Is an Asset Protection Trust a Good Idea?
Many people think that the most common type of living trust, which is the revocable living trust, provides asset protection. Unfortunately, this is not true. The reason is that a revocable living trust is considered a ‘self-settled’ trust because you still control the assets you placed in the trust. Since you control the assets, they are subject to claims of your creditors. The assets in the trust are also subject to claims after your death by the creditors of your estate. However, in a few situations, a self-settled revocable living trust might be able to provide asset protection. Those situations mainly involve trusts formed under Domestic Asset Protection Trust (DAPT) laws, which are enacted in only Delaware, Alaska and Nevada. Trusts which are created under these laws are commonly referred to as Delaware Trusts, Alaska Trusts or Nevada Trusts. These three states, in different ways, let you form a trust for your own benefit and protect the trust assets from any creditors. Sometimes
