Table of Contents

1. Assets at Risk - Overview of asset protection.
   
2. Basic Asset Protection Tools - Insurance, exemptions, homestead, and business entities
   
3. Irrevocable Trusts - Traditional spendthrift trusts
   
4. Fraudulent Transfers - Transfers that hinder, defraud, or delay creditors
   
5. Self-Settled Spendthrift Trusts - Domestic Asset-Protection Trusts
6. Other Asset-Protection Techniques - Asset divisions with spouses; off-shore trusts
   
7. Conclusion
   

1. Assets at Risk

   1. Overview: Many people are concerned about having their assets ⁽²⁾ taken from them by creditors. This memo briefly outlines some of the basic techniques that can be used to insulate property from various claims. This memo is intended for people who want to insulate their assets from future potential claims. This memo focuses on practical, legal methods intended to discourage and defer future creditors, bit it does not discuss gimmicks, "bullet-proof" schemes, or illegal methods. This memo does not address asset protection from existing claims ⁽³⁾ or the divestiture of assets for welfare qualification ⁽⁴⁾.

   2. Who Are My Creditors?: You do not have to look very hard to find people and agencies who want your property. It is too easy to find yourself owning people money, and sometimes unwittingly. Some possible creditors include:

      1. Tax-collecting agencies, including the Internal Revenue Service (IRS). Tax authorities may have (or may think they have) a claim against you for all types of taxes imposed upon you, upon a business of which you are an officer, or upon a trust of which you are the trustee.

      2. Auto accident victims, perhaps even persons you believe were at fault.

      3. Other accident victims, including victims whose injuries were caused by the actions of minor children or employees.

      4. Doctors, hospitals, nursing homes, and other health-care providers.

      5. Credit card issuers.

      6. Business creditors, including employees, governmental agencies, suppliers, accident victims, partners, etc.

      7. Creditors of others, where you have cosigned or guaranteed their obligations.

2. Basic Asset-Protection Tools

   1. Liability Insurance: The best protection against liability is insurance. Before you do anything else, you should seriously consider purchasing or increasing "umbrella" coverage on your homeowners insurance policy. Since those policies rarely cover business-related liability, for any business activities, consider purchasing or increasing liability coverage under your business insurance policy or policies.

   2. Miscellaneous Exemptions: Nevada law also provides several minor exemptions from executions upon judgments. [NRS 21.090] ⁽⁵⁾ These exemptions are extremely limited and afford no real protection to anyone who has accumulated possessions of any significant value.

   3. Home and Homestead: Nevada law provides for several exemptions related to a person's primary residence.

      1. Limited Medical Exemption. A primary residence is protected from execution upon a judgment for medical bills, regardless of equity, but this protection ends when no one living in the residence qualifies as the debtor, the debtor's spouse, or the debtor's child who is a minor or a disabled adult [NRS 21.095].

      2. Limited Homestead Exemption. Nevada's homestead exemption law [NRS Chapter 115] protects up to $125,000 of equity in a person or married couple's primary residence. This includes the land and the home, and the home can be a mobile home even if the owner rents rather than owns the land.

      3. Unlimited Homestead Exemption. Nevada law provides for an unlimited homestead for a homeowner who is granted "allodial title" by the state. As of the date this page was updated, a visit to the web page of Nevada's Treasurer tells us that "This Program Has Not Been Established".

         1. The homeowner of a single-family dwelling that is unencumbered by a mortgage or other lien may apply for an "allodial title", which is granted when the homeowner prepays the property tax for his or her life expectancy based on the calculations of the state treasurer's office. ⁽⁶⁾

         2. The amount of the property tax prepayment can be paid in a lump sum or over a ten-year period. Once the amount is paid, a "certificate of allodial title" is issued to the homeowner.

         3. Once the "certificate of allodial title is issued, the property becomes exempt from further property taxes so long as the homeowner owns the property, and the homestead exemption covers the entire equity in the home and all "appurtenances and the land on which it is located". In other words, for property with "allodial title", the $125,000 limitation to the homestead exemption does not apply.

   4. Business Entities: Business entities--such as corporations, limited partnerships, and limited-liability companies--can provide two types of protection. They can shield business assets from the claims of its owners' creditors, and they can shield the owners' assets from the claims of the businesses' creditors.

      1. Generally. Business entities were traditionally used to shelter personal assets from business liabilities, but increasingly they are being used to shelter business-owned assets from personal liabilities.

