Unlike basic estate planning, asset protection is constantly evolving. Nevada spendthrift trust law remains the best in the country with the State Legislature frequently making tweaks and adjustments to keep it that way.
However, a new type of asset protection trust has become popular recently and one of its advantages is that it functions just as well in any jurisdiction. It's known as the Special Power of Appointment Trust (aka "SPA Trust"). It uses the power of appointment, a well-established estate planning tool, to allow the trustee of an irrevocable trust, in his full discretion, to appoint assets back to the grantor without sacrificing creditor protection.
This irrevocable spendthrift trust functions as most any other with an independent trustee endowed with discretionary powers of distribution to named beneficiaries. However, it does not require a "self-settled trust" situs like Nevada, Alaska, Delaware, etc., where local trust law allows the grantor to also be a beneficiary. Instead the grantor bestows a special power of appointment upon the trustee, who in turn, may choose to use that power of appointment to appoint assets back to the grantor. The technique does not jeopardize the asset protection of the trust thanks to the inherent prevention within this type of power of appointment that prohibits the "donee" of the power, in this case the trustee, from appointing assets to himself or his creditors. The "permissible appointee," here, the grantor, may receive assets without being a beneficiary, which in a majority of states, would eliminate any protection from creditors that trust is written to provide.
Noted asset protection attorney Lee McCullough, III has brought this tool to the attention of asset protection attorneys, including myself. You can read more about it at his website, or in the article published in the January issue of Estate Planning Magazine.
If you're interested in asset protection and/or what a SPA trust can do for you, call my office.