James F. McDonough
Of Counsel
732-568-8360 jmcdonough@sh-law.comFirm Insights
Domestic Asset Protection – Why State Legislation Is Not Set In Stone
Author: James F. McDonough
Date: June 19, 2013
Key Contacts
Back
The State of Nevada spent considerable time and effort in crafting its asset protection and dynasty trust statute. Nevada worked hard to attract trust business to the state in an effort to broaden its economic base and decrease its reliance upon tourism and mining. Yet, one amendment to a piece of legislation nearly upset years of work.
Nevada Assembly Bill 378 (Bill 378) acquired an amendment after introduction that would have neutralized Nevada’s ironclad asset protection. Specifically, the amendment would have opened up Nevada trusts to claims of a future class of creditors consisting of spouses, domestic partners and children. Up to now, future creditors had been barred from piercing Nevada trusts to pay judgments.
Although local attorneys, accountants and trust companies responded to defeat Bill 378, this episode points out the pressures that state legislators may be subject to satisfy particular constituencies. The amendment was appended to Bill 378 in response to the urging of certain interest groups. The mere fact that this amendment was accepted is enough to give one pause when choosing an asset protection jurisdiction.
This type of legislation is less likely to be introduced in an offshore jurisdiction because of the economics. These jurisdictions rely heavily on its statutes, reputation and stability to attract trust business. Any threat to a foreign jurisdiction’s trust business would have greater economic impact upon a typically smaller economy heavily that is heavily dependent upon trust and financial business. Foreign trusts, with a flight clause as standard feature, would have fled a foreign jurisdiction before the ink was dry on legislation similar to Bill 378.
The same questions must be asked in selecting a jurisdiction, foreign or domestic. Bill 378 reminds us that we are only a pen stroke away from a reversal of fortune. A trust fleeing one state for another may subject the trust to a new statute of limitations, claims of a fraudulent conveyance and other tax issues. Foreign jurisdictions are less likely to raise issues that would discourage new business.
- Practices: Tax and Trusts & Estates, Corporate Transactions & Business, Sophisticated Estate Planning & Wealth Preservation
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
Reputational Risk and Legal Exposure: Why New Jersey Businesses Must Manage Them Together
New Jersey businesses must manage legal and reputational risk together because modern disputes play out on two fronts at once: the legal proceeding itself and the court of public opinion, where customers, employees, investors, and business partners often reach conclusions long before a judge or jury has had the opportunity to evaluate the facts. Success […]
Author: Sean M. Pena
Eviction Is Not Always the End: Understanding Post-Possession Rent Claims in New Jersey and New York
No. An eviction does not automatically end a tenant’s obligation to pay rent. Post-eviction rent claims are common because recovering possession resolves who has the right to occupy the premises, but it does not extinguish the tenant’s contractual obligations under the lease. Whether unpaid or future rent remains owed depends on three factors: the lease’s […]
Author: Donald M. Pepe
Company Dissolved? Legal and Financial Consequences to Expect
A company is dissolved; legally, it ceases to exist. Accordingly, dissolution results in significant legal and financial consequences. It is a process that must be properly managed to avoid continuing liability. The Corporate Dissolution Process Corporate dissolution is the legal process of formally closing a corporation, paying its debts and distributing the remaining assets. Most […]
Author: Jay McDaniel
The Legal Implications of Signing a Triple Net Lease
A triple net lease is a commercial lease in which the tenant pays the property’s real estate taxes, insurance, and maintenance costs, known as the three nets, in addition to base rent. They are most often used in freestanding retail and office buildings and in large single-tenant industrial properties, with terms that typically run 10 […]
Author: Donald M. Pepe
When to Settle and When to Fight: A Litigator's Framework
Every lawsuit comes with a cost, and knowing when to settle a lawsuit is one of the most consequential decisions a business owner will face. Experienced litigators understand how to minimize cost and obtain certainty for their clients. For many business owners, the decision is viewed almost entirely through a financial lens: What will it cost […]
Author: Sean M. Pena
What Is Corporate Litigation? A Clear Guide for Businesses
Corporate litigation, also called commercial litigation or business litigation, is the formal legal process through which companies resolve disputes in the civil court system. When a business relationship breaks down and other resolution methods have failed, litigation provides a structured legal mechanism for asserting rights, recovering damages, enforcing obligations, and obtaining court-ordered relief. Unlike criminal […]
Author: Scarinci Hollenbeck, LLC
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.