Prenup Vs. Domestic Asset Protection Trust

MarriageSo how do DAPTs work in a marriage to protect assets? Do they need to be set up before the marriage? Can they be set up during the marriage?

Marriage might be that last step in bringing two people and two lives together. Nevertheless, that moment often causes one to pause, however idyllic a match may be. Cold feet is cold feet.

When it comes to bringing two financial lives together, there are some hard numbers to work through and some tough decisions to make before opening each other up to one another’s liabilities or the liability of divorce itself. You can use a prenuptial agreement – the so-called “prenup” of courthouses and tabloids alike. Alternatively, as pointed out in a recent Forbes article, titled “How To Protect Yourself In A Divorce Using A Domestic Asset Protection Trust,” you might have better luck with a Domestic Asset Protection Trust or DAPT. It’s a big topic.

The article builds the case that prenups and DAPTs are simply different tools to the same end, but a DAPT is a potentially more powerful tool. Prenuptial agreements work like a contract and spouses agree on the disposition or partitioning of assets well before that knot is tied. Consequently, there is that agreement to come back to when and if the knot is to be untied.

As business owners will tell you, however, even airtight contracts can be misunderstood, brought to court, and heavily litigated. Although you might win in the end, you certainly weren’t spared from the fight. A DAPT, as a trust, works to solve that by moving the assets in question out of reach so it’s not a question of how to untie those special assets from the knot at all.

That’s the basics of the idea, but there is much more to say, much more that can be done, and a few drawbacks to understand. The original article jumps into it a bit more deeply.

If there are any assets worth planning to protect, then it’s worth consulting your attorney about whether a DAPT will do the work. The biggest point about the trust itself might be that it can go a long way toward solving potential spousal creditor issues too. Take the time to look into the issue and the tools at hand.

For additional information about asset protection and elder law topics in Houston, please visit my website.

Reference: Forbes (May 15, 2014) “How To Protect Yourself In A Divorce Using A Domestic Asset Protection Trust



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