Utah Domestic Asset Protection Trust – The Good, the Bad, and The Better

What is a Utah Domestic Asset Protection Trust (UDAPT)?

  A UDAPT is an irrevocable trust that provides (1) asset protection, (2) control, (3) and access. Hundreds of years of laws previously stated that your creditor can get access assets in your trust to the extent that you can benefit from them. Utah is one of 17 US States that turned the tables allowing creditor protection for a self-settled trust (a trust whose settlor is also a permissible beneficiary).

Who should consider a UDAPT?

  People with high-liability professions, high net-worth, or high-risk aversion who want to take some “chips” off the table and also be a permissible beneficiary. People who want to protect assets such as a residence or other real estate, savings or investment accounts, business interests, or other valuable assets should consider a UDAPT in their asset protection plan.

Pros and Cons of a UDAPT?


  • Statutory – Blessed by Utah Statutes.
  • Control – The Settlor can control the trust assets and investments (however another non-beneficiary co-trustee is required to make distribution decisions).
  • Access – The Settlor is a permissible beneficiary.
  • Statute of Limitations
    • Non-existing Creditors (Potential Future Creditors): Immediate protection
    • Existing Creditors: Barred from making a claim after the later of 2 years or 1 year after they reasonably should have known about the transfer to the trust. This can be reduced to 120 Days by providing actual notice to known creditors and by publishing notice for unknown creditors.


  • Affidavit of Solvency – A strict interpretation of the UDAPT statute appears that every time you make a transfer into the trust, you must sign an affidavit of solvency. If this isn’t followed for each transfer, a potential creditor could attempt to attack the trust on the grounds that the formalities had not been followed (although there are no court cases on this).
  • New Law – Only 17 States allow DAPTs. Utah has only allowed the use of a DAPT since 2013. Alaska was the first state and has only allowed this type of trust since 1997. There are very few court cases addressing their effectiveness.
  • Liabilities in other States – There is concern that the trust assets are vulnerable to creditors outside of Utah without DAPT statutes.
  • Real Estate – Utah requires that deeds to real estate transferred to a UDAPT state that the trust is an “asset protection trust.” This requirement appears in a different part of the Utah statutes (not the UDAPT statute) and is often missed. Some have concerns about whether they lose the protection if they don’t do this. Some prefer not to put the words within an “asset protection trust” on a publicly recorded document.
  • Bankruptcy – Federal bankruptcy can reach assets transferred into the trust within 10 years of the bankruptcy. 

How to set up a UDAPT?

  The UDAPT requires specific language and should be prepared by an attorney with extensive knowledge about Utah estate planning and asset protection. At least one trustee of your DAPT must be a Utah resident. The Settlor must sign an Affidavit of Solvency each time assets are transferred into the trust, which means you are certifying that after the transfer of every asset into your DAPT, you still have more assets than liabilities and can cover your obligations.

 When to create an Asset Protection Trust?

  Timing is important with any asset protection. The trust should be established in advance of a creditor problem to avoid fraudulent/voidable transfers (transfers which render the settlor insolvent or are made with the intent to delay, hinder, or defraud known creditors). Any asset protection strategies should be established before the liability wind is blowing so that if the storm comes, you already have a bunker prepared.

Building a Better UDAPT

  McCullough Sparks has 30 years of combined experience in creating irrevocable trusts. Understanding a client’s particular situation is key in determining what tools to use. A UDAPT can be created with variations and provisions to provide greater protection and flexibility. This could include (1) appointing a Trust Protector who can remove and replace trustees among other things, (2) limiting the settlor’s beneficial interests (such as to reside in trust owned real estate, if the settlor doesn’t need distributions, or the trust only owns a residence), (3) asset protection planning with more than one trust, and (4) publishing notice (or providing specific notice to creditors) to shorten the statute of limitations period to 120 days.

What is better than a UDAPT?

In many circumstances, a third-party trust (non-self-settled) is a better planning tool. We call our third-party trust a 541 Trust®. A 541 Trust® works in all 50 States. We always consider your specific circumstances when determining which type of asset protection trust is best for you. Asset protection plans require customization by a knowledgeable attorney.


  A UDAPT is a good option if the settlor lives in Utah, the assets the settlor needs protecting are in Utah (or in another DAPT State), and the settlor doesn’t have a likelihood of bankruptcy within 10 years of funding the trust. UDAPTs often work well for unmarried individuals with assets in need of protection. If, however, the settlor has assets or liability exposure in many states other than Utah, a 541 Trust® may be a better solution.