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DAP Trusts: Asset Protection for Frequently Sued Occupations

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Estate planning can be a complicated and confusing process. Part of estate planning is protecting your assets during your lifetime, for your own continuing support as well as to provide for your loved ones after you die. There are many options for asset protection for frequently sued occupations. One is the creation of a domestic asset protection trust (DAP trust).

Who Needs Asset Protection for Frequently Sued Occupations?

Certain professions experience a higher risk of involvement in a work-related lawsuit. Being named a defendant in one of these suits can put more than the individual's job or career in jeopardy. Examples of occupations that can benefit from DAP trusts due to a high rate of litigation include these:

  • Medical professionals;
  • Attorneys;
  • Architects;
  • Financial advisors;
  • Tax professionals; and
  • Engineers.

Health care professionals hold the dubious distinction of being among the most frequently sued professions. These health care specialties are sued the most often:

  • OB-GYN;
  • Surgery;
  • Otolaryngology;
  • Orthopedics;
  • Aesthetic medicine;
  • Radiology;
  • Emergency medicine; and
  • Anesthesiology.

Whether or not your career is in at risk of lawsuits, preserving the assets you've worked hard to acquire is chief among all professionals concerns. DAP trusts are an attractive option for professionals and others investigating strategies for protecting assets from creditors.

What is a Domestic Asset Protection Trust?

A domestic asset protection trust is a trust that can protect your assets from future creditors. A DAP trust is a type of self-settled spendthrift trust (SSST), which protects assets from the reach of trust beneficiary creditors. These trusts can contain real property, personal property, financial accounts, business interests, and other assets.

How Does a DAP Trust Work?

DAP trusts are created in the same manner as are other trusts. The grantor executes a trust document identifying the assets that are to be permanently transferred into the trust. The transfer to the trust is irrevocable, meaning the grantor generally cannot change the terms of the trust. The trust document names the beneficiaries who may have access to trust assets and how and when assets may be withdrawn.

Some situations that might make you think about creating a domestic asset protection trust include accidents or injury, high-risk professions, and business ownership.

Which States Allow DAP Trusts?

Many states in the US do not allow DAP trusts, but you do not have to be a resident of the state in which you set up such a trust. The states that currently allow DAP trusts include:

  • Alaska;
  • Delaware;
  • Hawaii;
  • Michigan;
  • Mississippi;
  • Missouri;
  • Nevada;
  • New Hampshire;
  • Ohio;
  • Oklahoma;
  • Rhode Island;
  • South Dakota;
  • Tennessee;
  • Utah;
  • Virginia;
  • West Virginia; and
  • Wyoming.

Even if the state where you reside doesn't allow a self-settled asset protection trust, you can work with an attorney in a state that does allow DAP trusts. To obtain valid protections of the state law, the trustee of your out-of-state DAP trust must be a resident or a corporate fiduciary of that state. Be sure to talk with an attorney there experienced in this type of asset protection trust.

Where to Look for a DAP Trust Attorney

Whether you are looking into asset protection for frequently sued occupations or you are just investigating assets protection strategies generally, consider the DAP trust as one of your options. Regardless of whether your home state allows DAP trusts, Anna M. Price of Jenkins Fenstermaker, PLLC can help you with your DAP trust, asset protection, and general estate planning needs. For more information or to set up a consultation, call (304) 523-2100 locally or (866) 617-4736 toll-free or complete her online contact form.

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