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By several measures, Nevada offers numerous benefits as a state in which to incorporate and operate a trust company:
- No State Tax. Nevada has no state corporate or personal income tax, which means it does not tax trust company profits or trust income. This makes it possible for trusts or other entities managed by a Nevada trust company to produce returns that are not taxed on the state level.
- Wide Range of Trust Vehicles. Nevada permits the creation of dynasty and asset protection trusts, as well as the full range of trusts permitted by other states.
- Reasonable Capital Requirements. Nevada requires $1,000,000 in minimum capital, or additional levels as the commissioner(s) may require. As such, Nevada’s initial capitalization requirements are comparable to most other jurisdictions.
- Low Operating Costs. Because of its business-friendly climate, the cost of talented labor, office space, utilities, and services in Nevada are among the lowest in the U.S.
- Asset-Protection Friendly. Nevada has one of the best asset protection laws of all the states. It carries one of the shortest statute of limitations. It permits persons in other states to act as co-trustees.
- Out-of-State Ownership Permitted. With the proper management and disclosure, Nevada permits the owner or owners of a licensed Nevada trust company to reside anywhere.
- Host for Retirement Accounts. A Nevada trust company may serve as custodian trustee for many types of retirement accounts including retirement plans under ERISA, such as IRAs, SEP IRAs, Keoghs, 401(k)s, and other qualified plans.
- Alternative Assets. Nevada trust law permits trust companies to serve as custodians or trustees for a variety of client assets. These include traditional assets such as stocks, bonds, and mutual funds, as well as alternative assets such as cryptocurrency, digitally issued securities, partnership interests, real estate, aircraft and vessels, and personal property such as art, fine wine, and autos.
Requirements for Trust Companies in Nevada
While Nevada is one of the most welcoming states for new trust companies, concern for depositor and customer safety led the state to establish certain requirements. Chief among these is the need for a physical presence in the state.
A Nevada trust company cannot be a mere “brass plate” or “nameplate” entity; it must establish what is referred to as a “bricks and mortar” presence in the state. This means that the company must maintain an office in Nevada that the public can enter and in which it may conduct business. It also means that a knowledgeable and qualified trust officer must be available to carry out any trust transaction, as well as maintain books and records.
A trust company licensed in Nevada, therefore, may operate and accept accounts from residents of all 50 states subject to certain limitations. Nevada trust companies may open offices in other states, subject to compliance with such state’s legal requirements. Each state, however, is free to regulate out-of-state trust companies. In general, there are six activities of an out-of-state trust company that a so-called host state may decide to regulate:
- Client acquisition in the host state.
- Serving as a custodian for a host-state resident.
- Serving as a fiduciary in the host state.
- Marketing services and soliciting customers without establishing an office in the host state.
- Opening a representative office in the host state.
- Opening a full-service office in the host state.
Host states generally consider other activities — such as opening a full-service trust office, a representative office, or an administrative office in the host state — on a case-by-case basis, basing their decision on the level of activity contemplated, the business plan, and the level of operating capital. Nevada law allows for a Nevada trust company to operate in other states based on an evaluation of other states’ reciprocity provisions.
Form Your Nevada Trust Company with Saltzman Mugan Dushoff, PLLC
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.