Estate holders in Ohio may be familiar with domestic asset protection trusts, commonly known as DAPTs. These planning tools do just what their name implies — protect the assets contained in trusts. They are used most often in estate planning, allowing those managing their assets to avoid probate for their heirs and other beneficiaries. However, DAPTs are useful for much more than this, according to experts in wealth management.
DAPTs manage what are known as spendthrift trusts, planning vehicles designed to keep certain heirs from engaging in unbridled spending of inherited assets. In this scenario, creditors are kept from access to funds in such a trust and the beneficiary is not in charge of the money. That asset protection responsibility falls to a trustee, often an attorney experienced in trust administration.
DAPTs provide many potential benefits for those who live in states that allow them. Perhaps first and foremost is that spendthrift trusts protect young adult beneficiaries who may lack the maturity to wisely manage a large amount of inherited wealth. They are also used for prenuptial planning arrangements, non-U.S. taxpayers immigrating to the United States, grantors who want to transfer assets and engage in tax planning and privacy from those without legitimate interest in certain financial affairs. There is no additional tax exposure through the use of a DAPT as long as the trust is established and managed correctly.
An individual interested in establishing a DAPT may benefit from the advice of an attorney well-versed in areas of wealth management. Such engagement might mean the difference when it comes to making sure beneficiaries are protected.