By Lauren D. Honet, ATA National Title Group
Michigan has become the 17th state to enact a statute allowing an individual to create a domestic asset protection trust (DAPT). The Michigan Qualified Disposition in Trust Act (MCL 700.1041, et seq.) became effective on March 8, 2017. A domestic asset protection trust allows the trust settlor to retain a beneficial interest in the trust while limiting the ability of creditors to reach the trust assets. Prior to the statute’s enactment, Michigan residents could create a DAPT in another state that allowed the creation of a DAPT. As both the settlor and the property were located in Michigan, out of state courts would apply Michigan law in order to resolve the challenge. Because Michigan did not allow DAPTs, creditors could easily reach the property transferred to the DAPT. With the new Michigan law, the administration of the property held in a DAPT will now remain in Michigan.
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