Huntington-based attorney Anna M. Price suggests West Virginians set up domestic asset protection (DAP) trusts as essential wealth management tools to protect valuable family property.
"A DAP trust is an irrevocable trust that can shield assets from potential creditors," Price, a member of Jenkins Fenstermaker, PLLC, told the West Virginia Record. "A DAP trust can benefit the grantor as well as other beneficiaries."
For West Virginia residents, DAP trusts cover personal property such as real estate, certain financial accounts, jewelry, art, antiques, and other valuables from creditors.
"The sentimental value of these items may far outweigh the financial value to you and your family," Price said. "However, a creditor will only be interested in the financial value and may attempt to force a sale in order to garner funds owed."
Price recommends developing a strategy with a qualified West Virginia estate planning attorney as a way to protect assets, tax benefits and help heirs avoid probate actions.
“A DAP trust can benefit the grantor as well as other beneficiaries,” Price said.
Price said the irrevocable trusts help shield assets from creditors while potentially benefiting both the grantor and the beneficiary.
“Clients with high risk of being sued and who have assets that they will not need regular access to are good candidates for a DAP trust,” Price added. “Specifically, we see a lot of business owners, attorneys, physicians, engineers and accountants seeking advice about these trusts.”
DAP trusts also protect those in frequently sued occupations from career-threatening lawsuits, said Price.
Certain professions face higher risk of work-related lawsuits, Price blogs on her firm's website. As lawsuits can jeopardize an individual's career, DAP trusts offer a safety net for occupations most vulnerable to litigation. Price lists the following as professions at high risk of being sued:
- Medical professionals
- Attorneys
- Architects
- Financial advisors
- Tax professionals
- Engineers
“Setting up a DAP trust in another state may require certain criteria for the terms of the trust or the trustee of the DAP trust,” Price said. “Often, clients look to set up DAP trusts in states with more favorable trust laws.”
In addition to West Virginia, states that currently allow DAP trusts include: Alaska, Delaware, Hawaii, Michigan, Mississippi, Missouri, Nevada, New Hampshire, Ohio, Oklahoma, Rhode Island,South Dakota, Tennessee, Utah, Virginia and Wyoming.
For those considering going the DAP route, Price advises doing your homework first.
“The first step in establishing DAP trust is finding an attorney with experience and skill to do so,” she said. “Once you and your attorney have worked together to determine the best possible terms of your trust, you will want to choose a trustee that is trustworthy and responsible. Choosing the wrong trustee can negatively impact even the best written trusts. Some states require affidavits of the grantors to ensure no fraudulent transfers were made, and there are no pending or known causes of litigation or known creditors.”
Price said a DAP can be initiated in a few simple steps.
"Once the DAP trust is established, you will begin transferring assets into your trust," she said. "These transfers can be considered gifts for gift tax purposes, so you would want to work with your tax preparer in the process. Once the trust is formalized, the trustee will be responsible for the administration of the assets in the DAP trust."
Price is a “go to resource” in the world of Domestic Asset Protection (DAP). As an experienced estate planning attorney with clients in West Virginia, Kentucky and Ohio, Price prides herself on protecting those who seek to protect their assets.