While most are familiar with the concept of creating an offshore trust in the Cayman or Cook Islands to protect their assets, few are aware that the same benefits can be obtained on US soil. State laws govern trusts and trust asset availability to creditors. It so happens that the state of Nevada has arguably the best asset protection laws in the country. A Nevada Asset Protection Trust (NAPT) can be drafted to accomplish just about any goal relating to asset protection and estate tax limitation. A carefully-drafted NAPT can be used to transfer unlimited assets outside of a potential creditor’s reach, gift-tax free, or can be used to move assets completely outside of the Grantor’s estate and enjoy asset protection in addition to estate tax minimization. These benefits are available provided timing requirements are met and specific formalities and procedures are followed.
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 look back period has expired.
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.
In either case, your tax status will not change and you avoid the stigma of moving assets offshore. And 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 stigma and additional reporting requirements of an offshore trust.
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 us and let’s get started.