In this podcast, Blake interviews Greg Crawford, the president, founder, and CEO of Crawford Trust Company in Nevada. They discuss the benefits of the Nevada Asset Protection Trust for asset protection, tax benefits, and dynasty provisions, as well as strategies to protect assets.
Blake:
Welcome to today’s show, we have a very special guest for you. We have Greg Crawford, who’s the president, founder, and CEO of Crawford Trust Company in Nevada. Greg, great to have you on the show today.
Greg:
Thanks, Blake for inviting me. I’m very glad to be here.
Blake:
So Greg, can you start off by telling me a little bit about your background and your company’s background?
Greg:
Sure. Crawford Trust is a Nevada-licensed trust company, so we can offer a lot of unique solutions and benefits that Nevada trusts can provide. My background is I previously ran another trust company here in Nevada, the largest independent trust company in Nevada, and a few of us left the old firm to create a new one during COVID. And we’re off to a great start.
Blake:
Very good. So, we’ve been working together for some time now, we’ve had quite a few clients that you’ve helped us out with, glad to be able to work with you. Can you tell me a little bit about some strategies that you use to help protect your client’s assets?
Greg:
Sure, the benefits of Nevada trusts really revolve around a couple of different areas, asset protection, tax benefits, and dynasty provisions, with a lot of flexibility built into all of those provisions. Nevada is one of the handfuls of states that allows what’s called a self-settled spendthrift trust. That’s a complicated way of saying it’s an asset protection trust. So you can fund a trust that you are, in fact, a beneficiary of with your assets. And after two years pass, those assets are protected from unknown creditors and future liabilities and other sorts of perils in life that no one can anticipate, but we all know can happen.
Blake:
And can you tell me about a time when you saw a Nevada Asset Protection Trust benefit a client?
Greg:
Oh, most definitely. They’re beneficial in a variety of ways because they do protect your assets against unforeseen kinds of events, creditors coming out of car accidents, and those sorts of things. They can also protect family assets for many, many generations. So if you’re in a high-risk or high-liability field, or say you’re concerned about the stability of one of your kid’s marriages, all those kinds of concerns that people have in life can be addressed with a Nevada Asset Protection Trust. So the assets that are placed in the trust, once a certain amount of time has passed, are very, very well protected from outside creditors.
It’s a very, very common structure that we have in our office. We have seen dozens of people over the years helped dramatically by using these types of trusts. the outcomes that they have in some of these unfortunate kinds of situations, where accidents and other things occur, the outcomes are much better when these trusts are in place, as opposed to when they’re not.
Blake:
So, I find a common misconception is that people think that you only need an asset protection trust if you’re super wealthy. This is certainly not what I’ve seen with my client base.
Greg:
What would you say is the starting level of assets that somebody would have before they should consider creating a Nevada Asset Protection Trust?
Blake:
Well, typically, we see asset levels around half a million dollars or more, but we’ve had trusts as small as $100,000. I mean, whatever you have to protect, if you’re concerned about future liabilities, whatever you have is a lot to you. And since the fees to maintain these trusts are not particularly exorbitant, they can be economical at some pretty low asset levels that people wouldn’t traditionally associate with asset protection trusts.
Greg:
Right, so it’s a matter of a few things. It’s not simply the number, the level of your assets, but it’s what risk you’re facing, and how important those assets are to you as well. So, in addition to forming Nevada Asset Protection Trust, sometimes clients will form underlying entities as well.
Blake:
Can you talk about what underlying entities or what other documents or tools are used in conjunction with a Nevada Asset Protection Trust or that you’ve seen used?
Greg:
Sure. The most common underlying entities in Nevada LLC, and in Nevada Limited Liability Company, offer their own layers of asset protection as well as trust when they’re combined. In a strategy, they are extremely effective. And there’s no record of any case of Nevada piercing and Nevada LLC titled to a trust, there simply isn’t any case law along those lines. The other advantage of an LLC in Nevada is very often you could be named the owner, your own manager of the LLC.
