There are many nuances and complexities involved in setting up an asset protection trust. Today, we’re going to look at the top two mistakes people are making in 2025 when it comes to asset protection trust planning.
Mistake #1: Choosing the Wrong Jurisdiction
The first major mistake is selecting the wrong jurisdiction. Only a minority of U.S. states offer what’s known as self-settled asset protection trusts, which allow you to create an irrevocable trust for your own benefit and transfer your personal assets into it. While around 20 states may have such laws, not all asset protection laws are equal, and only a few states offer truly strong and flexible protections. The most respected and widely recognized jurisdictions are Nevada and South Dakota. Their asset protection trust laws are nearly identical and are considered the gold standard. Following them, you’ll hear about Tennessee, Ohio, Delaware, Alaska, and Wyoming—though Wyoming, while often marketed as a good jurisdiction, typically ranks below the others in terms of strength and flexibility. One critical detail to examine is the statute of limitations on fraudulent transfers. For instance, in Wyoming, a personal creditor has up to four years to challenge a transfer made to a trust. In contrast, Nevada and South Dakota offer a two-year limitation period. Ohio has the shortest—just 18 months—but overall, Nevada and South Dakota offer stronger privacy protections and greater legal flexibility, making them superior choices despite that one advantage in Ohio. Unfortunately, many people simply rely on the advice of a local attorney without comparing options. If you consult an attorney in Nevada, they’ll likely say Nevada is best. Likewise, South Dakota attorneys (like myself) will often advocate for South Dakota. That’s why it’s crucial to perform a side-by-side comparison of jurisdictions to determine what truly serves your needs. While setting up an asset protection trust in a weaker state is still better than having no trust at all, you could be putting yourself at a disadvantage.
Mistake #2: Hiring Non-Attorney Promoters
The second—and perhaps more serious—mistake is relying on non-attorney promoters to set up your asset protection trust. These individuals are often found online, presenting sleek marketing, engaging YouTube videos, and appealing social media content. But when you look closer, it becomes clear they’re not attorneys. Many have never drafted a trust, and they often misrepresent or misunderstand legal issues—like which jurisdiction to use or why one lawyer is better than another. I’ve had clients come to me after working with such outfits, often feeling uneasy or uncertain. When I ask them a simple question—“Who is your attorney?”—they frequently don’t know. In some cases, they were told to speak with another attorney or were given the name of the company’s attorney, who was drafting the documents but not representing the client. This is a serious legal issue and could be considered the unauthorized practice of law, which carries civil and criminal penalties. In one recent example, someone hired a YouTube personality for foreign asset protection trust planning. When asked who the attorney was, the promoter finally provided the name of their own attorney, but clarified that this attorney wasn’t working for the client—just the company. That is a major red flag. My advice is simple: Don’t hire anyone who’s just trying to sell you something. Work only with qualified attorneys. As an attorney myself, I’m upfront when a client doesn’t need a trust. Sometimes all a person needs is a basic LLC in their home state. The goal is to provide what’s truly appropriate for your situation—not just what’s profitable to sell.
Summary: Avoid These Two Mistakes
To recap, the two biggest mistakes in 2025 related to asset protection trust planning are:
- Using the wrong jurisdiction – Not all states with asset protection trust laws are equal. Do a proper side-by-side analysis.
- Working with non-attorney promoters – Don’t trust slick marketing or sales tactics from unqualified individuals. Always ensure you’re working with a licensed attorney who is representing you.
Making these two mistakes can seriously undermine your protection strategy—so be informed, do your research, and work with the right professionals.