2005 Nevada Revised Statutes - Chapter 164 — Administration of Trusts

CHAPTER 164 - ADMINISTRATION OF TRUSTS

GENERAL PROVISIONS

NRS 164.005 Applicabilityof provisions of chapters 132, 153 and 155 ofNRS regulating matters of estates.

NRS 164.010 Trustee:Petition for confirmation of appointment; jurisdiction of court; petition forremoval of trust from jurisdiction of court.

NRS 164.015 Petitionconcerning internal affairs of nontestamentary trust; jurisdiction of court;final order; appeal.

NRS 164.025 Noticeof death of settlor; filing of claim against trust estate; effect of failure tofile claim; notice to Department of Health and Human Services; notice ofrejected claim; effect of failure to bring suit after notice of rejected claim.

NRS 164.030 Petitionfor instructions: Notice; hearing; final order; appeal.

NRS 164.033 Petitionconcerning conveyance, transfer or delivery of property of trust; notice ofhearing; order; appeal.

NRS 164.037 Petitions:Notice and hearing.

NRS 164.040 Poweror jurisdiction of court not abridged; court may take action necessary orproper to dispose of matter presented by petition.

POWER OVER PROPERTY

NRS 164.067 Powerto sell, convey or encumber.

COMMON TRUST FUNDS (UNIFORM ACT)

NRS 164.070 Shorttitle.

NRS 164.080 Establishment;investments; management.

NRS 164.090 Accountings.

NRS 164.100 Uniformityof interpretation.

TRANSFER OF SUPERVISION OF TRUSTS

NRS 164.130 Transferby court to another judicial district in this State or court outside Nevada.

CERTIFICATIONS OF TRUST IN LIEU OF TRUST INSTRUMENTS

NRS 164.400 Presentation;effect; form.

NRS 164.410 Contents.

NRS 164.420 Dispositiveprovisions not required; person presented with certification may requestexcerpts from trust instrument designating trustee.

NRS 164.430 Relianceupon facts contained in certification; enforceability.

NRS 164.440 Failureto demand certification not improper act; liability.

UNIFORM MANAGEMENT-OF-INSTITUTIONAL-FUNDS ACT (UNIFORM ACT)

NRS 164.500 Shorttitle.

NRS 164.510 Definitions.

NRS 164.520 Donativeinstrument defined.

NRS 164.530 Endowmentfund defined.

NRS 164.540 Governingboard defined.

NRS 164.550 Historicalmonetary value defined.

NRS 164.560 Institutiondefined.

NRS 164.570 Institutionalfund defined.

NRS 164.580 Governingboard authorized to appropriate certain assets of endowment fund forexpenditure under certain circumstances; conclusivity of determination ofhistorical monetary value.

NRS 164.590 Exceptionto provision authorizing governing board to appropriate certain assets ofendowment fund; applicability.

NRS 164.600 Additionalinvestments.

NRS 164.610 Powersof governing board: Delegation of authority to invest institutional funds;employment of certain persons to provide advisory or managerial services.

NRS 164.620 Standardof care for exercise of certain powers by governing board; additional considerations.

NRS 164.630 Releaseby governing board of certain restrictions on use or investment ofinstitutional fund: Requirements; limitations.

MANAGEMENT AND INVESTMENT OF PROPERTY

General Provisions

NRS 164.700 Definitions.

 

Uniform Prudent Investor Act (Uniform Act)

NRS 164.705 Shorttitle.

NRS 164.710 Administrationof trust or estate by fiduciary in accordance with its terms or in accordancewith provisions of NRS.

NRS 164.715 Actingin interest of beneficiaries.

NRS 164.720 Trusthaving two or more beneficiaries; impartial administration of trust or estate.

NRS 164.725 Noticeof proposed action: Authorized; to whom notice must be sent; content; objectionto proposed action; liability of trustee; court order to take action overobjection; burden of proof; notice when action not taken.

NRS 164.730 Noduty to make adjustment between principal and income; trustee immunity fromliability.

NRS 164.735 Applicability.

NRS 164.740 Dutyto comply with prudent investor rule; trustee acting in reliance on trust termsimmune from liability.

NRS 164.745 Satisfactionof prudent investor standard; evaluation of decisions; consideration ofcircumstances; verification of facts; types of investments; special skills orexpertise of trustee.

NRS 164.750 Diversificationof investments.

NRS 164.755 Dutyto bring trust portfolio into compliance with terms and circumstances of trustand provisions of NRS within reasonable time.

NRS 164.760 Incurringcosts.

NRS 164.765 Determinationof compliance with prudent investor rule.

NRS 164.770 Delegationof functions by trustee; standard of care owed by agent; trustee immunity fromliability; jurisdiction over agent.

NRS 164.775 Termsand language of trust which authorize certain investments or strategies.

 

Uniform Principal and Income Act (1997) (Uniform Act)

NRS 164.780 Shorttitle.

NRS 164.785 Definitions.

NRS 164.790 Allocationof receipt or disbursement to principal when terms of trust and provisions ofNRS do not provide rule.

