Under Nevada law, the “grantor” or “grantors” of a trust is an individual or entity who creates a trust and transfers assets to the trust. This transfer is called “funding”. A trust is a legal instrument where a grantor transfers assets to the trust which are then managed by a trustee. For most of us, the Trustee and the Grantor(s) are one in the same. The trustee then manages those assets on behalf of the beneficiaries of the trust, again, during the grantor’s life, the grantor is also the beneficiary. The grantor is also known as the trustor, trust maker, or settlor.
The grantors have significant control over the trust, including selecting the current acting trustee (usually themselves), and the successor trustee who takes over upon incapacity and death. The grantor or grantors determine the beneficiaries and set the terms of the trust. The grantor can also change or revoke the trust at any time during their lifetime. This is called a grantor’s revocable living trust. When a grantor creates a trust, their social security number becomes the Tax Identification number for the trust, thus, there are no additional tax implications for a grantor’s revocable living trust.
In Nevada, a trust grantor can create many different types of trusts, including revocable trusts, irrevocable trusts, and asset protection trusts. A revocable trust allows the grantor to retain control over the assets and change the terms of the trust during their lifetime. An irrevocable trust, on the other hand, cannot be changed once it is created, but it offers additional tax and asset protection benefits. These types of trust are usually created for a very specific purpose. Most of us simply need a Revocable Trust to avoid probate and preserve assets for those we leave behind.
Nevada is a popular state for creating trusts because of its favorable trust laws, including no state income tax on trusts and strong asset protection laws. Where your successor trustee resides matters. Careful planning in necessary to avoid unwanted tax applications from other states.
Overall, a trust grantor in Nevada has the ability to create a powerful estate planning tool that can provide significant benefits to themselves and their beneficiaries. It is important for a trust grantor to work with an experienced attorney to ensure that their trust is properly created and managed. Call our office and set a consult with one of our experienced attorneys to set up your estate to protect your loved ones from the extreme hassle of probate.
By Travis Clark, Esq.