If you have a domestic asset protection trust, or you are considering one, the most important question may not be which state you formed it in. It may be where the property actually sits.

A federal court tested that question earlier this year, and the result is worth understanding.

In United States v. Huckaby, the Eastern District of California allowed the IRS to enforce a judgment lien against real property in South Lake Tahoe that had been held in a Nevada domestic asset protection trust for over a decade.1 The trust was properly formed under Nevada law. It designated Nevada as its governing jurisdiction. None of that mattered, because the property was in California, and California does not recognize self-settled spendthrift trusts.

For anyone involved in asset protection planning, this case is worth reading carefully, not because it means DAPTs are dead, but because it shows exactly what happens when a trust is built on state selection alone.

What Happened

Robert Huckaby, himself an attorney, and Joyce Tritsch acquired a property at 2448 Alice Lake Road in South Lake Tahoe, California in 2005, as joint tenants.2 In 2011, they executed a trust instrument creating the Circle H Bar T Trust, a Nevada domestic asset protection trust designated as a Nevada Spendthrift Trust by its terms. The property was transferred into the trust the same day.

Both Huckaby and Tritsch served simultaneously as the trust's settlors, trustees, and sole beneficiaries during their lifetimes.3 The property was held directly in the trust, with no intermediary entity, no land trust, no LLC layer. It was the simplest possible structure for holding real estate in a DAPT.

Huckaby had unresolved federal tax obligations that eventually led to IRS levies. When he failed to honor those levies, a judgment was entered against him in 2018. The IRS does not reach this stage quickly. Levies follow a long sequence of assessment, notice, and demand. By the time a judgment is entered for failure to honor levies, the taxpayer has had years of prior process and multiple opportunities to resolve the liability.4 By June 2025, the outstanding balance was approximately $87,960. The federal government filed suit in the Eastern District of California in March 2023, seeking to enforce its judgment lien against Huckaby's interest in the Tahoe property.

How the Court Decided the Choice-of-Law Question

This is where the case gets interesting for planners.

The defendants argued that the trust should be governed by Nevada law, because the trust instrument designated Nevada as the governing jurisdiction. The government argued that California law should apply, because the property is in California.

The court agreed with both, in a sense, because the choice-of-law question actually has two distinct parts.

The Ninth Circuit's approach to choice-of-law in federal question cases draws on the framework set out in the Restatement (Second) of Conflict of Laws.5 Under that framework, questions about how to interpret a trust of an interest in land are governed by the law of the state designated in the trust instrument. On that point, the defendants were correct. Nevada law governs the construction of the Circle H Bar T Trust.6

But construction was not the question before the court. The question was whether a creditor could reach the land held in that trust. That is a different question entirely. Whether a beneficiary's interest in trust land can be reached by creditors is determined by the law of the situs, the state where the land sits.7

Because the property was in California, the court applied California law to determine whether the trust's spendthrift provisions could block the government's lien.

This distinction matters enormously. A trust instrument can designate any state's law for purposes of interpretation. But that designation does not control how a different state treats creditor access to real property within its borders. When the property sits in a state that does not recognize self-settled asset protection trusts, the trust's choice-of-law clause may not help.

Why the Trust Failed: The Complete Absence of Separation

Once California law applied, the result followed relatively quickly.

California Probate Code Section 15304 prohibits self-settled spendthrift trusts. Under California law, a person who creates a trust and also names themselves as a beneficiary cannot use that trust to shield property from creditors. The policy is straightforward: you cannot place assets beyond the reach of people you owe while continuing to enjoy those assets yourself.8

Here, there was no separation of any kind. Huckaby and Tritsch created the trust, served as its trustees, and remained the sole beneficiaries during their lifetimes. They filled every role. No independent trustee. No distribution committee. No structural limitation on their access to or control over the property. Nothing about their relationship to the asset changed in any practical way after the transfer.

