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Domestic Asset Protection Trusts in Utah

by Norris Law Group on June 10, 2014

Domestic Asset Protection Trusts in UtahThe previous installment of this blog introduced an asset protection strategy known as a self-settled spendthrift trust. A spendthrift trust is often set up by someone who would like to designate a beneficiary for an inheritance, but who is also afraid that the beneficiary might waste the inheritance and spend it all on frivolous or dangerous things, such as flashy cars or a substance abuse habit. A spendthrift trust mitigates a beneficiary’s ability to do something like this, and helps ensure that the inheritance will be used as you intend for it to be used.

Utah is a state that allows self-settled spendthrift trusts, which falls under the category of a Domestic Asset Protection Trust, or DAPT. Timothy Beppler and Christopher Reimer write about this particular asset protection vehicle in an article for the Utah Bar Association, which explains the history behind the creation the DAPT statute in Utah, which makes spendthrift trusts possible.

Utah Code section 25-6-14 allows Utah residents to create self-settled spendthrift trusts for their own personal advantage. Utah’s code is different from that of other states that also allow spendthrift trusts. For example, Utah specifies a number of circumstances in which transferring funds to such a trust is not effective. Utah statute also sets a very short statute of limitations on creditors that may try to avoid transfers to an asset protection trust.

Utah allows a person setting up a spendthrift trust (known as the “settlor”) to transfer assets to a trust in which in which he or she has a personal stake. Creditors may not make claims on the assets in the trust if certain conditions exist.

Some requirements for a Domestic Asset Protection Trust in Utah include:

  1. the trust must contain an enforceable spendthrift provision;
  2. the trust must have been created on or after December 31, 2003;
  3. the trust must be irrevocable; and
  4. the trust must have at least one trustee authorized to engage in trust business in Utah. A qualified non-co-trustee may also serve with the authorized trust company.

Attorney Graham Norris and his associates at the Norris Law Group serve the residents of Utah County and throughout Utah in the area of asset protection. Contact them today at 801-932-1238 or online for a free consultation.

 

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