Nevada residents who have accumulated valuable assets know the important role estate planning plays in protecting those assets. One way to protect those assets is through an asset protection trust, also called a self-settled spendthrift trust.
An asset protection trust is unique because it allows the trust grantor to also be a beneficiary. Nevada state law requires that the trustee for an asset protection trust be a resident of Nevada, or a Nevada based bank or trust company.
If that requirement is met, an asset protection trust can be established. Nevada has some of the most favorable laws when it comes to asset protection trusts. Any assets added to the trust by the grantor are protected from creditors after 2 years. This is one of the shortest periods among states that allow asset protection trusts. Additionally, the 2-year period may potentially apply to current creditors.
An asset protection trust can be an especially powerful estate planning tool for individuals in professions that carry a great deal of responsibility and risk. This includes business owners, doctors, lawyers or other professionals. The trust can help shield assets from creditors within a rather short period of time.
If an asset protection trust sounds like a good idea, and you have no current or pending lawsuits against you, it is important to set one up right away. An asset protection trust cannot be set up once a lawsuit has already been initiated against you, because the trust will be viewed as a fraudulent conveyance. However, if the asset protection trust is already set up, and 2 years have passed, any assets in the trust are protected if someone sues you.
An asset protection trust can provide you with peace of mind, knowing that a portion of your assets will be retained if unexpected circumstances arise. Exploring your options with this type of trust can be one of the best financial decisions you make.