         1. Shielding Personal Assets from Business Liabilities. Corporations, limited partnerships, and limited-liability companies cam into being for the purpose of allowing persons to form and to own a company as a separate legal entity that can conduct business without exposing those persons to personal liability for the company's obligations.

         2. Shielding Business Assets from Personal Liabilities. In most states, including Nevada, the laws relating to limited partnerships and limited-liability companies do not permit the creditor of a partner or member ("owner") to force a liquidation of the company. That would generally be unfair to the other owners. The law does permit a court that is enforcing a judgment to issue a "charging order" that requires the company to distribute the owner's share of income to the judgment creditor. A charging order makes the creditor responsible to pay income taxes on the debtor-owner's share of the company's income, even if no income is actually distributed. This serves as a disincentive for the creditor to ask for a charging order. While the charging order is the primary remedy available, it is not the only remedy. Out-of-state courts have forced a liquidation of limited partnerships and limited-liability companies where the charging order is an inadequate remedy for the creditor and company assets can be liquidated without reducing the value of the other owners' interests.

         3. Using Multiple Business Entities to Shield Assets. If a business loses a lawsuit and does not have enough cash to pay the judgment, all of its assets are subject to attachment and sale in order to satisfy the judgment. It can be prudent to divide a business into multiple entities in order to reduce the exposure. For example, suppose you have three apartment complexes in a single limited-liability company. Suppose further that a tenant of one of the apartments is seriously injured and prevails in a lawsuit against the company. Now, all of the company's assets, including all three apartment complexes, are exposed to that liability. On the other hand, if a separate company were formed and operated separately for each apartment complex, a lawsuit against one company would not affect the other companies' assets.

      2. Corporations: A properly established corporation can protect its shareholders from the corporation's liabilities. If claimants want to establish the personal liability of a corporation's shareholders, the claimants must "pierce the corporate veil" by arguing (i) that corporate formalities have not be observed, (ii) that the corporation is really the "alter-ego" of its majority shareholder(s), or (iii) that the corporation is under-capitalized.

         1. Corporate formalities include proper formation under state law, the issuance of stock, the adoption of bylaws, regular meetings of shareholders and directors, the maintenance of corporate records, including meeting minutes and accounting records.

         2. The "alter-ego" theory can be used to pierce the corporate veil if the majority shareholder(s) use the corporate assets as though they were their personal assets. This can occur if personal and corporate assets are co-mingled, personal obligations are paid from corporate funds, or if corporate assets are held out to be personal assets.

         3. To counter the argument that a corporation is under-capitalized, the corporation must have sufficient assets and reasonable liability insurance coverage. The corporation cannot be merely an empty shell, with insufficient assets to carry on its business.

         4. If a corporation's employee (including an officer) does something that harms someone else, that "culpable" employee can be sued individually, and the corporation offers no protection to that employee. It does offer protection to the shareholders, officers, and other employees who were not responsible for the actions of the culpable employee.

      3. Limited Partnership: Limited partners are protected similarly to shareholders in a corporation,and the same guidelines and limitations apply. They have no personal liability with respect to partnership obligations. Limited partnerships do not participate in the management of the business, so it is far less likely that a limited partner, as such, will be named in a lawsuit for his or her own negligence or other misconduct. A limited partnership must have at least one general partner who is personally responsible, but that general partner can be a corporation.
         1. Under Nevada's Revised Uniform Limited Partnership Act [NRS Chapter 88], a judgment creditor of a partner cannot usually force the liquidation of the limited partnership. A judgment creditor can obtain a court order directing the partnership to make the debtor partner's income distributions to the creditor. This order is referred to as a "charging order". If the creditor obtains a charging order against the partner-debtor's interest, and the partner-debtor is allocated income for income tax purposes, the creditor may be forced to report the income and pay the resulting tax without ever receiving an actual distribution from the partnership.

         2. By not allowing one partner's creditor to liquidate the corporation, the limited partnership can serve as a protection for the nondebtor partners. The limited partnership can also serve to protect a limited partner's nonpartnership assets from the claims against the partnership. The general partner is exposed to partnership liability, but if the general partnership is a corporation, the corporation can protect the stockholders' personal assets from partnership and corporation liabilities.

