|The 7520 rate is 2.2%|
|are as follows|
Monday, June 19, 2017
Friday, June 16, 2017
Just a few weeks ago, the Nevada Supreme Court issued their ruling in a case involving a domestic asset protection trust (DAPT) or a self-settled spendthrift trust (SSST), which our office calls the Nevada On-Shore Trust. The court decision can be accessed here.
This case involved a dissolution of a marriage and whether a SSST can be invaded to satisfy a judgment for child support. In this case, Klabacka V. Nelson, the Nevada Supreme Court expressly upheld the validity of Nevada’s “self settled spendthrift trust” statute, found in Nevada Revised Statutes, Chapter 166. In the Court decision, the requirements for establishing a SSST were reinforced:
“A spendthrift trust is created ‘if by the terms of the writing (construed in the light of [NRS 166] if necessary) the creator manifests an intention to create such a trust.’ In addition to the spendthrift requirements, to create a valid SSST, NRS 166.015(2)(a) requires the settlor to name as trustee a person who is a Nevada resident. Further, NRS 166.040(1)(b) provides that the SSST must (1) be in writing, (2) be irrevocable, (3) not require that any part of the trust’s income or principal be distributed to the settlor, and (4) not be ‘intended to hinder, delay or defraud known creditors.’”
We also note that the Court’s decision specifically stated that Nevada’s SSST statute is not subject to any type of “exception creditors.” Many states which have joined Nevada in offering DAPTs, have built into their statutes exceptions for certain types of creditors, such as child support, alimony, tort creditors, or contract creditors. While these other states may have their own purposes and public policy in mandating certain exceptions to the protection of an SSST, the Nevada Supreme Court has made it very clear that the intent of the law in Nevada is that Nevada-based DAPTs are to be free from exception creditors. The Klabacka case states:
“We conclude Nevada SSSTs are protected against the court-ordered child support or spousal support obligations of the settlor/beneficiary that are not known at the time the trust is created.”
This court decision adds to the commentary and writings of many practitioners in this area of the law and reinforces the claim that Nevada is the best state for establishing DAPTs/SSSTs, or the Nevada On-Shore Trust. If you would like more information regarding the Nevada On-Shore Trust, please investigate our website or contact our office to schedule a consultation.
Friday, June 9, 2017
On June 2, 2017, Assembly Bill 314 was approved by the Governor and will become Nevada law on October 1, 2017. Assembly Bill 314 has been in the works for the past two years by the Probate and Trust Section of the Nevada bar. The new Nevada law makes positive changes to existing probate and trust law in Nevada.
Some of the major provisions of the bill include:
- Increasing the judgment exemption amount for Individual Retirement accounts from $500,000 to $1,000,000;
- Allowing the court to release Testamentary Trusts from on-going court supervision;
- Clarifying the existing no-contest laws;
- Explaining the rights of creditors related to non-probate transfers;
- Creating law to allow individuals over the age of 18 to authorize another person to order a burial or cremation in the event of his or her death; and
- Amends and clarifies many important issues relating to probate and trusts.
We are excited for the passage of Assembly Bill 314 and expect the new bill will make positive changes for our clients.
Attorney – Corey J. Schmutz
Thursday, June 1, 2017
Clients that come into our office looking for asset protection in the form of a domestic asset protection trust (“DAPT”) often ask us what additional protections an offshore trust could offer them. Some of those additional protections include a shorter statute of limitations for creditors to attack assets after the assets have been transferred into the trust, a higher standard of proof that creditors must meet to undo a transfer into an offshore trust, and the fact that the creditor must go to the foreign jurisdiction to pursue their claims. After reviewing these benefits, many clients are anxious to set up an offshore trust, but that excitement wanes considerably when the fees for setting up an offshore trust are discussed, as well as the formalities and complexities that must be adhered to in order to obtain those extra protections.
To obtain those protections for our clients, but reduce the upfront costs in setting up an offshore trust and avoid some of the more stringent formalities of an offshore trust, our firm has created the Passport Trust ™. The Passport Trust ™ is an asset protection vehicle that combines the flexibility and simplicity of a domestic asset protection trust (DAPT) with the advantages of an offshore jurisdiction’s additional protections against creditors, if the need arises.
A Passport Trust ™ includes “passport” provisions in the trust agreement that enable a DAPT to be redomiciled in a foreign non-US jurisdiction such as Nevis or the Cook Islands if there is ever a distress event. Typically there will be no new waiting period for creditor claims in the new jurisdiction – the original transfer date of assets into the DAPT will be used as the transfer date for purposes of the foreign jurisdiction’s rules regarding creditor claims.
Passport Trusts ™ lower the entry cost to obtain the additional protection an offshore jurisdiction can provide by allowing you to begin with a NOST and ‘start the clock’ on the waiting period for protection from creditor claims and later convert to an offshore trust, if necessary, for the best of both worlds.
The Passport Trust™ begins as a DAPT with all the protections that Nevada’s self-settled spendthrift law provides, but includes a special passport provision that enables the Trustee to move the trust’s domicile to a foreign jurisdiction. In conjunction with this passport provision, application will be made to a foreign trust company upon the creation of the DAPT to pre-approve the DAPT for re-domiciliation. The foreign trust company shares in the due diligence regarding the creation of the trust. As a result of their early involvement, the foreign trust company agrees to serve as a special trustee, dormant and waiting with ‘open arms’ to receive the trust assets if a distress event occurs.
To find out more about the “Passport Trust” and how it might be a part of your integrated estate plan, please contact our office.