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Since 1999, Nevada has permitted use of self-settled spendthrift trusts that provide
asset protection for grantors. Essentially, this means you cannot be a direct
beneficiary of your own irrevocable trust and protect your assets with
a Nevada Asset Protection Trust.
Nevada statutes require an independent trustee, such as Dunham Trust Company, to
distribute any Nevada Asset Protection Trust income or principal to you. As a
co-trustee and indirect beneficiary, you can distribute trust assets to other
beneficiaries, but you may not distribute assets to yourself.
Assets in a Nevada Asset Protection Trust are not immediately 100 percent protected.
Creditors can pursue assets within two years after you transfer property to the trust,
within six months of discovering the transfer, or when they reasonably should have
discovered the transfer. Further, any persons who become creditors after you create
the trust must make a claim within two years after the assets are transferred. After
this two year period, trust assets are protected against further claims.
Nevada law provides that self-settled spendthrift trusts, whether created in or outside
of Nevada, will be respected so long as all or part of the property you transfer into
the trust is located in Nevada; you live in Nevada; or all or part of the trust's
administration is performed in Nevada by a qualified Nevada trustee.
In most cases, a Nevada Asset Protection Trust is created by a Nevada resident who has
all of his or her property located in Nevada and has an active qualified Nevada
trustee. Any assets you may own that are not in Nevada, such as stocks, bonds, interests in
real property, limited liability company interests, etc., can be easily moved to Nevada
and transferred into your trust. A Nevada Asset Protection Trust is particularly suitable
for individuals exposed to a significant degree of professional liability, such as doctors,
though more people are becoming increasingly concerned about liability and the need to
protect their assets. A Nevada Asset Protection Trust may be an excellent way to help you
accomplish this goal.
The information above is general in nature and not intended as legal or tax advice. Please consult with
your tax professional or attorney regarding guidance for your individual
circumstances. Dunham Trust Company recommends you authorize our senior
trust officers to work in tandem with your trusted financial professionals.
Such trusts are used to develop a vehicle for donations to a favorite charity,
which also allows for the reduction of income taxes through a charitable deduction
and favorable tax treatment at the date of the gift by non-recognition of built-in-capital gains.
All information is current as of September 2007.
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