         3. The assets of the limited partnership itself are at risk to partnership liabilities. Separate limited partnerships for different assets can insulate one partnership's assets from the claims against another. For example, if a limited partnership owns several apartment complexes, a claim arising at one apartment complex may result in a lawsuit against the limited partnership, which puts all of the apartment complexes at risk. On the other hand, if each apartment complex was in a separate limited partnership, a lawsuit against one apartment complex would not affect the others.

         4. Partnerships and corporations should exist for valid business purposes, and personal-use assets, such as homes and vehicles, should not belong to business entities in the absence of valid business agreements. In other words, your home should not belong to a business entity unless you are paying rent to the business entity.

      4. Limited-Liability Companies: Limited-liability companies ("LLC's) are relatively new, but have gained in popularity. Nevada adopted its law on LLC's in 1991 [NRS Chapter 86]. An LLC is a hybrid between a corporation and a limited partnership. Like a corporation, all of its owners ("members") are protected from personal liability for business obligations. For tax purposes, the LLC is a partnership. In other words, a limited-liability company is like a limited partnership with no general partner. Claimants seeking to establish personal liability of LLC members for LLC obligations can use the same arguments that are used to "pierce the corporate veil", which are discussed above.

      5. Limitations of Business Entities: The protection of corporations, limited-liability companies, and other entities can be meaningless as to any debts for which personal guarantees are given. Also, as stated above, no business entity can protect a person from his or her own negligence or intentional misconduct. If personal liability cannot be avoided, then the next level of protection involves having assets that are exempt or placing assets in ownership forms that become obstacles to collection of any amounts found to be due.

   5. Gifts; Irrevocable Trusts: Assets that are given away are not generally available to satisfy claims against the donor so long as the transfer is not a "fraudulent transfer", as defined by law. ⁽⁷⁾ This applies to gifts to irrevocable trusts, which can also be established as "spendthrift trusts" that prevent both voluntary and involuntary transfers. Irrevocable Trusts are discussed in the next section of this memo.

3. Irrevocable Trusts
   1. Claims Against A Beneficiary: Assuming there is no fraudulent transfer, a beneficiary's interest in a trust is an asset of the beneficiary and subject to claims unless (1) the beneficiary's interest is contingent upon the occurrence of an event which has not occurred yet; (2) the beneficiary's benefits are determined by the trustee's under the trustee's discretion; or (3) the trust contains a provision making it a "spendthrift trust" within the meaning of Chapter 166 of the Nevada Revised Statutes ("NRS") or the similar law of the state having jurisdiction over the trust. To create a spendthrift trust under Nevada law, it is usually enough for the trust instrument to say that "the trust is a spendthrift trust" or "the trust is not subject to attachment or other involuntary anticipation" for it to qualify as a spendthrift trust.

   2. Claims Against The Settlor: Assets transferred to an irrevocable trust do not belong to the creator ("settlor") of the trust and are not subject to claims of the settlor's creditors except to the extent of any benefits retained by the settlor, unless the transfer of the assets is considered a "fraudulent transfer".
      1. The traditional irrevocable trust requires the settlor to relinquish all benefits, so that the settlor can honestly say that the settlor has retained no interest in or benefit from the transferred assets. If the settlor retains benefits, most states allow the settlor's creditors to reach the trust's assets, at least to the same extent the settlor can. Exceptions to this are discussed in the section of this memo relating to self-settled spendthrift trusts.

      2. One trust that is growing in popularity for asset protection is the "Qualified Personal Residence Trust" or "QPRT". This trust was originally intended to facilitate the giving of a remainder interest in a home for a low gift-tax value. Under a QPRT, the Settlor has the right to use the home for a term of years, but upon the expiration of that term, the home belongs to the designated remainder beneficiaries (or to the trust for their benefit). Since the gift to the remainder beneficiaries is irrevocable, it will not be set aside by most courts unless the transfer is considered a fraudulent transfer. ⁽⁸⁾ State courts may try to get value out of the Settlor's right to use the property, but I know of no Nevada case on this issue.

      3. In Nevada and some other states, the settlor (creator) of a trust can create a "self-settled spendthrift trust" that is exempt from creditors' claims, which are discussed in a separate section of this memo. In most other jurisdictions within the United States, the settlor cannot create a spendthrift trust for himself or herself. Except as to self-settled spendthrift trusts that are specifically permitted under applicable state law, to the extent assets of a trust are available for the settlor's benefit, they may also be available to the settlor's creditors through appropriate legal process; however, this can be made more difficult for a creditor to assert if there are also other beneficiaries who have rights under the trust.

