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Asset protection in divorce with a DAPT

On Behalf of | May 21, 2014 | Property Division

Florida residents who are heading into marriage with significant assets from their single life may want to consider a complement to the protection a prenuptial agreement can provide. While a prenup can open up a conversation with one’s partner about financial matters, a Domestic Asset Protection Trust, or DAPT, may shield assets from creditors as well as spouses.

Not every state permits DAPTs, however, and of the 15 states that do, not all of them provide protection from a spouse. Fortunately, it is not necessary for an individual to be a resident of a state in order to establish a DAPT there. Nevada is one popular choice; the Nevada Asset Protection Trust ensures that spouses cannot access the assets kept there.

There is one other catch, and it is that the trust creator does not control the assets. A DAPT is an irrevocable trust. However, there is a way around this: It is possible for the creator to also be a discretionary beneficiary.

A DAPT or NAPT should be established well in advance of the marriage. If set up once divorce proceedings are underway, it may appear to be an effort to conceal assets. If the DAPT is established after the marriage, there is a danger it may represent a fraudulent transfer of funds or be subject to property division if the couple resides in a community property state. A DAPT also cannot be used to protect out-of-state real assets like a home. It can, however, protect mutual funds, stocks, cash and other non-real assets.

Asset division can be a difficult and contentious part of divorce proceedings. With a DAPT in place for protection, though, many of those difficulties can be avoided. An experienced lawyer could help navigate through the divorce proceedings and ensure that asset division is dealt with in the most efficient way possible.

Source: Forbes, “How To Protect Yourself In A Divorce Using A Domestic Asset Protection Trust“, Robert Pagliarini , May 15, 2014


The LAW OFFICES OF FORREST & Forrest, PLLC represents individuals in Fort Lauderdale in high-asset divorce matters. Daniel Forrest is board-certified family lawyer and mediator serving the South Florida area.

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