Personal Trusts / Nevada Trusts
Trust administration is the core of our business
Whether you are looking for an alternative to naming a friend or family member as successor trustee of your revocable living trust or looking to leverage the favorable tax and estate planning laws of Nevada, we are here to help. We are among the top trust companies in Nevada because of our longevity in the industry, our highly experienced staff, and our personalized service.
trust administration at PREMIER TRUST
We offer clients across the nation administration services of administering and settling trusts. This includes administering an account pursuant to the applicable governing trust document which may include: collecting, holding and valuing assets, paying debts, expenses and taxes, distributing property, monitoring investment portfolios, and advising heirs.
Dedicated Trust Administrator assigned to your account
Online access to your account 24/7
Specialized experience with asset protection trusts, charitable trusts and special needs trusts
your professional trustee
For your Personal Trust Needs
Incapacity
Premier Trust can intervene if a grantor cannot pay bills and make financial decisions.
Trust Settlement
Your trust must be settled when you pass away. This includes coordinating final tax documents, uncovering and liquidating assets, and making distributions. When clients utilize a revocable living trust properly, they can avoid probate.
Continual Administration
When funds stay in a trust for the benefit of beneficiaries.
Trusts in Nevada allow for dynasty planning, enabling funds to stay in trust for 365 years after the grantor's death.
Premier will make distributions to beneficiaries, keep accounting records, send account statements, oversee investments, and coordinate preparation of tax documents.
Premier can be a co-trustee with a trusted friend or family member.
We can review current trusts held at another trust company and change the trustee to Premier Trust.
Our minimum is $500,000 in assets.
Personal Trusts
-
Trusts can be revocable or irrevocable, the former being changeable by the grantor during the grantor’s lifetime and becoming irrevocable at the grantor’s death. Revocable trusts set the stage for the disposition of assets similar to a will, however, they generally avoid probate administration and the costs associated with it. Make sure that assets are titled into the name of the revocable trust after it is established.
An irrevocable trust is generally not readily changeable and is used for specific purposes in estate and financial planning. Assets placed in an irrevocable trust are generally transferred outside of the grantor’s estate for estate and transfer tax purposes.
An example is an Irrevocable Life Insurance Trust (ILIT) that is used to hold life insurance and collect proceeds outside of the client’s estate. Asset Protection Trusts (APTs) are also irrevocable trusts, however, the assets held in them are all considered held in the grantor’s estate and are taxed upon the grantor’s demise.
-
Clients with a net worth high enough to be subject to the estate tax will often have substantial illiquid assets as part of their overall investment portfolio. Accessing the value of these types of assets for liquidity to pay estate taxes (due within nine months of death) often results in accepting prices that are forced lower by this time constraint.
To avoid this fire sale situation, clients often choose to liquidate more of their investment assets to cover estate taxes. They sell marketable securities and take withdrawals from investment and brokerage accounts.
The use of a properly structured and administered Irrevocable Life Insurance Trust (ILIT) and the life insurance it holds can provide the liquidity necessary to cover estate taxes. This avoids or limits the sale of other investment assets.
ILITs can help accomplish other planning goals as well. When a client does not have a taxable estate, life insurance inside an ILIT can help leverage the amount of money that passes to the client’s heirs. Since the death benefit will be received inside an ILIT, the client can dictate through the terms of the trust just how the insurance proceeds are to be used and allocated to the beneficiaries. If drafted properly, the trust may protect the insurance proceeds from the beneficiaries’ creditors, including potential divorcing spouses. If dynasty provisions are included, the trust can prevent future depletion of trust assets by eliminating estate taxes paid by future generations on the assets held in the trust, for as long as state law permits.
Discussing estate planning and life insurance with clients can help financial professionals retain assets by minimizing loss due to estate taxes and potential creditor claims of heirs. Using Premier Trust as independent trustee to administer trusts mitigates the chance for potential poaching of client assets by banks or trust companies. Financial Professionals become a valuable resource to help clients accomplish long-term goals.
-
Nevada Special Needs Trust (SNT) are irrevocable trusts created to ensure that a physically or mentally disabled beneficiary can enjoy the use of property held in trust for his or her benefit.
A SNT may be established for a beneficiary to prevent a beneficiary from losing access to essential government benefits including: Social Security Disability Insurance (SSDI or SSD), Supplemental Security Income (SSI) and federal and state sponsored Medicaid programs that provide the beneficiary access to healthcare, long-term care and nursing home care.
SNTs are frequently established for the benefit of a disabled person to receive an inheritance, personal injury settlement proceeds, or the proceeds of compensation for criminal injuries, litigation or insurance settlements. Often they are set up under the guidance of a Structured Settlement planner in cooperation with a qualified legal and financial team.
When established by a Court, family members, a trust company, individuals or entities may be appointed to administer the trust as its trustee.
An independent trust company is often the preferred recommendation since it can act more efficiently to secure government benefits than a court appointed official or an individual that does not have the expertise.
