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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.

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