The Asset Protection Guide For Florida Physicians
trusts is “heavily dependant upon a settlor-beneficiary’s control.” You may remember that since the DAPT also serves as the Settlor’s primary estate planning document and that to add flexibility the settlor is typically given a “Limited Power of Appointment” which allows a Settlor to change (i) the persons who will receive the assets in the DAPT upon the death of a Settlor, and (ii) the manner in which they receive it (i.e., in trust, outright, in a specialized trust, etc.). This could be a type of “control” a court may use to assert that Florida’s public policy against self-settled spendthrift trusts should apply to a DAPT. Building on the previous example of Barney and Betty, if Betty (i.e., the lower risk spouse) is given this power, but not Barney (i.e., the physician), the protective nature of the DAPT can be ameliorated. Duress Clause, Flight Clause, and Trust Protectors. As discussed previously in this Chapter, the addition of a Duress Clause, a Flight Clause, and a Trust Protector can add additional protection and flexibility to your Integrated Wealth Plan. Upsides to Using a DAPT. Expensive to Litigate with no Guarantee of Success. A creditor seeking to reach assets properly transferred to a DAPT will have to be prepared to spend considerable money to try and pierce the DAPT with no guarantee of success. In the event the trust agreement contains some of the suggestions mentioned above to mitigate some of the potential arguments a creditor may use to try and pierce the DAPT, its protection will be even stronger. This being the case, a creditor will likely think twice about suing you in the first place or will be much more likely to settle for a significantly reduced amount. Exempt Under New Bankruptcy Laws. As mention previously in Chapter 7, any assets transferred to a DAPT more than the ten years prior to filing for bankruptcy will be fully exempt from creditors. In addition, it appears that even transfers made within the ten year period may also be exempt in bankruptcy so long as the transfers to the DAPT are not “fraudulent transfers.” If you consider the fact that most lawsuits take anywhere from three to five years from initial filing to judgement (sometimes longer if an appeal is pursued), if you established a DAPT today and were sued only Page 311