In our opinion, the four states that have the best statutory structures to create your asset protection plan are Alaska, Delaware, Nevada and South Dakota.

Alaska

Alaska was the first state to enact Domestic Asset Protection Trust legislation, which protects debtors in ways that are very similar to offshore trusts. In addition, Alaska has an extremely low life insurance premium tax rate, making it attractive for those who wish to purchase life insurance as part of their Domestic Asset Protection Trust.

Delaware

Long considered a tax haven for corporations, Delaware has also enacted legislation that makes it an attractive choice for establishing a Domestic Asset Protection Trust. For example, a Dynasty Delaware Trust is exempt from future estate, gift and generation-skipping taxes so long as the assets remain in trust. A statutory Delaware Trust allows an individual to enjoy income for himself while directing another portion of the trust to investments for future heirs. A Delaware Total Returns Trust is structured to allow a mandatory payout trust to utilize both income and principal to provide a greater payout.

Nevada

Nevada has a very favorable statute of limitations which provides that a creditor may only bring an action against the Trust within two years after the transfer to the Trust or six months after the creditor discovers or reasonably should have discovered the transfer, whichever is later.

South Dakota

South Dakota was one of the first states to enact legislation that allows a trust to endure perpetually, and has no state taxation on trust assets. The state also enacted a self-settled trust statute in 2005, which protects all assets held in trust from creditors.

Other states with self-settled trust statutes

…include Missouri, Rhode Island, Utah, Tennessee, Wyoming, Oklahoma and New Hampshire.