Side-by-side comparison of dynasty trust laws
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Get Personalized Results →| Criteria | Delaware | Nevada |
|---|---|---|
Dynasty Duration How long can a trust last in this jurisdiction? States that have abolished the Rule Against Perpetui... | 100 Perpetual | 100 Perpetual (personal property) |
State Income Tax Does the state impose income tax on trust income? States with no income tax or favorable trust taxat... | 85 No tax with conditions | 100 No state income tax Higher |
Asset Protection How strong are the state's Domestic Asset Protection Trust (DAPT) laws? Key factors include statute ... | 88 Strong DAPT with 4-year statute of limitations | 95 Strong DAPT with 2-year statute of limitations Higher |
Directed Trust & Trust Protector Does the state have robust statutes for directed trusts (separating investment and distribution duti... | 100 Most comprehensive directed trust statutes in the US Higher | 98 Comprehensive directed trust and trust protector statutes |
Decanting Flexibility How easily can trust terms be modified through decanting? Broader decanting powers allow for greater... | 95 Broad decanting powers with 60-day notice Higher | 92 Broad decanting powers with notice requirement |
Delaware abolished the Rule Against Perpetuities for interests in trust property effective July 1, 1995. Trusts can continue indefinitely with no durational limit, making Delaware one of the premier dynasty trust jurisdictions.
Nevada abolished the Rule Against Perpetuities for personal property in 2005. Trusts holding financial assets, securities, and business interests can continue indefinitely. Real property interests remain subject to the common law RAP.
Delaware does not tax trust income if: (1) all current beneficiaries are non-Delaware residents, (2) there is no Delaware-source income, and (3) trustee location alone does not create tax nexus. Delaware statutory trustees/directed trustees do not create income tax liability by themselves.
Nevada's constitution prohibits state income tax. This applies to individuals, corporations, and trusts. Trust income is not taxed at the state level regardless of trustee location, beneficiary location, or income source.
Delaware's DAPT statute requires creditors to prove fraudulent transfer by 'clear and convincing evidence' - a higher standard than typical civil cases. The 4-year statute of limitations (or 1 year from discovery, whichever is later) provides strong protection after seasoning.
Nevada has one of the strongest DAPT statutes with a 2-year statute of limitations for fraudulent transfer claims. The state allows self-settled spendthrift trusts and has fewer exception creditors than many competing jurisdictions.
Delaware is widely recognized as having the most sophisticated directed trust statute in the nation. The statute allows complete separation of administrative, investment, and distribution functions with explicit liability protection. Trust protectors can be granted broad powers and are not fiduciaries unless the trust instrument provides otherwise.
Nevada has comprehensive directed trust statutes allowing separation of trustee duties. Investment advisors and distribution advisors can direct the trustee with explicit liability protection. Trust protector powers are broadly defined and can include powers to modify trust terms, remove trustees, and change situs.
Delaware's decanting statute is one of the most permissive in the nation. Trustees with discretionary distribution authority can decant to new trusts with modified terms, extend trust duration (perpetual in Delaware), and change situs. No court approval required.
Nevada's decanting statute allows trustees with discretionary authority to distribute trust property to new trusts with modified terms. No court approval is required. Decanting can add trust protector provisions, change administrative provisions, and modify beneficial interests in many cases.
Nevada for no income tax and asset protection. Delaware for legal sophistication. These serve fundamentally different needs.
You expect legal complexity, want the deepest case law, and can manage the income tax requirements.
You want no income tax and strong asset protection with simpler administration.
Different tools for different jobs. Nevada is the all-around performer; Delaware is the specialist. Most people should pick Nevada unless they have Delaware-specific reasons.