Domestic Asset Protection Trusts

Richard W. Nenno, the Managing Director and Trust Counsel for Wilmington Trust Company in Wilmington, Delaware, has recently published the first installment of his article on domestic APTs, Planning with Domestic Asset-Protection Trusts: Part I, 40 Real Prop., Prob. & Tr. J. 263 (2005).

Here is the editor’s synopsis of Mr. Nenno’s article:

A domestic asset-protection trust (“DAPT”) is an irrevocable self-settled spendthrift trust effective against claims brought by creditors. This Article covers reasons for and against DAPTs, fraudulent- transfer rules, and ethical and practical considerations (Part II); discusses the federal income-tax and transfer-tax implications of DAPTs (Parts III and IV); assesses their asset-protection effectiveness (Part V); describes possible uses of these trusts (Part VI); compares DAPTs to offshore asset-protection trusts (“APTs”) (Part VII); and discusses how to establish, design, and administer a DAPT (Parts VIII and IX). The appendix contains a sample solvency letter. A second installment, which will appear in the next issue of the Real Property, Probate and Trust Journal, will summarize and compare the DAPT statutes.