Valid Assets for Funding Your Domestic Asset Protection Trust


There are several categories of asset protection trusts that you can set to protect your valuable properties. Each kind has its own terms and limitations, making it difficult to select which one to go for especially if it’s your first time to set up a trust. But of course, finding the right firm to manage your account is equally important. If you are in good hands, your assets will be protected from creditors and would withstand any attack.


One specific kind of asset protection trust used by business owners to protect their assets for their own interests is the Domestic Asset Protection Trust (DAPT). DAPT is a kind of irrevocable trust, which sets the grantor as the only beneficiary of the trust’s assets. Most states in America do not allow DAPT yet, as it has controversial attributes connected to its legality and repercussions. Depending on what state the DAPT is established, the benefits the grantor obtains from a DAPT are the protection of his or her assets and state income tax savings.


DAPT offers excellent protection against creditors. Cloud Peak Law, asset protection specialists based in Wyoming, says that any creditor that actively pursues you can’t seize your assets because they are already owned by the trust, not by you.


However, a DAPT cannot actuate without assets that are funded by it. Trust assets that are eligible to fund a domestic asset protection trust are as follows:


  • Cash

Cash is a liquid asset, which makes it the easiest kind of asset to use as funds for your DAPT. It can enhance the substantial relationship that needs to be formed with the state you registered your DAPT in. Cash can be easily invested in bonds, stocks, and treasury funds, and is best kept in a single investment account.


  • Limited Liability Companies (LLC)

LLCs protect the personal assets of a business owner. Being held liable for a company’s actions and the state getting your own assets as payment for the cost incurred is made impossible if your business is registered as an LLC. Registering an LLC in your trust state can help enhance protection of your personal and business assets, but it can be quite a controversy.


  • Business & Recreational Assets

Private jets, luxury vehicles, boats, and other assets used for business and recreational activities are also viable to fund your DAPT. Registering these assets under your LLC in the trust state would require careful documentation and tax reporting as creditors may file liability claims. What you can do is to lease these belongings to the LLC where you can report them as rental income. This would also be better when it comes to paying due taxes.


  • Real Estate

The transfer of real estate asset to the trust estate may be quite a challenge since land cannot be bought and moved to the state of your DAPT. The best option when using real estate as funds for your DAPT would be to transfer the real estate as the property of your LLC–which is registered to your trust state.



A DAPT can be a weak option to protect your asset simply because it would be hard to register a DAPT on your home state. You need to find a trustworthy state with the substantial relationship in order to establish a DAPT that would actually protect your assets.