The Nevada Asset Protection Trust: Gary L. Fales, Las Vegas Attorney

The Nevada Asset Protection Trust: Gary L. Fales, Las Vegas Attorney

Hi, this is attorney Gary Fales. I just got done speaking with about 50 realtors. They were in a workshop, and I was sharing some thoughts with them about protecting assets. One of the interesting questions that keeps coming up is whether or not the asset protection trust is the same thing as a living trust. The answer to that is "no." They are very similar, just like boys and girls are similar in the sense that they're both humans, but other than that, the asset protection trust is very different from the living trust. The asset protection trust is a revocable. The asset protection trust will protect the assets inside and shield them from creditors (so long as the assets have been in there for the appropriate period of time.) While they are both trusts, and they both give you a great deal of control over the assets, they are different.

Another question is: "When do the clocks start for timing purposes? How long does it take until the assets are considered to be safe inside of the trust?" The answer to that is: "That is going to depend on which jurisdiction we're forming this in." With offshore trusts the period of time is one year. In the United States, if you use Nevada, the period of time is two years from the date of the transfer, and they must be in there six months from the date the creditor discovers the transfer. In other states it's three to four years; I believe Utah and South Dakota are three years, and the rest of the states have four year windows (Alaska, Delaware, New Hampshire, and Colorado.) Thus, it is a two, three, or four year window, and in Nevada has the shortest period of time with it's two year window.

Along with that question, I often get asked, "If I transfer the assets into the trust, what happens in six months or twelve months from now when I want to transfer new assets into the trust?" My answer is: "Those new assets have to have been in there for their own seasoning period." If it's twelve months from now, those assets are going to be unprotected until two years from the date of the transfer, and until six months from the date of the discovery of the transfer.

The final common question I'm going to answer today is: "Can I get the assets out of the trust once I place them into the trust?" And I have an analogy that I like to use to compare the asset protection trust and the living trust to answer this question: The living trust can be compared to a house built out of sticks. The asset protection trust can be compared to a house made out of steel beams. The materials of the houses are different. However, if you want to move assets in and out of the two different houses, you have the freedom and ability to do that.

There is a complete freedom within the revocable living trust for the trustees to transfer the assets out at any time. With the asset protection trust, you can get the assets out, but there is an extra hurdle you have to go over in order to get those assets out. If you know how to do these trusts, that hurdle is very, very easy; it's a very low hurdle to get over. Essentially, as long as the distribution trustee or the blocker trustee authorizes such distributions, those distributions can come back from the trust back to you, so long as you're not under duress. That small hurdle that we put in front of the transfer from the trust back to you is built there for good reasons: it's required by the statute, and it's also there in order to give effect to the asset protection features of the trust.

These were just some random questions that people have about the asset protection trust, and I thought I would answer those for you today. This is Gary Fales, and I hope this was educational. Thank you!

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