Additional benefits of a Nevada self-settled asset protection trust are that Nevada chose to limit its statute of limitations, and to this day, it has the shortest statute of limitations against pre-existing creditors' claims: just two years.
For example, a self-settled asset protection trust emphasizes the fact that the settlor is also a beneficiary, while a self-settled discretionary spendthrift trust emphasizes the discretionary authority of the trustee to disburse income and principal to the beneficiaries.
In May 2011, an Alaska bankruptcy court avoided a transfer of real property of a settlor of an Alaska self-settled asset protection trust. In re Mortensen, A09-90036-DMD, 2011 WL 5025249 (Bankr.
(7) In 1997, seeing the opportunity to compete against offshore asset protection trusts by developing a competitive environment, Alaska became the first state to recognize self-settled discretionary spendthrift trusts (also known as self-settled asset protection trusts) (8) as a way to shield a settlor's assets from creditors.
A notable issue with all domestic asset protection trusts is the fact that a court in a different jurisdiction, one that does not recognize self-settled asset protection trusts, might grant creditors access to the Alaska trust.
(144) Following Alaska and Delaware generally, Nevada made it known that its purpose was to enforce self-settled asset protection trusts, except in the case of fraudulent transfers.
While domestic self-settled asset protection trusts have now been in existence almost fifteen years, there has been little in the way of meaningful case law challenging their major provisions.
It has been almost fifteen years since Alaska made its groundbreaking move into the realm of domestic self-settled asset protection trusts. Since that time twelve additional states have followed it down that path.