Side-by-side comparison of dynasty trust laws
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Get Personalized Results →| Criteria | Nevada | Tennessee |
|---|---|---|
Dynasty Duration How long can a trust last in this jurisdiction? States that have abolished the Rule Against Perpetui... | 100 Perpetual (personal property) Higher | 84 360 years |
State Income Tax Does the state impose income tax on trust income? States with no income tax or favorable trust taxat... | 100 No state income tax | 100 No state income tax |
Asset Protection How strong are the state's Domestic Asset Protection Trust (DAPT) laws? Key factors include statute ... | 95 Strong DAPT with 2-year statute of limitations Higher | 78 DAPT with 4-year statute of limitations |
Directed Trust & Trust Protector Does the state have robust statutes for directed trusts (separating investment and distribution duti... | 98 Comprehensive directed trust and trust protector statutes Higher | 95 Comprehensive Uniform Directed Trust Act (2020) |
Decanting Flexibility How easily can trust terms be modified through decanting? Broader decanting powers allow for greater... | 92 Broad decanting powers with notice requirement | 92 Full Uniform Trust Decanting Act (2016) |
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.
Tennessee modified (but did not abolish) the Rule Against Perpetuities in 2007, extending the permissible trust duration to 360 years. While substantial, this is shorter than perpetual jurisdictions like South Dakota, Nevada, and Delaware.
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.
Tennessee fully repealed the Hall Income Tax effective January 1, 2021. Tennessee now has no state income tax on trust income, interest, dividends, or capital gains. This makes Tennessee equivalent to other no-income-tax states for trust purposes.
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.
Tennessee has DAPT legislation through the Tennessee Investment Services Trust Act. The statute of limitations is 4 years from transfer or 1 year from discovery, whichever is later. Tennessee's DAPT statute is newer than South Dakota or Alaska with less established case law.
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.
Tennessee adopted the Uniform Directed Trust Act effective July 1, 2020, providing comprehensive, modern directed trust and trust protector provisions. The statute allows separation of trustee duties with explicit liability protection for directed trustees following proper directions.
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.
Tennessee adopted the full Uniform Trust Decanting Act effective July 1, 2016. The statute provides broad powers to modify beneficial interests, extend trust terms, change situs, and update administrative provisions. No court approval generally required.
Nevada wins clearly. No income tax, better asset protection, no tort exception. Tennessee's only advantage is if you already have strong Tennessee connections.
You want no income tax, strong asset protection, and the best overall package.
You have deep Tennessee ties and asset protection genuinely isn't important.
Tennessee is like a sports car with a flat tire. Looks good until you need to actually drive it. The tort exception makes its asset protection claims hollow.