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
New York NDA Requirements for Businesses
Non-disclosure agreements (NDAs) remain a critical tool for protecting sensitive business information. However, New York NDA requirements have evolved, and businesses must ensure these agreements are carefully drafted to remain enforceable. In a competitive market like New York City, NDAs are commonly used to protect proprietary information, client relationships, and strategic plans. At the same […]
Author: Dan Brecher
New Jersey Will Contest Grounds Explained
How Courts Evaluate Testamentary Capacity and Undue Influence Will contests in New Jersey are difficult to win, given the strong presumption that a properly executed will reflects the testator’s intent. However, challenges based on lack of testamentary capacity and undue influence remain common, particularly where there are concerns about mental capacity or the involvement of […]
Author: Marc J. Comer
Legal Issues Before Bringing on Investors
Bringing on outside investors can provide the capital and strategic support a business needs to grow. However, raising capital also introduces important legal, financial, and operational considerations. Before bringing on investors, businesses should address key legal issues to reduce risk, streamline investor due diligence, and position the company for long-term success. Early preparation signals that […]
Author: Dan Brecher
SECURE 2.0 RMD Planning Strategies
How the Updated Law Shapes Retirement and Estate Planning The SECURE 2.0 Act of 2022 materially reshapes the required minimum distribution (RMD) landscape, extending tax deferral opportunities while accelerating distribution requirements for many beneficiaries. For high-net-worth individuals and families, these changes are not merely technical. They require a reassessment of retirement income strategies, beneficiary planning, […]
Author: Marc J. Comer
Buying Commercial Property in New Jersey: Legal Guide for Small Businesses
Small businesses considering buying commercial property in New Jersey must evaluate a range of legal, financial, and operational factors. While ownership can offer long-term value and control, it also introduces significant risks if not properly structured. This guide outlines key considerations to help New Jersey business owners make informed decisions, minimize legal exposure, and successfully […]
Author: Robert L. Baker, Jr.
The SEC’s Latest Guidance on Applying Federal Securities Laws to Tokenized Securities
On January 28, 2026, staff of the U.S. Securities and Exchange Commission’s Divisions of Corporation Finance, Investment Management, and Trading and Markets issued a joint statement clarifying how existing federal securities laws apply to tokenized securities. The SEC’s “Statement on Tokenized Securities” does not establish new law, but it does provide greater clarity on the […]
Author: Dan Brecher
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.