The court found that the trust's spendthrift provisions were void against creditors, including the United States.9 That resolved the case. The court did not need to reach the government's alternative argument that the transfer was fraudulent.10

It is worth noting what the court did not address. The opinion does not tell us whether an independent trustee, a more thoughtful distribution mechanism, or a different ownership structure would have changed the analysis. Those questions were not before the court, because the Circle H Bar T Trust did not present any of those features. This was the simplest version of a DAPT holding real estate, and it failed on the simplest available grounds.

What the Court Granted, and What It Denied

The outcome was more nuanced than some commentary has suggested.

The court found that the judgment lien encumbers Huckaby's one-half ownership interest in the property and authorized the government to submit a proposed order of foreclosure. But the court denied the government's request to declare the defendants joint tenants of the property, holding that the trust's existence was not voided entirely, only that the spendthrift protection was unenforceable against creditors.11

That distinction is worth noting. The trust was not declared a nullity. The trust still exists. Its protective provisions simply could not block a creditor from reaching Huckaby's beneficial interest in the California real property.

What This Means for DAPT Planning

Huckaby is a useful case because the failure points are identifiable. They are also avoidable, for planners willing to take the structure seriously rather than treating state selection as a shortcut.

Situs matters for real property. This may be the most important takeaway for clients who own land. A DAPT formed in Nevada, South Dakota, or any other favorable jurisdiction may not protect real estate located in a state that does not recognize self-settled spendthrift trusts. For anyone building an asset protection plan around real property, the location of that property is a design constraint, not an afterthought. That does not mean owning real estate in a non-DAPT state is a dead end. It means the structure has to account for the situs rather than ignore it. A more thoughtful approach, planned before a dispute exists, can address this problem. The question of where to form an entity matters, and we have written about it in the LLC context as well.12 The same logic applies here with even more force, because real property has a fixed situs that cannot be moved.

The absence of structural separation made this case easy. The court applied Section 15304 because the facts made it straightforward: every role in the trust was held by the same people, the property was held directly with no intermediary structure, and nothing about the arrangement created any real distance between the debtors and the asset. That complete absence of separation is what allowed the court to resolve the case without reaching the harder questions. A trust with an independent trustee, a distribution mechanism with real limitations, or an intermediary ownership structure would have presented a different set of facts, and the court might have needed to work through the fraudulent transfer analysis instead. We have seen the same dynamic in the LLC context, where a Colorado single-member LLC can lose its charging order protection because the owner's control is too concentrated.13

Certain creditors are structurally resistant to DAPT protection. Huckaby involved federal tax enforcement, and federal tax liens operate under 28 U.S.C. Section 3201(a), which creates a lien on all real property of a judgment debtor. No domestic trust statute can override that. But the IRS is not the only creditor class that occupies this kind of position. State taxing authorities have their own enforcement mechanisms. In rem judgment creditors can reach property based on its location regardless of how title is held.15 Domestic support creditors, those owed child support or alimony, are carved out of most DAPT statutes by design. Planners should be honest with clients about which categories of creditors a DAPT can realistically address and which ones it cannot, regardless of the state or the structure.

Protection Requires Tradeoffs

The recurring lesson in asset protection planning, the one that Huckaby illustrates as clearly as any case in recent years, is that protection costs something.

The Circle H Bar T Trust did not require Huckaby and Tritsch to give up anything. They kept control. They kept beneficial enjoyment. They kept the same relationship to the property they had before the trust existed. The trust changed the label on the title. It did not change the substance.

Real asset protection requires real tradeoffs. Sometimes the tradeoff is control: an independent trustee, a distribution committee, a structure where the settlor cannot simply direct outcomes. Sometimes the tradeoff is time: a distribution mechanism that introduces process and deliberation before assets move. Sometimes it is access, flexibility, or cost. But the tradeoff has to exist. If a client is not giving anything up, the structure is unlikely to survive the kind of scrutiny that Huckaby faced.

That is not a flaw in the system. That is how creditor protection law has always worked. The designer of one these systems has to anticipate whether the strategy was built with enough substance that a court will respect the separation it claims to create.

