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Nevada Asset Protection Trust

Since 1999, Nevada has permitted use of self-settled spendthrift trusts that provide asset protection for grantors. Essentially, this means you can be a direct beneficiary of your own irrevocable trust and protect your assets with a Nevada Asset Protection Trust.

Nevada statutes require an independent trustee to distribute any Nevada Asset Protection Trust income or principal to you. As a co-trustee and indirect beneficiary, you can distribute trust assets to other beneficiaries, but you may not distribute assets to yourself.

Assets in a Nevada Asset Protection Trust are not immediately 100 percent protected. Creditors can pursue assets within two years after you transfer property to the trust, within six months of discovering the transfer, or when they reasonably should have discovered the transfer. Further, any persons who become creditors after you create the trust must make a claim within two years after the assets are transferred. After this two year period, trust assets are protected against further claims.

Nevada law provides that self-settled spendthrift trusts, whether created in or outside of Nevada, will be respected so long as all or part of the property you transfer into the trust is located in Nevada; you live in Nevada; or all or part of the trust's administration is performed in Nevada by a qualified Nevada trustee.

Any assets you may own that are not in Nevada, such as stocks, bonds, interests in real property, limited liability company interests, etc., can be easily moved to Nevada and transferred into your trust. A Nevada Asset Protection Trust is particularly suitable for individuals exposed to a significant degree of professional liability, such as doctors, though more people are becoming increasingly concerned about liability and the need to protect their assets. A Nevada Asset Protection Trust may be an excellent way to help you accomplish this goal.

See the Domestic Asset Protection Trust State Rankings to compare the twelve states that currently offer Domestic Asset Protection Trusts.

The information above is general in nature and not intended as legal or tax advice. Please consult with your tax professional or attorney regarding guidance for your individual circumstances. Dunham Trust Company recommends you authorize our senior trust officers to work in tandem with your trusted financial professionals.

Such trusts are used to develop a vehicle for donations to a favorite charity, which also allows for the reduction of income taxes through a charitable deduction and favorable tax treatment at the date of the gift by non-recognition of built-in-capital gains.

All information is current as of September 2007 and maybe subject to change.

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