A popular tool for asset protection in the United States is the “domestic asset protection trust” (the “DAPT”). Considered to have first been recognized under state law by Alaska in 1997, the DAPT is currently approved under state law by approximately 20 states.

Broadly speaking, DAPTs are U.S. domestic trusts established by a grantor, who generally retains certain rights over the trust, but wants the assets of the trust to be protected from creditors. The DAPT generally is irrevocable and is often referred to as a “self settled” trust.

An important recent case concerning the use of DAPTs, specifically the use of DAPTS for asset protection for real estate, is United States v. Huckaby, 2026 WL 587784 (E.D. Cal. 2026). This article discusses the Huckaby case and its asset protection implications.

The key background facts in the Huckaby case were as follows:

1. On August 29, 2005, Defendants Robert Huckaby and Joyce Tritsch, as joint tenants (“Defendants”), acquired a property located in South Lake Tahoe, California (the “Property”).
2. On October 17, 2011, Defendants executed a trust instrument creating the Circle H Bar T Trust (the “Trust”) and transferred the Property into the Trust.
3. Defendants were the Trust’s settlors, trustees, and sole beneficiaries during their lifetimes. Although the Trust has been described by several commentators as a Nevada DAPT, it is unclear if the Trust was in compliance with all the necessary provisions of Nevada statutory law to properly create a Nevada DAPT (and the court never expressly ruled on this specific issue).
4. On March 30, 2018, a judgment was entered in favor of Plaintiff United States (“Plaintiff”) and against Defendant Robert Huckaby for failure to honor Internal Revenue Service levies. As of June 15, 2025, Defendant Huckaby owed the Plaintiff a total balance of $87,959.84.
5. On March 29, 2023, Plaintiff filed a civil complaint in the United States District Court for the Eastern District of California, seeking, among other declaratory relief, that the court determine that Plaintiff may enforce its judgment against the Property.
6. On June 23, 2025, Plaintiff filed a motion for summary judgment seeking a court order, declaring Defendants to be the true owners of the Property, Plaintiff’s judgment lien to encumber Defendant Huckaby’s ownership interest in the Property, and Plaintiff to submit a proposed order of foreclosure of the Property.

On March 2, 2026, on the motion for summary judgment, United States District Judge Dale A. Drozd issued the opinion in the Huckaby case, stating:

“The court first determines what law governs the matter of whether a creditor can reach property that is held in trust. Plaintiff argues that California law on trusts governs defendants’ Trust in this regard because the land at issue in this action is located in California. . . . Defendants argue that the Trust is governed by Nevada law because it was designated as a Nevada Spendthrift Trust by its terms. . . .

Where, as here, a federal court’s jurisdiction is based on federal question jurisdiction, ‘federal common law choice-of-law rules apply.’ . . . Accordingly, the court ‘follows the approach outlined in the Restatement (Second) of Conflict of Laws.’ . . . (‘Federal choice-of-law rules in the Ninth Circuit follow the Restatement (Second) of Conflict of Laws as a ‘source of general choice-of-law principles,’ and ‘an appropriate starting point for applying federal common law in this area.’’ . . .

To the extent that defendants argue thar the Trust should be constructed in accordance with Nevada law, they are correct. The Restatement (Second) of Conflict of Laws § 277 provides that a ‘will or other instrument creating a trust of an interest in land is construed in accordance with the rules of construction of the state designated for this purpose in the instrument.’ Restatement (Second) of Conflict of Laws § 277 (1971). However, the issue before the court is not a matter of interpreting the Trust but instead whether the land which is held in that trust can be reached by a plaintiff creditor. As to that question, the court finds § 280 to be persuasive in stating that ‘[w]hether the interest of a beneficiary of a trust of an interest in land is assignable by him and can be reached by his creditors, is determined by the law that would be applied by the courts of the situs.’ Restatement (Second) of Conflict of Laws § 280 (1971) (emphasis added); see also In re Anselmi, 52 B.R. 479, 490 (Bankr. D. Wyo. 1985) (‘Where the res of the trust is real property, the law applied in determining whether the beneficial interest of a beneficiary is exempt from process is the law of the situs of the land.’). Accordingly, because the Property is located in California, the court will apply California law in determining whether it is subject to enforcement of a judgment lien by plaintiff.

‘[U]nder California law, a settlor of a spendthrift trust cannot also act as a beneficiary of that trust (i.e., California law prohibits ‘self-settled’ trusts). California law voids self-settled trusts to prevent individuals from placing their property beyond the reach of their creditors while at the same time still reaping the bounties of such property.’ . . . Here, the Trust is a self-settled trust because it was formed by defendants Robert Paul Huckaby and Joyce Ann Tritsch as trustors, settlors, trustees, and beneficiaries of the Trust. . . . [B]ecause the trust ‘is a self-settled trust, its spend-thrift provisions are void against defendants’ creditors, including the [United States].’ . . . Accordingly, applying California law regarding the effectiveness of a spendthrift trust in shielding real property from creditors, the court concludes that the judgment liens here are enforceable against the Property to the extent that defendant Huckaby has an interest in that [P]roperty. . . .

