As you all know, I strive to provide the best possible service to my client and friends and, to do so, I have to keep myself informed, adjourned and be knowledgeable in many fields connected to the real estate and law, by all means, is one of them.

So..... to keep up with my strive, I recently met with a very well known lawyer here in Vegas and learn from him something that I was totally unaware of, like most of us.

What that is? Is how to protect our naked assets from our creditors!

What that means? What is NEKED ASSETS?

NEKED ASSETS is our hard-earned CASH, CARS, REAL ESTATES and so on and so forth… and what that means is, how to protect them, NOW AND IN THE FUTURE, from our creditors!

Now, we all know, or at list most of us do, about Homestead our home against unsecured debt and that I.R.A.’s, 401 K’s, pensions etc. etc, are exempt from execution, in addition to all items listed in the N.R.S.21.090 but very few knows about the N.R.S. 166 also known as Spendthrift Trust or (DAPT)

Let’s step back one second here. Because of the real estate turmoil and the properties value going down the drain we all are, (or at list know someone that is) facing what I call “THE DILEMMA”…… What should I do with my underwater property? Well, I am not going to answer that question in this article.

What I will talk about is what to do with the necked assets you may have and that the banks, creditors or collection agencies can go after in case you decide to foreclose or short sale. You may think to create an L.L.C. or to give your assets as a donation to someone you are related to or friend with. Wrong, totally wrong, your creditor can still come after you (even if your L.L.C. is set in the Cayman Island L.O.L.) and you most likely will stand the chance to spend a nice chunk of time in a colorful State Facility! (If you know what I mean!)

Here where the self settled spendthrift trust, or domestic asset protection trust (DAPT) comes in place.

This particular trust has nothing to do with a probate trust, but actually can work in conjunction with it if you so wish and Nevada was one of the first states to pass legislation regarding it.

In general, NRS 166 permits individuals to protect assets from the reach of their personal creditors and still derive personal benefit from such assets by transferring them into a trust where at least one of the trustees is a Nevada resident, Nevada bank or Nevada trust company, and where the settlors are not authorized to make distributions back to themselves. Assets are then shielded from the reach of the settlor’s personal creditors once a specific seasoning period has run.

Here the basics on how all works directly from N.R.S.166:

· There is a two-year statutory seasoning period, once the two-year period has passed, the assets held in trust are protected from creditor reach. Creditors also have six months from the time of discovery or reasonable discovery to bring legal action against a transfer into trust; however, NRS 166 provides that creditors shall be deemed to have discovered the transfer once the transferor publicly records the transfer with the county recorder or files a financing statement with the Secretary of State.

· Settlor can serve as trustee: the law makes clear that not only can a settlor of a self-settled spendthrift trust serve as a trustee, but it also explicitly provides that a settlor-trustee can hold and exercise any other power under the trust, including the power to remove and replace a trustee, direct trust investments and execute other management powers. Moreover, the language in the statute allows a settlor-trustee to even make a distribution to himself, provided another person consents to such distribution. (Mom, dad, ….)

· Fraudulent transfer requirement: Under NRS 166, for a creditor to bring an action against a transfer of property to a Nevada self-settled spendthrift trust, the creditor must prove (good luck trying to do that), the transfer was either Fraudulent Transfer or “otherwise wrongful as to the creditor.” Furthermore, if a creditor proves the transfer of a certain asset to be fraudulent (again, good luck trying to do that), that proof does not provide blanket evidence as to all other transfers or for all other creditors. Each creditor must make his own case for each asset.

In simple words, no one can touch your assets after two years the same are under the trust, and even in the improbable case a creditor comes after you the day after you move your assets under the trust, chances are that your lawyer can stretch the case passed the two-year mark. You can put your cash under the trust and distribute the money to yourself as long a third party under the trust consents to it in writing. (Your relative or a friend writes a yearly letter to be kept on file, authorizing the distribution).

Now don’t waist any time, Google Nevada or Las Vegas assets protection attorneys and start your trust NOW even if you don't think you need one! (Consider it like your best insurance plan for the future!) or, at list, consult with one of the attorneys you Googled. I wish I knew about this law years and years ago!!!!!!!

As always.....

Professionally Yours, Michelangelo

DISCLAIMER: I am not a CPA or a lawyer, so make sure to consult your professional advisors.This and all articles in this blog are intended to provide general information only, this is not intended to be a tax or legal advice and you should always consult with your own accountant, attorney and trusted advisors to discuss your specific situation, goals, rights and options.