The Story Behind Asset Protection Trusts

The current legal treatment of trusts for asset protection has a rich history that dates back to early Roman Civil Law. Dating back in history to a time predating Christ, Roman law had a testamentary trust concept called fidei commissum. England then developed the Roman trust law to include inter vivos trusts. Prompted by concerns for a need for a way to protect creditors against trusts being used by debtors to avoid repayment, English law further borrowed from Roman laws regarding fraudulent transfers law.

After the English trust laws came to the colonies, the spendthrift clause began to develop in the late 1800s. The concept of a spendthrift clause was opposed by commentators, and the invalidity of self-settled spendthrift trusts became established law. That is until the Offshore Boom of the 1990s prompted states to change their laws, and brings us to the current trust climate in which Domestic Asset Protection Trust (“DAPT”) are allowed in 16 states.

See Jay Adkisson, A Short History of Asset Protection Trust Law, Forbes, Jan. 26, 2015.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.