When a person receives a settlement to pay for medical care and other injury-related needs, dissipation or a catastrophic loss down the road could put them at risk for losing all their assets. Dissipation can occur over time as a result of big life events such as divorce or starting a business. A catastrophic loss is immediate and impactful, such as bankruptcy.
To protect against these risks, a settlement planner may suggest establishing a domestic asset protection trust (DAPT). A DAPT is an irrevocable trust that gives an individual the opportunity for lifelong protection of one’s assets. And it’s not only a planning tool for settlements – anyone can get a DAPT to protect their assets at any time.
Establishing a DAPT is a bit like an insurance policy. When a settlement is intended to cover the expenses related to a lifelong injury, a DAPT should protect against judgments, creditors, bankruptcy, divorce, business failure, and liability from accidents.
When is a DAPT Helpful?
With the right plan and trustee, a DAPT can be an effective option for a parent or spouse caring for a person with special needs. This kind of trust can also be useful in protecting the assets for young adults when established in a jurisdiction that favors the protection of trust beneficiaries; a DAPT can protect against most catastrophic losses to which the financially young are particularly vulnerable.
Getting Advice from an Expert
Settlement is life-changing. Developing the most informed plan possible is a critical step to take before a plaintiff receives his or her settlement proceeds. To come up with the right plan for an incoming settlement, a comprehensive settlement planning firm will take a holistic look at a plaintiff’s situation and combine strategies involving wealth management, long-term risk analysis, future healthcare costs, and trust protection. With a plan in place, the settlement proceeds will be able to meet a plaintiff’s immediate and future needs.
A West Point graduate where he served as captain and military aviator, John Bair continues his commitment to our country through his efforts within the settlement planning industry. He has represented families of victims lost in the Flight 3407 crash, offered pro bono services to the families of 9/11 victims and drafted the first consumer protection bill for plaintiffs (H.R. 3699).