The Hard-Shell Nest Egg

Home \| Contact \| Admin

What is a Self-Settled Asset Protection Trust?
A self-settled, asset protection trust is a trust created by an individual (the settlor), funded with the settlor's own assets, and then held by a trustee for the benefit of the settlor, without being subject to the settlor's creditors or debts. These trusts are sometimes referred to as domestic asset protection trusts or DAPTs.

For more than one and a half centuries since the 1850 case of Hawkins v. Pearce, the law was well-settled in Tennessee that all of the assets of a debtor are subject to execution for the payment of his debts. Therefore, a DAPT was void against public policy in this state. Prior to 2007, only a handful of states (Alaska, Delaware, Missouri, Nevada, Oklahoma, Rhode Island, South Dakota, Utah and Wyoming) permitted DAPTs. Now, add Tennessee to that short list.

On May 10, 2007, Governor Phil Bredesen signed the Tennessee Investment Services Act of 2007 into law. The new law permits any person to create a self-settled, asset protection trust, which is referred to as an "Investment Services Trust." This new law sanctioning the creation of a Tennessee asset protection trust (TAPT) was effective July 1, 2007.