Nevada is not just a superior tax haven for most businesses, as noted in part 1 of this discussion; there are no individual income taxes. In addition to these benefits, there are other tax and regulatory benefits for trusts established and maintained trusts in Nevada; it is one of the best states to establish trusts in the nation.
Enclosed are various benefits for trusts established and maintained in Nevada:
- The ability to appoint, or “decant” property or assets from one trust to a second trust in order to take advantage of changes in law or resolve problems or issues in the existing documents. As an example, the Nevada decanting laws, in many circumstances, save the beneficiaries of the trust substantial taxes by allowing for flexibility in planning for distributions.
- The state has adopted the Uniform Prudent Investor Act that measures performance on an entire portfolio. This adoption protects trustees and advisors to Nevada trusts and lowers regulatory fees (other forms of taxation) and related costs.
- The ability to establish a directed trust and use trust protectors. In Nevada, directed trusts allow for trustees to administer trusts with investments managed by independent investment advisors. This flexibility for the grantors and trustees allow them to separate these two functions.
- Nevada laws provide for protection from personal creditors through a Nevada Domestic Asset Protection Trust, (DAPT). As discussed in Part 1 of this discussion, trusts that earn “passive income”- interest, dividends, and capital gains – are exempt from state income tax and exempt from Nevada’s recently enacted Commerce Tax.
There are best practices to obtain residency for trusts and individuals but there are no official checklists to establish and sustain residency in Nevada.
Residency guidelines should be seriously considered to protect trusts and individuals against state audits. For more information, please contact our office or to discuss your facts and circumstances to consider becoming domiciled in Nevada.
We welcome your comments or questions regarding this topic.