So even though the membership interest ownership of the LLC is titled to the trust, you have a lot of control and authority in terms of investments, selections, and other sorts of things that you can do at the LLC level, which ordinarily wouldn’t be able to do with the trust level. So, it gives that flexibility that I referenced earlier when the limited liability company is used with a Nevada trust. Other structures can be used as well depending on circumstances, but the LLC, the Nevada LLC, titled to a Nevada trust, is the most common and most popular solution that we see at our offices.
Blake:
And I think it’s a great solution for clients who may want the protection of a Nevada Asset Protection Trust, but they’re not ready to give up some of the control that comes along with managing their assets, so we can place the Nevada LLC or an LLC, based anywhere under the Nevada trust the member of that LLC, the owner would be the asset protection trust, but the manager of the assets, the one with signing power in the account would be the client.
And this is fine to do anytime that there’s no pending litigation, if there’s pending litigation, or the client has been called in for debtors exam. At that time, we probably recommended the trustee step into service manager. But up until that point, it’s a healthy balance of protection and control.
Greg:
Exactly. And the number one thing that people are typically concerned about and creating a trust is that loss of control. But by using a Nevada LLC, by taking advantage of the Nevada statutes that allow flexibility, in terms of directions to the trustee around distributions and investments, you can have a very, very high level of protection, at the same time, have the control that most people want to retain, you know, with their assets.
Blake:
So, asset protection is about keeping your property protected while you’re alive. Just real quickly, can we talk a little about how estate planning folds into asset protection planning and how the two of them work together?
Greg:
Most definitely. So, the asset protection trust in and of itself is an excellent vehicle. But it’s not a complete estate plan. Everyone needs a revocable living trust. And they’re very important components. It’s not only the things that aren’t titled to the trust, but all the healthcare directives, and other things that go along with the traditional estate plan, the building block of your estate plan really is the revocable living trust.
The asset protection trust is a specialized trust, that operates side by side to protect assets. But the revocable living trust avoids probate, and includes a lot of instructions about what you want to have to happen, if you’re incapacitated, they’ve served different purposes, but both are essential to having a complete estate plan.
Blake:
And just to add a few points to that, an estate plan is for after you pass away or once you become incapacitated. And a common structure that we use with our clients is we set it up so that the client’s assets are currently in an asset protection trust, and then upon their passing, those assets pour into a revocable trust. This gives the client the ability to change who the beneficiaries are during their lifetime without changing up their asset protection trust.
Now, when we set up this arrangement, we do include a provision that the trustee of the asset protection trust is not to distribute assets to the revocable trust if doing so could allow a creditor to jump in there and snag the assets. If there’s a threat that could happen, instead what we will do is have the trustee incorporate the dispositive provisions of the revocable living trust into the asset protection trust. So that allows the client the ability to make sure that everything passed, but still have the flexibility to change the estate plan, which is always important.
I never want to take away my client’s power to disinherit a child. I don’t want my clients to do this, but I want to make sure that they have that power over their children.
Greg:
Sure. Great, great point Blake, that’s another whole element of flexibility that you design into the strategies and, you know, clients appreciate the flexibility, they want to retain that, that ability to influence things down the road. And that’s a terrific part of the strategy too.
Blake:
And I have a set of nine-year-old twins, and I remind them about this constantly. Well, if you’re not going to take out the trust, I may be updating my estate plan soon. So, tell me a little bit about where you see, what changes you’ve seen in the asset protection industry since you got into this, and you’ve been in this just about as long as anybody in the industry, and, where you maybe see the industry going.
Greg:
So what changes have happened? What changes do you maybe see coming?
Blake:
Sure, sure. I think the number one change that we’ve seen over the years is the greater awareness and acceptance of asset protection planning. When it was first developed, it was somewhat of a foreign concept. There was some skepticism as to how well it worked. Would it stand up to challenges and the test of time that you always want to see? That has all been addressed now, as I said, there’s no case of any sort of piercing of these trusts in the state of Nevada and we’ve had cases go all the way to the Nevada Supreme Court.
