State laws govern trusts and trust asset availability to creditors. In the state of Nevada, a domestic asset protection trust is also referred to as a self-settled spendthrift trust. In order to make fraudulent transfer claims against assets held in offshore trusts, creditors must travel to the jurisdiction where the trust is held. The state statutes require the use of an independent trustee before distributions can be made to the grantor. Nevada is one of only a few states that allow a person to create an asset protection trust for oneself. In order to avoid claims of fraudulent transfer, assets should be transferred into the trust well in advance of any activity which could render the settlor insolvent. Not having control over the distribution of the assets is a good thing because it keeps creditors from attacking them. There is no question, a Nevada Asset Protection Trust (“NAPT”) works best if you are a resident of Nevada, the assets held by the trust are in Nevada, and all trustees are in the state. It may be possible for the settlor of an offshore trust to have access to their assets even in the event of legal duress. So, with the extra risks, it is important to know the Nevada asset protection strategies. In addition, the trustee fees start at about $2500 per year. However, in order to protect assets from the claims of creditors, a co-trustee must be appointed. With a few exceptions, all of your assets are subject to collection by your creditors. Alternatively, a trust company legally operating in Nevada or a bank which legally operates in Nevada may be used. Asset Protection Planning is proactive legal action that protects your assets from threats such as creditors, divorce, lawsuits and judgments. The 2007 legislature modified Nevada’s law relating to self-settled spendthrift trusts, which are more commonly called “asset-protection trusts”. © 1906-document.write( new Date().getFullYear() ); Asset Protection Planners, Inc Terms of Service | Privacy, Your information remains confidential Privacy Policy. The beneficiary, who in this case may also be the settlor and trustee, does not control distributions. They are also barred from making distributions if they can reasonably assume that the distribution would be seized by a creditor. In other states, one must have a two or more member LLC or else the judgment creditor can seize one’s interest in the LLC. A DAPT is an irrevocable trust into which the settlor (the trust creator) transfers assets in order to protect those assets from the settlor’s creditors. Call now to let our attorneys help you. The list changes from time to time. Creditor may file suit and record a judgment lien against any real property owned by a debtor. These entities include corporations, limited partnerships, and limited liability companies. Nevada law protects the equity in a person’s home up to $550,000 from general creditor claims. Even in cases where the settlor is also a beneficiary and a trustee, they are not in control of distributions. Usually, a DAPT must comply with the following requirements: Consultations and Ordering: 1-800-830-1055. Formation of trusts, including Nevada Asset Protection Trusts (also known as Nevada Self-Settled Spendthrift Trusts, Nevada Domestic Asset Protection Trusts), Nevada LLCs & other business entities, and counsel regarding maximizing state & federal exemptions are some of the services we offer to the greater Las Vegas area (as well as to clients throughout Nevada & California). Recording a Declaration of Homestead protects only a person’s primary residence up to the statutory maximum. First, business entities may be used to shield personal assets from liabilities incurred by a business. The statute requires the trustee or at least one independent co-trustee to be a Nevada resident or a Nevada financial institution with trust powers. Examples of fraudulent transfer could include transferring assets immediately prior to filing for divorce or bankruptcy. A NAPT must also be structured so that: 1. Please visit our FAQ page to learn more about Nevada Asset Protection Trusts, and why these trusts are the best in the … This means that it will be much easier for a creditor to successfully enforce a fraudulent transfer claim in Nevada than in an offshore jurisdiction. What is a Nevada Asset Protection Trust?Nevada asset protection trusts are self-settled spendthrift trusts. Nevada protects your wealth more than any other state. * Nevada is one of the few states, that has a statute that allows the creation of a self-settled spendthrift trust to protect ones assets from creditors. Nevada Asset Protection Trust – Just Prudent Planning by Geri Tomich, Esq. Since 1999, Nevada has permitted the settlor (creator) of a trust to transfer assets into an irrevocable spendthrift trust to make those assets unreachable by creditors. Qualified legal counsel should be consulted before the creation of the trust since such a trust must be irrevocable. The primary issue with using domestic business entities to protect assets is that it may be possible for creditors to do what is known as “piercing the corporate veil.” If majority shareholders or partners use business assets as if they were personal assets, those assets will not be protected from legal claims. If a creditor seeks access to a beneficiary’s assets, the creditor is limited to the value of the beneficiary’s interest in the trust, as opposed to the total value of the assets. The settlor may also serve as the trustee. Nevada law was not intended to allow one to … The Nevada homestead exemption does not provide protection from exemption creditors. One important note before we dive into this is that Nevada is one of the eight community property states. Currently, 13 states authorize the use of asset protection trusts. The fees for a Nevada trust vary from about $9,500 to $15,000 depending on who set up the trust. Nevada Asset Protection Trust - The next level of asset protection for your real estate. The most effective Nevada asset protection strategies consider multiple vehicles. Most importantly, the Nevada legislature is continually improving the laws in this area every legislative session. 