Thursday, May 20, 2010

Synopsis on Nevada Lawyer Article: Nevada Law Provides Top Trust Situs

David Grant and I recently co-authored an article on the state of Nevada being one of the most favorable jurisdictions for establishing a trust in the May issue of the Nevada Lawyer (Nevada Laws Provide Top Trust Situs). The article focuses on the recent attention Nevada has been receiving on a national level as a top tier situs for estate planning and asset protection. Nevada has always been a pioneer in the areas of progressive trust jurisprudence and asset protection, but recent legislative amendments to its trust laws have solidified Nevada’s place as a jurisdiction of choice in these areas.

While David and I strongly encourage you to visit the link above and read our article, the following is a high-level summary of the items it touches on:

• Nevada’s lengthy time period applicable to its Rule Against Perpetuities law (365 years). The duration of this time period allows individuals and families to dramatically increase their wealth over successive generations by shielding it from estate and generation skipping transfer tax.

• Virtual Representation laws that make it easier for unascertainable beneficiaries (e.g., unborn children) to have their interests represented in the context of trust administration.

• Codification of a Trust Protector Statute, Trust Protectors are sometimes called Trust Consultants.

• Statutes that now allow Decanting Provisions in Nevada trusts. Decanting provisions make it possible to transfer assets of one irrevocable trust to another provided there is no substantial change in beneficial interests.

• Updates to Nevada’s Domestic Asset Protection Trust statute which indicate further validation by the state of this instrument. Updates include provisions allowing settlors to serve as trustees and adviser protection language.

• No state income, estate, gift or inheritance taxes.

• A summary of Nevada’s favorable Charging Order laws and State Exemptions (e.g., $550,000 homestead exemption).

The article provides a good overview of these areas without going into too much detail. As practitioners in the area of estate planning, we felt it important to point out the many favorable aspects of forming a trust in Nevada and the efforts the state legislature is making to keep Nevada competitive with other trust-friendly states like Alaska and Delaware. The comprehensiveness of the most recent legislative changes make it seem likely that Nevada will continue to be a pioneer with respect to trust law and asset protection and remain at the forefront of these areas.

-Attorney Jeremy Cooper

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