Why This Matters Now
Earlier situs conversations
California advisors are increasingly evaluating trust situs earlier in the planning process.
Liquidity events
Liquidity events and concentrated wealth continue to drive multistate planning discussions.
Shifting tax policy
Changes in tax policy often create opportunities to revisit trustee selection and trust administration.
Why California Residents Use Nevada Trust Structures
California residents often face complex planning concerns, especially when significant wealth, business interests, real estate, family assets, or multigenerational estates are involved. Between high tax exposure, creditor risk, and the need for long-term wealth preservation, many families look beyond California when structuring their trusts.
At the recent Tax & Trust Conference held in Las Vegas in May 2026, California wealth protection in the context of the 2026 Billionaire Tax Act was a major topic addressed in several continuing education presentations.
If approved by voters, the initiative would generally apply to individuals who were California residents on January 1, 2026, and certain applicable trusts, with the tax based on covered net worth measured as of December 31, 2026. If approved, it would impose a one-time 5% tax on net worth for California residents whose net worth is at least $1 billion as measured on assets owned by the end of 2026.
While the Billionaire Tax Act has captured much of the recent attention, it is only one example of a broader trend. California advisors have increasingly been evaluating trust situs and multistate planning strategies as clients seek greater flexibility, privacy, and long-term wealth preservation.
Regardless of the ballot outcome, this timing has prompted many California advisors to consider Nevada more often as a preferred trust jurisdiction among the UHNW individuals and families who could be impacted by the impending legislation.
Nevada has become one of the most attractive jurisdictions for sophisticated trust planning. Its favorable trust laws, strong asset protection framework, privacy advantages, and long trust duration make it a preferred option for families and advisors seeking greater flexibility.
Nevada Trust Company® helps California residents and their legal advisors establish and administer trust structures designed to protect wealth, support long-term family goals, and take advantage of Nevada’s trust-friendly legal environment. Founded in 1995, Nevada Trust Company® is an independent, privately held firm specializing in trust and investment management services.
PLANNING CONSIDERATION
Regardless of future legislative changes, advisors may wish to review whether existing trust structures continue to align with a client’s long-term objectives. Changes in tax policy often prompt valuable conversations about governance, trustee selection, privacy, succession planning, and multistate administration, even when no immediate restructuring is warranted.
Key Differences Between California and Nevada Trust Laws
California and Nevada take very different approaches to trust planning. California offers access to strong legal and financial markets, but its tax and creditor protection environment can create limitations for high-net-worth individuals, business owners, and families with complex estates.
Nevada, by contrast, is widely recognized for its favorable trust laws. The state has no state income tax, no inheritance tax, strong privacy rules, and a long trust duration of up to 365 years. These advantages can make Nevada especially appealing for California residents who want to preserve assets across multiple generations.
A Nevada trust may also offer more flexibility in administration. Families can work with a Nevada-based trustee while coordinating with California attorneys, tax advisors, and financial professionals. This allows clients to maintain a cohesive planning strategy while using Nevada’s jurisdictional benefits.
In our work with California advisors, family offices and individuals, we encounter a few common misconceptions about a Nevada trust that can lead to unintended planning consequences if not considered in the planning stages.
For example, assets transferred to a Nevada Asset Protection Trust are generally not protected from creditors whose claims arose before, or within two years after, the trust was created and funded if the transfer is determined to have been made with the intent to hinder, delay or defraud those creditors.
A spending spree and resulting bankruptcy can still go after assets that are placed in a Nevada Asset Protection Trust if the trust is established after the spending spree. Similarly, assets placed in a trust after a divorce cannot be protected from the spouse of the divorcing grantor.
There must be a defined Nevada trustee for the trust which was made clear in the recent Huckaby case where a California resident couple intended to protect their real estate from California tax on the presumption that as part of their Nevada trust it was protected; however, the trust designated no trustee residing in the state of Nevada.
In the case of avoiding or mitigating capital gains tax in the sale of a business, the estate planners may consider transferring the ownership of the business to a Nevada LLC and the individual establishing residence in Nevada to accomplish the goal of mitigating the state capital gains tax on the sale.
PLANNING CONSIDERATION
Before recommending a change in trust situs, advisors should evaluate more than the governing law. Trustee residency, where the trust is administered, the location of trust assets, beneficiary residency, and California-source income can all affect planning outcomes. Jurisdiction should be evaluated as part of the overall estate and tax strategy, not in isolation.
Asset Protection Advantages
Asset protection is one of the most common reasons California residents consider Nevada trust structures. A Nevada Asset Protection Trust, often referred to as a NAPT, is an irrevocable trust created under Nevada law to hold and protect assets.
