A Nevada Trust vs. a Nevada DAPT

The Nevada DAPT

Nevada is one of the 20 States in the US which as specifically adopted what has become known as a Domestic Asset Protection Trust (DAPT) statute.  This statute is codified in NRS Chapter 166 - SPENDTHRIFT TRUSTS.

One one of the features of Chapter 166 is:

If the settlor is a beneficiary of the trust, at least one trustee of a spendthrift trust must be:

      (a) A natural person who resides and has his or her domicile in this State [NEVADA];

      (b) A trust company that...

This is included in the Statute specifically to establish proper jurisdiction for the administration of the DAPT as well as to support the Trust Company industry which has sprung up around the Nevada DAPT.

It has also often lead to a belief that to have a valid Nevada Trust, you must have a Nevada Trustee.  However this is not quite correct because Chapter 166 is not the only chapter regarding Trusts in the Nevada Revised Statutes.

The Nevada Trust

Prior to the addition of Chapter 166, Trusts in Nevada were governed by NRS Chapter 163 - TRUSTS. In this Chapter there are NO REQUIREMENTS for a Nevada Trustee whatsoever.  In fact, the creation of Trust under 163 is very liberal and requires simply a declaration of an intent to create a trust combined with the contribution of some property to the Trust. That's basically it!

Using Nevada as a Trust Jurisdiction

There are many reasons to choose Nevada as a jurisdiction of a Trust. 

1. Nevada has adopted Digital Signing and is a leader in making the creation and administration of Trusts very simple.  
2. Nevada does not have a State income tax and Trusts in Nevada will only be responsible for federal taxes.
3. Nevada allows for Trust to stay in existence indefinitely, allowing for effective Dynasty Trust creation.
4. Nevada allows Directed Trusts, which is unique and not available in most states.
5. Nevada has a clear regime for Decanting of Trusts.
6. Nevada has a clear and established non-judicial settlement process which allows parties to correct mistakes and clarify ambiguities without court intervention.
7. And of course, under Chapter 166, Nevada also has a clear Domestic Asset Protection Trust Statute.

Summary

Even if you are not choosing to use the Chapter 166 and create a Nevada Domestic Asset Protection Trust, we have found that using Chapter 163 and creating a Trust in Nevada can still have significant advantages and is a worthy jurisdiction to consider for the creative practitioner.