Login | August 29, 2026
Protecting Your Assets With a DAPT
Julie Jason
Published: August 27, 2026
Are you concerned about protecting your assets, perhaps because you are in a "high risk" occupation? A relatively new method (Domestic Asset Protection Trust or DAPT) might be worth exploring with your legal and tax counsel. Let's review some resources for further study.
The American College of Trust and Estate Counsel describes a DAPT as "generally an irrevocable trust with an independent trustee who has absolute discretion to make distributions to a class of beneficiaries which includes the settlor. The primary goals of DAPTs are asset protection and, if so designed, transfer tax minimization." The description is part of the "Fourteenth ACTEC Comparison of the Domestic Asset Protection Trust Statutes (August 2025)" (tinyurl.com/4ur42e8j). A settlor is the person who creates and funds the trust.
The ACTEC Comparison lists 21 states that allow for the creation of a DAPT, including Connecticut, Ohio and Virginia.
What types of assets can fund a DAPT? According to the Fifth Third article "6 Insights into Domestic Asset Protection Trusts," "A DAPT can be funded with many types of assets, from equities and fixed income to real estate and closely held business interests" (tinyurl.com/3mux5474). Fifth Third is a bank holding company.
Who should inquire about a DAPT? Attorney Lisa Metz, a principal of Brody Wilkinson PC, said, "If they have potential future creditor issues (no current claims), e.g., doctors, and only if they have enough money that they are willing to put a chunk of money in the DAPT that they don't need to live on."
DAPTs "offer the potential for more complete creditor protection than a limited liability company or a limited liability partnership," according to the Fifth Third article.
Maryland's DK Law Group outlined the steps for establishing a DAPT in its article "What Is a Domestic Asset Protection Trust (DAPT)?" (tinyurl.com/38fxxw46):
1. Establish the (irrevocable) trust, including appointing a trustee to manage it. The trust must be created "under the laws of a state that permits DAPTs."
2. Fund the trust. "Once transferred, those assets are owned by the trust, not by you personally."
3. The trustee manages the assets and can "make distributions to the beneficiaries according to the trust's terms." Note that payments from the trust are made "at the trustee's discretion -- you cannot demand them on a whim. This lack of direct control is what helps fortify the assets against creditors."
Fifth Third points out that there is "usually a waiting period (such as two years after trust creation) before the assets are deemed completely shielded from claims, meaning that DAPTs cannot be used to protect assets in current litigation," adding that DAPT assets "can be deemed 'voidable' if the assets were being moved to protect them from a pending bankruptcy or to artificially create insolvency."
Can you set up a DAPT in a state that has the statute, even though you live in one that does not? The answer is it's possible, but as CPA and attorney Mark J. Kohler writes on his website, "Where you live, where your assets are located, and where your liability exists can all influence whether a DAPT is the right tool, and how much protection it may ultimately provide" (tinyurl.com/4p5ex6a8).
The ACTEC Comparison cautions that DAPT creators should carefully review court rulings related to DAPTs, saying, "These cases will provide guidance concerning how courts are interpreting a particular state's DAPT law."
While the ACTEC Comparison provides a chart offering details of the various state DAPTs, it also notes that a chart "by its very nature, is an oversimplification" and urges people "to carefully analyze the provisions of a statute before implementing a DAPT."
The Ellis Law Group, based in Boca Raton, Florida, points out on its website that DAPT statutes "differ greatly between states, with some offering much more comprehensive protection than others" (tinyurl.com/59mn4zw7).
Fifth Third provides an important piece of advice: "Bear in mind that each individual is unique and should consult with their attorney and tax advisors before committing to any trust approach."
Good advice. Experience is a must. Explore possibilities with only those attorneys and CPAs who are seasoned in asset protection strategies. These trusts are intended to be permanent -- that is, irrevocable.
Seasoned investment counsel (tinyurl.com/52nus8hz) and award-winning columnist and author, Julie Jason, JD, LLM, promotes financial literacy and investor protection. Read her latest book, "The Discerning Investor: Personal Portfolio Management in Retirement for Lawyers (and Their Clients)" (tinyurl.com/4u7h9pjs), published by the American Bar Association. Write to Julie at readers@juliejason.com. While all questions cannot be answered, each email is read and reviewed and can lead to discussion in a future column.
COPYRIGHT 2026 Julie Jason, DISTRIBUTED BY ANDREWS MCMEEL SYNDICATION, 1130 Walnut St., Kansas City, MO 64106; 816-581-7500