Ohio is One of Top States for Asset Protection
November 30th, 2017
Once again, Ohio has been ranked as one of the top states for asset protection. Ohio is one of seventeen states that permit Domestic Asset Protection Trusts (DAPT). Nevada attorney Steve Oshins does an annual ranking of the states that have the most favorable jurisdictions for this type of trust. In 2016, as in 2015, Ohio ranked fourth on the list—an impressive accomplishment.
This is good news for Ohioans who want to maintain control over their assets, but protect them from most creditors. A DAPT is an irrevocable trust established under the laws of a state that permits these trusts. DAPTs are unique because they allow the settlor or grantor (creator) of the trust to be a trust beneficiary, yet still protect the assets from their creditors.
If Ohio is fourth on the list, why not set up a trust in the top-ranked state (which is Nevada, incidentally)? In general, the more ties you have to a particular state, the more likely a court will be to enforce the trust as valid and not allow a creditor to "pierce" the trust. If you already live in Ohio, it makes sense to have an Ohio DAPT. If you were to set up a DAPT in Nevada with no ties there beyond the occasional weekend jaunt to Vegas, there exists a chance that an Ohio court might be suspicious of your motives for establishing a DAPT there. While you do not need to reside in the state where your DAPT is established, the trustee of the DAPT must.
Who Needs a Domestic Asset Protection Trust?
The primary benefit of DAPTs is that they shelter your assets from future creditor claims. If you have a judgment against you or you are being sued, the trust won't protect you. But if you have considerable assets and reason to believe that you could have future exposure to lawsuits, a DAPT is definitely worth considering. An example might be a professional, such as a doctor or lawyer, who has not done anything for which they expect to be sued, but who knows that lawsuits are a likelihood at some point for those in their profession.
You might also want a DAPT if you are looking to protect assets for an heir who is something of a spendthrift. If you are contemplating marriage and want to protect your assets in the event of a possible divorce, a DAPT can place your wealth out of your future spouse's reach. As a bonus, the assets in the DAPT are not part of your probate estate.
Establishing an Ohio Domestic Asset Protection Trust
You won't know if your DAPT is effective as a protection from creditors unless and until it's tested. Don't stay awake nights worrying whether creditors will be able to "pierce" your trust. Make sure you work with an attorney who is experienced in drafting these trusts and familiar with Ohio DAPT law.
A knowledgeable attorney will be able to discuss not only the advantages, but also the limitations of a DAPT with you and help you determine whether a DAPT is right for your needs. If, together, you conclude that a DAPT is ideal for your asset protection goals, you can rest secure in the knowledge that Ohio is an excellent state in which to establish one.
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