Nevada’s two-year seasoning period is one of the shortest in the country. After assets have been held in the trust for the required period, they may receive protection from many types of creditor claims, subject to applicable law and proper trust structuring. Nevada is also known for its strong treatment of exception creditors, including certain claims related to divorce or child support.
This can be especially valuable for California residents who own businesses, hold investment assets, work in high-liability professions, or want to separate personal wealth from future risk. A properly structured Nevada trust may help protect family assets while still allowing the creator to maintain certain controls, such as involvement in investment decisions.
Asset protection planning must be done before problems arise. A Nevada trust is not a tool for avoiding existing obligations or fraudulent transfers. Instead, it is a proactive planning strategy for individuals and families who want to build a stronger legal framework around their wealth.
Our trust team has seen this mis-step several times over the decades of our work. We’ve also seen some excellent examples of advantageous planning that preserved the wealth accumulated by the grantor as intended.
Trust Team Lead and Nevada Trust Company® Vice President James Kriss recounts a California client’s successful efforts in planning for the sale of his home services business. “Our client owned 100% of his company valued at about $18 million. His attorney worked with him early on to put the business into a Nevada Asset Protection Trust with the goal of preserving the proceeds from the sale of the business that was expected to happen within five years. He was concerned that a lot of his net worth was concentrated into that one asset and that could impact his exposure to liability for both the company and him personally. He had 2 nearly grown kids that he also wanted to make sure were taken care of.”
As predicted, the company sold for $23.5 million about four years later. Because he and his attorney had placed the business into the trust before there was any impending sale, the proceeds of the sale remained in the trust, protected from future creditors under Nevada law. The client remained a discretionary beneficiary based on the trust’s original structure, and his children’s inheritance was also creditor-protected. “It worked out perfectly for him because he was smart enough to plan for that sale early,” said Kriss.
PLANNING CONSIDERATION
Nevada’s asset protection laws can be powerful, but their effectiveness depends on proper trust design, timing, funding, and the client’s specific circumstances. Advisors should evaluate these factors with qualified legal counsel before implementing any strategy.
Privacy and Trustee Benefits
Privacy is another important reason California residents use Nevada trust structures. Nevada does not generally require trusts to be recorded or registered in public records, which can help families keep sensitive financial and estate planning details confidential.
For families with significant assets, privacy is not only a personal preference. It can also reduce unwanted attention, protect family members, and support smoother wealth transitions. This is especially relevant for business owners, public-facing professionals, and families with multigenerational planning needs.
Working with a Nevada-based professional trustee can also add stability and continuity. Unlike an individual trustee, a corporate trustee provides an institutional framework for administration, recordkeeping, reporting, custody, and investment management. This can reduce family conflict, support compliance, and ensure that the trust is managed according to its terms.
Nevada Trust Company® serves clients with complex and multifaceted needs, offering professional trustee, custody, and investment management services through a single source. For California residents, this can provide confidence that their trust is being administered by professionals familiar with Nevada’s laws and fiduciary standards.
Common Trust Structures Used by California Clients
California residents may use several types of Nevada trust structures depending on their goals. The right structure depends on the client’s assets, family situation, tax exposure, risk profile, and long-term planning objectives.
A Nevada Asset Protection Trust is commonly used by individuals who want to protect assets from future creditor claims while retaining certain permitted rights under Nevada law. This may appeal to business owners, physicians, executives, real estate investors, and others with elevated liability concerns.
One of the most common misconceptions we encounter is that a Nevada Asset Protection Trust is primarily a tax-planning vehicle. In practice, California advisors more often use these trusts as part of a broader wealth preservation, governance, and estate planning strategy, with tax considerations evaluated alongside but not in place of those long-term objectives.
Dynasty Trusts and Directed Trusts are features of a NAPT. Think of them like leather seats and tinted windows in a vehicle. You can choose to add these provisions to your asset protection trust, and they still allow the grantor to maintain control of the assets in the trust.
A Nevada Dynasty Trust is often used for multigenerational wealth planning. Because Nevada allows trusts to last up to 365 years, families may use this structure to preserve assets for children, grandchildren, and future descendants while reducing repeated estate transfer exposure.
A Nevada Directed Trust may allow responsibilities to be divided among different parties, such as a trustee, investment advisor, distribution advisor, or trust protector. This can be helpful for families who want professional administration while keeping specialized decision-making with trusted advisors.
Some California residents may also use Nevada trusts as part of broader estate, business succession, or investment planning. In these cases, the trust may work alongside family limited partnerships, LLCs, retirement assets, charitable planning, or other wealth management tools.