The disabled person, a parent, grandparent, legal guardian or court, can establish a Self-Settled SNT for the sole benefit of a disabled person under the age of 65. Under current Social Security Law, the trust assets are not counted as assets available to the beneficiary for benefits qualification purposes. However, the trust must include “Payback” provisions for Medicaid upon the death of the beneficiary, if the beneficiary had the right to outright possession of the assets.
Pooled trusts, in which several individual beneficiaries are “Pooled” together, can be managed only by authorized non-profit organizations. At the death of a beneficiary “Payback” is modified to allow the remaining funds held in trust to be available to the other pooled beneficiaries.
Third-Party SNTs, that are established by anyone other than the disabled beneficiary (or someone acting on behalf of the beneficiary), are not restricted as to age of the beneficiary and do not need to include Medicaid “payback” provisions.
SNTs are complicated instruments that are affected by many different competing laws, rules and regulations. Great care must be taken in the choice of appropriate trustees to administer trust assets for a disabled person and to the specific provisions that should be included in the trust. Competent professionals specializing in this very unique aspect of the law should be engaged to draft the appropriate documents.
-
Charitable trusts are irrevocable trusts that include both taxable and non-taxable beneficiaries. They are popular vehicles that can be structured to provide the donor with flexible planning options.
There are two basic types of Nevada charitable trusts; charitable remainder trusts and charitable lead trusts. In both instances, the donor can contribute highly appreciated assets to fund the trust, avoid the capital gains tax on the sale of the assets, and receive an income tax deduction for a portion of the amount donated in the year of funding.
Charitable Remainder Trusts (CRTs):
CRTs provide a stated percentage of trust income to the donor during the donor’s lifetime. Upon the donor’s death the assets that are left, known as the “remainder,” are distributed to the charitable beneficiary. There are two main subsets of CRTs:
Charitable Remainder Annuity Trusts – CRAT:
Pays the donor annually, a fixed dollar amount determined when the trust is established.
Charitable Remainder UniTrusts – CRUT:
Pays the donor annually, a fixed percentage of trust’s value computed at the start of each year.
A popular variation of the CRUT provides for distribution of a set percentage of Net Income With Right of Make-up, known as a NIMCRUT. It is very flexible since income can be deferred for years and then paid out as needed, similar to a retirement plan but without the IRS restrictions.
Charitable Lead Trusts (CLTs):
CLTs provide distribution of a portion of the trust’s income to the charitable beneficiary for a specified period of years or designated lifetime after which the balance is distributed to non-charitable beneficiaries, either back to the donor or to the donor’s heirs. They can be setup to provide an Annuity or UniTrust payment, similar to CRTs. CLTs are useful planning tools for donors who are not concerned with receiving current income from donated assets and are more interested in removing assets from their taxable estate.
How Premier trust works
Using a Nevada trustee offers a unique opportunity for clients who desire to take advantage of Nevada’s favorable laws in their estate and financial planning. Clients can utilize Nevada specific trusts and retain control of the assets.
One benefit of Nevada is the ability to divide duties among multiple trustees. We can take on one role, two, or all three, while the grantor, friend, family member, or trusted professional takes on the other role(s).
Administrative Trustee
Distribution Trustee
Investment Trustee
Nevada Specific Trusts
-
The number and size of lawsuits brought against wealthy individuals increases every year. With this increase in lawsuits comes an increasing need for people to protect their assets. Many people fail to address this need until after the liability occurs. Unfortunately, many asset protection opportunities are no longer available at such time because of fraudulent conveyance laws.
Nevada is one of only a limited number of states that allow a person to create an asset protection trust for oneself. This Nevada law became effective for trusts created on or after October 1, 1999, yet many doctors, business owners, corporate executives and other high net worth individuals still have not taken advantage of this opportunity.
Assets transferred to a Nevada asset protection trusts are generally protected from the transferor’s creditors two years after the transfer to the trust. Nevada law is superior to the laws of the other domestic asset protection jurisdictions in this regard since the required waiting period in most of the other jurisdictions is four years.
-
Effective October 1, 2005, the Nevada perpetuities law was modified to allow a dynasty trust to continue for up to 365 years with its assets protected from estate taxes, creditors and divorcing spouses during such time.
A dynasty trust is an irrevocable trust that leverages a person’s estate, gift and generation-skipping transfer tax exemptions for as many generations as applicable state law permits. Whereas most attorneys draft trusts to provide for mandatory distributions to the grantor’s children at staggered ages (e.g., one-third at age 25, one-half of the balance at age 30, and the balance at age 35), a dynasty trust is drafted to encourage the trustees of the trust to keep the assets in trust for the benefit of the beneficiaries and to allow the beneficiaries to “use” Nevada trusts properties rather than receive it outright where it will be subject to estate taxes, creditors and divorcing spouses.
Discretionary Trusts – For maximum creditor and divorce protection, an independent trustee is used to make discretionary distributions and other tax sensitive decisions. The primary beneficiary can be given the power to remove and replace the independent trustee with or without cause. Additionally, the primary beneficiary can be the investment trustee of the discretionary dynasty trust thereby being able to make all investment decisions over his trust assets. Thus, the primary beneficiary has the control over and use of the dynasty trust property as though he owned it free of trust. However, by having the dynasty trust as the owner, if drafted correctly, the assets are protected from estate taxes and from the beneficiary’s creditors, including divorcing spouses. This co-trusteeship, although slightly more complex than drafting just one trustee into the dynasty trust, provides the ultimate combination of control, estate tax savings and creditor protection.
