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Posted on May 13, 2023 in asset protection,estate planning
Estate planning has become more popular over the last decade, but now individuals are going even further and incorporating asset planning to supplement their estate plan or, in some cases, replacing it altogether. Depending on the circumstances of a situation and the individual’s assets and specifics of their wishes for those assets following their death, using asset protection to plan for after-death financial proceedings can be a clever way to further secure assets.
Nevada offers some of the most favorable legal structures for protecting valuable assets. The state allows many financial protections and legal structures for assets that other states do not allow to appeal to individuals looking to optimize wealth management and asset protection of significantly large assets. The asset protection options available in the state can be a worthwhile addition to estate planning.
Asset protection planning, outside of estate planning, involves strategizing ways to protect large assets from being seized by creditors, the IRS, divorce proceedings, bankruptcy, or other legal judgments. The devices used in asset protection strategies are legal ways to prevent these outside entities from accessing assets. There are several methods used to ensure an individual’s personal assets remain in possession of the asset holder, from enlisting the services of a Las Vegas estate planning attorney to set up a trust or setting up an LLC to protect assets.
With the variety of these holdings, it is understandable that the right financial structures for one person might not be right for another. Therefore, many people who seek to secure assets through asset protection consult with an attorney to discuss their options.
Choosing to implement asset protection with a Nevada estate plan can protect an individual’s assets, as well as their beneficiaries’ inheritance, from lawsuits, creditors, and tax claims. Nevada’s strong asset protection laws allow for significant protection of eligible assets. The importance of asset protection in estate planning lies in protecting assets from future risks, claims, and liabilities.
Without asset protection, even a well-thought-out estate plan is subject to creditors taking control of assets from the estate before beneficiaries receive anything. By the time they do receive their inheritance, the amount is reduced significantly. Alternatively, asset protection can prevent the risk of creditors and other entities collecting on the debts of the asset holder from the estate following their death.
Nevada’s unique approach to asset protection aims to offer attractive wealth management options to appeal to wealthy individuals looking to secure their assets. As a result, Nevada is one of the few states that allows residents of the state to open a special self-settled spendthrift trust (SSST), also known as a domestic asset protection trust (DAPT). These trusts not only protect assets from beneficiaries after they receive their inheritance, but they add additional asset protections for the asset holder, as well. In most states, these trusts are designed solely for asset protection in estate planning. In Nevada, though, they offer additional asset protection advantages as well.
The extra incentives provided by a spendthrift trust in Nevada allow the grantor to also be named as the beneficiary. This lets the holder of the trust maintain control of their assets while still alive if they are competent to do so. It also safeguards assets with typical securities of asset protection against the collection of outside debts from entities such as creditors. Another advantage is that these trusts can protect any amount of assets and any type of assets from creditors and are easily manageable. The downside to irrevocable spendthrift trusts is that they can be expensive and are vulnerable to dispute by beneficiaries.
Additionally, there are limitations to these types of trusts. They cannot be set up with the intent to defraud creditors, and creditors can still pursue assets that are not held within the trust itself. However, especially in estate planning with a knowledgeable estate planning attorney, when established properly and with honest and lawful intentions, a Nevada spendthrift trust can provide significant benefits for beneficiaries looking to safeguard their wealth.
Nevada is a lenient state when it comes to allowances for asset protection, but not all assets are eligible for these protections. Partnerships and sole proprietorships are not protectable assets in that a lawsuit filed against these types of businesses can make personal and work assets liabilities, including cars, homes, and bank accounts. A limited liability corporation (LLC), however, does provide asset protection in most cases.
A: No, they are not the same, but when asset protection is combined with other financial structures as part of an estate plan, it can be a beneficial strategy with various benefits for residents of Nevada who maintain a high net worth. Asset planning is a complex and legal method for protecting assets, while estate planning is the determination of how assets will be distributed following the asset holder’s passing. Both require scrutiny by a professional estate planning attorney to ensure they aren’t subject to vulnerability.
A: Asset protection is not necessary, but it can be a useful tool in estate planning for certain individuals with significantly high-value assets. Asset protection is not a valid financial application for everyone because each individual’s case has its own set of unique circumstances. Only a qualified estate planning lawyer can determine if asset planning is appropriate for an individual’s unique situation.
A: A Nevada SSST will typically cost between $3,000 and $4,000 to establish but can be as much as $10,000 and then about $2,500 annually thereafter. Other trustees charge a flat fee of around $2,000 for an irrevocable trust. Alternatively, still some trustees base the cost of these trusts on a percentage of the assets held within the trust. These are just estimated values, though, and the actual fees of Nevada trustees may be different.
A: Nevada residents who establish asset protection are typically wealthy individuals who may be vulnerable to lawsuits or going through a divorce. Others who have a high net worth and are likely to be targets of lawsuits or creditors commonly establish asset protection to protect their wealth. Also, those individuals who have occupations that are at high risk for lawsuits, such as real estate developers, doctors, or dentists, are good candidates for these protections.
Contact Ken R. Ashworth & Associates to speak to a Las Vegas estate planning attorney about adding asset protection to your estate plan. Our successful and experienced legal team is ready to answer your questions and provide you with our exceptional and distinguished services.
