Asset Protection Lawyers in Las Vegas, Serving Nevada
There are many types of asset protection techniques, including use of state and federal exemption statutes, various types of insurance products, business entities, gift-giving (including gifts to irrevocable trusts), and domestic self-settled spendthrift trusts. The various asset-protection tools and strategies provide varying levels of protection. In this area of the law, as the level of creditor-protection increases, control and flexibility over an asset decreases. Thus, asset-protection planning starts with the process of finding the level of protection that provides an acceptable combination of control and protection.
Using a Business Entity for Asset Protection
One of the common ways to shield assets from lawsuits and creditors is to utilize a business entity. As an example, if a person forms a business, and the corporation follows the applicable rules and regulations that govern corporations, then if the business is sued, only the assets invested in the corporation are at risk. The shareholder cannot be sued for the acts of the corporation because the law regards a corporation as a separate legal entity from a person. Thus, an individual’s personal assets are protected. This is true even if the person owns all of the shares in the corporation. This protection from personal liability also applies to LLCs.
Another way of limiting liability for asset protection is to use a limited partnership. Limited partnerships are a common vehicle for real estate investment projects. In the typical real estate limited partnership, there is a general partner that wants to develop land. The general partner obtains funds from limited partners who are limited in the sense that they are passive investors and do not help manage the real estate development. If the real estate venture prospers, so do the limited partners, but if it fails, the limited partners lose only what they invested. They are not personally liable to the creditors of the limited partnership. For even extra layer of protection, the limited partner itself could be a corporation or an LLC.
Asset Protection by Placing Assets in Trusts
A common technique is to place one’s assets into a trust specifically designed for asset protection. A person can convey their assets to a trustee, to be disposed of according to the terms of the trust. Under the trust, the person who created the trust and transferred the assets to the trust can also be the beneficiary of the trust. If the trust is properly drafted, the assets owned by the trust are not subject to creditor claims. These types of trusts are sometimes called self-settled spendthrift trusts or asset protection trusts. Only a few states permit asset protection trusts, and Nevada has some of the strongest laws favoring these trusts.
These types of trusts have several critical requirements. One of them is that the trust must be irrevocable. If the trust is revocable, then a creditor might be able to force a settlor to dissolve the trust and then seize the assets contained within the trust. An asset protection trust also should have what is called a “spendthrift clause.” This type of clause prohibits a beneficiary’s interest in a trust to be used to pay the debts and claims of the beneficiary. Thus, a creditor cannot force payment from a the trust to pay a judgment against the beneficiary.
Protect Assets by Acquiring Property Exempt From Execution
“Execution” is the process of seizing a debtors’ property and selling it to satisfy a debt. Nevada law, like the law of other states, includes a list of assets that are exempt from execution. Many of the exemptions are for property of little value, but there are some items that can be used in conjunction with an asset protection plan, including:
- A homestead exemption up to $605,000 of equity in an individual’s primary residence.
- Up to $1,000,000 held in retirement accounts such as IRAs.
- A discretionary beneficial interest in a trust, even if the trust does not contain a spendthrift clause.
Some of the easiest strategies of asset protection include purchasing a sufficient umbrella insurance policy, paying down a mortgage up to $605,000 of equity in the property, and contributing up to $1,000,000 to a retirement plan. If these are utilized, a person can enjoy a substantial amount of asset protection.
Contact an Asset Protection Lawyer in Nevada
LKP has highly experienced asset protection attorneys in Las Vegas who can help protect assets throughout Nevada. If you or someone you know needs asset protection in Nevada, whether in Las Vegas, Henderson, Reno, or Carson City, contact us for a free consultation using our online contact form. Or call 702-333-1711 to speak to an asset protection lawyer experienced in protecting assets from creditors.