Asset protection is a power tool created by lawmakers to allow individuals to protect your property from creditors and law suits. Asset Protection in Nevada allows you to make certain decisions today that will protect you, your family, your business, and your hard-earned assets in the future. This type of legal planning is particularly important for business owners and professionals as their property could be more significantly at risk.
It is not pleasant to think that one accident or verdict could potentially take away all that you have worked so hard for. However, we all know how staggering the number of lawsuits, bankruptcies, and divorces is becoming. To protect against these possibilities and to protect a lifetime of hard work, create an asset-protection plan in Nevada. This can give you a safety net you can rely on. Proper risk-management strategies should be carefully considered. These strategies include using Nevada domestic asset protection trusts, limiting your legal liability through Nevada business entities, and transferring risk with insurance.
Nevada Asset Protection Trusts
A Nevada domestic Asset Protection Trust (APT), also known as a Nevada self-settled spendthrift trust, can be an appropriate solution to protect against creditors. High-risk professions like attorneys, architects, doctors, engineers, developers and small business owners can benefit greatly from creating this type of trust.
When a Nevada asset protection attorney creates an APT for a client, assets placed into the trust are protected from all creditor claims after two years. Nevada’s asset protection laws also protect against ex spouse’s claims for alimony and child support when the APT is paired with a Nevada Limited Liability Company (LLC) and Nevada Limited Partnerships (LPs). Additionally, Nevada has the added benefit of not having a state fiduciary income taxes on trust income which allows for greater planning flexibility.
Limit Liability for Nevada Business Owners and Professionals
If you operate a business as a sole proprietor you could be subjecting yourself to significant legal risk. Many know this but they choose not to form a Nevada Corporation or Nevada Limited Liability Company, often because of the legal fees required to create and maintain a legal entity. There are many different advantages to creating to legal entity for your business. Of the many benefits, risk management is at the top of the list because of the significant need to assure that your standard of living can continue regardless of a potential lawsuit.
Life insurance and Estate Planning go hand in hand. Irrevocable life insurance trusts (ILITs) combine two very powerful resources and they can be a great estate planning tool under the right circumstances. ILITs have significant asset protection capabilities.
Life Insurance owned by an ILIT is powerful for estate planning purposes because the life insurance is taken out of the insured’s estate. An ILIT will be most effective if it is formed prior to acquisition of the life insurance policy(s). If the ILIT is formed properly, creditors of the person establishing the trust and the intended beneficiaries should have no right to collect from the cash value or the death benefit of the insurance.
Assets of an ILIT are also generally immune to claims in a divorce. An ILIT may be used to provide for the termination of a spouse’s interest in the event of remarriage. This is not trust of certain other trusts such a so-called marital deduction trusts, credit shelter trusts, and/or QTIP trusts.
An ILIT is only one component of a complete estate plan. Whether or not an ILIT is suitable depends on the specific facts and circumstances of your situation. In addition, the insured must effectively give up control of the assets held in this type of trust. However, an ILIT can be an extremely valuable estate planning tool and can also provide a significant asset protection opportunity.
Asset Protection Requires Expert Advice
You have worked hard to get to where you are, and if you don’t have a plan you are at risk of losing everything. The attorneys at Parry & Pfau will analyze your unique situation and recommend proven strategies designed to achieve your asset protection and wealth preservation goals.
If you are interested in speaking to an Asset Protection attorney to review your specific scenario please call us a 702-912-4451 to schedule a complementary 60 minute consultation.
Matt Pfau is an attorney and founding partner at the law firm Parry & Pfau. Matt has a background in business consulting, estate planning, business start-ups and bankruptcy and is licensed to practice in both Nevada and California. A partner in the firm Parry & Pfau, he can be reached at 702-912-4451 or [email protected].