The state of Nevada has become an attractive destination for the creation of family trusts due to its unique combination of favorable factors. Legal industry rankings show that Nevada is currently the top state in the country for asset-protection trusts. These trusts offer a range of benefits, including no income taxes, strong secrecy protections, and robust defenses against creditors.
Nevada’s advantage in the realm of asset-protection trusts has positioned it as a global center for the management of significant fortunes. While the total amount of assets held in Nevada trusts is not publicly reported, experts estimate that the state likely holds hundreds of billions of dollars in trust assets. These assets are tucked away in nondescript office buildings or trust companies, offering little visibility to the outside world.
According to Steven Oshins, a Nevada attorney and authority on asset-protection trusts, Nevada has been the top-ranked state for at least four years. South Dakota comes in as a close second, followed by a significant drop-off with states like Tennessee and Delaware.
Nevada’s prominence in the field of asset-protection trusts aligns with a larger trend of wealth accumulation and transfer. The United States currently hosts over $5.6 trillion in trust and estate assets, a figure that has more than doubled since 2011. Economists predict that the so-called Great Wealth Transfer will see over $80 trillion passed down to the next generations. The potential expiration of the estate and gift tax exemption next year, along with fears of a global wealth tax and an IRS crackdown on wealthy taxpayers, has led to a surge in the creation of new trusts.
In the race among states to attract new trust assets, Nevada maintains a comfortable lead. The state’s legislature regularly updates its trust laws and regulations to make them more appealing. Nevada boasts no state income tax, no corporate income tax, and no inheritance tax, allowing trusts to grow in value without significant deductions. Additionally, the state’s secrecy laws are among the strictest in the country. Records submitted to the Division of Financial Institutions are considered confidential, and a 2023 law permits the confidentiality of trust names, settlors, and beneficiaries without a court order. Nevada’s unique “silent trusts” also allow trustees to keep the existence of the trust hidden from beneficiaries.
One of Nevada’s most significant advantages, particularly relevant to the Murdoch family feud, is its trust flexibility. The Murdoch Family Trust, which holds controlling shares in News Corp. and Fox Corp., is at the center of the dispute. Under the current terms, control of the trust would pass to four of Rupert Murdoch’s children upon his death. However, Rupert Murdoch seeks to change the terms to give control to his son Lachlan. In many states, changing an irrevocable trust is nearly impossible, but Nevada allows for a process known as “decanting,” which permits the modification of irrevocable trusts as long as specific provisions are met. In this case, Rupert Murdoch would have to prove to a probate court that the change is in the best interests of the heirs.
While it is uncommon for a trust donor to argue in favor of heirs who are opposing the change, Nevada trust and estate attorneys believe that if Rupert Murdoch can demonstrate that Lachlan’s control would maximize the financial value of the companies and benefit all siblings, the court may side with him. The trial is set to begin in September.
It is worth noting that it is unusual for a family to establish a trust in Nevada without any personal or business ties to the state. The Murdochs do not appear to have residences or public headquarters in Nevada. Typically, families would have some connection to the state, such as living there or owning real estate.
In conclusion, Nevada’s rise as a global center for family trusts stems from its favorable combination of factors, including no income taxes, strong secrecy protections, and robust defenses against creditors. The state’s trust industry has seen significant growth, with experts estimating that it holds hundreds of billions of dollars in trust assets. Nevada’s comfortable lead in attracting new trust assets is driven by the impending Great Wealth Transfer, potential tax changes, and increased demand from foreign millionaires and billionaires. The state’s trust laws and regulations are regularly updated to maintain its appeal, and its trust flexibility, including the ability to decant irrevocable trusts, sets it apart from other states. The ongoing Murdoch family feud brings attention to Nevada’s unique trust environment and the potential for modifications to irrevocable trusts. However, it is uncommon for a family to establish a trust in Nevada without any personal or business ties to the state.