Support Trusts – Alternatively, the primary beneficiary can be the sole trustee of the dynasty trust. With this option, the beneficiary can only distribute assets from the dynasty trust to himself for his health, education, maintenance and support. This is often called a “support trust,” as opposed to a “discretionary trust” which uses an independent trustee for discretionary distributions. Although a support trust is simpler to administer than a discretionary trust, certain creditors of the beneficiaries of a support trust may access the trust assets, so it is less protective than a discretionary trust. One such creditor is a divorcing spouse of a beneficiary which is why the discretionary dynasty trust is the superior option.
-
If a client has beneficiaries in another state that has a state income tax, a trust can be used to save state income taxes for the otherwise-taxed beneficiary or beneficiaries. For example, if a Nevada resident has children who live in California, the Nevada resident could leave the inheritance for the child who lives in California in a continuing complex trust. To the extent that the child in California does not need the income from the inheritance (but is rather saving it for the future), the income would accumulate within the complex trust and be protected from California state income tax.
In order to be protected from California state income tax, (i) the income earned by the trust cannot be California source income and the fiduciaries (trustees) of the complex trust would have to be non-residents of California. In this example, it would be natural for the Nevada resident to name another Nevada resident or a Nevada bank or trust company as the fiduciary of the complex trust for the California-resident beneficiary. In addition to protecting a beneficiary’s inheritance from potential state income tax, many clients from neighboring states like CaIifornia have been seeking Nevada counsel to help them reduce their lifetime state income tax liabilities. A trust that is often referred to as a NING (standing for Nevada Incomplete gift Non-Grantor trust), may be used to mitigate state income tax for a non-resident of Nevada.
The ideal client for a NING Trust is a resident of a state with an income tax, who has income producing assets, the income of which is not traceable back to the taxing state. The client would need to be willing to divest himself or herself of the asset and the income from the asset by placing the asset into a complex trust that has no fiduciaries in the taxing state. To the extent income is accumulated within the complex trust in Nevada, the income should not be taxed in the client’s residency state. It is important to note that structuring of a NING trust for a client is a complex endeavor that requires analysis of the state income tax laws for the state in which the client resides. Nevada is one of the leading jurisdictions for this type of trust because of Nevada’s favorable self-settled spendthrift trust laws (found in NRS Chapter 166).
The NING may be structured to benefit the client contributing the funds as a beneficiary at some point in the future (assuming state income tax savings are no longer a concern because of a change of desires of the client or a change of residence).
-
The Inheritor’s Trust is one of the most powerful estate, tax and asset protection strategies available to planning professionals. Essentially, it is a third-party settled trust designed: (1) to give the client (who is both a trustee and the initial primary beneficiary of the trust) control and beneficial enjoyment of trust property such that the client can use and manage the trust assets without compromising the trust’s ability to avoid transfer taxes at the client’s death, and (2) to protect the trust assets from the client’s creditors. After the demise of the client (the primary beneficiary), control of the Nevada trusts pass to subsequent primary beneficiaries, often on a per stripes basis, subject to change through the exercise of a non-general power of appointment by the client. In addition to receiving control of the trust, the subsequent primary beneficiaries also receive the benefits of trust-owned property such as: (1) transfer tax avoidance, (2) creditor protection, including protection from a divorcing or separated spouse, and (3) potential income tax savings, including state income tax, by domiciling the trust in a state with preferable income tax rates.
The critical concept empowering the Inheritor’s Trust is that assets received from a third party and retained in a properly structured trust are protected from unnecessary exposure to the client’s “predators,” including the IRS, judgment creditors, a divorcing spouse, disgruntled family members, and/or business partners. A standard Inheritor’s Trust becomes “beneficiary defective” when it is drafted so that the beneficiary is treated as the owner of the trust for income tax purposes pursuant to the IRC’s grantor trust rules (a “Beneficiary-Defective Inheritor’s Trust” or “BDIT”). This (1) requires the beneficiary to pay the income taxes on the income generated by the trust and (2) also permits the beneficiary to engage in transactions with the trust income-tax-free. Significantly, this also allows trust assets to grow income-tax-free, which compounds the multi-generational accumulation of wealth in the trust.
With respect to the beneficiary, a BDIT combines the benefits of a traditional intentionally-defective grantor trust (IDGT)5 created for others with the enhanced wealth, transfer tax and asset protection advantages of a trust created and funded by a third party for the benefit of the beneficiary.
Because of the enhanced planning benefits available through a BDIT, particularly the control of the trust property and the access to and enjoyment of the trust property, many clients who otherwise are reluctant to do comprehensive planning or make significant wealth transfers now can enjoy the benefits of advanced wealth and asset protection planning with minimal personal, financial and tax risk.