In recent years, taxpayers have successfully shielded assets from creditors' claims by establishing trusts in foreign jurisdictions (in places like the Cook Islands or the Bahamas) which do not recognize judgments of U.S. courts. Often, creditors find it difficult, if not impossible, to reach assets placed in a so-called "offshore" asset protection trust (or "APT"). However, offshore APTs often are very expensive to create and administer. Furthermore, they require that at least one trustee be located in the foreign jurisdiction which can impose certain administrative burdens on the trust. For those seeking to obtain the asset protection power of the offshore trust without many of the negatives usually associated with the offshore trust, a Nevada On-Shore Trust, also known as a domestic self-settled spendthrift trust, can provide a viable asset protection alternative.
Contrary to the majority of other states, Nevada law recognizes the validity and enforceability of "self-settled" spendthrift trusts. According to Nevada law, a spendthrift trust is a trust that imposes a valid restraint on the voluntary and involuntary transfer of the interest of a beneficiary. Under Nevada law, the term "permissible beneficiary" now includes the settlor. This means the beneficiaries' creditors and the creditors of the person transferring property in the trust cannot reach such interests. Thus, a person can transfer property into a Nevada spendthrift trust knowing that such property is safe from his/her potential creditors as well as future creditors of the other beneficiaries.
Because there are precise statutory requirements for the creation of an enforceable "self-settled" spendthrift trust, please contact the Law Offices of Jeffrey Burr (800) 945-5766.
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