IN Legacy Trust

Question 1

What is a Domestic Asset Protection Trust (DAPT)?

Answer 1

Often called a “self-settled spendthrift trust”.

• an irrevocable trust . . .
• funded with assets of the settlor . . .
• administered by an independent trustee . . .
• under which the settlor is (usually) a beneficiary eligible to receive or benefit from discretionary distributions . . .
• and which contains a spendthrift clause that effectively protects (usually with a few exceptions) the assets in the trust from future creditors
• after a “seasoning period” that is shorter than the corresponding limitations periods under the fraudulent transfer or voidable transaction statutes of the settlor’s home state

Question 2

What was the risk of Hoosiers using other state’s DAPT?

Answer 2

Creditor could file in IN and seek to “claw back” the assets.