Michigan Domestic Asset Protection Trusts
Michigan will allow asset protection trusts beginning February 5, 2017. The purpose of a domestic asset protection trust (“DAPT”) is to shield one’s assets from claims of creditors. Previously, trusts could be used to protect assets after the death of the grantor and for the benefit of the grantor’s children and grandchildren. However under previous law, the creditor of the grantor could still invade the trust while the grantor was living. Under the Qualified Dispositions in Trust Act of 2016, a grantor can effectively shield his or her own assets from creditors while still receiving income and principal from the trust. There are, of course, limitations. But a DAPT can be an effective tool to protect one’s assets from the reach of creditors indefinitely. Those looking to create an asset protection trust should consider creating a Michigan asset protection trust, by selecting a Michigan Trustee and specifically requesting an asset protection trust. For reference, see MCL 700.1049. A summary of the Qualified Dispositions in Trust Act can also be found in the Michigan Senate Bill Analysis for Senate Bill 597 of 2016.
