DAPT stands for Domestic Asset Protection Trust. These trusts allow you to protect assets from creditors while remaining a beneficiary of those same assets. You create the trust, you fund it with your own wealth, and you can still receive distributions from it. The trust shields what you have built from future lawsuits, judgments, and creditor claims.
Not every state recognizes DAPTs. The protection exists only because certain state legislatures created statutes authorizing these trusts. Understanding what is DAPT asset protection requires understanding how these trusts work, which states allow them, and why the choice of jurisdiction matters.
The Basics of a DAPT
A DAPT is an irrevocable trust created under the laws of a state that permits self-settled asset protection. You transfer assets into the trust, and those assets become owned by the trust rather than by you personally. The trust document names you as a discretionary beneficiary, meaning you can receive distributions at the trustee’s discretion.
A trustee located in the DAPT state manages the trust. The trustee holds legal title to the assets, makes investment decisions, and controls distributions to beneficiaries. This trustee must be a resident of the DAPT state or a trust company licensed there. The presence of a local trustee is what gives the state jurisdiction over the trust.
Creditors who obtain judgments against you personally cannot reach assets inside the trust. The judgment attaches to your personal assets, and the trust assets are not your personal assets. You do not own them. The trust does. This separation is what creates the protection.
How DAPTs Differ from Traditional Trusts
Traditional trust law drew a hard line. If you created a trust for your own benefit, creditors could reach whatever interest you retained. Self-settled trusts offered no creditor protection because courts reasoned that you should not be able to shield assets from creditors while still enjoying them yourself.
Traditional irrevocable trusts could provide creditor protection, but only if you gave up all beneficial interest. You could create a trust for your children or grandchildren, and that trust would protect assets from your creditors. But the moment you retained any interest for yourself, the protection evaporated.
Revocable trusts offer no creditor protection at all. Because you retain the power to revoke the trust and take assets back at any time, courts treat those assets as yours for creditor purposes. The revocable trust is useful for estate planning but worthless for asset protection.
DAPTs changed the equation. State legislatures enacted statutes that specifically override the traditional rule against self-settled trust protection. Under these statutes, you can create a trust, fund it with your own assets, remain a beneficiary, and still receive statutory protection from creditors. This combination did not exist under traditional trust law. It exists now because legislatures made it so.
Which States Allow DAPTs
Approximately twenty states have enacted DAPT legislation. The list includes Wyoming, Nevada, South Dakota, Delaware, Alaska, Ohio, Tennessee, and others. Each state that permits DAPTs has its own statute with its own rules.
The differences between state statutes matter. Some states have shorter fraudulent transfer lookback periods than others. Some have broader exception creditor provisions that allow certain creditors to reach trust assets despite the protection. Some require specific trust language or trustee qualifications that others do not.
Wyoming, Nevada, South Dakota, and Delaware are among the most established DAPT jurisdictions. These states have the longest track records, the most developed case law, and the most sophisticated trust infrastructure. Attorneys who specialize in asset protection planning gravitate toward these states because the legal framework is clearest.
The strength of protection depends heavily on which state’s law governs the trust. A weak statute in one state may provide less protection than a strong statute in another. Choosing the right jurisdiction is one of the most important decisions in establishing a DAPT.
Why Wyoming Leads in DAPT Asset Protection
Wyoming was among the first states to adopt DAPT legislation. The state recognized early that favorable trust laws could attract business and decided to compete for trust administration the way other states compete for corporate formation.
The Wyoming Trust and Estate Political Action Committee, a consortium of attorneys, accountants, and banks, drafted the original statute and has refined it over decades. This is not a law that was passed and forgotten. It is a living framework that gets updated as issues arise and case law develops.
Wyoming has no state income tax on trust income. For people in high-tax states, this creates meaningful savings beyond the asset protection benefits. A California resident who establishes a Wyoming DAPT avoids California income tax on trust earnings.
Wyoming established a specialized tribunal to handle trust disputes. The judges who preside over trust cases understand DAPTs, Private Family Trust Companies, and the statutes that created them. Disputes get resolved by people who know what they are doing rather than generalist judges encountering these structures for the first time.
You do not need to live in Wyoming to establish a Wyoming DAPT. You need a Wyoming trustee or co-trustee and a trust document drafted under Wyoming law. Your assets can be held anywhere. Your residence can be anywhere. The trust’s legal domicile is what matters.
Limitations of DAPT Protection
DAPTs are powerful, but they are not absolute.
Fraudulent transfer laws still apply. If you transfer assets into a DAPT after a creditor has a claim against you, or after an incident that might give rise to a claim, that transfer can be challenged and reversed. The protection works only for transfers made while you are solvent and before any liability exists.
Courts in non-DAPT states may not automatically defer to the DAPT state’s laws in every situation. Most courts respect properly established trusts, but outcomes can vary depending on the facts and the jurisdiction where litigation occurs.
Certain creditors may have exception creditor status under state law. Child support, alimony, and some government claims receive special treatment in many DAPT statutes. These creditors may be able to reach trust assets even when other creditors cannot.
DAPTs protect against future creditors, not existing debts. If you owe money today, you cannot shield that money from the person you owe by moving it into a trust tomorrow.
The Most Effective Domestic Tool
What is DAPT asset protection? It is the most effective domestic tool available for shielding wealth from future creditors. Wyoming offers the strongest statutory framework, the most refined trust code, and the most sophisticated infrastructure for administering these trusts.
The protection works when established properly and before problems arise. The planning window is open when you have no claims pending and no incidents that might become claims. That window closes the moment liability arises.