A Note on What This Case Did Not Decide

Huckaby was a specific case with specific facts: California real property held directly in a self-settled Nevada DAPT, the settlors filling every role in the trust, and a federal tax creditor with a judgment lien. Do not read more into the decision than the court actually held.

The case did not hold that all DAPTs fail. It did not address trusts with independent trustees or meaningful distribution limitations. It did not address DAPTs that hold property located in the same state where the trust was formed. It did not address intangible assets, which do not carry a fixed situs the way real property does.

And the choice-of-law question itself remains open in important respects. This was a federal court applying the Ninth Circuit's framework. A Nevada state court, presented with different facts, might reach a different result.14

The Real Question

Huckaby did not break new legal ground. It applied settled principles to a trust that did not account for any of them.

The structure ignored the situs of the property. It ignored the creditor protections of the state where the property sat. It created no separation between the people who formed the trust and the people who controlled and benefited from it. The trust held the real estate in the most direct, most exposed way possible. And it was set up against the backdrop of existing, unresolved federal tax obligations.

Every one of those problems was avoidable. Every one of them is something a careful planner addresses before the trust is formed, not after a court order arrives.

The question this case should prompt is not whether domestic asset protection trusts work. It is whether yours was built by someone who understands why this one did not.

  1. United States v. Huckaby, No. 2:23-cv-00587-DAD-JDP, 2026 WL 587784 (E.D. Cal. Mar. 3, 2026).
  2. The factual background is drawn from the court's order granting summary judgment in part. Huckaby, 2026 WL 587784, at *1–2. The facts were undisputed.
  3. Id. at *1 ("Defendants are the Trust's settlors, trustees, and its sole beneficiaries during their lifetimes.").
  4. The IRS collection process typically begins with assessment and a notice of balance due, followed by formal demand, then a series of notices before levy authority attaches under 26 U.S.C. § 6331. A judgment for failure to honor levies reflects sustained noncompliance over an extended period.
  5. Huynh v. Chase Manhattan Bank, 465 F.3d 992, 997 (9th Cir. 2006); In re Sterba, 852 F.3d 1175, 1179 (9th Cir. 2017) ("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.'").
  6. Restatement (Second) of Conflict of Laws § 277 (1971) (a trust of an interest in land is construed in accordance with the law of the state designated in the instrument).
  7. Restatement (Second) of Conflict of Laws § 280 (1971) ("whether 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"); see also In re Anselmi, 52 B.R. 479, 490 (Bankr. D. Wyo. 1985).
  8. Cal. Prob. Code § 15304; In re Moses, 167 F.3d 470, 473 (9th Cir. 1999).
  9. Huckaby, 2026 WL 587784, at *4–5; see also United States v. Campbell, No. 2:11-cv-02826-MCE-EFB, 2013 WL 3490740, at *8 (E.D. Cal. July 10, 2013) (reaching the same result with a self-settled trust holding California real property).
  10. The government also argued the transfer was fraudulent because Huckaby was served with the IRS levy approximately one month after the property was placed in the trust in October 2011. The court did not need to address this argument. Huckaby, 2026 WL 587784, at *5 n.2.
  11. Id. at *6 (granting in part, denying in part; declining to declare defendants joint tenants).
  12. See "Does It Matter Where You Form Your LLC? Why Wyoming Keeps Coming Up" in this series, discussing how jurisdiction selection affects LLC protection, charging order remedies, and multi-state operations.
  13. See "Why Your Colorado Single-Member LLC May Not Protect You" in this series, discussing In re Albright, 291 B.R. 538 (Bankr. D. Colo. 2003), and the vulnerability of single-member LLCs to creditor execution.
  14. A state court applying its own choice-of-law rules, rather than the Ninth Circuit's federal common law framework, might weigh the factors differently. The choice-of-law question in domestic trust disputes involving multi-state elements remains unsettled, and practitioners should not assume that Huckaby's framework will apply uniformly across jurisdictions.
  15. An in rem action is a proceeding directed against the property itself, rather than against the person who owns it. A creditor with an in rem judgment can reach the asset based on its location, regardless of how title is structured.