NEVADA ASSET PROTECTION TRUST

ASSET PROTECTION

NEVADA ONSHORE TRUST BASICS

In terms of personal asset protection, the Nevada Spendthrift Trust (AKA: “Nevada Onshore Trust” or “Nevada Wealth Preservation Trust” or “Nevada Domestic Asset Protection Trust”) offers unparalleled protection while allowing you to maintain maximum control of the trust and trust assets:

1. Who May Form a Nevada Onshore Trust? Nevada law (NRS 166.010 et seq.) allows any individual to create a valid trust whereby he or she is a Trustee (i.e. in control of the assets), he or she is the Beneficiary (i.e. entitled to receive the benefit of trust assets) and the assets are still protected from creditors while in trust.

2. What if I am Not a Nevada Resident? You need not be a Nevada resident to take advantage of the Nevada Spendthrift Trust [the Nevada Spendthrift Trust Act requires either that: (1) the trustor/creator of the Trust be a Nevada resident; or (2) that the primary assets of the Trust be Nevada based or controlled property; or (3) if you will be a trustee and also the beneficiary of your own trust, that a Co-Trustee of the Trust be designated that is a Nevada Resident, Nevada Trust Company or a Nevada Bank and that Co-Trustee must have the primary administrative function of the trust [essentially, the record keeper of the trust; more specifically, the Nevada Spendthrift Trust Act requires either that, if the declared domicile of trustor/creator of the Trust is not Nevada, then at least one of the Trustees of the Trust must have powers that include maintaining records and preparing any income tax returns for the Trust (if any income tax return is to be filed) and that Trustee must be either a Nevada resident, a trust company legally operating in Nevada, or a bank that legally operates in Nevada, and that all or part of the administration of the Trust be performed in Nevada]

3. What Kinds of Assets Can the Trust Protect? Any type of asset (real estate, personal property, cash, stocks, bonds, savings accounts, investment accounts, business ownership interests, jewelry, valuable collections, family heirlooms, etc.) in any location can be protected by the Nevada Spendthrift Trust with proper planning.

4. How Does the Trust Protect the Assets ? The Nevada Spendthrift Trust can provide protection from your own personal potential judgment creditors. By way of summary, here is how that protection is legally afforded:
A. The Nevada Spendthrift Trust requires that assets may be used only for the Health, Education, Welfare, Maintenance and Support of the beneficiary and for no other purpose. You (individually or as a husband and wife) may be designated as the beneficiary of the Trust. [Note that death planning is also accounted for in the Trust in that you will designate a plan of distribution of trust assets upon your death (i.e., who gets the property of the trust when I die) just like you would do in a Will or a Living Trust].

B. Payments and distributions by the trustee may be made only to the beneficiary (the beneficiary can also be the person establishing the trust). Payments are in the discretion a trustee. The Trust mandates that if the coast is not clear and there is risk of seizure by a beneficiary's personal judgment creditor or otherwise, the Trustees may not distribute money or assets directly to that beneficiary until the coast is clear. In the meantime, the Trustees are authorized to pay directly for services and expenses that are for the beneficiary's health, education, welfare, maintenance and support.

C. The Nevada Trust, by law, prohibits the assignment, alienation, acceleration and anticipation of any interest of the beneficiary under the trust by the voluntary or involuntary act of the beneficiary, or by operation of law or any process.

D. The trustee of a Nevada Spendthrift Trust is required to disregard and defeat every assignment or other act, voluntary or involuntary, that is attempted contrary to the provisions of the Nevada Spendthrift Trust Act.

E. The trustee may not distribute money or assets from the trust to a beneficiary if the trustee knows or believes that the distribution would be seized by a creditor once it is in the beneficiary’s control.

SUMMARY OF BENEFITS OF THE NEVADA SPENDTHRIFT TRUST

$ You maintain custody and control of the assets in the Trust
$ You are entitled to all of the benefit of your own assets
$ You can protect any amount and value of assets from personal judgment creditors
$ You can protect any type of asset from personal judgment creditors
$ You do not have to be a Nevada resident in order to utilize the Trust
$ Assets are kept within the United States and not subject to overseas risks, government offshore activity scrutiny, or offshore tax reporting problems and scrutiny
$ Less expensive and complicated than foreign/offshore asset protection trusts and other planning strategies which are prone to IRS audits and investigations and governmental scrutiny
$ Less expensive and more protective than malpractice or other insurance
$ Peace of mind from litigation/creditor harassment
$ Trust assets may provide protection from becoming bankruptcy property in the case of a future bankruptcy (see information regarding self-settled spendthrift trusts and the new bankruptcy code)
$ Protects future Generation's assets (can provide for children and heirs upon your death while maintaining control and protection of the assets)
$ Can protects assets with sentimental value
$ Keeps assets "in the family"
$ Can be integrated with your existing estate plan (Living Trust, Will & other estate planning devices)
$ Assets held in the trust avoid a probate proceeding upon your death
$ Trust assets may be protected from becoming marital or community property in the event of a future marriage (a great planning device for single individuals)
$ Allows maximum anonymity and privacy

CAVEATS

1. If the person establishing the Trust will be a Trustee and a Beneficiary of their own Trust, another Trustee must also be appointed. This other Trustee must have the discretion over distribution of assets to the beneficiaries
2. 2 year Window of Exposure: [If action is taken within 2 years of the Trust’s creation and transfer of assets to the Trust (or when a creditor knew or “reasonably” should have known of the transfer), a judgment creditor can judicially attempt to recover assets that have been transferred into the Trust to satisfy the Judgment] ---- [Note: Through proper advanced planning, the Trust assets may be protected, even during the 2 year “exposure” period, as long as there are no fraudulent transfer issues (i.e., a known individual or entity that has a legitimate claim against you)]
3. A minor amount of inconvenience (additional bank accounts, proper procedure in distributing to beneficiaries, etc.)

WHO MAY BENEFIT FROM A NEVADA SPENDTHRIFT TRUST?

$ Nevada Residents and Non-Nevada Residents alike
$ It is ideal for Doctors, Dentists, Chiropractors, Architects, Lawyers, Real Estate Brokers and other professionals with potential malpractice or professional liability (for these types of individuals, business entities alone are not going to protect the individual professional that will always have individual liability; thus, such professional's personal assets are always at risk, unless personal asset protection planning and structuring takes place)
$ Real estate and other investors and business owners
$ Individuals with equity in their homes that exceeds the statutory homestead protection amounts
$ Just about anyone who would like to protect the wealth that they work so hard to accumulate

DO I REALLY NEED TO DO PERSONAL ASSET PROTECTION PLANNING?

One question commonly asked is, "do I really have personal liability" or "do I have enough assets or weath to really need to do asset protection planning?" The answer is that we all have some risk that we may get sued personally at some point. Even average, ordinary individuals with low-risk occupations get sued in our modern, litigation-prone world. In fact, one of the most common phone calls that we receive is someone who has been in a car accident and has been sued for millions because the person on the otherside of the accident ended up being seriously injured. In such an instance, insurance alone with ordinary policy limits will not adequately protect your personal assets from potential loss to the judgment creditor. Also remember that in the personal asset protection area, pre-planning is critical. DO NOT WAIT UNTIL YOU HAVE BEEN SUED TO START THINKING ABOUT PROTECTING YOUR ASSETS! Once the issue has arisen or the lawsuit has been filed, it may be too late to protect your assets. To us, that is the saddest thing to see. Don't let that happen to you!

Nevada Domestic Asset Protection Trusts are for anyone who has current or future assets that they want to protect from the risk of potential loss from a future unforseen incident.

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