100 West Liberty St. - Suite 100 Reno NV 89501(775) 297-4000, 2300 West Sahara Ave. - Suite 1200Las Vegas, NV 89102(702) 297-5200, © Alliance Trust Company All Rights Reserved, Defined Contribution and Defined Benefit 401k. Those Nevada residents who wish to settle a Nevada asset protection trust are not required to meet the above criteria. Very simple. In other states, as of this writing, a lawsuit against a shareholder means the shareholder can easily lose his or her shares in a corporation. Moreover, we can tell you which trust companies to use and not to use. Domestic asset protection trust Alaska was the first US jurisdiction to enact laws allowing protection for self-settled trusts (in 1997) and was shortly followed by Delaware, Nevada, South Dakota and a few others. This Nevada law became effective for trusts created on or after October 1, 1999, yet many doctors, business owners, corporate executives and other high net worth individuals still have not taken advantage of this opportunity. An Asset Protection Trust is an irrevocable trust that’s often created to protect the beneficiary from the potential negative consequences associated with transfer tax laws, divorce settlements, and bankruptcy regulations. Fraudulent transfer occurs when a person transfers assets to knowingly delay or defraud a creditor. As a result, the beneficiary’s creditors are unable to enforce claims against the assets held within the trust. The co-trustee must have discretion over the distribution of assets held in the trust. A variety of business entities may be used in the state of Nevada for asset protection. So, there are few more skilled in preparing the trusts. Nevada Asset Protection Trusts include a Spendthrift Provision that prevents beneficiaries and potential creditors (including previous spouses) from gaining direct access to assets within the trust. The Nevada Self-Settled Domestic Asset Protection Trust In 1999, in the wake of other states passing such laws, the Nevada Legislature amended NRS Chapter 166 to permit self-settled, first-party spendthrift trusts, commonly referred to as Nevada DAPTs. However, Nevada has many advantages that make Nevada Asset Protection Trusts the preferred choice. 1 An "asset protection trust" is simply a trust created under the laws of a jurisdiction that provides spendthrift protection for a settlor or beneficiary's interest. However, the offshore trustee is legally barred from recognizing foreign judgments, including the claims of US creditors. This allows the settlor to maintain control of the assets held in the trust. They generally do not increase or decrease taxes. Nevada asset protection trust statutes provide some of the strongest domestic asset protection available. Anyone can set up an asset protection trust in Nevada, as long as you have a Nevada resident trustee or co-trustee, including international families and businesses as well. These laws were strengthened in 2009 to provide additional guidance to settlors and advisors. Nevada offers a fairly generous homestead exemption. Asset Protection Trusts provide peace of mind by legally protecting assets from lawsuits and other claims. Alliance Trust Company qualifies as a Nevada Financial Institution and can serve as an independent trustee. An Asset Protection Trust helps legally protect assets from creditor claims without putting the beneficiary in violation of laws concerning tax evasion and asset concealment. You do not have to live in Nevada to use the Nevada asset protection trust, as long as you have a Nevada resident trustee, like Alliance Trust Company. So many people meet this requirement by publishing the transfer in a Nevada newspaper. By creating the formidable Nevada asset protection trust statutes, Nevada has demonstrated the most debtor-friendly legislation with its asset protection trust features. 1-800-830-1055. 2. These assets may be located anywhere in the world. Similar to Nevada asset protection trusts, offshore trusts in many jurisdictions have the ability to be self-settled. Additionally, a Settlor of a Nevada Asset Protection Trust may also be a beneficiary of the trust. Nevada trusts are tax neutral. In certain jurisdictions, such as the Cook Islands, the burden of proof is beyond all reasonable doubt. As a result, creditors often do not consider it worthwhile to make claims against assets held in offshore trusts. The Nevada asset protection trust is a powerful planning technique. It so happens that the state of Nevada has arguably the best asset protection laws in the country. Nevada asset protection trust statutes provide some of the strongest domestic asset protection available. A co-trustee is also often called a distribution trustee or may also be a trust protector. It is the same when someone obtains a judgment against the wife. Please fill out the consultation form on this page or call the number above. Nevada allows self-settled spendthrift trusts by statute; these are also known as domestic asset protection trusts or Nevada Asset Protection Trusts.