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MICHIGAN AUTHORIZES DOMESTIC ASSET PROTECTION TRUSTS

Under the new law, which was signed into effect by Governor Snyder in December 2016, Michigan becomes the 17th state to permit domestic asset protection trusts (DAPTs). DAPTs are irrevocable trusts which can provide protection from creditors while allowing the creator and other beneficiaries of the trust to benefit from the trust assets. This can be an especially useful tool for business owners, executives, high risk professionals and real estate developers concerned about protecting assets from creditors. There are certain requirements that must be met in order for these protections to take place, including a two year waiting period from the date the assets are transferred to the trust and the requirement that the trustee be an independent third party (typically an institution) who has total control over distributions.

DAPTs can allow the creator to be a beneficiary as well as being able to retain certain rights to make investment decisions, receive income from the trust, receive distributions from the trust and other benefits. The creator cannot be the trustee, but has the right to remove and replace trustees. To use DAPTs as an effective asset protection tool, it is important to have the trust created prior to any creditor claims being filed against the assets, and because of the two year waiting period the sooner the DAPT is created the sooner the benefits of this protection. 

If you have any questions concerning whether this might be something that could work for you, talk with your professional at UHY LLP in Detroit 313 964 1040, Farmington Hills 248 355 1040 or Sterling Heights 586 254 1040.




Published by UHY LLP News.
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