USA – NEVADA Law and Practice Contributed by: Brian K. Steadman, Alexander LeVeque, Jeffrey Luszeck and Craig Friedel, Solomon Dwiggins Freer & Steadman
• The Revocable Living Trust – primarily established for probate court avoidance and future genera - tional planning. • The Self - Settled Spendthrift Trust ( also known as the Nevada Asset Protection Trust ) – primar - ily established for creditor-protection purposes to shield assets from an individual’s creditors during their lifetime. • The Dynasty Trust – mainly established to take advantage of federal gift, estate and generation- skipping-transfer tax benefits in a manner that can help limit tax liabilities, sometimes eliminating them. With a Nevada Dynasty Trust, assets that are subject to federal gift, estate and GST taxation (or application of the federal estate tax lifetime exemp - tion) initially upon transfer to a trust can eliminate application of said taxes for future generations if a trust is properly structured, allowing many genera - tions to enjoy gifted assets inheritance tax free. • Private foundations – Nevada statutes create sig - nificant flexibility relating to the establishment and governing provisions private foundations. Further, Nevada’s governmental involvement and oversight of private foundations is minimal. • Charitable trusts – Nevada’s statutes allow charita - ble trusts, such as charitable remainder and chari - table lead trusts, to be designed with unmatched flexibility. 3.2 Recognition of Trusts Nevada leads the nation when it comes to estate plan - ning, setting the standard for other states to follow. Its robust statutory framework and favourable case law have positioned the state as the premier jurisdiction for ironclad generational wealth protection in the US. Key advantages that make Nevada a top choice for long-term estate planning and wealth preservation include the following. • Extended trust duration – Nevada allows trusts to last up to 365 years, permitting long-term preser - vation and management of wealth across multiple generations. • Significant tax - planning benefits – Nevada trusts can be structured to take full advantage of federal gift, estate, and GST tax exemptions. Properly established Nevada Dynasty Trusts may eliminate
the application of these taxes for future genera - tions, allowing beneficiaries to inherit assets free of transfer tax liabilities. • No state income tax on trusts – Nevada is one of the few states with no state income tax. Trusts domiciled and administered entirely in Nevada may circumvent state income taxation altogether. • Flexibility in trust administration – progressive trust laws in Nevada allow for modifications to the administrative provisions of irrevocable trusts, providing the flexibility to adapt to future changes in tax laws and other legal developments. • Superior creditor protection – some of the strong - est asset-protection laws in the country are offered by the state of Nevada. Its legal precedent sup - ports upholding trusts against creditor claims, helping to shield wealth for the benefit of future generations. • Trust modification – Nevada law allows for the modification of irrevocable trusts through multi - ple different mechanisms, including modification/ reformation through court approval, modification by way of non-judicial settlement among parties interested in the trust, and via a process called “decanting,” through which a trustee with discre - tion or authority to distribute trust income or princi - pal to or for a beneficiary of the trust may exercise such discretion or authority by appointing the property subject to such discretion or authority in favour of a second trust – provided that the second trust may only have as beneficiaries one or more of the beneficiaries of the original trust to or for whom a distribution of income or principal may be made from the original trust. 3.3 Taxation of Trusts, Foundations and Similar Entities Located in Other Jurisdictions As Nevada does not impose an income tax, estate tax, gift tax, or inheritance tax, any trust, foundation, or similar entity structure established within or out - side Nevada does not generally impose additional tax burdens. Indeed, under some circumstances, a Trust established in Nevada can avoid income taxation aris - ing from other jurisdictions, both within and outside of the US.
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