4 Reasons to Consider Establishing Your
Dynasty Trust in Nevada
Choosing the right trust strategy to protect your assets is an important and often complex decision. Dynasty trusts are a great option when you need to secure assets for generations, and they minimize or even eliminate many taxes associated with trusts including distribution, estate, inheritance, transfer taxes, and more.
Once you’ve decided that a dynasty trust is right for you, the next most important decision is where you should establish your trust. Both Nevada and Delaware are considered some of the best places to establish a trust to take full advantage of friendly trust laws, because of precedents set in both Nevada and Delaware, Nevada is often considered the better choice.
If you’re feeling unsure about establishing a Nevada Dynasty Trust, here are five reasons why it’s the best choice to pass your legacy to your family for several generations.
Nevada Dynasty Trusts: 4 Things that Set Them Apart
1. Unique Precedents Set in Nevada
Nevada has long paved the way when it comes to friendly trust laws. Moreover, several recent cases proved the state’s protection laws are second to none.
In the case of Klaback v Nelson, 133 Nev. Adv. Op. (May25, 2017): Nevada DAPT Protects Against Spousal/Child Support Claims, the Nevada courts moved to protect Eric L. Nelson’s trust from the mandated $800,000 his estranged wife was seeking in child support and alimony, choosing to allow Nelson to fulfill these obligations out of his liquid assets.
In the Matter of Daniel Kloiber Dynasty Trust u/a/d December 20, 2002 (Court of chancery of Delaware), an ex-spouse was granted access to a Delaware Dynasty trust, effectively weakening the state of Delaware’s trust laws and further establishing Nevada as the superior choice.
Currently, Nevada has the most current and robust precedents set to protect assets while still protecting those affected by life events such as divorce, especially in the case of a Nevada Dynasty Trust with the potential to last up to 365 years.
2. Minimize Taxes
With a Nevada Dynasty Trust, your assets will only be taxed at the estate level once with the federal gift/estate tax or lifetime exemption upon transfer into the trust. The Nevada Dynasty Trust allows you to allocate a generation-skipping-transfer tax exemption which is a powerful way to limit estate tax liabilities, sometimes even eliminating them altogether.
Due to the nature of the Nevada Dynasty Trust, these tax benefits are provided for an extended period of time.
3. Short “Seasoning Period”
Nevada’s seasoning period is one of the shortest in the United States. The statute of limitations during this vesting period is just two years on asset transfers to self-settled spendthrift trusts (domestic asset protection trusts).
During the seasoning period, your assets are not under the full protection of the dynasty trust. For this reason, a short seasoning period is essential to ensure the security of your assets as quickly as possible.
However, the burden of proof that creditors would have to provide to gain access to your trust during the seasoning period is quite challenging in the state of Nevada – another benefit to those looking to establish a trust in the state.
4. Flexible Decanting Statute
Trust decanting is a term taken from wine decanting in which wine is transferred from one container to another, leaving the undesirable sediment behind. With trust decanting, the terms of the trust are changeable after it has been established.
Trust decanting allows trustees to keep aspects of the trust that are still beneficial while leaving old trust provisions that are no longer wanted, needed, nor relevant behind.
Nevada allows for trust decanting without the need for court approval, which can be expensive, or notice to the beneficiaries.
Advantageous Trust Laws at Your Fingertips
An important consideration as you prepare to set up your Nevada Dynasty Trust is the use of an independent corporate trustee. Because Dynasty trusts can last hundreds of years, it’s advisable to put an independent corporate trustee in place to avoid needing to transfer trustees due to death or unforeseen circumstances.
Alliance Trust Company of Nevada is a trusted and qualified institution and is available to serve as trustee, directed trustee, or many other capacities if you choose to establish your trust in the state of Nevada.