Nevada is one of only a few states that recognize the validity and enforceability of self-settled spendthrift trusts, such as the Nevada Self-Settled Spendthrift Trust, under certain circumstances.

At least one of the trustees of a Nevada Self-Settled Spendthrift Trust must be a qualified Nevada trustee (which can be either an individual resident, or a bank or trust company with offices in Nevada).

Also, the trust must:

1. be in writing;
2. be irrevocable;
3. not require that any part of the trust’s income or principal be distributed to the settlor; and
4. not be created with the intent to hinder, or delay or defraud known creditors of the settlor.

Although a Nevada Self-Settled Spendthrift Trust cannot require that a distribution be made to the settlor, a trustee other than the settlor may have the discretion to distribute trust income or principal to the settlor. Thus, as long as the trust meets the general requirements described above, the settlor may still be a primary beneficiary of the trust while the assets he or she transfers into the trust are shielded from his or her future creditors.

As to creditors’ claims, Nevada law specifies exactly who can bring an action against property transferred into a Nevada Self-Settled Spendthrift Trust. Creditors existing at the time the settlor transfers property into the trust must commence an action within two years after the property transfer or six months after they discover or reasonably should have discovered the transfer, whichever is later. Those who become creditors after the settlor transfers property into the trust must commence action within two years of the transfer. Thus, anyone becoming a creditor at least two years after property is transferred into a Nevada Self-Settled Spendthrift Trust would be forever barred from bringing an action to recover such property.