Nevada Trusts, Delaware Trusts, and Other Domestic Trust Will Likely Not Protect You In Florida Court

I get calls from people who have established their own asset protection plan using self-settled trusts in states such as Nevada, Delaware, and Alaska. These states have enacted statutes which protect from creditors a debtor’s beneficial interest in a trust which the debtor sets up for his own benefit- a “self settled trust.”

A self-settled trust protected by state law is referred to as a domestic asset protection trust (“DAPT”)  Florida does not have a DAPT law, and generally speaking a self-settled trust in Florida does not protect the debtor’s beneficial interest even when the trust has standard spendthrift clauses.

I have written before, but it needs repeating, that general conflict of interest law principals hold that Florida courts will not recognize or enforce the DAPT statutes enacted in other states. A Florida debtor who transfers his assets to a Nevada trust or a Delaware trust will probably  find that the Florida courts will permit his creditors to levy upon his interest in this trust. Bankruptcy courts are more likely than state courts to penetrate a DAPT.