2009 Nevada Legislative Changes
The Legislative Committee of the Probate and Trust Section of the State Bar of Nevada, along with others, proposed some legislation intended to improve Nevada’s laws (the “Nevada Revised Statutes” or “NRS”) as they relate to estates and trusts. This memo will attempt to highlight some of the key changes made by the 2009 legislature and signed into law by the Governor. Within each bill, the changes are listed essentially in the order of their appearance in the bills mentioned. In each bill, several minor changes have been excluded. Other bills may be added later. For an index of all 2009 statutory changes, click here.
Unless specifically noted otherwise, the changes officially took effect October 1, 2009.
- SENATE BILL 283 (Chapter 393 of the 2009 Statutes)
- Nevada law now provides for domestic partnerships giving partners and former partners the same protections and benefits as spouses, former spouses. and widow(er)s.
- SENATE BILL 314 (Chapter 64 of the 2009 Statutes)
- Nevada has made significant changes with respect to powers of attorney. Refusal to honor power of attorney can result in liability for attorneys fees if a court order is obtained to enforce the power.
- ASSEMBLY BILL 471 (Chapter 310 of the 2009 Statutes)
- As to the mortgage or trust deed executed by the original purchaser of a primary residence as part of the original purchase transaction that takes place on or after October 1, 2009, if the lender is a financial institution, the lender cannot get a personal judgment against the borrower if the proceeds from a foreclosure (of a mortgage) or trustee’s sale (under a trust deed) do not fully pay off the loan.
- SENATE BILL 277 (Chapter 358 of the 2009 Statutes)
- NRS 133: A spouse or a child who is omitted from a will made prior to the marriage or birth cannot claim against the will if he or she has been provided for in another manner (such as under a living trust).
- NRS 136: A lost will has been made easier to probate.
- NRS 137: The enforcement of a no-contest clause in a will has been strengthened, but there is an exception for a challenge brought in good faith and based on probable cause.
- NRS 138 and 139: A felony conviction generally disqualifies a person from service as a personal representative (executor or administrator), but the court may determine otherwise. The court may also appoint as special administrator a non-Nevada person serving alone if that person is named as personal representative in the will.
- NRS 146: The statutes relating to setting aside small estates for the benefit of a spouse and/or minor children have been clarified, and before setting aside probate assets for their benefit without the payment of creditors, the court can take into consideration other resources.
- NRS 148: If real estate is sold to a person who outbids the original offer, the real estate commission is to be divided equally between the real estate agent of the original proposed buyer and the real estate agent of the person making the highest bid.
- NRS 150: The compensation for probate attorneys may be determined in a number of ways, including computation based on a percentage of the probate estate. If a percentage is used, the statute sets the “allowable” compensation as 4% of the first $100,000, 3% of the next $100,000, 2% of the next $800,000, 1% of the next $9,000,000, and half a percent for the next $15,000,000. For estates over $25 million, the court determines a “reasonable amount”. The attorney may also ask for extraordinary fees. All attorneys’ fees are subject to court approval after a hearing.
- NRS 150: The tax apportionment statute was expanded to apply to the federal gift and generation-skipping transfer taxes, as well as the federal estate tax.
- NRS 153: A trustee can petition the court to permit the division or allocation of community property using different assets of equal value, rather than just a 50% undivided interest in each asset.
- NRS 30: A person who has made a will or trust may ask the court for a declaratory order determining its validity and its meaning prior to his or her death. In part, this is intended to avoid post-death disputes over documents where there is a question of the mental capacity of the person making the will or trust. This action must be brought in probate court.
- NRS 163: The enforcement of a no-contest clause in a trust has been strengthened, but there is an exception for a challenge brought in good faith and based on probable cause.
- NRS 159: A felony conviction generally disqualifies a person from service as a guardian, but the court may determine otherwise. Certain guardianship petitions can now be brought by an “interested person” and not just the guardian.
- NRS 163: Discretionary trusts are protected against the claims of creditors. The law makes it more difficult for a person to be deemed to have improper dominion or control over a trust, making conflicts of interest irrelevant. It is also more difficult for someone to argue that the trustee of an irrevocable trust is the alter ego of the trust’s settlor, expressly stating that requests honored by the trustee are not sufficient. While “support interest” are enforceable, no one can compel a distribution that is discretionary. Protections have been added to eliminate liability for persons appointed as an adviser or a “trust protector”.
- NRS 163: The trustee can “decant” or pour assets from one trust into a new trust under appropriate circumstances, but not to the detriment of existing beneficiaries.
- NRS 163: The fiduciary powers given in NRS 163.265 through 163.410 are incorporated into a will or trust automatically unless the testator or settlor provides otherwise.
- NRS 164: An income interest can be converted into a “unitrust” interest (which pays a fixed percentage out of income and, if needed, principal), but the rules are very strict and narrow.
- NRS 164: The “proposed actions” that can be approved under the procedure given in NRS 164.725 have been expanded, including a proposal to decant part of a trust’s assets into a second trust, a proposal to create a unitrust, and a proposal to allow the trustee to lend to itself.
- NRS 164. If the trustee of a trust gives a person notice of the existence of the trust and that person’s inclusion or exclusion as a beneficiary, any contest brought by that person must be brought within 120 days from the date the notice is given.
- NRS 164. The need for legal representation for minors, incapacitated persons, unknown, and unborn beneficiaries has been clarified. If persons who are not represented by counsel have essentially the same interests as persons who are represented by counsel, the unrepresented persons do not require separate legal counsel.
- NRS 164. When one settlor of a trust holding community property dies, the trustee may allocate the community property on a non-pro rata basis if each spouse’s interest has an equal fair market value.
- NRS 164. The probate court has jurisdiction over a revocable trust while the settlor is living if the court determines that the settlor cannot adequately protect his or her own interests or if an interested person shows that the settlor is incompetent or susceptible to undue influence.
- NRS 165. NRS 165.135 applies to nontestamentary trusts unless the settlor declares otherwise.
- NRS 166. The spendthrift trust laws now make it clear that the settlor of a Nevada self-settled spendthrift trust (sometimes called a “Nevada asset-protection trust”) may act as a cotrustee, may hold the power to remove and replace the trustee, and may have the right to direct the investments of the trust. The spendthrift trust law was updated to allow accumulation trusts permitting no distributions without negative spendthrift trust protection. Actions to enforce beneficiaries’ rights under a trust must be made in the probate court. To negate a transfer to a spendthrift trust, each creditor must prove that the transfer was fraudulent under NRS Chapter 112 or “otherwise wrongful” as to that creditor. Transferring property out of a spendthrift trust for mortgage-financing purposes and a reconveyance back to the trust thereafter are disregarded for purposes of calculating the two-year look-back period. For an adviser to the settlor or the trustee to be liable to a claimant, the claimant must show that the advisor acted “knowingly and in bad faith”, and the claimant must show that the advisor’s actions directly cause the damages suffered by the claimant.
- NRS 21 and NRS 31: Undistributed assets of spendthrift trusts and discretionary trusts are excluded from garnishment and other execution.
- A new chapter is added to NRS Title 12 adopting the Uniform International Wills Act.
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