Black & LoBello on AM720 KDWN

Black & LoBello on AM720 KDWN

Click here to listen to the Legal Hour on KDWN AM720 from April 4th, 2012. Christopher Phillips, Esq., who practices Probate, hosts with guest lawyer Andras Babero, Esq., who practices in Commercial Litigation and Real Estate Law from the law firm Black & LoBello in Las Vegas, Nevada.  Mr. Babero and Mr. Phillips discuss AB 284 and how lenders could avoid its requirements (1:20), how robo-signing affects foreclosure (10:40), how irrevocable trusts can be amended (13:35), how to remove a trustee (18:30), contesting rights to assets (20:55), liability on mortgage fraud (25:40) and assets exempt from collections (33:40). 

Please tune in to AM720 KDWN’s “Legal Hour,” Wednesdays, from 9 AM to 10 AM.  Listen live on the radio or online.   Feel free to call in with your comments or questions at 702-257-5396.

To listen to past shows, visit our Media page.

Asset Protection Techniques

Every day, potential clients come to find out how to protect their assets from potential creditors and lawsuits. Nevada law offers many “free” exemptions under NRS 21.090. However, many assets are still vulnerable such as non-homesteaded real property, bank accounts and investments. Fortunately, Nevada also offers other options for helping to safeguard these exposed assets.

Once risks and areas of exposure have been identified and the potential protection strategies have been carefully explored, a cost vs. benefit analysis should then be conducted before finally deciding which asset protection strategies to employ.

Two of the most widely used Nevada asset protection structures are the Nevada Limited Liability Company (LLC) and the Nevada Asset Protection Trust (NAPT).

Nevada LLC

A limited liability company formed in Nevada offers excellent domestic protection. Most practitioners agree that Nevada offers some of the most favorable corporate laws in the country. Some of the pros of a Nevada LLC are:

  • Nevada’s statues generally favor businesses;
  • The organizational requirements are quite informal- no annual meetings or minutes are necessary;
  • LLC’s are flexible structures that can be used in many different ways- to own property, to manage an operating business and to hold liquid assets;
  • LLC’s can be taxed in four different ways: as a disregarded entity, a partnership, an S-Corp or a C-Corp;
  • Nevada, unlike many other states, has no state income tax or corporate tax; and
  • Nevada LLC’s can be structured to maximize privacy and anonymity.

Perhaps most importantly, the members’ interests cannot be attached by a creditor. The only remedy against a member is to obtain a “Charging Order” allowing the creditor to lien or “charge” the member’s profit distribution rights when, or if, a distribution is made by the member of the LLC. As such, assets within the LLC are safe but trapped.

Nevada Asset Protection Trust

Nevada Asset Protection Trusts (NAPT) were created by The Nevada Spendthrift Trust Act, NRS 166.010 et seq. in 1999. Nevada is one of just a handful of states that provide a Trust of this sort.

This unique law lets an individual create a valid Grantor Trust where he or she is both the Trustee, the person who controls the Trust assets, and the beneficiary, while the assets within the Trust remain protected from creditors. Unlike many other states with similar laws, the Trust creator does not need to be a Nevada resident to create a NAPT. Additionally, any category of asset such as real property, personal property or liquid assets in any location can be protected with a NAPT.

NAPTs work in the following manner: By law, the Trust prohibits the assignment, alienation, acceleration and anticipation of any interest of the beneficiary under the Trust by the voluntary or involuntary act of the beneficiary or by operation of law or any process. Payments by the Distribution Trustee, a third party who has discretion to make distributions, are made only to the beneficiary who can also be the person establishing the Trust. The Trustee of a Spendthrift Trust is required to disregard and defeat every assignment or other act, voluntary or involuntary, that is attempted contrary to the provisions of the Nevada Spendthrift Act.

Some of the benefits of the Nevada Asset Protection Trust are:

  • You keep control of your assets;
  • You may receive the full benefit and use your own assets;
  • You don’t need to give away your assets;
  • You can protect any type, and an unlimited amounts, of assets from creditors;
  • The Nevada Asset Protection Trust is less expensive to form and maintain and much less complex than foreign or offshore Trusts which are often troubled by IRS audits and complicated tax reporting requirements;
  • The Nevada Asset Protection Trust may avoid loss of the assets through a bankruptcy; and
  • The Nevada Asset Protection Trust can be integrated with your estate plan (remember, a “Living” or “Family” Trust does NOT provide the creditor protection benefits discussed above).

With all of its benefits, there are some disadvantages to an NAPT. If the Grantor of the Trust is also a beneficiary, a third party Distribution Trustee must serve as well, which means that the Grantor does not have absolute discretion. Additionally, there is a two-year seasoning period. If a creditor is a current creditor when the transfer of the asset to the NAPT occurs, the creditor must bring suit against the property transfer within two (2) years of the transfer or within six (6) months after the creditor discovers, whichever is later. After the seasoning period is over, the creditor is barred from bringing suit to recover said property.

