A Comparison of Revocable Trusts in DC Versus Nevada
Explore the key differences in revocable trusts in DC versus Nevada, focusing on what’s similar and what’s different between the two jurisdictions.
If you’re comparing revocable trusts in DC versus Nevada, you’ve probably heard that Nevada is a trust “powerhouse.” That’s true, but for revocable living trusts (the garden-variety tool most families use to avoid probate and manage incapacity), the differences are more practical than headline-grabbing.
What a Revocable Trust Does in DC and Nevada
A revocable living trust is your lifetime planning hub. You (the grantor) keep control, can change or revoke it anytime, and typically serve as your own trustee. The core benefits:
Avoid probate. Assets titled to the trust pass to beneficiaries privately and faster.
Incapacity planning. Your successor trustee can manage things if you’re ill or unavailable.
Organization. Clear instructions, centralized records, and fewer administrative headaches.
For revocable trusts, the day-to-day experience is broadly similar:
1) Probate avoidance works in both places—what matters most is properly funding the trust (retitling your home, accounts, and other assets).
2) Incapacity planning is the same core idea: your named successor steps in seamlessly.
3) Privacy and speed: both beat a public probate file.
If you live in DC, using a standard DC-governed revocable trust will accomplish these goals effectively.
Special Nevada Considerations
State income tax: Nevada has no state income tax. But a revocable trust is usually a grantor trust, meaning all income is taxed to you, in your state of residence. If you live in DC, the District’s tax treatment generally applies regardless of a “Nevada” label.
Situs and trustee choice: Trust law often follows the place of administration and your trust’s choice-of-law clause. If you’re a trustee and live in DC, the practical “center of gravity” is DC. Naming a Nevada trust company as successor trustee can shift situs later—but again, for a standard revocable trust, that rarely changes taxes or asset protection while you’re alive.
Community property angle (married couples): Nevada is a community property state; DC is not. Community property can offer a double step-up in basis at the first spouse’s death if you actually have Nevada community property (which typically requires Nevada residency or specific structuring). However, simply stamping “Nevada” on a DC couple’s revocable trust doesn’t turn separate property into community property.
The DC Estate-Tax Wrinkle
The District of Columbia has a standalone estate tax with an exemption that’s far lower than the federal level. (Although it has no inheritance tax). A revocable trust won’t by itself reduce DC estate tax exposure (it primarily avoids probate). Couples in DC often add simple marital/credit-shelter mechanics to a revocable trust plan to help use both spouses’ exemptions efficiently. Translation: the drafting choices inside your DC revocable trust matter more than the state name on the cover.