What is the Connecticut Qualified Dispositions in Trust Act?
In Connecticut, Public Act 19-137 created an omnibus trust code that included, as Sections 99 to 108 of the code, the Connecticut Qualified Dispositions in Trust Act (QDTA). The Connecticut QDTA, and the rest of the Connecticut Uniform Trust Code, was enacted in 2019 and took effect in January 2020. Importantly, the Connecticut QDTA allowed for the creation of domestic asset protection trusts (or DAPTs). What is the purpose of the Connecticut QDTA, and what should you know about creating a DAPT if you are beginning to work on an estate plan in the Canton area? Our Connecticut trusts lawyers can provide you with more information below, and we can assist you with the creation of a DAPT and other types of trusts that may be relevant to you or your beneficiaries.
What is the Purpose of the Connecticut Qualified Dispositions in Trust Act?
The general purpose of the Connecticut QDTA was to enable Connecticut residents to establish domestic asset protection trusts that could be for their own benefit and would protect them against claims from a range of future creditors. In enacting this law, Connecticut lawmakers viewed it as a law that would be complementary to the Uniform Fraudulent Conveyance Act (UFCA), which exists in part to prevent debtors with actual or constructive intent from defrauding creditors or delaying payments to creditors.
What does the latter have to do with the former? In short, prior to the enactment of the Connecticut QDTA, a resident creating a trust designed to protect their assets from creditors could be in opposition to the terms of the UFCA. Now, Connecticut residents often can protect their assets from certain creditors by creating a DAPT under the Connecticut QDTA.
What is a DAPT?
A DAPT, or domestic asset protection trust, is an irrevocable, self-settled, spendthrift trust that is established by the grantor or settlor (i.e., the person making the trust) for their own benefit (i.e., for which they are a beneficiary) that also prevents claims against the trust by creditors of the grantor or settlor.
Previously, under Connecticut case law, creditors were able to reach a grantor’s assets held in an irrevocable trust. There are still some limitations, including the timing for when a grantor places assets into a DAPT and when claims to creditors become owed. The best way to find out if a DAPT is appropriate for your estate plan is to discuss your financial circumstances with an estate planning lawyer in Connecticut.
Contact a Canton, Connecticut Trusts Attorney for Assistance Today
Whether you have questions about creating a trust under the Connecticut QDTA or you want to find out more about establishing another type of trust under Connecticut law, an experienced Canton estate planning lawyer at the Law Office of Brian S. Karpe can assist you. We can speak with you today to learn more about your individual and family circumstances, and we can provide you with information that is specifically relevant to your circumstances about trusts and other important estate planning tools. Contact our firm today to get started.
Source:
cga.ct.gov/2023/pub/title_45a.htm