So these trusts have been tested, and they’ve been proven to work. So the acceptance and recognition of the importance of having an asset protection component to your estate plan has gone up over the years. I think the number one issue that we’re going to see in the future is there’s a tremendous demographic wave of people who will eventually, you know, age out and pass away. And that transition of assets, from one generation to another as baby boomers, age and leave us is going to be a really important component of the future in terms of how is that done. Dynasty trusts, which is another aspect of Nevada, allow for trust last up to 365 years.
So if you are concerned about, again, stability of a child’s marriage, or maybe they’re just not responsible with money, the transfer of assets to the next generation is a gift. And you can put conditions on those gifts as part of the trust. So, if you want to leave a legacy of education, or some sort of extended benefit over multiple generations pay for your great great great grandkids college, all of those sorts of things can be accomplished in this generation of trust planning that maybe wasn’t available, you know, a couple of generations ago, because the laws didn’t exist.
Greg:
This is certainly very true. When the asset protection industry started out, it was unclear whether or not the term asset protection was going to be used now it’s a term that’s very well embraced, and some attorneys even out there pushing well if you’re not putting through some asset protection, you’re committing malpractice. I don’t know that I would go that far in every situation. But I definitely liked, like that mindset.
And it’s becoming more and more mainstream, I was down in St. Kitts and Nevis a couple of weeks ago meeting with an asset protection attorney out of California. And he told me that back in England, setting up an offshore trust was as common as setting a revocable trust is now. And so I think this could be very much the trend where if you have half a million dollars of assets if you’re involved in business, it’s pretty standard to do something to protect those assets. And in today’s very litigious society, it makes sense to engage in this type of planning.
Blake:
So, when it comes to setting up an asset protection trust, there’s certainly lots of options in terms of jurisdictions, both domestically and offshore. Could you give a little bit of an overview of why someone would select Nevada over an offshore trust and why someone would select Nevada over one of the other states that allow one asset protection trust such as Alaska, South Dakota, Wyoming, Delaware?
Greg:
Sure, of course, and there are a handful of states that are very competitive with Nevada, and I don’t knock the other jurisdictions because I think you can, you could benefit from an asset protection trust in several different pot tier jurisdictions, Nevada, South Dakota, Delaware, being in that class, no doubt. I think when you’re looking at Nevada, there are a few things that distinguish us.
One is the fact of the lack of a state-level income tax, there is no state income tax. In Nevada, that’s actually constitutional. It’s not statutory. So, the ability to change the state constitution exists, it requires a vote of the people, two years apart, essentially people voting to tax themselves, which isn’t the most popular profitable thing to have happened. So, the tax environment here is, I think, very stable for the long run, no exception creditors, certain states have exception creditors for certain classes of creditors, that do not exist in Nevada.
And we have a very well-developed industry here. I mean, if you think about what, say, Delaware is to New York City, Nevada is the same thing to California. And that’s how it developed. This is a wonderful place to store and protect your assets. The state has a reputation for that. And it’s something that we’re always working on to make sure that we’re on top of your jurisdiction, I work with the legislature, which meets every other year, they understand the importance and the significance of this industry and all the jobs and economic activity it brings to the state, when you have a valuable component of your state economy you work really hard to protect it.
So, certainly, if someone said, “Hey, I live in Chicago, and I’d like to set up an asset protection trust in South Dakota”, by all means, do it. There are a lot of good selections out there. But I think Nevada is definitely one of them to consider.
Blake:
And I’ll even go so far as to say Nevada is the top jurisdiction, in my opinion, and I’m agnostic to where my clients set up trusts, it doesn’t make any difference to me, except that I want my clients to be the most secure position because that’s good for both of us. It’s also very interesting what you said or very important, what you said about you have a state government that is vested in the protection of keeping its reputation as an asset protection state.
