Spotlight on Mississippi: Domestic Asset Protection Trust Legislation

by Baker Donelson

Mississippi recently became the 16th state to pass legislation permitting the creation of domestic asset protection trusts. The new law was effective July 1, 2014.

Under the new Mississippi Act, a domestic asset protection trust, called a "qualified disposition trust" (QDIT), is an irrevocable trust that contains a spendthrift clause and incorporates Mississippi law to govern the validity, construction and administration of the trust. Generally, the assets in a QDIT are protected from seizure by future creditors of the creator, subject to the exceptions discussed below.

At least one of the trustees of the QDIT must be an individual who is a resident of Mississippi or a Mississippi bank or trust company. The Mississippi trustee must maintain or arrange for custody in Mississippi of some or all of the trust assets, maintain records for the trust on an exclusive or non-exclusive basis, prepare or arrange for the preparation of the required income tax returns for the trust or otherwise materially participate in the administration of the trust.

If you are creating the QDIT, you cannot be a trustee. You may, however, retain certain rights and powers with respect to the trust, including the potential or actual receipt of income. You may also retain the right to the potential or actual receipt of principal, if distributed in the discretion of the trustee or pursuant to an ascertainable standard. You cannot retain any powers or interests that are not specifically authorized by the new Act. Other family members may also be beneficiaries of the trust.

Before you transfer assets to the QDIT, you must sign an affidavit stating the following:

  1. you have full right, title and authority to transfer the assets to the trust;
  2. the transfer will not render you insolvent;
  3. you do not intend to defraud a creditor by the transfer;
  4. you do not have any pending or threatened court action against you, other than those identified in the affidavit;
  5. you are not involved in any administrative proceedings, except for proceedings identified;
  6. you do not contemplate filing for bankruptcy;
  7. the assets transferred to the trust were not derived from unlawful activities; and
  8. you are a named insured of a general liability policy, and, if applicable, a professional liability insurance policy with policy limits of at least $1,000,000 for each respective policy.

Under the new Mississippi Act, there are several specific exceptions provided which would allow certain creditors to reach the assets of your trust. If you have not paid child support, alimony or a court ordered property settlement to a spouse who was married to you prior to your transfer of property to the QDIT, your ex-spouse can bring an action against the trustee to satisfy the past due payments. There is also an exception for an unpaid tort judgment for death, personal injury or property damage where the tortious act occurred before the date of the transfer of property to the QDIT. There are further exceptions for the State of Mississippi or any political subdivision of the state and to any creditor in an amount not to exceed $1,500,000 if you fail to maintain the liability insurance as provided in the affidavit. These exceptions also require a court order that your debt is past due and that claimant has made reasonable attempts to collect the debt from your other sources.

This new Mississippi Act is complex but can provide reasonable asset protection under the appropriate circumstances.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Baker Donelson | Attorney Advertising

Written by:

Baker Donelson

Baker Donelson on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.