Types of Trusts in Nevada
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Legitimate Ways to Avoid Probate and Protect Assets
When people think about estate planning, having a will is usually the first thing that comes to mind. However, a more favorable and financially savvy option in Nevada is establishing a trust.
Trusts are attractive for several reasons, such as probate avoidance, tax planning, and asset protection. If you want to know how creating a trust can benefit you, speak with a lawyer from the Wood Law Group. Our estate planning attorneys can help you create a sound plan for preserving your assets even after death.
Why Trusts Are Essential in Nevada?
One of the main reasons for setting up a trust is for asset protection. Because Nevada’s trust laws protect wealth more than any other state in the country, many high-net-worth families and individuals set up their trusts in this state.
Trusts are legal arrangements between the trustee and the trustor. Setting up a trust is an asset protection strategy wherein the trustor (also called grantor) places their assets in the control of a trustee. In turn, the trustee oversees the grantor’s assets on behalf of one or more beneficiaries.
Trusts are created mainly for the following reasons:
- For asset protection: Trusts can be used to place assets outside the creditors’ reach. For instance, a Nevada Asset Protection Trust (APT), a type of irrevocable trust, prevents beneficiaries from voluntarily or involuntarily transferring any assets in the trust. Also, Nevada Asset Protection Trusts allow grantors to establish a trust for their own benefit, thus protecting their properties held in trust against their creditors. If APTs are properly structured, creditors may not be able to reach the properties and assets in the trust account.
- For tax planning: Trusts can be used to minimize tax liabilities. Nevada does not have a state income tax, unlike most states. This means that the income generated by the trust assets is not taxed on the state level for generations, depending on the type of trust created.
- No probate proceedings: A person’s estate assets are frozen during probate proceedings and are inaccessible to heirs until the proceedings are over. Additionally, the probate process is time-consuming and expensive, and it can take years to complete. With trusts, grantors can avoid the probate process, and their assets can be distributed to beneficiaries immediately after their death. After all, the trust legally owns the assets and not the estate of the person who died.
Types of Trusts in Nevada
Trusts come in different forms, depending on the goals of the grantor.
- Revocable trusts: Also called a living trust, a revocable trust allows the grantor to change how the assets in the trust are handled while the grantor is still alive. Thus, the provisions in the trust instrument can be altered or canceled depending on the wishes of the grantor.
- Revocable trusts are advantageous because they are flexible. Also, the income earned by the trust is distributed to the grantor. Unfortunately, assets under revocable trusts are subject to state and federal estate taxes upon the grantor’s death. Consult revocable living trust attorneys to know more about the advantages and disadvantages of a living trust.
- Irrevocable trusts: Contrary to a revocable trust, an irrevocable trust cannot be changed or modified unless the beneficiary consents to it. Irrevocable trusts are for those who want to maximize tax benefits and protect their assets. Assets in the trust are not subject to income taxes and estate taxes.
- Special needs trust: These trusts are created for those who have physical or mental disabilities under the age of 65. The good thing about creating this trust is that persons with disabilities can still receive Supplemental Security Income and Medicaid.
Legal Framework for Trusts in Nevada
Nevada’s superior trust laws make it very appealing to individuals seeking to protect their assets. The state’s domestic asset protection trust (DAPT), also known as spendthrift trusts, provides grantors with adequate asset protection against creditors. DAPT also protects the assets from the claims of divorcing spouses and other lawsuits. These assets include cash, real estate, stocks, and business assets.
Additionally, the Spendthrift Trust Act passed in 1999 allowed individuals to create self-settled spendthrift trusts, which permits the grantors to name themselves as trust beneficiaries.
Here are other laws and regulations about Nevada trusts:
- Uniform Statutory Rule Against Perpetuities: This provides that a trust in Nevada can last 365 years without the trust assets being subjected to estate tax.
- Nevada’s decanting statute: This allows modification of irrevocable trusts to address issues in the family and the trust laws.
- Nevada-directed trust statute: A directed trust is a type of trust that permits the grantor to have an advisor who makes certain decisions related to the trust. For instance, the administration of the properties is under the control of the personal trustee, while investment decisions and other financial matters may be placed in the hands of a trusted advisor or family member.
Considering Creating a Trust? Call the Wood Law Group
Navigating the trust laws may sound simple, but it is actually a complicated matter. From the type of trust to set up to how your estate will be managed long after you’re gone, deciding on these matters can be perplexing. You would need an experienced estate planning lawyer who not only knows estate and probate laws but also takes careful consideration of your unique situation.
Revocable living trust attorneys from the Wood Law Group can help you determine the ideal estate plan that best suits your needs. We have over 40 years of combined experience in estate planning and other legal matters.
The Wood Law Group is known for addressing the needs of our clients in creating revocable living trusts, domestic asset protection trusts, estate plan options, and other estate planning actions. Our personalized approach is what sets us apart. We focus on developing meaningful relationships with our clients.
If you want to know more about revocable trusts, our initial consultation is free of charge. Get in touch with us to book your appointment with our revocable living trust attorneys.