Delaware Asset Protection Trust Law and Legal Definition
Delaware Asset Protection Trust or Delaware Trust is an irrevocable, self-settled spendthrift trust designed to provide the grantor with protection from the claims of creditors. Unlike other types of spendthrift trusts, the grantor is permitted to retain a beneficial interest in the trust. The Trust must be established in accordance with the Delaware Qualified Dispositions in Trust Act (the "Act"), and is subject to certain requirements and limitations.
The trust must be irrevocable, appoint at least one qualified Delaware trustee, contain a spendthrift clause and be governed by Delaware law. A qualified Delaware trustee is a Delaware resident or an entity authorized to act as trustee within the state. The grantor cannot serve as trustee.
The Act imposes certain limitations, such as a period of time (generally four years) during which creditors can challenge transfers to the trust as being fraudulent. In addition, claims such as alimony, child support and tort injuries incurred prior to the date of the trust are exempt from creditor protection for public policy reasons.