It’s very easy for another state to come out and just Ctrl+C Ctrl+V, copy what the legislature has passed, but does it have the mentality to continue to uphold that? We wouldn’t want to set up a trust in, let’s say Florida allows an asset protection trust law, and then we get a new governor, and all of a sudden, those trusts are no longer protected. A long-standing history like Nevada does, of being very debtor-friendly, is a very important consideration when setting up an asset protection trust.
Greg:
Now, when a client sets up an asset protection trust with Crawford Trust, what are their options in terms of opening up a bank account? Where can they bank? And what would they be able to do within their trust, in terms of investing?
Blake:
Sure. And that is another aspect of the flexibility of Nevada laws. So, if someone were to open a trust, and Crawford Trust is the trustee, we can serve solely as the administrative trustees. So we are the legal link to Nevada so that the nexus, the legal relationship with Nevada is formed, the benefits flow from there. We don’t manage investments, we don’t even have to handle the distribution aspect of the trust. So, different components of the trust can be given to other individuals or entities.
So here at Crawford Trust, we have lots of trusts, where the assets are managed at JPMorgan, Goldman, or people, you know, set up their own Schwab account, or they are their own investment manager, or it’s done at the LLC level. So, there’s a lot of flexibility in terms of how you invest your assets, who makes that decision, who has the authority, and where you have those assets custody, we have relationships with all the major investment banks, not only in the US but even some over in Europe.
So it’s very flexible in that regard. On the retail banking side, just because of convenience’s sake, there is a US Bank across the street from us, we often recommend US Bank, but people are free to choose their own institution, you do want to have some portion of your assets in Nevada, that’s part of the statute for the asset protection. So, we strongly encourage if you’re flexible around, you know, where to establish the bank account, we strongly recommend having an account in Nevada, of course, we facilitate all of that in the background for our clients.
Blake:
Is there a minimum account size that has to be in Nevada? Or is it just any thousand dollar account?
Greg:
Yeah, the statutes aren’t very clear, and they don’t specify a minimum amount of assets to be held in Nevada.
Blake:
Okay.
Greg:
I think it’s wise to have something meaningful, you know, I wouldn’t recommend, you know, just putting $10 or something into an account out here, you know, sometimes a few $1,000 will be enough, is kind of how most legal practitioners view it. So, technically, the letter of the law says some assets, you’d like that to be a little more than some sort of de minimis level. That might cause a problem.
Blake:
But $10,000 would at least check the box, and then the clients can put in more if they would like to. So, one or two final questions. Clients who own cryptocurrency, want to keep it protected from lawsuits, they’re not going to go and claim that they lost all their crypto in a boating accident. They’re going to disclose it, and they’re not going to risk criminal penalties, but they don’t want it lost in a lawsuit. What can clients who are interested in investing in crypto or have crypto investments do with the Nevada Asset Protection Trust?
Greg:
Sure, again, this is a kind of evolving aspect of trust law. And certainly, we’re seeing a dramatic uptick in new types of assets, digital assets being titled to Nevada trust. Because of the frequency, the typical frequency of the trading, we will see people use an underlying LLC and have the crypto assets held at the LLC level. But we can be flexible depending on client needs. And again, the frequency of activity and those sorts of things. So crypto assets are eligible to be titled to Nevada trust in one strategy or another.
Blake:
Very good. And finally, Greg, somebody wants to set up a Nevada Asset Protection Trust, they’ve listened to this podcast, and they’re interested in working with Crawford Trust, how does someone get in contact with you?
Greg:
Very easy. All of our contact information is at crawfordtrust.com. You can also call us 775-499-8900. I do like to point out that because we’re a trust company doesn’t mean that we actually draft trusts. That’s where Blake, you would come into the equation because we don’t provide trusts, we simply administer them once they’re established. But obviously, we have a great working relationship with you, Blake. And I think the two of us, our two respective organizations can get the clients the outcomes that they want.
Blake:
Well, I appreciate the plug, and I appreciate that. And I appreciate having you on my podcast. Thanks for all this, Greg. You have a great rest of your day.
Greg:
Hey, I enjoyed it! Thanks so much. Take care.
