Are there different types of trusts in Las Vegas, Nevada?

Nevada has rapidly become one of the most popular states for those seeking to protect assets, minimize tax liabilities and maximize inheritance to beneficiaries through the state’s favorable trust laws. Numerous trust options are available depending upon your estate planning strategy.

Nevada-based trusts are attractive to many due to several factors, including the absence of state income and inheritance taxes, extended perpetuity protections, directed trusts, decanting, non-judicial settlements and asset protection benefits. We’ll examine these complex topics in more detail below.

Nevada trust basics

Trusts are financial arrangements that allow a trustee to oversee assets on behalf of one or more beneficiaries. They can be funded with cash, real property, life insurance, investment accounts, business interests and other assets. Trusts offer many benefits, such as:

• Avoiding probate
• Saving time, money and court fees
• Reducing tax liabilities
• Controlling your wealth
• Protecting vulnerable loved ones
• Donating to charities
• Privacy

Many people believe estate planning involves only drafting a will. Wills are an essential part of an estate plan, but trusts provide sophisticated protections that help ensure that you protect and efficiently distribute assets according to your wishes.

Revocable Vs. Irrevocable

While many types of trusts exist, one of the most significant distinctions is whether they are revocable or irrevocable:

• Revocable trust: Also called a living trust, this type of trust helps your assets avoid probate and go directly to your heirs. Since the trust is revocable, you can name yourself as the trustee and retain control of the assets, meaning you can amend or cancel it while you’re alive.
• Irrevocable trust: This type of living trust cannot usually be changed or canceled after the document is signed. You usually must appoint a third party as trustee, and the assets contained in the trust are under their control. People generally choose irrevocable trusts for tax relief or planning, asset protection or charitable purposes.

Proceeds placed in an irrevocable trust are typically protected from creditors two years after the trust is funded. Assets in a revocable trust are generally not protected from creditor claims.

Basic Types Of Trusts

Besides living trusts, commonly-used types include:

• Charitable lead trust: This designates specific benefits to a charity, with the remainder going to beneficiaries:
• Charitable remainder trust: This allows you to direct income to beneficiaries for a specific period of time and direct that leftover funds go to a charity.
• Special needs trust: Assets are held and managed for disabled individuals under 65. The assets can be exempted from eligibility requirements for Medicaid or other assistance programs.
• Testamentary trust: This type of trust is created by a will when the grantor dies. It can be used to protect assets for children from a previous marriage, to provide lifetime income for a spouse or for other purposes. However, it does not avoid probate.

While these trusts are commonly used across the country, the reasons for selecting them are complicated and different for every individual.

Nevada-Specific Trust Rules

Experienced estate planning attorneys also understand the protections offered by Nevada’s complicated and beneficial trust laws. The options include:

Nevada asset protection trust:

NAPTs are irrevocable trusts designed to protect your assets from creditors two years after the transfer occurs. Also known as a self-settled spendthrift trust, it allows the grantor to place assets in an irrevocable trust and name themselves as a beneficiary.

Beneficiary defective inheritor’s trust:

BDITs allow beneficiaries to control assets contained in the trust. They are often used by individuals with significant assets, such as businesses or real estate. Subsequent transfers can be made to multiple generations of beneficiaries.

Dynasty trust:

The trust’s assets and property are protected from creditors, estate taxes and divorcing spouses. They offer extended perpetuity protections for up to 365 years. Dynasty trusts are irrevocable and exempt from gift and generation-skipping taxes.

Nevada incomplete gift non-grantor trusts:

NINGs are irrevocable trusts structured as independent taxpayers for federal and state tax purposes. If you live in a state with high income taxes, this can reduce your tax liability. NINGs use Nevada’s self-settled spendthrift rules allowing you to be a beneficiary of the trust.

Decanted trusts:

Nevada’s decanting statutes allow trustees to modify irrevocable trusts created in another state to benefit one or more beneficiaries. Decanting is the process of distributing assets from one trust to another with different terms. This is also known as a “do-over trust.”

Directed trusts:

Nevada allows trustee duties to be shared by multiple people, such as a family trustee overseeing investments, an independent trustee directing distributions and an administrative trustee to maintain trust records.

Specialized Guidance Is Essential

Trusts are not exclusively beneficial to the ultra-wealthy. People of all income levels can benefit from this estate planning tool or a combination thereof, whether it’s to protect assets, avoid probate, streamline distribution to heirs or safeguard vulnerable family members.

When considering the complexity of trust laws and assessing your unique needs, it’s advisable to consult with a legal professional who understands the estate planning benefits trusts can offer. The bottom line is to explore every avenue available to protect your interests and your family’s future.