4. Fraudulent Transfers

   1. Generally: When people feel threatened by creditors or even potential creditors, it is a natural reaction to try to transfer assets to trusted persons to try to shelter those assets. NRS Chapter 112 contains Nevada's Uniform Fraudulent Transfer Act. The law allows creditors to ask a court to allow them to ignore fraudulent transfers for collections purposes. A proof of fraudulent intent is not always required for a transfer to be considered "fraudulent" for the purposes of this statute.

   2. Problem Areas: Fraudulent transfers come in all varieties:

      1. T owes money to C. T transfers assets to his children, S & D, leaving himself without assets. Since the transferor made himself insolvent (i.e., his debts exceed the fair market value of assets), the transfer is fraudulent and can be set aside. The result would be the same if the transfer was made to a trustee of an irrevocable trust instead of the children.

      2. T owes money to C. T, who is insolvent, transfers assets to his children, S & D, to satisfy a debt T owed them. If S & D have "reasonable cause to believe" that T was insolvent, the transfer can be set aside. Since S and D are "insiders", the fact that there was adequate consideration does not protect this transfer. (Incidentally, transfers that favor one creditor over another can also be set aside under federal bankruptcy law.)

      3. T is in an auto accident. C was injured, and T was at fault. T is concerned that C may sue and ask for more than the limits of his insurance policy. Before C sues T, T transfers all of his assets to his children, S and D. If C files a lawsuit and wins a judgment, the transfer can be set aside because the statute refers to the time "the claim arose" and not to the time of the judgment. Since the transfer was after the "claim arose", the transfer can be set aside.

      4. T has no debts and transfers all of his assets to S & D. T then makes credit purchases to the extent of his available credit limits. The transfer would probably be set aside, since it would appear that T incurred the debts with full knowledge that he could not pay them. If T could establish that at the time he incurred the credit purchase, his income was sufficient to make the payments, the transfer would probably not be set aside.

      5. Other Issues: Transfers for full fair market value are not fraudulent conveyances, but transfers to "insiders" are subject to closer scrutiny. "Insiders" include relatives and controlled business entities. If the transferor transfers title, but retains possession or control of the transferred asset, the statute allows the inference to be drawn that the transfer was intentionally fraudulent.

      6. Future Creditors: Transfers are not usually set aside as fraudulent transfers if a creditor's claim arises after the transfers; however, they can be if (1) the transfer was made with actual intent to defraud any creditor; or (2) the debts were incurred without reasonable expectation that they would be paid.

5. Self-Settled Spendthrift Trusts

   1. Generally. A "spendthrift trust" is a trust that precludes a beneficiary or his or her creditors from reaching the assets of the trust contrary to the terms of the trust. A "self-settled spendthrift trust" is a spendthrift trust that includes the trust's creator ("settlor") as a beneficiary. Traditionally, self-settled spendthrift trusts were not permitted, but now there is a growing number of states that permit self-settled spendthrift trusts.

   2. Current Trend. Nevada, Alaska, Delaware, Rhode Island, and perhaps other states ⁽⁹⁾ have adopted statutes that exempt from collection assets trusts under certain conditions. These states have responded to a demand for preventative planning options for those who currently have no known exposure to current creditors, but want to shelter assets from claims of future creditors. This is attractive to those who want to create obstacles to collection without having to move assets to a foreign jurisdiction. Of course, the courts in one state must recognize judgments from any other state under the "full faith and credit clause" of the U. S. Constitution. This means that some of the roadblocks to jurisdiction that are used in foreign countries are not available to discourage a claimant in the courts of any state in the Union. So, these trusts are seen as discouraging claims but without all of the deterrents that foreign-situs ("offshore") trusts can provide.

   3. Nevada Spendthrift Trust Law. Since October 1, 1999, Nevada law has permitted self-settled spendthrift trusts. The 1999 legislation was more of a minor revision to existing laws on spendthrift trusts and fraudulent transfers than a major new act, which means that the protections afforded are based on well-established law. Nevada law does not permit one to hide assets from existing creditors, but it does allow the protection of assets from future potential creditors. Nevada law has put a deadline (statute of limitation) for claims against a spendthrift trust, and creditors who file claims too late are simply out of luck.
      1. In Nevada, a trust that benefits the settlor qualifies as a spendthrift trust if:

         1. There is a connection to Nevada. This requirement is met if one of the following is true:

            1. Some or all of trust assets or income are in Nevada; or

            2. The settlor is a Nevada resident; or

            3. At least one trustee:
               • has powers that include maintaining records and preparing income tax returns for the trust, and all or part of the administration of the trust is performed in this state; and

               • is an individual who is a Nevada resident or is a bank or trust company that maintains an office in this state for the transaction of business and possesses and exercises trust powers.

