$97 JANUARY 2011

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The Nevada Asset How Life Insurance
Protection Trust Protects Assets

By Gary Fales By Steven C. Fales

The Nevada Asset Protection Trust (“NAPT”)
Open Now to Learn the WORST Thing You Can Do With Your Wealth!
is a viable tool for nearly everyone. To understand
why, you have to understand that if you get sued
and you lose, there are only a few assets that are
protected under state law. If an asset is not on the
protected list, then it can be taken from you. That’s
where the NAPT comes in.
One strong way to protect a portion of our
assets is to have life insurance. Life insurance
proceeds are one of the major exemptions to judg-
ments from creditors allowed under NRS 21.090.
The exemption is defined as:
“All money, benefits, privileges or immuni-
ties from life insurance where the annual premi-
um does not exceed $15,000”

IF YOUR HOME IS “ P ROT E C T YO U R

It is well known that beneficiaries do not
have to pay federal income taxes on death bene-

UNDERWATER, THEN YOU NAKED ASSETS”

“ANYSUCCESSFUL PERSON
SHOULD HAVE UP TO $15,000
SHOULD… OPEN THIS Under NRS 166, a trust can be created that
protects the naked assets. Let’s say you get sued
OF ANNUAL LIFE INSURANCE
PREMIUMS”
and you lose the lawsuit. At some point you will be

NEWSLETTER. taken to the Debtor’s Exam wherein you will be

asked two general types of questions: (1) what do
you own and (2) what gifts have you made. Clear-
fits paid to them from a life insurance policy.
What is also satisfying and less well known is that
ly, if you are in the Debtor’s Exam, you don’t want after paying out premiums for years and after
to own any naked assets.
See “NAPT” page 2. See “Life Insurance” page 3.
NAPT” from page 1.
So in planning ahead, you
can sell your naked assets, spend
all the naked assets, or give them
away.
Selling the assets doesn’t
help because the sale proceeds
will still be naked. If you sell
them and take back a promissory
note, the note is still a naked asset
that can be seized.
Spending the assets could
work, but then you no longer have
the assets.
Gifting the assets is the best
solution IF you retain control. If
you gift to your kids or to any
other human, you’ve lost control
because you cannot get the assets
back without their permission.
Additionally, you’ve lost
control because your kids could
get into a lawsuit, bankruptcy,
divorce or IRS trouble. So, you
need to gift the naked assets while
at the same time you need to keep
control.
The Worst Thing…
The worst thing you can do is
own assets in your own name
where they can be seized by
creditors.
2 3
That’s why the NAPT is
wonderful. It lets you keep con-
trol while at the same time the
assets in the NAPT are not con-
sidered to be in your name.
Let’s go back to the Debt-
or’s Exam. Remember they ask
you two general types of ques-
tions: (1) what you own and (2)
what gifts you’ve made. If we
gift the naked assets to the
NAPT, then we no longer own
them and we’ve successfully
made it through the first line of
questions. Now, they ask you
about the gifts. If they find out
about any gifts, then they’re go-
ing to try and reverse the gifts so
they can seize the assets. Now
let’s get clear that they are going
to discover all gifts, including
the ones to the NAPT. They are
going to try and reverse the gifts
by arguing Fraudulent Transfer.
But if the gifts to the
NAPT were made over two years
ago and if such gifts to the trust
were recorded in the county in
which the property was located, then
any action that the creditor is taking
against the trust is barred by the
NAPT statute of limitations! (If you
didn’t see it, I just gave you the
punch line.)
More technically, the law
states that an action with respect to a
transfer of property to an NAPT
must be brought within two years
after the transfer is made or six
months after the person discovers or
reasonably should have discovered
the transfer, whichever is later.
If a person habitually placed
their naked assets into the NAPT,
then as time goes by they are placing
those assets out of reach of their
creditors while at the same time they
are in control of the assets.
If you’re reading this article
and you have not had the thought,
“Why isn’t everyone putting their
naked assets into a NAPT” then you
have not yet reached the point of as-
set protection bliss. You should own
nothing and control everything be-
cause you can be sued by anyone for
any reason at any time. Unless
you’re a mob boss, you’re not going
to have the ability to do this unless
you use a NAPT or an offshore trust.
If you’re in Nevada, I would highly
recommend the NAPT.
I will dedicate my next few
columns in this newsletter to explor-
ing the NAPT and how we can max-
imize its effectiveness in our own
lives while at the same time mini-
mizing any administrative burdens.
GARY FALES is the manag-
ing attorney at the Law Offices of
Gary L. Fales and Associates. He
can be reached at 702-804-0024 or
at gfales@garyfales.com.
Life Insurance” from page 1.
accumulating a substantial cash
value within the policy, your
growing cash value is safe from
creditors as long as your annual
premiums are under $15,000. Es-
tate taxes on death benefits, how-
ever, can be a major issue if the
proceeds become part of your es-
tate.
A combination of term
and whole life insurance is essen-
tial in the family protection and
Protecting your
assets is a mind set.
Some predators growl
and fight like a lion.
That would be a
plaintiff and his or her
lawyer.
But there are many
more subtle predators
that we must watch for
at all times.
Our role is to help
people protect their
assets like a fortress
protects a family.
estate planning program of practi-
cally everyone. These concepts
are integrated into the planning
that we do for our clients. Just
keep in mind that any successful
person should have up to $15,000
of annual life insurance premiums
as part of their asset protection
program. It is a free exemption
and a healthy one that protects
your assets and your family.
A N N U I T I E S
C A N R E A L L Y
F I L L A N E E D …
B U T A R E T H E Y
A S S E T
P R O T E C T E D ?
T h a t d e p e n d s
o n w h o o w n s
i t !
An annuity acts like a per-
sonal pension plan. You pay
money into it as a lump sum or
over a period of time. It grows
tax deferred, and eventually you
make an agreement with the in-
ATTEND OUR NEXT WORKSHOP
“UNDERWATER AND
WALKING AWAY”
Saturday, January 29, 2011
10 am until Noon
2451 S. Buffalo Dr, Suite 100
Las Vegas, NV 89117
surance company to receive a
guaranteed income for a number
of years or for a lifetime.
But if you have a legal judg-
ment against you, can your credi-
tors take it away from you? The
answer is yes—they can garnish
the payments that exceed $4,200
per year. That is not very good
protection, because a person may
receive annuity income much
greater than that amount.
So what can be done to pro-
tect an annuity? The answer lies
in the answer to this question:
Can a trust own an annuity?
The answer is in the affirma-
tive: Yes, a trust can own an an-
nuity. It can be the owner, and
the payments can be to the trust.
If this is an Asset Protection
Trust, then the entire annuity and
eventual payout is protected with-
in your trust.
It is all about ownership.
STEVEN C. FALES is a prin-
ciple in Fales and Fales Finan-
cial and can be reached for fur-
ther information at 702-804-
0024 or at ste-
ve@falesandfales.com