Why a Nevada Trust Didn’t Protect a California House: Lessons from United States v. Huckaby

Domestic asset protection trusts get sold on a simple promise. Move your assets into an irrevocable trust governed by Nevada law, stay on as a beneficiary, and let Nevada’s spendthrift statute keep your creditors out. It’s a clean pitch, and for the right client in the right posture the structure does real work.

It did nothing at all in Huckaby.

In 2005, Robert Huckaby and Joyce Tritsch bought real property in South Lake Tahoe as joint tenants. In 2011 they created the Circle H Bar T Trust, a Nevada spendthrift trust with a Nevada choice of law provision and deeded the property into it. They were the settlors, they were the trustees and they were the lifetime beneficiaries. Every role, both of them.

The IRS then reduced Huckaby’s tax liabilities to judgment. By June 2025 he owed $87,959.84. The government moved to enforce its lien against his interest in the Tahoe property and asked the court for authority to foreclose. The trust was the only thing standing in the way, and the court held that it wasn’t standing in the way at all. United States v. Huckaby, 2026 WL 587784 (E.D. Cal. Mar. 3, 2026).

A Choice of Law Clause Doesn’t Relocate the Land

The threshold question was whose law applied. Nevada, because the trust instrument said so? Or California, because that’s where the house sits?

The court split the question, and the split is the whole case. Under Restatement (Second) of Conflict of Laws section 277, the law the settlor designates generally governs how the trust is construed and administered. Under section 280, when a creditor attacks a beneficiary’s interest in real property, the law of the situs of that property controls. The house was in California, so California law applied.

That ended the analysis. California doesn’t let a settlor use a spendthrift restriction to insulate his own beneficial interest from his own creditors. Because Huckaby was both trustee and beneficiary, he held the legal and the equitable interest in the property, and the federal tax lien attached to his one half interest as if he had never signed the trust. Summary judgment for the government.

Notice what the court didn’t need to get there. No alter ego finding. No voidable transfer analysis. No sham trust doctrine. As far as the opinion goes, this was a valid Nevada trust. It simply wasn’t a California-proof one.

That’s what makes Huckaby worth reading. Most reported DAPT failures come loaded with bad facts: transfers made after the claim arose, obvious badges of fraud, a debtor running personal expenses through the trust account. This one turned on a conflicts rule you can find in a treatise.

Land Has a Fixed Situs, and the Situs Comes With Its Own Law

Real estate is the least portable asset a client owns. You can change the trustee, the governing law, the administrative situs and the beneficiaries, and the property stays exactly where it was, subject to the courts and the creditor remedies of the state it sits in.

So a client with property in six states doesn’t have one asset protection question. He has six. A Nevada trust may well control the creditor analysis for a brokerage account and control nothing for the rental duplex in Ohio. Planners who run a single jurisdictional analysis across an entire real estate portfolio are delivering a result the client believes he bought and doesn’t actually have.

There’s a structural fix, and it isn’t exotic. Put each property into a limited liability company and have the trust hold membership interests rather than the deed. The trust then owns intangible personal property, the creditor’s path to that interest runs through a different and usually more favorable set of rules, and liabilities arising at one property stay at that property. The analysis gets more complicated where the LLC is single member or where the debtor controls the manager, so this is a planning improvement rather than a cure.

The Deeper Problem Is Self-settled, Not Nevada

The conflicts issue is the headline, but it isn’t the most useful part of the case.

Huckaby and Tritsch contributed the property, held title as trustees and enjoyed it as beneficiaries. Ownership, control and benefit never actually separated. They stayed exactly where they started, with a trust instrument wrapped around them.

That’s the built-in tension in every self-settled structure, and it’s why these trusts generate so many angles of attack. A creditor can argue about which state’s law applies. A creditor can point to the legal and equitable interests the settlor kept. A creditor can attack retained control, or the settlor’s continuing enjoyment, or the gap between how the trust reads and how it actually operates. Any one of those arguments can be answered. Having to answer all of them, in someone else’s courthouse, is a bad place to start from.

The question worth asking isn’t whether a state permits self-settled spendthrift trusts. Seventeen or so do, and the list keeps growing. The question is whether the structure puts real distance between the person exposed to liability and the assets meant to be protected. Huckaby had no distance at all.

Ten Years, Not Two

DAPT statutes come with comparatively short seasoning periods. Nevada’s is two years for most creditors. Clients hear that and think they’ve crossed a finish line.

Federal bankruptcy law runs its own clock, and it’s five times longer. Under 11 U.S.C. section 548(e), a bankruptcy trustee can avoid a transfer made within ten years before the filing if the property went to a self-settled trust or similar device, the debtor is a beneficiary, and the transfer was made with actual intent to hinder, delay or defraud a creditor.

Actual intent is a genuine element and the trustee has to prove it, so this isn’t a rule that voids every transfer made in the preceding decade. But the practical point stands. State law seasoning

tells you when you’re safe from state law claims. It tells you nothing about an involuntary bankruptcy petition filed in year nine.

That’s an argument for planning early, not an argument against planning. Transfers made while the sky is clear look nothing like transfers made two weeks after a demand letter arrives. Nearly everything in this area turns on timing, and timing is the one variable the client controls completely.

What Actually Holds Up

None of this makes the DAPT worthless. It makes the DAPT one component in an architecture rather than the architecture itself.

Third party trusts start from a stronger premise. When the protected beneficiary didn’t contribute the property, the entire self-settled objection disappears, and spendthrift protection works the way the doctrine intends it to work. That’s why planning for a spouse, for children or for future generations frequently outperforms planning built around the client’s own retained interest, even in states with favorable DAPT statutes.

Independent fiduciaries matter for the same reason. So does entity structure for real estate, dynasty planning where the family’s horizon supports it, and offshore structures where the exposure justifies the cost and the compliance burden. Each carries its own tax, governance and reporting consequences, and none of them is a plug-in replacement for a DAPT.

The principle underneath all of it is the one Huckaby illustrates. Asset protection is built on genuine legal and economic separation. It is not built on the name of a state in a choice of law clause.

The Takeaway

Huckaby doesn’t hold that Nevada trusts never work. It holds something narrower and more useful: a validly formed Nevada trust doesn’t control creditor rights in real property sitting in California.

For clients with real estate in more than one state, the situs of every parcel belongs in the planning analysis from day one. For self-settled trusts generally, retained ownership, retained control and continuing enjoyment have to be weighed against state law protection and a ten-year federal lookback.

A trust is only as strong as the separation it creates. Where the client forms the structure, controls the structure and benefits from the structure, there isn’t much separation to rely on. Durable planning starts by giving something up.