         2. The trust is irrevocable, although the settlor may have a special power of appointment.

         3. The trust is not intended to hinder, delay or defraud known creditors.

         4. Distributions to the settlor are not mandatory and made only in the discretion of a person other than the settlor.

         5. The trust is subject to Nevada's statutory rule against perpetuities. ⁽¹⁰⁾

      2. If the trust qualifies as a spendthrift trust for the benefit of the trust's settlor, then a transfer of assets to the trust triggers a statute of limitations, which sets a time limit by which a creditor must challenge the transfer in order to reach the transferred assets for the purpose of satisfying the creditor's claim. The length of the time limit depends on whether the creditor had a claim when the transfer was made.

      3. A creditor who had a claim at the time of a transfer to a spendthrift trust must commence an action to challenge a transfer within the later of:

         1. two years after the transfer; or

         2. six months after he discovers or reasonably should have discovered the transfer.

      4. A creditor whose claim arose after the transfer to a spendthrift trust must commence an action to challenge that transfer within two years after the transfer.

   4. Limitations to Spendthrift Trust Laws. Because state laws that allow the creation of self-settled spendthrift trust are new, there is no case history to indicate how these laws will be enforced and honored in all jurisdictions.

      1. It is not clear how one state's spendthrift trust laws will protect assets located in another state. For example, if a Nevada self-settled spendthrift trust owns real estate in California, and a California creditor sues the settlor of that trust, it is unknown whether the California courts will give "full faith and credit" to the Nevada spendthrift trust laws or whether they will use their jurisdiction over the property to bypass Nevada's trust laws.

      2. It is also unclear whether the federal government will consider itself bound by state law. For example, suppose a taxpayer establishes a Nevada self-settled spendthrift trust in 2000, and in 2003 the taxpayer fails to file a personal income tax return and fails to pay income taxes. Will the Internal Revenue Service be able to reach the assets of the spendthrift trust to satisfy the settlor's tax liability? No one can say for sure at this point, but it is a reasonable guess that the federal goverment will not feel restricted by state-law limitations.

6. Other Asset-Protection Techniques

   1. Division of Assets between Spouses: If one spouse has a high exposure to potential liability because of his or her occupation or business, it may be advisable to divide the couples' assets. The one spouse would retain the assets and income from business that provides the exposure and his or her separate property, and the other spouse would take the couples' investments and valuable assets, also as separate property. To make this work, the couples must agree to the division of assets long before any problems arise, and there should be little or no community property. Ideally, this agreement should be in a prenuptial agreement, but a postnuptial agreement can provide some level of protection. ⁽¹¹⁾ Of course, the agreement would be binding in a divorce, so it is important that each spouse balance the relative risks and rewards of this approach. Also, with no community property, the spouses lose the benefit of the stepped up income tax basis of all appreciated property upon the death of the first spouse to die.

   2. Foreign-Situs Trusts: Foreign-situs trusts (often called "offshore trusts") are very popular as a shield against creditors. Assets are transferred to a trust either originally established under, or subsequently made subject to, the laws of a foreign jurisdiction--such as the Cook Islands--that does not automatically honor judgments granted outside its own courts. The settlor may be a trustee, but there is always a trustee who is governed by the laws of the foreign jurisdiction. Until claims are made, the trust may operate as any domestic trust would operate. The trust can be revocable but usually they are not so that transfers to the trust can be irrevocable to avoid statute of limitations issues, especially with respect to the "fraudulent transfers" issue.

      1. The assets can remain in the United States under the settlor's control. If claims against the trust are threatened, the foreign trustee exercises its powers to fire the U.S. trustee (usually the settlor) and to take control of all assets. This usually requires that all U.S. assets be liquidated so that they are no longer subject to the control of the U.S. courts, which might mean that assets would have to be sold at fire-sale prices.

      2. The best protection comes from having the offshore trust invest in offshore investments. For example, it would be hard to enforce a judgment against a person who had a Cook Islands trust investing in a corporation established in the Cayman Islands that held assets located in Jersey.