Both of these techniques, amongst others, can be extremely useful in protecting assets and providing peace of mind in our volatile economy.

Tiffany N. Ballenger, Esq.

Click here to listen to Mr. Phillips talk about how different types of trusts can be used to protect your assets as well as other methods used to transfer assets in case of death or disability.

Nevada requires that a deed of trust be used to secure a real estate loan.  Although commonly referred to as a mortgage, a deed of trust has significant differences from a mortgage.  In addition, states using deeds of trust differ among themselves in their requirements.

All mortgages are two-party instruments between the lender and the borrower.  Foreclosure of a mortgage requires the lender to file a complaint with the appropriate court and proceed through the judicial process. Anecdotal reports from mortgage states such as Ohio indicate that borrowers can delay these cases for years. The process is slow and expensive.

Deeds of trust are three-party instruments.  There is a beneficiary who is the lender, a trustee who is a third party responsible for the foreclosure process including filing the Notice of Default and related documents, and the trustor who is the borrower.  A foreclosure of a deed of trust does not require that a court case be filed.  It is fast and inexpensive compared to a mortgage foreclosure.

In Nevada, the foreclosure process begins with the filing of a notice of default by the trustee.  The borrower has 35 days from that date to bring the delinquent payments current together with the lender’s costs and fees.  Starting on the 36th day, to prevent foreclosure the borrower must pay the entire principal balance owing together with interest and any additional amounts owing for fees and costs. 21 days prior to the trustee’s foreclosure sale the trustee must publish a notice of the sale once each week and also post the notice.   At the end of 111 days the property may be sold at the trustee’s sale.  The borrower has no right of redemption after the sale.

Nevada was a full recourse state until October 1, 2009.  This meant that the foreclosing lender had six months to file a complaint against the borrower seeking the recovery of the deficiency after the sale.  After the six month period lapses the lender was barred from filing suit to recover the deficiency.  Full recourse means that the borrower is liable for the deficiency regardless of the purpose of the loan.  There is no exemption for loans used to purchase an owner occupied residence.

Effective October 1, 2009, Nevada became a limited recourse state similar to California.  Loans made after October 1, 2009 by a financial institution to a borrower who continuously occupied the property as a primary residence were nonrecourse.  This means that the lender may not pursue a foreclosed borrower to recover a deficiency.

Nevada recently joined the small number of states that entitle the borrower receiving a notice of default to request mandatory mediation with the lender.  This applies to all primary residences receiving a notice of default starting July 1, 2009.

Tisha Black Chernine, Esq.

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Fannie Mae announced this week that it will begin monitoring all delinquent loans in its portfolios and backed-securities to guarantee that servicers comply with foreclosure time frames.   Fannie Mae currently monitors the progress of the foreclosure process by reviewing delinquent loans at the first of the month.   If Fannie Mae believes there is a delay in completing the foreclosure process, and the servicer is unable to provide a reasonable explanation for the delay, Fannie Mae may require the servicer to pay a compensatory fee.  This fee will not only reimburse Fannie Mae for damages but emphasizes the importance of foreclosing on delinquent loans in a timely manner.

Fannie Mae also announced an update to the allowable foreclosure time frames for Nevada to 150 days.  Foreclosure time frames account for the time starting from when the case is referred to the attorney or trustee for action to the completion of the trustee’s sale.  These allowable time frames represent the time typically required for routine, uncontested foreclosure proceedings where mediation is not required.

Joshua D. Carlson, Esq.

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What is the Meeting of Creditors?

Between thirty (30) and forty (40) days after filing your bankruptcy petition, the randomly assigned Chapter 7 Trustee will hold a meeting of creditors.  During this meeting, the debtor is placed under oath and the Chapter 7 Trustee along with any creditors that attend may ask questions regarding your bankruptcy petition.

You MUST attend this meeting and be able to answer questions regarding the contents of your bankruptcy petition, including all the assets and liabilities you have listed.  If a husband and wife have filed a joint petition then BOTH the husband and wife must attend the meeting of creditors and answer questions.

Further, you must provide the Chapter 7 Trustee with certain documents at least ten (10) days prior to the meeting of creditors.  While each Chapter 7 Trustee may have certain requirements, generally you must produce at least the previous two (2) years tax returns, previous six (6) months of bank statements and pay stubs, and a Trustee Questionnaire.   Your attorney should be able to provide the documents to the Chapter 7 Trustee for you.

It is important to cooperate with the Chapter 7 Trustee and provide any financial records or documents that the Chapter 7 Trustee requests.

Randy M. Creighton, Esq.

