Saltzman Mugan Dushoff, PLLC has a robust practice advising clients on trust company matters. We have worked with clients to charter many Nevada retail trust companies. We also routinely represent clients who form family trust companies that may be licensed or unlicensed.
In Nevada, a natural person can act as a trustee of a trust but special licensing requirements exist for business entities that act as a trustee. For years, providing fiduciary services was the sole province of bank trust departments and corporate trustees. They administered trusts for wealthy clients, keeping decisions about asset choice and administration—and the profits from those activities—to themselves.
Traditionally, forming a trust company is difficult and expensive, and state laws typically discourage new entrants. That is not the case in Nevada. Nevada offers a level playing field for persons who decide to launch their own trust company.
Trust Company Services
Why do we provide trust services? Because of powers conferred to them by state laws, trust companies have the unique ability to act as a trustee — a person or company that administers financial assets for the benefit of someone else.
The assets are typically held in the form of a trust, which is a legal document that defines who the assets are being held for and how they can be used. As detailed in Nevada’s trust company laws, licensed trust companies are permitted to perform a variety of functions, including the following:
- Trust Administration. These services include safekeeping and management of client assets. This includes administering distribution requests, managing insurance claims, tax and retirement planning, and farm and property management.
- Investment Management. Investment management services include the formulation and administration of investment programs carried out in accordance with fiduciary principles. These services may be provided to individuals, corporations, charitable organizations, and trusts.
- Custodial and Escrow Services. Under Nevada law a state-licensed trust company can act as a custodian of assets and act as an escrow agent. Trust companies can assist in transactions involving newly developing technologies such as cryptocurrency storage and services related to digital security offerings.
- Trust and Estate Planning Services. A trust company can be named as an executor in a will, and as such is responsible for settling estates. This can include collecting debts, settling claims, accounting for assets to the courts, and distributing wealth to beneficiaries.
- Qualified Plan Design and Management. These services comprise assistance to individuals and businesses in formulating and implementing retirement plans that qualify for special tax treatment. Such plans range from Individual Retirement Accounts (conventional IRAs, Roth IRAs) and qualified retirement plans such as 401(k) and 403(b) plans, for example, to plans for the self-employed (SEP IRAs) and executive benefit plans. In some cases, trust companies are called upon to educate employees about a particular plan or a set of plan options and to create and monitor investment portfolios for the particular type of plan chosen. The services required may include record-keeping and tax return preparation services for plan participants.
- Corporate Money Management. These services include assisting in managing short-term cash assets, as well as constructing portfolios of money market instruments, Treasury bills, government agency paper and commercial paper to generate the highest possible return consistent with relevant risk parameters.
- Charitable Funds Management. These services comprise asset-growth assistance to charitable organizations, foundations, and endowments, and in some cases, formulation of investment guidelines or planned donation programs, as well as assistance in the design and implementation of charitable trusts.
Trust companies also offer estate planning advice and may utilize affiliates to sell various insurance products to minimize the impact of estate taxes. In addition, a trust company may act as a guardian of a minor’s property until adulthood or as conservator of an estate of an adult unable to handle his own finances.
Successful Trust Companies
In order to be successful, a state-chartered trust company must be established in a jurisdiction that supports a wide range of trust alternatives and provides a favorable operating environment.
Taxation is the central issue in operating a trust company, both from a customer service and an enterprise perspective. A jurisdiction in which trusts can be created without state taxation, where transactions within a trust can be performed state tax-free, and where gains are not subject to state tax is most desirable.
Another criterion in the choice of jurisdiction is the range of trust vehicles that its laws permit. Two types of trusts, in particular, should be permitted.
- The first is the dynasty trust, which is a trust that has perpetual duration and continues forever.
- The second is the asset protection trust, which can serve to preserve assets and shield beneficiaries from creditors. Nevada has enacted laws permitting irrevocable trusts that severely limit creditors’ rights to trust assets under certain circumstances.
Learn More About Forming A Trust Company in Nevada
Matthew D. Saltzman, Esq. is the Managing Shareholder of Saltzman Mugan Dushoff, PLLC, who specializes in corporate and administrative law matters for financial institutions. He routinely counsels banks, trust companies, mortgage and installment lenders on Nevada chartering and regulatory compliance matters. Saltzman Mugan Dushoff, PLLC is the preeminent financial institutional law firm in the State of Nevada. Contact us online or call (702) 330-3441.