      3. In a recent court case referred to as the "Anderson case" ⁽¹²⁾, the U. S. Ninth Circuit Court of Appeals ruled that debtors (the Andersons) could be jailed for contempt of court for failing to make assets held in an offshore trust available to creditors. The court simply did not accept debtors' argument that the assets in the offshore trust were out of their control.

         1. Some commentators believe that this signals the death knell for foreign-situs trusts, but others believe that the facts and circumstances of this case were unique. The truth is probably somewhere in the middle. The Anderson case has removed some of the luster from offshore trusts, but it did involve litigation in a federal court that was brought by a federal agency against people who had enriched themselves in an illegal scam. That is not the same case as a lawsuit brought by an average citizen in an automobile accident in a state court.

         2. The Anderson case demonstrates several important points: (1) no asset-protection technique is perfect;(2) a good technique done poorly may create problems but also may be better than doing nothing; (3) the courts do not believe cheaters; and (4) the federal courts do not like offshore trusts.

         3. The Anderson case has made asset-protection advisors re-think their use of offshore trusts and to consider using domestic self-settled trusts instead.

         4. Regardless of the location of the assets, this type of trust usually discourages creditors from beginning the long legal battle required to challenge the trust and to seek its assets. On the other hand, legal fees to establish this type of trust are often around $15,000 to $25,000, and the annual fees charged by the foreign trustee can be substantial ($3,500 to $5,000). This type of trust would be appropriate only for large estates with a very high exposure to claims.

7. Conclusion

   1. Select the Appropriate Tools: The tools discussed in this memo should be evaluated as to your specific situation. If your exposure to claims is small, adequate insurance, and a homestead declaration may be sufficient. As your exposure increases, you may wish to consider making asset transfers before a claim arises. At the highest level of exposure, you may be willing to transfer a significant portion of your assets to one or more foreign-situs trusts. You must evaluate the price you must pay for each tool (in terms of money and potential loss of control) against the anticipated protection.

   2. No Guarantee. There is no guarantee that any particular shield will be absolutely bullet-proof. Because of the ever-changing nature of laws, what works today may not work tomorrow.

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NOTES

1. Although this memo provides information that may apply throughout the United States, this memo was written by a Nevada attorney, so the primary focus is on Nevada law. This memo is intended to provide general information and is not given as legal advice for any particular person's situation. [Click here to return to text.]

2. In this memo, "property" and "assets" are used interchangeably. [Click here to return to text.]

3. If you have current problems with creditors, call an attorney who specializes in bankruptcy and debtor protection to discuss your situation. [Click here to return to text.]

4. To the extent the trustee of a trust may use a trust's income or assets for the benefit of the trust's settlor, the trust's income and assets will normally be considered as available resources that will disqualify the settlor from receiving welfare benefits. For questions relating to Medicaid qualification and other "elder law" issues, please call attorney James M. O'Reilly at 702-477-7517 (Las Vegas, Nevada) or 775-782-3647 (Gardnerville, Nevada). [Click here to return to text.]

5. "NRS" refers to the "Nevada Revised Statutes". [Click here to return to text.]

6. The Nevada State Treasurer's web site has a page entitled "allodial title", but as of March 1, 2000 the page merely stated "This Program Has Not Been Established". [Click here to return to text.]

7. Fraudulent Transfers are discussed in a separate section of this memo. [Click here to return to text.]

8. Fraudulent transfers are discussed in a separate section of this memo. [Click here to return to text.]

9. It is my understanding that Illinois and Indiana are considering laws that would permit self-settled spendthrift trusts. [Click here to return to text.]

10. The 1999 Nevada legislature adopted a resolution to amend the Nevada constitution to allow for perpetual trusts. If the same resolution is approved by the legislature in 2001 and by the voters in 2002, then presumably the 2003 Nevada legislature will modify Nevada's law that prohibits perpetual trusts (except for charitable trusts). [Click here to return to text.]

11. NRS 123.220(1) states that an agreement between spouses that converts community property into separate property is effective only as between the parties. Presumably, this was intended to prevent defrauding creditors. It would probably be more wise to do actual asset transfers rather than a mere agreement so that the statute of limitations under the Fraudulent Transfer Act apply. [Click here to return to text.]

12. FTC v. Affordable Media, No. 98-16378, 9^th Circuit. It is referred to as the "Anderson case" because the case involved a family named Anderson. [Click here to return to text.]

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