(Copyright 2011)

I. Introduction

In Connecticut and most other states, when an individual who creates and transfer assets to a Trust (the maker or "trustor" of the Trust), is also a beneficiary of that Trust, the Trust provisions will not protect the trustor/beneficiary"s creditors from reaching the assets of the Trust. On the other hand, the laws of many foreign jurisdictions provide that when a trustor transfers assets to an Offshore Asset Protection Trust that Trust can protect the assets of the Trust even though the trustor is a beneficiary of the Trust.

In the late 1990s, several states began to mirror the Offshore Asset Protection Trust law and reverse the general rule concerning self settled spendthrift trusts and statutorily modified their laws accordingly. Delaware and Alaska along with Nevada are among the 11 states that have adopted such legislation. The Nevada legislation was enacted in 1999 and allows the trustor or creator of the Trust to protect the principal of the Trust from outside creditors even though the trustor is a beneficiary of the Trust.

This legislation is extremely important and critical to Asset Protect Planning for residents of Connecticut. For many people, the typical revocable living trust that they have set up in Connecticut or elsewhere provides zero protection against the creditors of the trustors of the Trust whether they have a claim arising prior to establish the Trust or after its set up.

II. How Does the Nevada Asset Protection Trust Work?

Under the relevant provisions of the Nevada law, at least one Trustee must be a Nevada resident. We recommend that a Trust company organized under the laws of Nevada be the Trustee of the Nevada Asset Protection Trust. The major advantage of the Nevada laws is the shorter period of time required for protection between the date an asset is transferred to the Trust and the date the protection begins from the creditors of the trustor. The Nevada statute of limitation in this regard is only two years where as the other principal states have a much longer statute of limitations.

Again, it should be emphasized that only a minority of states permit self settled Asset Protection Trusts. The benefits of using the Nevada Asset Protection Trust are obvious not only from the standpoint of high net worth individuals who want to protect their large property holdings, but also for many younger people who are in the process of building their estate and who face high liability exposure such as doctors, lawyers, other professionals and many other types of business owners and executives.

III. Modular Structure Using LLCs

One of the best ways to utilize the Nevada Asset Protection Trust is to create a modular structure combining the Nevada Asset Protection Trust with a limited liability company ("LLC"). Basically, the member interest of the owner of the LLC is transferred to the Nevada Asset Protection Trust which holds the interest, more or less, as a custodian. For example, a husband or wife can be the trustor or the maker of the Nevada Asset Protection Trust. The LLCs can then be set up to hold the real property and other assets of the trustor and the member interests of the LLCs can be transferred to the Nevada Asset Protection Trust. It is recommended that a third party own at least 5% of the LLC because the efficacy of the Charging Order remedy limitation of creditors of the LLC is greatly reduced and possible eliminated when the LLC is a single member LLC. A diagram of the structure is set forth below (Joan and Jenny are John and Jane"s daughters):

IV. Conclusion

Most professionals (physicians, dentists, attorneys, business owners, real estate investors) and anyone else who owns substantial assets should consider setting up an Asset Protection structure. It may well be that the Nevada Asset Protection Trust should be an integral part of that structure. We invite you to contact the law office of John Massih in Trumbull, Connecticut at 203-880-9980 to set up an appointment to discuss your Estate and Asset Protection Planning. Jeff Matsen is Of Counsel to Mr. Massih"s law firm and works closely with Mr. Massih on many of his Asset Protection Planning matters. Jeff is only licensed to practice law in California.


John N. Massih received his law degree with distinction from University of Nebraska Lincoln College of Law, and his Masters in Business Administration from Creighton University. He is an Estate, Business Planning and Asset Protection attorney in Connecticut whose experiences in the Fortune 50, public finance and venture capital have provided a unique perspective in his practice and an understanding of business transactions and tax matters from the position of a business owner. Attorney Massih is a Board Member of the Financial Planners Association of Fairfield County, CT, and a member of the American Bar Association, the Connecticut Bar Association and the Fairfield County Bar Association. He is also an active member of WealthCounsel. Attorney Massih is further recognized in his community by various civic contributions including his role as a Board member of the White Ribbon Campaign associated with the Center for Woman and Families of Eastern Fairfield County, and a member of the Young Leader"s Society of Coastal Fairfield County.


Jeffrey R. Matsen received his law degree with honors from UCLA Law School and has provided a myriad of clients with the highest level of legal services for over 35 years. He is one of the leading Estate, Asset Protection and Business Planning attorneys in the country and is internationally recognized in the areas of Asset Protection, International Trusts and Offshore Business Entity Formation. Attorney Matsen"s knowledge, professionalism, responsiveness and integrity have vaulted him to the top of his field culminating in his designation by Worth Magazine as one of "America"s Top 100 Attorneys", by Los Angeles Magazine as one of California"s "Super Lawyers" and by OC Metro Magazine as one of "O.C.'s Top Lawyers."The Nationally Renowned Attorney Rating Service, „AVVO" has rated Mr. Matsen a perfect "10/10 Superb", he has continued to achieve the highest "AV rating" and has been designated a "Preeminent Lawyer" by the only other prestigious attorney rating directory, Martindale Hubble. Matsen regularly presents continuing education seminars for the California State Bar, the National Business Institute and WealthCounsel, a national league of over a thousand Estate attorneys. Matsen is a Fellow and Guest Lecturer for The Center of International Legal Studies in Salzburg, Austria.

Categories: Asset Protection