What is a Nevada Domestic Asset Protection Trust?
Nevada is one of several states that allows the creation of a home asset protection trust. This is a special type of irrevocable trust in which the creator of the trust can also be a beneficiary of it, and have the protection of its assets that were placed within the trust. Unlike Nevada, most states, such as Texas, do not allow the creator of the trust to be a beneficiary and enjoy protection of assets against creditors. The purpose of a Domestic Asset Protection Trust is to keep the trust’s assets safe for the beneficiaries rather than being exposed to creditors, divorces, or other risks that the beneficiary may run.
What are the two types of Domestic Asset Protection Trusts?
The two types of Asset Protection trusts are: “To third parties” and “Self-Settlements.” A third party trust is made by a single person for the benefit of another person, while a self-settled trust is made by one person for their own benefit. Both asset protection trusts are designed to protect your family’s wealth according to your specific needs.
I live in Texas, can I create such a trust?
Yes, we have the tools to help you! According to Nevada state law, the main requirements for creating a home asset protection trust are: at least one of the trust’s administrators must be a resident of the state of Nevada and have assets in it. There are other technical requirements that are written within the trust documents to comply with the law.
Once I transfer my assets to the trust, are they protected from my creditors immediately?
Under Nevada state law, “existing creditors” have two years to challenge the transfer of their assets to the trust as a “fraudulent transfer” with the intention of preventing or delaying that particular creditor, which is very difficult to prove. . As for the “future creditors” at the time the assets are transferred to the trust, they are fully protected.
What else should I know about Domestic Asset Protection Trusts?
When creating such a trust to protect an inheritance it can be very flexible. For example, you can make distribution rules very limited or as broad as you like. Another example is making funds only available for medical or educational payments. Or, the administrator may be given freedom to distribute the trust funds to the beneficiary at his discretion. Finally, it is important to emphasize that in order to enjoy the benefits of a trust, it is necessary to plan in advance. Good estate planning is the best way to take care of the future of our loved ones.