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The federal government provided new Home Affordable Modification Program (HAMP) outreach and communication guidelines for foreclosure actions while evaluating the borrower.  These guidelines provide additional protection for delinquent borrowers who have filed bankruptcy but would otherwise be eligible for HAMP benefits. Some key highlights from the directive include:


  • The servicer must evaluate the borrower’s eligibility under HAMP and determine ineligibility before referring the borrower to foreclosure (or make “reasonable solicitation efforts”).
  • If foreclosure activity has already been initiated, the foreclosure sale cannot occur until after the servicer determines if the borrower is ineligible under HAMP (or makes “reasonable solicitation efforts”).
  • The servicer must give the borrower 30 days to respond to HAMP “Non-Approval Notices” in certain circumstances before conducting the foreclosure sale.
  • The servicer must provide, in writing, to the foreclosure attorney certification that the borrower is ineligible for HAMP before conducting the foreclosure sale.


  •  A borrower in active Chapter 7 or Chapter 13 bankruptcy or the borrower’s attorney or bankruptcy trustee can request the servicer to consider the borrower under HAMP.  The servicer can no longer decline the borrower as a “proper exercise of discretion.”
  • If the borrower has been approved on a trial loan modification and files a Chapter 7 or Chapter 13, the servicer may not deny the borrower a permanent modification simply for filing bankruptcy.  
  • If a delinquent borrower has a discharged Chapter 7 and chooses not to reaffirm, the first lien mortgage debt is still eligible under HAMP with the following provision added to the permanent modification agreement: “I was discharged in a Chapter 7 bankruptcy proceeding subsequent to the execution of the loan documents. Based on this representation, the lender agrees that I will not have personal liability on the debt pursuant to this Agreement.”

Homeowners struggling to make mortgage payments or feeling their lender or servicer has not worked with them on a loan modification should call a bankruptcy attorney.  For a copy of the full disclosure, see Supplemental Directive 10-02.

What Is A Trust?

A trust is an agreement that provides for the management of property and involves at least three parties:

  • The Trust Maker, sometimes referred to as the settler or grantor, is the person who creates the terms or rules of the trust;
  • The Trustee is the person who agrees to accept the Trust Maker’s property and manage it as directed by the trust, and;
  • The Beneficiary is the person who receives the benefit of the property held in the trust.

Typically, this is the Trust Maker during his lifetime and the children of the Trust Maker when the trust terminates.

The Revocable Living Trust Document

A Revocable Living Trust (RLT) is a trust document created during the Trust Maker’s lifetime. An RLT is often referred to as an inter vivos trust, which means during life. The trust is revocable due to the Trust Maker’s ability to terminate and amend the trust.

The Trust Maker generally names himself/herself as the Trustee and the beneficiary of the trust while still alive. The Trust Maker also names Trustees to act for his/her benefit in the event of disability or death to manage the assets of the trust following the Trust Maker’s death. Typically the Trustee is also charged with the responsibility of settling the obligations of the trust and distribution to the beneficiaries.

Funding The Trust

After executing a revocable living trust, the Trust Maker then needs to fund the trust. Funding is the process through which the individually-owned assets of the Trust Maker are titled and transferred into the trust. If assets are not placed into the trust, the Trustee lacks authority to manage the assets, since the Trustee only has authority with respect to assets contained within the trust.

In Community Property states, such as Nevada, married couples can create a joint revocable living trust. The married couple will each re-title their property into the name of their trust, which creates a funded trust.

Re-titling is performed in different fashions for different assets. For example, a checking account held in the name of John and Mary Sample will be funded into the Sample’s Revocable Living Trust by re-titling it as John Sample and Mary Sample, Trustees of the Sample Living Trust dated (the date the trust is signed.)

A similar action will be taken in regard to all of their other assets, such as real estate, automobiles, boats, investment accounts, securities, and any other asset with a title. Assets that do not have titles will be transferred into the trust by an assignment of personal property. An assignment of personal property is a document, which demonstrates the Trust Maker’s intention to transfer all of property without title into his/her revocable living trust.

Once the revocable living trust has been funded, it will control all of the assets in its name. Inversely, a trust will not control assets not titled in its name. A well drafted revocable living trust will not only include direction on how to manage property, but also give instructions for how the Trust Maker or the Trust Maker’s family and loved ones are to receive the benefits of the trust. The trust also makes provisions for how the Trust Maker is to be cared for in the case of the Trust Maker’s disability and/or death.

A well-written living trust document will outline the Trust Maker’s financial and personal intentions, be clear in its directives and be protectively locked within the law.

Tiffany N. Ballenger, Esq.

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The information contained on this website is designed to enable you to learn more about the services that Black & LoBello offers to its clients. These materials do not, and are not intended to, constitute legal advice, nor are they intended as a source of advertising or solicitation. Your use of this website does not create or constitute an attorney-client relationship. You should not consider these materials to be an invitation for an attorney-client relationship. Further, you should not rely on the information provided on this website without first obtaining separate legal advice.

Tisha Black Chernine awarded for
Mountain States Rising Stars 2011

Michele T. LoBello awarded for 
Nevada Super Lawyers 2007

Black & LoBello is an AV® Preeminent rated, locally owned, full service law firm in Las Vegas, Nevada.