The Creditor Firewall: Domestic Asset Protection Trusts (DAPT)
The Creditor Firewall: Domestic Asset Protection Trusts (DAPT)
You can be the beneficiary of your own trust, yet your creditors cannot touch a penny. The magic of “Self-Settled” trusts in Nevada and South Dakota.
Executive Summary
- The Revocable Trust Lie: Most people have a “Living Trust” (Revocable). It avoids probate, but it offers **Zero Asset Protection**. Since you can revoke it, a judge can order you to revoke it and hand over the money to creditors.
- The DAPT Solution: A Domestic Asset Protection Trust (DAPT) is **Irrevocable** and **Self-Settled**. This means you put your own money in, you are the beneficiary, but because it is domiciled in a special jurisdiction (like Nevada/SD), the law forbids creditors from piercing the trust to satisfy your debts.
- The “Statute of Limitations”: Once you fund a DAPT, a “Look-Back Period” (typically 2 years) begins. If no one sues you within that window, those assets become legally untouchable forever. It is a vault that locks itself over time.
Fraudulent Conveyance
Critical Warning: You cannot set up a DAPT after you get sued. That is a crime called “Fraudulent Conveyance.” Courts will unwind the trust and may hold you in contempt. DAPT is preventative medicine; it must be built when the skies are clear.
Mechanic: The Legal Shield Architecture
Self-Settled
You enjoy assets
Nevada / SD
Specific State Law
2-Year Lock
Seasoning Period
Irrevocable
Hard to Change
Simulation: The Malpractice Lawsuit ($10M Judgment)
Scenario: Surgeon/CEO sued for personal liability
| Feature | Standard Trust (Revocable) | Asset Protection Trust (DAPT) |
|---|---|---|
| Creditor Access | 100% Accessible | Blocked (After seasoning) |
| Control | Total Control | Independent Trustee needed for distributions |
| Jurisdiction | Any State | Only 19 States (NV, SD, DE, AK…) |
“A DAPT puts a steel door between your wealth and the world. Even if you lose the lawsuit, the plaintiff wins nothing but a piece of paper, because the money is legally out of reach.”
Essential Resources
INTERNAL
BMT Playbooks