In 1999, Nevada became one of the first states to enact legislation allowing self-settled spendthrift trusts that provide asset protection for settlors. Since then, the Nevada legislature has consistently passed favorable, progressive asset protection and trust laws (including during the most recent legislative session) as evidenced by the timeline below.
Effective October 1, 1999, Chapter 166 of the Nevada Revised Statutes (“NRS”) was revised to permit the creation of Nevada self-settled spendthrift trusts (also commonly referred to as Nevada Asset Protection Trusts).
Effective November 1, 2003 (or, if certain factors set forth in the bill are applicable, January 1, 2004), Senate Bill 2 (now codified at NRS 86.401 and NRS 88.535) modified the 2001 version of the Nevada charging order law to remove the foreclosure remedy.
Effective July 1, 2007, Nevada, pursuant to Senate Bill 242 (now codified at NRS 78.746 and NRS 21.090), became the first state to extend charging order protection to closely-held corporations.
Effective October 1, 2007, Senate Bill 420 clarified the applicability of the six-month waiting period found in NRS 166.170 by including a provision that a transfer of property to a spendthrift trust is deemed “discovered” when “a public record is made of the transfer.”
Effective October 1, 2009, Senate Bill 287 made Nevada’s trust laws even more advantageous by: providing for the position of trust protector and setting forth powers that could be granted to a trust protector (see NRS 163.5547 and 163.5553); authorizing a trustee to decant or pour the original trust’s assets into a new trust (see NRS 163.556); permitting directed trusts (see NRS 163.553 to 163.556); allowing a settlor of a Nevada self-settled spendthrift trust to serve as cotrustee and to hold powers such as to remove and replace a trustee (see NRS 166.040); and establishing that, in order for a creditor to bring a claim against a transfer of property to a Nevada self-settled spendthrift trust, each creditor needs to prove that the transfer was fraudulent pursuant to NRS Chapter 112 or “otherwise wrongful as to the creditor” (see NRS 166.170).
Effective October 1, 2009, Senate Bill 350 included provisions authorizing the creation of a Nevada Restricted LLC or a Nevada Restricted LP.
Senate Bill 221, signed June 4, 2011 and effective October 1, 2011, enhances Nevada’s asset protection laws even further by: including a tacking provision that enables the trustee of an asset protection trust established in a less attractive jurisdiction to move the trust to Nevada and take advantage of the short two-year statute of limitations without restarting the clock; expanding the types of trusts that may provide asset protection; limiting the liability of the trustee of a spendthrift trust; and providing that, in order for a creditor to bring a claim against a transfer of property to a Nevada self-settled spendthrift trust, a creditor needs to prove “by clear and convincing evidence” that the transfer was fraudulent or violates a legal obligation owed to the creditor (for a further discussion of Senate Bill 221’s provisions, please see here).
Senate Bill 405, signed into law on June 16, 2011 and effective October 1, 2011, extends charging order protection to single member LLCs.