[T]he court concludes that the undisputed facts before the court on summary judgment establish that defendant Huckaby possesses both a legal and equitable interest in the Property. These facts are sufficient to demonstrate defendant Huckaby has a property interest in the Property such that the judgment liens may be enforced against the Property. . . .

For the reasons explained above, . . . Plaintiff’s motion for summary judgment . . . is GRANTED IN PART, as follows: . . . The Court declares the following: i. The United States’ judgment lien encumbers defendant Huckaby’s one-half ownership interest in the Property; ii. The United States may submit a proposed order of foreclosure with regard to the Property”.

It is important to understand the asset protection implications of the Huckaby case. The Huckaby case should not be viewed as general authority that a DAPT cannot provide asset protection. There is nothing in the Huckaby case to serve as authority that a DAPT owning personal property (all non-real estate property) cannot provide asset protection. Moreover, the Huckaby case should not be viewed as general authority that a DAPT owning real estate cannot provide asset protection. There is nothing in the Huckaby case to serve as authority in a state that allows a DAPT to provide asset protection that a DAPT owning real estate in such state cannot provide asset protection. In addition, the Huckaby case may be viewed as an example of a case with “bad facts”. The applicable facts in the Huckaby case of the Defendants being the Trust’s settlors, trustees, and sole beneficiaries during their lifetimes certainly were not helpful for the court to reach a favorable decision for the Defendants. First, as noted above, based on these applicable facts, it is unclear if the Trust was created as a proper Nevada DAPT. Second, such applicable facts are never favorable in any “trust asset protection” case when you want to establish distinct “separation” or “independence” with respect to the trust’s settlor, trustee, and beneficiary.

Notwithstanding the above-described various possible limitations on the scope of the Huckaby decision, the Huckaby case does provide important authority. The Huckaby case should be specifically viewed as authority in a state that does not allow a DAPT to provide asset protection (such as California) that a DAPT owning real estate in such state cannot provide asset protection. At its root, the Huckaby case concerns what state law should be applied to real estate owned in a trust – the law where the real estate is located or the law by which the trust is to be administered; the Huckaby decision applies the law where the real estate is located (California) instead of the law by which the trust is to be administered (Nevada). The Huckaby case highlights the critical importance of applying favorable state law to any asset protection plan. There are potentially 50 different state asset protection laws, and you want to structure your asset protection plan to maximize the likelihood that a court will apply the most “asset protection favorable” law to your asset protection plan.

Could the client in the Huckaby case have applied more “asset protection favorable” law to the Property? Could the client in the Huckaby case have applied a more “asset protection favorable” law than California law to this California Property? As real estate is generally subject to the state law of the state where it is located, a possible approach is to convert the real estate into personal property. How can you achieve this “real estate – personal property” conversion? One technique would be to transfer the real estate to a land trust and then transfer the beneficial interest in the land trust to a DAPT or other asset protection structure. The beneficial interest in a land trust generally is considered personal property, and not real estate. Another technique would be to transfer the real estate to a limited liability company and then transfer the membership interest in the limited liability company to a DAPT or other asset protection structure. Again, the membership interest in a limited liability company generally is considered personal property, and not real estate. If you are trying to implement asset protection for real estate located in a “non-DAPT” or otherwise “non-asset protection favorable” state, you should consider the possible benefit from a “real estate – personal property” conversion approach.

If you have any questions concerning the Huckaby case, or its asset protection implications, please discuss these issues with your advisers.

Note – July 4, 2026 and “Trump” Accounts

While we will celebrate America’s 250th birthday on July 4, 2026, the date also will be significant concerning the use of a new type of tax-preferred account – the 530A account or, as it is more commonly known, the “Trump” account. As created as part of the tax legislation enacted in 2025, a “Trump” account is a tax-preferred account intended for qualified children – generally children who are 17 or under during the entire applicable calendar year and have a Social Security Number. Earnings and appreciation in the “Trump” account can grow on a tax-free basis. “Trump” accounts generally are opened pursuant to Internal Revenue Service Form 4547. The initial benefit available from “Trump” accounts was based on a “pilot” program under which the Federal government agreed to contribute $1,000 to any “Trump” account established for any qualified child born between January 1, 2025 and December 31, 2028 (for this $1,000 “pilot” program, the child must also be a United States citizen). On July 4, 2026, the benefit available from “Trump” accounts will be expanded to allow anyone to contribute up to a maximum of $5,000 per qualified child per year; employers will be able to contribute up to $2,500 per qualified child of an employee per year. If you want to contribute to a “Trump” account (and the ultimate decision to make a contribution to a “Trump” account relative to other investments requires analysis and consideration and is beyond the scope of this brief planning note), you should keep in mind the July 4, 2026 date and fund the “Trump” account as soon as possible thereafter to potentially maximize its benefits.

If you have any questions concerning “Trump” accounts, please discuss these issues with your advisers.

If you wish to discuss any of the above, find Pen Pal Gary’s contact info here.

Disclaimer: please note that nothing in this article is intended to be, or should be relied on as, legal advice of any kind. Neither LHBR Consulting, LLC nor Gary Stern provides legal services of any kind.