During the dissolution process, spouses in Ohio and other states across the nation often spend much time sorting through their belongings and determining who gets what. Even in the simplest divorces, this process could be challenging. In a high-asset divorce, the property division process could be very complex, leading to lengthy disputes. In some matters, a spouse will take measures to ensure that their assets and property are protected. This is often done through the drafting of a prenuptial agreement, but asset protection could also be accomplished through other documents as well.
Discussions about a prenuptial agreement are often uncomfortable because a conversation about potentially divorcing before a couple is even married is not an easy one to partake in. Sometimes couples are able to move through the conversation and end up with a prenuptial agreement, but others do not. Even when a prenup results, these legal documents may not offer as much protection as one would like.
In order to better ensure the protection of assets in the event of a divorce, a domestic asset protection trust or a DAPT could be drafted and entered into. This irrevocable trust is considered an advanced asset protection strategy that allows individuals and families to not only shield their assets from a creditor, which is often what it is used for, but also offers protection during a divorce.
A DAPT allows the creator to become the discretionary beneficiary, but also allows for protection from the beneficiary’s creditors. Furthermore, a spouse or an ex-spouse could similarly be shielded from the asset or property. While a DAPT could be used to benefit a spouse or the couple in the event of a divorce, not all asset protection is best served through this document. This is why it is important that divorcing spouses understand their rights and how any documents drafted prior to or during marriage could affect their dissolution.
Source: Forbes, “How To Protect Yourself In A Divorce Using A Domestic Asset Protection Trust,” Robert Pagliarini, May 15, 2014