Asset protection trusts (APTs) are a type of legal trust which aims to protect assets from creditors and legal claims. A trust is a legal agreement between a grantor (the person who creates the trust), a trustee (the person who manages the trust), and a beneficiary (the person who benefits from the trust). An APT can provide significant benefits to individuals and families who are concerned about the potential loss of their assets due to lawsuits, divorce, bankruptcy, or other legal proceedings.
Definition of Asset Protection Trusts
An asset protection trust is a type of trust that is specifically designed to protect assets from legal claims and creditors. Unlike other types of trusts, the primary purpose of an APT is to protect assets from outside threats rather than provide income or other benefits to the beneficiary. There are several types of asset protection trusts available. The most common types include:
Domestic Asset Protection Trusts (DAPTs)
Domestic asset protection trusts (DAPTs) are trusts that are established under the laws of a particular state within the United States. DAPTs are designed to provide protection from creditor claims while still allowing the individual to retain some control over the assets. In order to establish a DAPT, the individual must transfer assets to the trust and comply with the state’s specific requirements for creating a valid trust. One of the main advantages of a DAPT is that it allows the individual to continue to receive income from the trust while still protecting the assets from potential creditor claims.
Offshore Asset Protection Trusts (OAPTs)
Offshore asset protection trusts (OAPTs) are established under the laws of a foreign jurisdiction. These trusts are typically established in countries with favorable trust laws, such as the Cayman Islands, the British Virgin Islands, or the Cook Islands.
Because the trust is established in a foreign jurisdiction, it can be more difficult for a creditor to gain access to the trust’s assets. In addition, many offshore jurisdictions have strict privacy laws that protect the identity of the trust’s beneficiaries. Nevada Trust Company® can get you started in your exploration of APTs. We have been successfully serving as Trsutee of APTs for over 25 years. Give us a call today to start the conversation.