2011 CHANGES TO NEVADA SPENDTHRIFT TRUST LAW
NEVADA LAW NOW EXPLICITLY ALLOWS FOR THE CHANGE OF JURISDICTION OF AN EXISTING TRUST TO NEVADA!
A bill passed in 2011 amends NRS 166.010 et seq. (the Nevada Spendthrift Trust Law – a/k/a the Nevada Asset Protection Trust) to specifically and explicitly allow a Trust that has been created in and under the laws of another state to change the Trust jurisdiction (a/k/a: “trust situs” “trust state of domestication”) to the State of Nevada to be governed under the Nevada Spendthrift Trust law.
In addition, if the laws of the state from which the Trust is being transferred are “similar” to the provisions of the Nevada Spendthrift Trust law (NRS 166.010 et seq.), the date of the “transfer” of the assets to the Trust for determination of whether or not a creditor can bring an action to go after the assets in the Trust (NRS 166.170 essentially limits the basis for any creditor to bring an action to pierce the trust to a case demonstrating “clear and convincing evidence” of a fraudulent transfer – and that time to do so is limited) is deemed to have occurred:
- on the date that the Settlor of the Trust transferred assets into the Trust (if the trust law of the original state of the Trust is substantially similar to the Nevada Spendthrift Trust law); or
- on the earliest date on which the applicable laws of the Trust were substantially similar to the provisions of the Nevada Spendthrift Trust law (essentially meaning the date that the Trust was re-domesticated to Nevada or that it was created or re-domesticated to prior state that has a Spendthrift Trust Law that is similar to Nevada’s.
What this means is that a person with an existing Trust that was created in another State that has less protective or otherwise less favorable trust laws than Nevada now has the opportunity to move the Trust jurisdiction to Nevada to take advantage of its protective and otherwise attractive Trust laws! And doing so, may allow you to tack on the original trust creation or amendment time to an earlier date so as to prevent judgment creditor claims against Trust assets. This can be a major benefit.
If you have an existing Trust, you may seriously want to consider moving the Trust jurisdiction to Nevada.