A Domestic Asset Protection Trust (DAPT) is an irrevocable trust that allows the trust’s settlor to be a discretionary benefi¬ciary. When the trust is created in a jurisdiction that allows the creation of a DAPT, generally a settlor’s creditors cannot reach the trust’s assets.
How long before the DAPT’s assets are protected from the settlor’s creditors, however, is determined by the statute of limitations and varies from DAPT state to DAPT state. For instance, in Nevada DAPT assets are protected two years after the date the assets are transferred to the DAPT for non-preexisting creditors. For preexisting creditors the statute of limitations is the greater of two years from the date of transfer to the DAPT or six months from when the creditor discov¬ered or should have discovered the transfer.
In Delaware, the statute of limitations is four years for non-preexisting creditors. For preexisting creditors it is the greater of four years from the date of transfer to the DAPT or one year from the date the creditor discovered or should have discovered the transfer.
Moreover, while most DAPT states, including Delaware, provide for certain classes of creditors, such as divorcing spouses, to still reach the assets of a DAPT despite the statute of limitations, Nevada does not.
Givner & Kaye focuses on sophisticated income tax planning and compliance, tax litigation and procedure, estate planning, and asset protection plans for individuals and businesses in Beverly Hills, Calabasas, West Los Angeles, Hollywood, and other areas of Los Angeles, Orange, Ventura, San Bernardino, Riverside and Santa Barbara Counties. Call Los Angeles Estate Planning and Asset Protection Plan Attorneys Givner & Kaye at (310) 207-8008 today.