Domestic Asset Protection Trusts are a compelling planning tool to use in lieu of or in conjunction with prenuptial agreements in the pre-marital planning process. While prenuptial agreements serve a certain purpose, there are many personal and legal issues that deter couples from executing them, and as such, many practitioners have turned to alternatives to protecting assets obtained prior to marriage.
Domestic Asset Protection Trusts, only available in fourteen states including South Dakota, are a formidable strategy that legally shields assets from third party liability (including spouses in a divorce proceeding) while permitting settlors (the person establishing the trust) to retain some control over the trust assets and enjoy a discretionary benefit during their lifetime. Therefore, prior to marriage, a spouse can establish a Domestic Asset Protection Trust that is fully discretionary, receive financial benefit from the trust, and protect trust assets from a spousal claim in a subsequent divorce proceeding.
Unlike prenuptial agreements, there is no disclosure or timing requirements. The trust can be established any time prior to marriage and never has to be revealed to the intended spouse, avoiding uncomfortable and potentially confrontational conversations. In addition, utilizing Domestic Asset Protection Trusts in the pre-marital planning process greatly reduces the chances of a successful attack resulting in the equitable distribution of property brought to the marriage.
Click here for a detailed presentation about the advantages of using Domestic Asset Protection Trusts in the pre-marital planning process.
