Nevada Asset Protection Planning

Can a Nevada Asset Protection Trust help you?

We certainly live in a society where disputes are too often resolved in court. You’ve worked hard to build an estate. Assets should be protected by setting up a comprehensive asset protection plan.

What is a Nevada Asset Protection Trust (NAPT)?

A domestic asset protection trust is a special type of irrevocable trust that is often referred to as a self-settled spendthrift trust.

Domestic Asset Protection Trusts

Historically the grantor of a trust, whether the trust is an irrevocable trust or not, cannot be a beneficiary of of the trust and have the assets be protected from creditors.

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. The Nevada legislature passed the Nevada spendthrift trust act in 1999.

Nevada is one of approximately 17 states that now allows you to create an asset protection trust, that is for the transfer of assets by the grantor to a self-settled trust, be a beneficiary of the trust, and still enjoy asset protection trust benefits.

And how does an NAPT work?

An estate planning lawyer experienced in asset protection planning can draft a Nevada asset protection trust. Nevada law requires that certain requirements be met.

For example, the trust is irrevocable. And at least one of the trustees must be a Nevada resident or a Nevada trust company or bank.

Also, while the grantor may be one of the trustees, a third-party independent trustee must serve as the distribution trustee.  Any distributions from the trust, whether income or principal, that is intended for the grantor must be authorized by the distribution trustee.

Stop Creditors in Their Tracks

The NAPT gets its ability to secure the assets it holds from the spendthrift clause contained in the trust document. 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.

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.

When to Set up an Asset Protection Trust

For effective asset protection, it is important to set up this type of trust well before the protection is needed. If there is already a judgment against you, it is too late.

Statute of Limitations

Even though the asset protection trust is an irrevocable trust, the assets within the trust are note initially protected from the grantor’s creditors.

Nevada has one of the shortest statutes of limitations. Generally, creditors may bring a claim within two years of trust property being transferred to the trust.

Specifically, under Nevada’s statutes, a creditor that exists at the time of the asset transfer has either the 2-year statutory period or 6 months following when the creditor discovers or should have discovered the transfer, whichever is greater.

A creditor that arises after the transfer only has two years after the transfer, and if the limitations period has expired, they are out of luck.

Nevada Trusts and LLCs

Because of the two year window in which creditors may access the trust property, the settlor of the trust may consider creating a limited liability company also. The LLC would own the assets and the trust would own the LLC.

If a creditor obtains a judgment within two years from the date of the transfer (or the additional 6 months if applicable), what the judgment creditor would need to obtain is a charging order against the LLC membership interest.

So the charging order protection of the LLC may also provide protection.

Who should consider an NAPT?

Those that should consider a Nevada asset protection trust include those engages in high-risk professions such as doctors, lawyers, and certain business owners.

Or if you have accumulated significant assets and wish to protect a nest egg for the future, setting up a self-settled spendthrift trust for your own benefit makes sense.

Other Forms of Asset Protection

Depending upon your situation, an Nevada asset protection trust 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.


A revocable living trust, which provides no protection, is very different from a Nevada asset protection trust. They have different goals and purposes.

NRS Chapter 166 governs the NAPT. To be valid the trust must be in writing, be irrevocable, not require any distributions to the settlor, 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 if the statute of limitations has expired.

Clearly the best time to plan for protecting assets is when it is not needed. Setting up a Nevada Asset Protection Trust sooner rather than later makes sense, as the NAPT will have time to mature.

To know what would work best for you, seek the counsel of an experienced Nevada asset protection attorney. Call for a consultation. (702) 894-4110