Completed Gift Domestic Asset Protection Trusts — What They Are and How They Work
July 6th, 2012
Completed gift domestic asset protection trusts (DAPTs) take advantage of U.S. tax law and trust laws in some states to protect up to $5 million from estate and gift taxes.
As a Dayton, Ohio asset protection attorney, one of the tools I use to minimize the taxes my clients pay on their estate is the completed gift DAPT. This tool allows people to transfer over $5 million to a self-settled asset protection trust and count it as a “gift” without having to pay gift taxes or estate taxes on that money.
Besides minimizing taxes, because of the nature of the trust, the Trustmaker also has access to his or her assets, including any income generated by the asset.
Completed Gift Domestic Asset Protection Trusts — How They Work
Under current federal and state law, anyone can give away up to $5,120,000 in their lifetime and not pay estate taxes or gift taxes on that money. Couples can give away up to $10,240,000 tax free. Most wealthy people do not know this.
By gifting that money to a self-settled domestic asset protection trust formed in a state with asset protection trust laws, like Wyoming, Delaware or Alaska, a wealthy individual can protect that money from both taxes and creditors, yet still have that money distributed to themselves during their lifetime should they have need of it. This makes the completed gift DAPT a valuable tool for minimizing taxes and protecting assets while still making those assets accessible.
When the Dayton, Ohio asset protection attorneys at Gudorf Law Group help set up your DAPT, we also prefer to set up a limited liability company that is owned by the trust. Ownership of your assets is transferred to the limited liability company and you are named manager of the company. Since you are the manager, you have control over the buying, selling and investment of the company’s assets. Since the company is owned by the trust, the transfer of assets still qualifies as a completed gift for IRS tax purposes and the assets are exempt from gift and estate taxes.
As you can see, the completed gift DAPT offers a lot of protective value while still giving trust makers considerable control over their assets.
In Dayton, Ohio, the asset protection attorney’s office of Gudorf Law Group, LLC, can assist in setting up a completed gift domestic asset protection trust under the trust laws of Wyoming or Delaware. Call our office at 1-877-483-6730 to schedule a free consultation.