§1Why Nevada Law?
Prior to the advent of the Internet, shopping for products and services was generally limited to that which was offered by local vendors. But the spectacular growth and revolutionary impact of cyberspace has influenced just about everything connected with our lives, including how we shop. Most everyone now enjoys the wide-spread benefits of the Internet's commercial platform.
Along that line, it is interesting to observe that "jurisdictional shopping" for achieving maximum-benefit estate planning objectives with trusts has been available for well over 200 years — back when certain states began codifying trust law. Any U.S. citizen could then, as any U.S. citizen can now, choose to establish a personal trust estate plan in any state that published and upheld a beneficial body of law concerning estate planning.
Of course, as a practical matter, using an out-of-state situs for establishing a personal estate plan with a multi-generational existence was available to only a few in the early 1800s — being the wealthy elite. But that's all changed now as digital transformation is upon us. Technology is facilitating and popularizing nationwide jurisdictional shopping for U.S. citizens in locating top-tier estate planning services and venues.
“The Full Faith and Credit clause of the U.S. Constitution requires that all states recognize the public acts, records, and judicial proceedings of every other state in the Union — including Nevada trust law.”
§2What Good Trust Law Must Cover
Estate planning with trusts should connect the main factors: (a) the initial implementation process; (b) proper and complete funding; (c) ongoing plan accessibility for Revocable Living Trusts; (d) important administrative regulations; (e) income and estate-transfer taxation planning; (f) asset "spend-thrift" protection; and (g) the eventual estate settlement process.
Legal statisticians have identified seven states that have employed purpose-drafted code with respect to providing foundational, user-friendly estate planning law to help families anywhere engage those important factors, and more, and realize their planning goals. Nevada is in that group and our recommended choice.
The State of Nevada has been on the "most favorable, pro-trust" list over a long period of time and consistently rated at the very top in current years. Nevada legislators have gone the extra mile in writing comprehensive trust law — including replicating and codifying the terms of the widely respected Uniform Trust Code of 2000 — to cover every important aspect possible. In our corporate view, the State of Nevada is clearly the most desirable situs for any American family, regardless of where they reside, to establish a living trust estate plan while utilizing 21st century dynamics to maintain their plan.
§3Q&A: Establishing a Nevada Trust From Anywhere
Q: Can I establish a Nevada trust regardless of where I live? Yes. Any U.S. citizen in any of the 50 states may establish a Nevada trust. In fact, even foreigners with domestic assets may establish a Nevada trust, and very often do. Nevada lawmakers welcome all wanting to employ Nevada trust law.
Q: Might there be any concern associated with administering my personal bank and brokerage accounts, real estate interests, closely held business interests, or personal chattel assets using a Nevada trust even though my assets are neither located nor registered in Nevada? Any and all of your domestic assets, regardless of where located, that can be assigned to, retitled to, or paid to a trust will be compatible with a Nevada trust. That is especially so in today's world, as constructive delivery and receipt transactions can be accomplished electronically, digitally, or by express delivery whenever necessary.
Q: Is it allowable for a family member or friend to succeed as successor trustee of my Nevada trust even though such person is not a citizen of Nevada? Yes. However, we recommend — for estate settlement purposes — appointing a Nevada trust company who is strategically partnered with ITS to serve as your successor trustee. But that choice is entirely up to you and under your control at all times.
§4Q&A: Taxation, Recognition, and Income Tax
Q: Does establishing a Revocable Living Trust under Nevada law help avoid any estate-transfer-related taxation that may be imposed by my own state of domicile at the time of my decease? No. If you are then a citizen of one of the twelve states, or the District of Columbia, that currently impose transfer/estate taxes upon their citizens at the time of decease — and/or one of the six states that currently impose transfer-related inheritance taxes upon their citizens at decease — then the same obligations, if any, shall be requisite upon your trust estate regardless of where it is sitused, including the State of Nevada.
Q: Is my state legally required to recognize all points of Nevada trust law at the same level of affirmation and effect that it would recognize its own trust law? Yes. The Full Faith and Credit clause of the U.S. Constitution (Article IV, Section 1) requires that all states recognize the "public acts, records, and judicial proceedings" of every other state in the Union — including Electronic Trust/Signature law.
Q: Does establishing a Nevada trust provide me, the creator of the trust, with any personal income and/or capital gains tax savings seeing that Nevada is an income-tax-free state? For a Revocable Living Trust, income and capital gains continue to flow through to the grantor's personal Form 1040 and are taxed in the grantor's state of domicile — Nevada situs alone does not change that. State-level income-tax advantages emerge with properly structured non-grantor, irrevocable Nevada trusts where the trust itself is the taxpayer and the situs governs state taxation of trust-retained income.
The material above is provided for informational and educational purposes only and does not constitute legal, tax, or investment advice. Engagements with RM Legacy Group are conducted under confidential terms in coordination with the family's counsel and fiduciaries.