In today’s volatile economy, you realize that one day you may be prosperous and the next day may be devastating to you. Sudden and substantial debt to creditors is a real concern for many of us including you. Realizing this fact makes you desire to develop a plan for our financial well being.
When considering the many options available to you, you may consider an International Asset Protection Trust because this option offers the greatest protection from creditors and litigation. However, after you look into an international asset protection trust, you realize that roughly ten thousand dollar a month is needed in fees just to administer it. Unless you have enough cash in hand earning ten thousand dollars a month in interest, an international asset protection trust is quickly crossed off your list of consideration to protect your wealth from creditors.
By this process of elimination, you are quickly left to consider a domestic asset protection trust (“DAPT”). After all, the purpose of DAPTs are to maximize the protection of trust estates from creditor claims.
There are twelve states that allow for DAPTs. Eleven of the twelve states have statutory exception for creditors, e.g., such as divorcing spouses and preexisting tort creditors. However, Nevada is the only state that does NOT have statutory exceptions for creditors.
Nevada also is the only state that has a two year statute of limitations for reaching the assets transferred to the DAPT. South Dakota and Utah have a three year statute of limitations, and the remaining states have a four year statute of limitations. Provided that you do not seek bankruptcy protection for ten years after forming a DAPT, these 2, 3 and 4 year statute of limitations are recognized by the courts and can protect your assets. However, if you are seeking protection from creditors or potential creditors, then you must also be aware of a recent 2011 bankruptcy case the held the bankruptcy law 10 year statute of limitations will trump the DAPT states’ statute of limitations. See Battley v. Mortensen, Adv. D. Alaska, No. A09-90036-DMD (2011). If you are considering a DAPT, or if you have formed a DAPT, and you have creditor issues where you are considering bankruptcy protection, then you must seek the advice of counsel in order to determine your options in preserving the protection of your DAPT assets from your creditors.
Otherwise, a DAPT remains an effective asset protection strategy for you. The next item for you to consider is which state DAPT should you elect. Most DAPT scholars agree that the Nevada DAPT is the top of the Tier 1 DAPTs. As noted above, it has the lowest statute of limitations, i.e., two years, and is the only state that does not have statutory exemptions for creditors.
Now consider titling your assets to a limited liability company and have your DAPT own your Nevada LLC. This would allow you to have the best of both the DAPT laws and limited liability laws for the protection of your assets. Once again, Nevada is the top choice for a DAPT owned limited liability companies because Nevada laws prohibit creditors from forcing the sale of DAPT assets to pay your creditors.
There are a lot more details to both a DAPT and incorporating the use of a limited liability company, and other trust options, to protect your assets. But you won’t know them unless you talk to a professional who can guide you and help you formulate a strategy to take advantage of a DAPT owned limited liability company. To help you get the insight and planning you need that can help you take advantage of this asset protection promotion, we’re waiving our usual ($750) Family Wealth Planning Session fee. Please come and see us right away because asset protection planning can take time. Hurry in and protect your assets from creditors. Call (919) 468-3266 or email firstname.lastname@example.org