Nevada Asset protection trusts (NAPT)

No Exception Creditors, Self-Settled Spendthrift Provisions, Nevada Supreme Court Precedents: Nevada Sets the Industry Standard with Asset Protection

Washoe Lake, Washoe, Nevada

Safeguarding Assets from Creditors Under the Most Secure Asset Protection Laws in the United States

When it comes to shielding assets from potential creditors, asset protection trusts are the most popular estate planning solution. While many states carry asset protection trusts, families across the U.S. establish their trusts in Nevada to truly secure their assets.

What is a Domestic Asset Protection Trust (DAPT)

An irrevocable trust established to protect assets from creditors. While typically a grantor trust, a domestic asset protection trust may be a grantor or a non-grantor trust. Grantors in creditor-friendly states often seek an asset protection trust jurisdiction with stronger protective trust laws, like Nevada.

Grantors and families with vulnerable assets are great candidates for asset protection trusts. For example, a grantor operating a medical practice in California can and should secure his practice from potential creditors under Nevada’s asset protection umbrella.

The trust may still be modified if appropriately drafted and with the permission of the trustee, and as directed by the trust protector.

Why Do Families Across the United States Prefer Nevada Asset Protection Trusts?

With 17 states allowing asset protection trusts, Nevada is not the oldest player in asset protection. However, Nevada’s asset protection is unmatched.

Who can establish an Asset Protection Trust in Nevada?

Nevada Asset Protection trusts are typically domestic trusts. But, not always. Many international families utilize Nevada Asset Protection as well. The trust must name a Nevada resident trustee, like Crawford Trust, to establish trust in Nevada.

What Makes Nevada the Benchmark in Asset Protection

Fraudulent transfer
Transferring assets to the trust intending to delay or defraud creditors

Shortest Statute of Limitations in the United States

Nevada’s statue of limitations, or “seasoning period,” to prevent fraudulent transfers is 24-months. Two years is the shortest seasoning period in the U.S.

Self-settled Spendthrift Provisions

When a grantor may also carry the role of a beneficiary, the asset protection trust is known as a self-settled spendthrift trust.

Exception Creditor statues
Many states place creditors in different classes and carry statues creating exceptions for certain creditors

No exception creditors, including divorcing spouses

When a grantor may also carry the role of a beneficiary, the asset protection trust is known as a self-settled spendthrift trust.

Taxes, or Lack Thereof

There are no state income, estate, nor corporate taxes in the state of Nevada.

Directed Trust Statues

Share trust management duties with financial advisors and other third parties utilizing directed trust statues.

Trust Decanting

As one of the most flexible trust jurisdictions, Nevada allows assets to move from the irrevocable asset protection trust to a new trust with different trust terms. (May not change the material terms of the trust).

Dynasty Trust Provisions

Nevada Asset Protection may span many generations, up to 365 years.

Washoe Lake, Washoe, Nevada

NAPT Benefactors

Grantors: Primarily Domestic

Asset Types: Tangible and Intangible

Asset Value: $500k+

Nevada Asset Protection Trust Case Study

John is in his fifth year practicing psychology and his client list continues to grow. John is concerned that the more his practice grows, his personal liability also increases. Legal liabilities are common in the medical industry. John’s practice is exposed in Minnesota, which is a creditor-friendly state.

John’s Practice Gets Sued, 2 Scenarios

One of John’s patients sues John and wins the case in Minnesota. John is facing a $2.5mm judgment.

John Williams, Married, 1 child
Lives in Minnesota (State Income Tax: 9.85%)
Private Practice Doctor and Owner
Net Worth: $3mm: Practice $1.25mm, Home $750k, Misc Assets $1mm

Without a Nevada Asset Protection Trust

John carries a $1mm malpractice policy. Minnesota exemptions only cover $600k of John’s assets. John must pay the remaining $900k from his practice and is left at a net worth of $500k.

With a Nevada Asset Protection Trust

John placed his practice and his home into a Nevada Asset Protection Trust three years prior to the suit but left his miscellaneous assets out of the trust. The trust is 12 months beyond the 24-month seasoning period.

With $2mm of John’s assets in the Nevada Asset Protection Trust and knowing John has a $1mm malpractice policy, the two parties agree on a $1.5mm settlement, knowing that John’s assets within the Nevada trust will be extremely difficult to access.

John’s policy pays $1mm, and John is on the hook for the $500k and uses other assets to settle the case. John is left with a net worth of $2.5mm securing his assets with a Nevada Asset Protection Trust.

How May We Assist You Further?

At Crawford Trust, we understand that every family is different and carries individual needs. Our experienced trust officers are happy to reach out and learn more about how we may help you.

Insights: A Deeper Dive into Nevada Trustee Services