Nevada's favorable tax climate has made the state a fertile location for the growth of trust companies.
Twenty-seven family trusts are licensed in Nevada along with 18 retail trusts.
Family trusts manage the assets of a particular family, while retail trusts (or general trusts) accept clients from the general public. The largest retail trust in the state is Schwab Trusts, based in Henderson, but many are much smaller.
Both retail and family trusts are increasingly setting up shop in the state.
"Nevada is very progressive and (its tax structure) puts Nevada out in front," said Mark Knobel, a partner with McDonald Carano law firm, and a specialist in trust laws. "We're definitely competitive; at the same level with favorable taxes as Delaware."
George E. Burns, commissioner for the Financials Department of the State of Nevada Department of Business & Industry, agreed.
"Trust sites in Nevada are very, very beneficial," Burns said.
"We have tried to establish ourselves as the Switzerland of family trust companies. They bring very high paying, white color jobs here."
While trusts have always been welcome in the state, there was a time when a segment of the trust industry rode roughshod in Nevada.
"The retail trust industry was out of control," Burns said. "Retail trust charters were handed out like paper napkins."
A company only needed $300,000 in capitalization to set up a trust company, he said. They'd hang the charter on a wall and go some place else to set up an office. One of those companies ran off to Illinois, where its clients lost $48 million.
"That was a huge black eye on the state of Nevada," he said.
During the 2009 legislative session, Burns, who at the time was new to the commissioner position, pushed to rewrite the trust statutes.
Now, to be chartered as a trust in Nevada, the organization must have at least $1 million in capitalization funds and maintain and staff its physical office in Nevada. If they wanted to have an office in Illinois, they would have to be licensed in Illinois.
Existing companies were given two years to meet the requirements.
April 1, 2011, many trusts closed, as their charters expired and they could not meet the new regulations.
Legislation in 2017 relaxed the out of state standards a little by allowing companies to open offices outside Nevada if the other state had reciprocal regulations. That helped national companies provide trust services to their clients nationwide. One of the largest is Schwab, Burns said.
"We cleaned up the industry, then loosened the reins a little bit," he said.
At the heart of Nevada's trust-friendly laws is the lack of an inheritance tax.
"If you're in New York and have a family trust (in that state) and the generation with that estate in trust dies, the pass-down is hell," Burns said. "In Nevada, wealth moves from one generation to the next with no inheritance tax; no corporate tax.
"Heirs are still going to pay income tax where they live, but no inheritance tax. Families don't have that huge chunk of wealth being lost."
Nevada also permits multi-generational trusts up to 10 generations, the highest in the country, he said.
"There are a number of wealthy families in this country with legacy wealth," Burns said. "They form a family trust then, become a family trust company. Family trusts are one of the biggest expanding areas in Nevada."
While information about retail trusts is readily available, family trusts tend to stay below the radar. The name of a family trust is usually something other than the family name.
"Family trusts manage assets of one family. They're not required to go through the same level of licensing because they're not open to the public," Knobel said. "They do not want to be available to the public at large."
One family trust in the state is Beacon Trust. Burns would not give the name of the family it served, but he did say it has 20 full-time employees and manages $60 billion in assets for one family.
One trust listed on the state website with a familiar name is Rothschild Trust North America, LLC. This is a retail that primarily serves wealthy Americans living in other countries. Whether the Rothschild family also has its family trust in Nevada is not public record.
"We're proud of the fact that we got an enterprise as large as the Rothschild's," Burns said.
Rostschild Trust North America is located in the same building as McDonald Carano's Reno offices. In fact, a number of trusts are located in that building at 100 West Liberty. Another cluster of trusts can be found on Caughlin Parkway.
According to Burns, those locations provide easy access to prominent legal experts in the area of family trusts: particularly McDonald Carano on West Liberty, and Maupin Cox Legoy on Caughlin Parkway.
Knobel said at least six attorneys in the McDonald Carano Reno office handle trusts. "That's a lot for Reno," he said.