A Nevada asset protection trust is an irrevocable, self-settled “spendthrift” trust created under NRS Chapter 166. It lets you place assets in trust for your own benefit while making those assets unavailable to most personal creditors after the statute of limitations runs, so long as transfers were not fraudulent.
Nevada requires a Nevada trustee, allows you to retain significant but carefully limited powers, and gives creditors only a short window—and a high burden—to challenge funding.
Nevada Asset Protection Trust at a Glance
| Topic | What Nevada Law Says |
|---|---|
| Who can use it | Any competent person may create a spendthrift trust for themselves if it is in writing, irrevocable, does not require distributions to the settlor, and was not intended to hinder, delay, or defraud known creditors. |
| Required Nevada connection | If the settlor is a beneficiary, at least one Nevada trustee (Nevada resident, Nevada bank, or Nevada trust company with a Nevada office) must administer core functions in Nevada. |
| Challenge window (statute of limitations) | Future creditors: 2 years from transfer. Existing creditors: the later of 2 years from transfer or 6 months after the creditor discovered or reasonably should have discovered the transfer. Public recording constitutes discovery. |
| Creditor’s burden | The creditor must prove a fraudulent transfer or violation of a legal obligation by clear and convincing evidence. |
| Exception creditors | None by statute. Nevada’s Supreme Court confirmed no special “exception creditor” carve-outs (for support, etc.) in Klabacka v. Nelson. |
| Permitted settlor powers | You may retain powers such as removing/replacing trustees, directing investments, holding a special power of appointment, and using trust property, but another person must control distributions to you. |
| Bankruptcy overlay | A separate 10-year federal look-back can apply to transfers to self-settled trusts if made with actual intent to hinder, delay, or defraud creditors. |
How a Nevada Asset Protection Trust Works
A NAPT is a Nevada spendthrift trust designed to protect assets you transfer into it. Once funded, the trust’s anti-alienation rules bar assignment or seizure of a beneficiary’s interest, and court proceedings about a beneficiary’s rights run through Nevada trust procedures.
That protection becomes durable after the statute of limitations runs, provided funding wasn’t a fraudulent transfer.
Why Nevada is considered a top DAPT jurisdiction
Nevada pairs a short, two-year limitations period with a clear-and-convincing proof standard, and it recognizes no statutory exception creditors.
Those features, affirmed by Nevada’s high court in Klabacka, are what practitioners cite when ranking Nevada at or near the top among domestic jurisdictions.
Core legal requirements
Your trust must be irrevocable and cannot require any distribution to you; distributions to you, if any, must be at someone else’s discretion.
The instrument can still let you replace a trustee, direct investments, or hold a special power of appointment, and you may use trust property. If you are a beneficiary, at least one qualified Nevada trustee must handle administration in Nevada.
The seasoning period and discovery
After funding, assets season for two years against future creditors. If a creditor existed when you funded the trust, that creditor gets the later of two years from transfer or six months from when the transfer became discoverable. Recording a deed or UCC filing counts as discovery.
Practically, recording key transfers can start the clock running.
What a Nevada asset protection trust does not do
No asset protection trust validates a fraudulent transfer. Bankruptcy adds a separate 10-year claw-back for transfers to self-settled trusts if made with actual intent to hinder, delay, or defraud.
Courts in non-DAPT states have, in some cases, refused to honor another state’s DAPT on public-policy or fraudulent-transfer grounds (for example, In re Huber and Toni 1 Trust v. Wacker). This is why planning the facts and timing matters.
Formation steps
Choose a qualified Nevada trustee (Nevada resident, Nevada bank, or Nevada trust company). Draft and sign the irrevocable trust with compliant terms, including a truly independent distribution fiduciary. Fund the trust with appropriately selected assets and maintain records and administration in Nevada. Then allow the seasoning period to run while following the trust’s formalities.
What assets to consider
Liquid financial accounts, marketable securities, and interests in closely held entities are common NAPT assets. Nevada law allows a settlor-beneficiary to use trust property under the instrument, but you should still avoid day-to-day commingling and keep personal use consistent with the trust’s terms and fiduciary controls.
Real property located outside Nevada may be better held through entity interests rather than directly for enforcement reasons.
Design features that improve outcomes
Use a genuine Nevada administrative trustee and keep trust records and tax compliance in Nevada.
Ensure distributions to the settlor are discretionary and controlled by an independent party.
Record major transfers so that any existing creditor tolling period begins to run. Avoid side agreements that undermine trustee discretion or appear to guarantee settlor access.
Nevada vs. other domestic options
Most DAPT states use a four-year limitations period and several create exception-creditor carve-outs; Nevada uses two years and none.
Some states require repeated solvency affidavits for each funding; Nevada does not impose that recurring affidavit requirement by statute, reducing administrative friction for clients who fund over time.
Domestic Nevada APT vs. Offshore Trusts
For clients with substantial litigation exposure or home-state public-policy risks, an offshore trust (for example, a Cook Islands trust) can add non-U.S. court jurisdiction and stronger enforcement hurdles.
Offshore planning is more complex and costly but may outperform a DAPT in contested, cross-border fights.
Common pitfalls to avoid
Do not fund in the shadow of a demand letter, judgment, or insolvency.
Do not retain informal control. Do not skimp on the Nevada nexus: pick a real Nevada trustee and run administration in Nevada.
Align entity structures, titling, and records with the trust to avoid easy “bad-facts” attacks.
Frequently asked questions
What is a Nevada asset protection trust?
A Nevada asset protection trust is an irrevocable self-settled spendthrift trust under NRS Chapter 166 that protects properly funded assets from most personal creditors once Nevada’s statute of limitations has run, provided the transfers were not fraudulent. It requires a qualified Nevada trustee and carefully limits any right to require distributions to the settlor.
How long before assets are protected?
Two years from each transfer for future creditors; for existing creditors, the later of two years or six months from when the transfer was or should have been discovered (public recording counts as discovery).
Can I be my own trustee or keep control?
You may retain significant powers (for example, remove/replace trustees or direct investments) and may even serve in a co-trustee or investment-direction role, but another person must control distributions to you; the trust cannot require payments to you.
Does Nevada allow exception creditors like child support or alimony?
Nevada has no statutory exception creditors. The Nevada Supreme Court confirmed that Nevada’s spendthrift protections are not pierced by support orders once the trust is validly structured and funded.
Do I need a solvency affidavit every time I fund the trust?
Unlike several DAPT jurisdictions, Nevada law does not require a new solvency affidavit with each transfer; the controlling requirements are Nevada’s fraudulent-transfer rules and the trust-creation elements in NRS 166.
Will a Nevada APT work if I live outside Nevada?
Yes, nonresidents commonly use NAPTs, but results can vary if a home-state court refuses to apply Nevada law or finds a fraudulent transfer; cases like Huber and Toni 1 Trust show the importance of facts, timing, and jurisdiction. Offshore options can mitigate that risk profile.
What about bankruptcy?
Bankruptcy law adds a separate 10-year look-back for transfers to self-settled trusts if the trustee proves actual intent to hinder, delay, or defraud; that federal rule can override Nevada’s shorter period in bankruptcy cases.
When a Nevada APT makes the most sense
NAPTs are a strong domestic tool for clients with predictable, ongoing, professional or business risks who can plan early, fund from a position of solvency, and maintain real Nevada administration.
Where stakes or hostility are higher or where a client’s home state is hostile to DAPTs, an offshore trust may be the better fit.
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