In the years since the first DAPTs were enacted, there have been no legal cases where a creditor has challenged a DAPT meeting Liberty Street’s criteria through the court system and accessed the grantor’s assets. A notable expert in the field has written that the main reason DAPTs have not been fully vetted in the court system is that most asset protection experts believe they do work and will protect their clients’ assets, if ultimately tested. Therefore, plaintiffs may be understandably reluctant to spend significant attorney’s fees and then fail to collect on a judgment.
Some traditional estate planners have taken the position that clients should only utilize a technique after it has been validated by a court. However, in asset protection planning, it is often the case that the fear of an uphill battle and a nearly insurmountable structure is sufficient to frustrate a potential creditor into settling a dispute or dismissing the suit altogether. Unfortunately, practitioners who fail to recognize this may end up doing no meaningful asset protection planning for their clients, since they are unable to find a structure they can guarantee will protect the assets 100% of the time. Those practitioners may harm their clients by failing to recognize that a lack of active planning guarantees that there will be little to no asset protection all the time.