provides several benefits. Some key asset protection benefits include:

Asset Protection From Creditors

The main benefit of a DAPT is to protect your assets from most creditors. Self-settled trust assets are not accessible to creditors if the trust is established correctly under Nevada laws. These assets are not the real or personal property of a beneficiary.

Tax Benefits

In Nevada, the assets held in the asset protection trust are not taxable. The assets inherited by your son or daughter will not be subject to inheritance tax. This might spare your descendants some money. 

Estate Planning Benefits for Divorce

A DAPT can also protect non-marital assets during divorce. You can have money and other personal items in the trust before marriage. That way, you can protect these items in the event of a divorce.

Nobody plans for a divorce, but with a DAPT, you can keep your assets protected without the emotional impact of asking for a prenuptial agreement.

Privacy Benefits

Asset protection trusts often provide a level of privacy and confidentiality. Depending on the state laws, the details of the trust and its assets may remain confidential, protecting your privacy and reducing the risk of targeted litigation or unwanted attention.

Legal Process of Creating an Asset Protection Trust

The legal process of creating an asset protection trust will depend on jurisdiction and state law. However, the process usually involves the following:

Engagement of Legal Counsel

You may consult with an experienced attorney practicing asset protection and trust law. Your attorney will guide you and ensure compliance with relevant legal requirements.

Choose Trustee and Beneficiaries

The next step is to select a trustee to manage the trust and protect the assets. Your trustee can be an individual or a trust company.

You also have to name the beneficiaries of a trust. For a DAPT, a settlor can be one of the beneficiaries. Other beneficiaries may be a spouse, children, or grandchildren of a settlor.

Fund the Trust

Transfer ownership of the chosen assets into the trust. This typically involves executing appropriate legal documents to transfer ownership, such as deeds for real estate or assignments for financial assets.

Asset protection planning may require the services of a professional law firm. This is because the laws and requirements may vary depending on the jurisdiction.

What to Include in an Asset Protection Trust

When creating an asset protection trust, several vital elements should be included to protect your assets. Here are essential components to consider:

Trust Purpose

Clearly state the purpose of the trust, which is typically asset protection. This section should outline the intent to safeguard assets from potential creditors and legal claims.


Identify the trustee(s) responsible for managing the trust and its assets. The trustee should be a trusted individual, professional trustee, or trust company. They should have the necessary knowledge and expertise to fulfill their fiduciary duties.


Specify the person or entity establishing the trust (the settlor/grantor). This could be you, as the individual creating the trust, or a legal entity such as a corporation or limited liability company (LLC).


Identify the beneficiaries who will receive the trust’s assets or income. The trust can have multiple beneficiaries. The beneficiaries could be your family members or charitable organizations.

Transferred Assets

Detail the assets to be transferred into the trust. Include a comprehensive list of the properties, investments, bank accounts, or other assets that will become part of the trust.

Trust Terms

Specify the terms of the trust. Important terms to include are:

  • The duration of the trust
  • Restrictions or provisions governing the management and distribution of the trust assets
  • Requirements for discretionary beneficiaries
  • Spendthrift clauses
  • Conditions on the trustee’s powers

Trust Protector

Consider appointing a trust protector. This is an independent third party who oversees the trustee’s actions and has the authority to change the trust if necessary. The trust protector can provide an additional layer of control and protection.

Governing Laws

Clearly state the jurisdiction whose laws will govern the trust. Choose a jurisdiction with favorable asset protection laws and a solid legal framework for trusts.


Speak With Our Domestic Asset Protection Trust Attorneys


The specific provisions and requirements for an asset protection trust might vary. Usually, the provisions will depend on the jurisdiction and the trust’s goals. Consulting with an experienced estate planning attorney in Las Vegas can be helpful for your case.

The lawyer will ensure the trust agreement meets your specific needs. They will also ensure compliance with relevant legal requirements.

If you want to create a domestic asset protection trust, look no further. Wood Law Group will handle the trust creation procedure for you. We can help keep your wealth safe and secure. Contact us today.