What is a Nevada Asset Protection Trust?
A Nevada Asset Protection Trust (NAPT) is a self-settled spendthrift trust that allows you to transfer assets outside of a potential creditor's reach while retaining beneficiary status. Unlike offshore trusts in the Cayman or Cook Islands, an NAPT provides the same asset protection benefits on US soil, without the stigma or additional reporting requirements of moving assets offshore.
Nevada has arguably the best asset protection laws in the country. A carefully-drafted NAPT can be used to transfer unlimited assets gift-tax free, or move assets completely outside of your estate to enjoy both asset protection and estate tax minimization. These benefits are available provided timing requirements are met and specific formalities are followed.
NAPT for Established Wealth
If you have already accumulated significant wealth, now is an excellent time to begin transfers to an NAPT. An installment sale technique can be used to have the trust purchase your property from you in exchange for a promissory note.
As you pay down the promissory note, which is essentially a payment from yourself to yourself, your personal estate subject to estate tax shrinks while you immediately enjoy the benefit of asset protection once the creditor lookback period has expired.
NAPT for Growing Wealth
If you are still in the early stages of amassing your fortune, now is an even better time to create an NAPT. You can have the trust own a start-up business before it has acquired any value. As it grows, its value is never included in your estate.
Furthermore, you may choose to gift cash to the trust and then have the trust purchase land, real estate or a business so that a sale of those assets to the trust, including the formalities of an appraisal or valuation, never has to occur.
Why Nevada Law is Superior
In either case, your tax status will not change and you avoid the stigma of moving assets offshore. Because the NAPT is governed by Nevada law, you as the Grantor can also be a beneficiary — a wrinkle that is unique to all but a few states. All this without the additional reporting requirements of an offshore trust.
Timing is Critical
Since ethical and legitimate asset protection depends on timing, it is crucial to create the trust and transfer assets to an NAPT while the waters are calm. I can draft you a complete asset protection plan within a couple of weeks from initial appointment to signing. Call me and let's get started.
Related Asset Protection Strategies
Learn about other tools that may complement or serve as alternatives to an NAPT:
- SPA Trust (Special Power of Appointment) - Alternative for non-Nevada residents
- Family Limited Partnerships and LLCs - Entity-based asset protection
- Irrevocable Life Insurance Trust - Protect life insurance proceeds
- Asset Protection Overview - Compare all available strategies