Can a Nevada Asset Protection Trust help you?
And how does it work?
We certainly live in a society where disputes are too often resolved in court. And it is often when someone is facing a potential lawsuit that the subject of protecting assets arises. By then it is too late to do much.
Clearly the best time to plan for protecting assets is when it is not needed. Setting up a Nevada Asset Protection Trust (“NAPT”) sooner rather than later makes sense, as the NAPT will have time to mature.
The NAPT gets its ability to secure the assets it holds from the spendthrift provision contained in the trust document. It is because of this provision that they are sometimes referred to as a Nevada spendthrift trust. The spendthrift provision prevents a creditor from reaching into the trust and attaching the beneficiary’s interest in the trust assets. While spendthrift clauses have been part of trusts for decades, they historically did not apply to the creditors of the person creating the trust.
Nevada, along with several other states, have amended their laws to allow the spendthrift provisions to apply to the grantor’s creditors as well, if certain requirements are followed. This type of trust is specifically a Nevada self settled spendthrift trust.
Requirements of an asset protection trust in Nevada:
Chapter 166 of the Nevada Revised Statutes governs the NAPT. To be valid the trust must be in writing, be irrevocable, not require any distributions to the settlor (the person creating the trust), and not be intended to hinder, delay, or defraud a known creditor. If the requirements are met, a creditor may not bring an action against the trust within 2 years of the property being transferred to the NAPT.
Even though there are no mandatory distribution from the NAPT, you, as the settlor, may still retain the power to veto any proposed distributions, hold a special power of appointment, and use real or personal property held by the trust. You may also retain the right to remove and replace a trustee, manage the investments, and perform other management powers. So, even as the settlor, you may retain significant powers and control over the Nevada domestic asset protection trust.
Depending upon your situation, an NAPT may not be necessary. Other options exist, such as filing a homestead on your home, investing in a deferred annuity, or holding life insurance. Also, proper use of an LLC can be beneficial. And for more extreme cases, setting up an offshore trust may be the answer to protecting a nest egg of the right assets.
To know what would work best for you, seek the counsel of an experienced Nevada asset protection attorney. Call us today for your initial consultation. (702) 894-4110