Florida Estate Planning and Probate Law Blog focused on recent case law and planning ideas.

NEW MICHIGAN LAW ALLOWS FOR THE CREATION OF DOMESTIC ASSET PROTECTION TRUSTS

On December 5, 2016, the State of Michigan joined the ranks as one of seventeen states (including Alaska, Delaware, Nevada, Utah and South Dakota) that permit the use of irrevocable self-settled asset protection trusts for purposes of creditor protection planning. The law becomes effective on February 5, 2017. A Michigan domestic asset protection trust ("DAPT") will enable an individual to shelter assets from future third party creditors. A DAPT is an irrevocable self-settled trust which, when established and funded properly, allows the grantor (the individual establishing the trust) to protect his or her property from the claims of future third party creditors and still maintain a beneficial interest in the trust property. The majority of DAPTs are administered by an independent Trustee (usually a corporate Trustee), friend or family member who is domiciled or has a business presence in the jurisdiction in which the DAPT is established. The Trustee will have the absolute discretion to make distributions to a class of beneficiaries, which may include the grantor. A DAPT can be a highly effective creditor protection tool.