Another client our team worked with was a California orthopedic surgeon who had accumulated significant investment assets of about $7 million, several rental properties and had a substantial annual income. She faced ongoing malpractice exposure despite maintaining insurance and was worried that a large judgment could threaten her wealth in the future. Before any legal issues arose, she collaborated with her advisor team to establish a Nevada Asset Protection Trust administered by Nevada Trust Company® as her corporate trustee in the state. She transferred her investment portfolio into the trust.
A few years later, she was involved in some litigation arising from a business dispute unrelated to her medical practice. All the assets that years earlier had been previously and properly transferred into the Nevada trust were protected by Nevada law from litigation. Her foresight allowed her investments to continue to grow despite an unforeseen legal battle.
PLANNING CONSIDERATION
Different planning objectives often call for different trust structures. Clients preparing for a business sale, transitioning concentrated stock positions, or planning for multigenerational wealth transfer frequently benefit from evaluating trust situs earlier in the planning process rather than after a significant liquidity event.
Planning Checklist for California Advisors
Before recommending a Nevada trust structure, advisors should consider:
- Trust situs
- California-source income
- Timing of anticipated liquidity event
- Administrative responsibilities
- Trustee residency
- Beneficiary residency
- Existing advisory team roles
A Collaborative Approach to Complex Planning
No two California families, or their trust structures, are exactly alike. That’s why Nevada Trust Company® approaches each relationship as a collaborative planning effort alongside the client’s estate planning attorney, CPA, investment advisor, and other trusted professionals.
Many of the most effective trust structures are developed by working through unique family circumstances, complex asset holdings, multistate tax considerations, and long-term succession goals. Rather than looking for reasons a strategy won’t work, our trust administration team works collaboratively with advisors to identify practical solutions that align with a client’s objectives while remaining consistent with Nevada law and sound fiduciary practice.
That collaborative, problem-solving mindset has made Nevada Trust Company® a trusted resource for advisors seeking an experienced Nevada trustee who values thoughtful planning as much as careful administration.
FAQs Related to California Residents
Yes. A California resident may establish a Nevada trust if the trust is properly structured under Nevada law and administered with the required Nevada connections, such as a qualified Nevada trustee. However, creating a Nevada trust does not automatically eliminate all California tax or legal considerations. Residency, source of income, beneficiaries, and administration details can all affect the outcome. California residents should work with experienced estate planning attorneys, tax advisors, and a professional Nevada trustee to determine whether a Nevada trust is appropriate for their goals.
A Nevada trust may offer tax planning opportunities, but it does not automatically allow California residents to avoid California taxes. California has its own rules for taxing trusts, residents, California-source income, and certain beneficiaries. The tax treatment depends on how the trust is structured, who the fiduciaries and beneficiaries are, and where the income is sourced. California residents should consult qualified tax counsel before creating a Nevada trust for tax-related reasons.
No. Most individuals and families who establish Nevada trusts continue to reside in their home state. The primary benefit of a Nevada trust comes from the trust’s legal situs (its governing jurisdiction) and administration rather than from where the grantor lives.
Because every family’s circumstances are different, advisors should evaluate trustee selection, trust administration, asset location, beneficiary residency and applicable state tax rules before implementing a Nevada trust strategy.
No. A Nevada Asset Protection Trust is not right for every California resident. It is typically most useful for individuals and families with meaningful assets, future creditor concerns, business ownership, professional liability exposure, or long-term wealth preservation goals. It must also be created and funded properly before creditor issues arise. The best approach is to schedule a consultation and review your goals with experienced legal, tax, and fiduciary professionals.
ADVISOR TAKEAWAY
Every California family brings a unique combination of tax considerations, business interests, family dynamics, and long-term planning goals. The most effective trust structures are rarely the result of a one-size-fits-all solution. They emerge from thoughtful collaboration among the client’s advisory team. At Nevada Trust Company®, we view that collaborative problem-solving process as one of the most valuable parts of our role as a trustee.
Explore Whether a Nevada Trust Fits Your California Estate Plan
California residents do not need to limit their planning options to California trust law. With the right structure, a Nevada trust may provide stronger asset protection, greater privacy, and a more flexible framework for preserving wealth across generations.
Nevada Trust Company® provides professional trust and investment management services for families, individuals, and advisors seeking sophisticated fiduciary solutions. Whether you are evaluating trust situs for a current client or exploring long-term planning strategies, Nevada Trust Company® welcomes the opportunity to collaborate with your legal, tax and investment advisors to determine whether a Nevada trust structure aligns with your client’s objectives.