NRS 164.795 Adjustmentbetween principal and income; consideration of factors; adjustment prohibitedunder certain circumstances; release of power to adjust; effect of terms oftrust that limit power to adjust.

NRS 164.800 Applicablerules after death of decedent or end of income interest in trust.

NRS 164.805 Distributionof net income to beneficiaries; rules for determining share of net income.

NRS 164.810 Dateon which income interest begins; date on which asset becomes subject to trustor successive income interest; date on which income interest ends.

NRS 164.815 Allocationof certain income receipts and disbursements; due dates for certain paymentsand distributions.

NRS 164.820 Paymentof undistributed income upon end of mandatory income interest; prorating finalpayment upon end of obligation to pay fixed annuity or fixed fraction of valueof trusts assets.

NRS 164.825 Allocationof money received from entity to income; allocation of receipts from entity toprincipal; partial liquidation; reliance upon statement about source ofcharacter of distribution.

NRS 164.830 Allocationof amount received as distribution of income to income; allocation ofdistribution of principal to principal; purchase of interest in trust that isinvestment entity.

NRS 164.835 Accountingseparately for business or other activity.

NRS 164.840 Allocationof assets, money, property and other receipts to principal.

NRS 164.845 Allocationof receipts from rental property to income; treatment of refundable deposit.

NRS 164.850 Allocationof interest on obligation to pay money to trustee to income; allocation ofamount received from disposition of certain obligations to principal;applicability of provisions.

NRS 164.855 Allocationof proceeds of life insurance policy and certain contracts to principal;allocation of dividends on insurance policy to income or principal.

NRS 164.860 Allocationof entire amount to principal if allocation between principal and income undercertain circumstances is insubstantial.

NRS 164.865 Allocationof certain payments received because of services rendered or propertytransferred to payor in exchange for future payments to income or principal, orboth.

NRS 164.870 Allocationof receipts from liquidating assets to income and principal.

NRS 164.875 Allocationof receipts from interest in minerals to income or to income and principal;allocation of receipts from interest in water to income or to income andprincipal; applicability.

NRS 164.880 Allocationof net receipts from sale of timber and related products to income orprincipal, or both; applicability.

NRS 164.885 Requestof spouse if marital deduction is allowed and amounts transferred fromprincipal to income and distributed are insufficient to obtain maritaldeduction; proceeds from sale or disposition of assets generally principal.

NRS 164.890 Allocationof receipts from and disbursements made in connection with transactions inderivatives to principal; allocation of amount received for granting certainoptions to principal.

NRS 164.895 Allocationfrom proceeds of collateral financial assets to income and principal;allocation of payments in exchange for interest in asset-backed security toprincipal or to principal and income.

NRS 164.900 Disbursementsrequired to be made from income.

NRS 164.905 Disbursementsrequired to be made from principal.

NRS 164.910 Transferof net cash receipts from principal asset subject to depreciation to principal.

NRS 164.915 Transferof amount from income to principal to make certain principal disbursements.

NRS 164.920 Paymentof taxes required to be paid by trustee.

NRS 164.925 Adjustmentsbetween principal and income to offset shifting economic interests or taxbenefits between income beneficiaries and remainder beneficiaries;reimbursement of principal if estate taxes are increased and income taxes aredecreased under certain circumstances.

_________

GENERAL PROVISIONS

NRS 164.005 Applicabilityof provisions of chapters132, 153and 155of NRS regulating matters of estates. When nototherwise inconsistent with the provisions of chapters162 to 167, inclusive, of NRS, all of theprovisions of chapters 132, 153 and 155 ofNRS regulating the matters of estates:

1. Apply to proceedings relating to trusts, asappropriate; or

2. May be applied to supplement the provisions of chapters 162 to 167,inclusive, of NRS.

(Added to NRS by 2001, 2351)

NRS 164.010 Trustee:Petition for confirmation of appointment; jurisdiction of court; petition forremoval of trust from jurisdiction of court.

1. Upon petition of any person appointed as trustee ofan express trust by any written instrument other than a will, or upon petitionof a settlor or beneficiary of the trust, the district court of the county inwhich the trustee resides or conducts business, or in which the trust has beendomiciled, shall consider the application to confirm the appointment of thetrustee and specify the manner in which the trustee must qualify. Thereafterthe court has jurisdiction of the trust as a proceeding in rem.

2. If the court grants the petition, it may considerat the same time any petition for instructions filed with the petition forconfirmation.

3. At any time, the trustee may petition the court forremoval of the trust from continuing jurisdiction of the court.

4. As used in this section, written instrumentincludes, without limitation, an electronic trust as defined in NRS 163.0015.

[1:22:1953](NRS A 1961, 400; 1999, 2377; 2001, 2352)

NRS 164.015 Petitionconcerning internal affairs of nontestamentary trust; jurisdiction of court;final order; appeal.

1. The court has exclusive jurisdiction of proceedingsinitiated by the petition of an interested person concerning the internalaffairs of a nontestamentary trust. Proceedings which may be maintained underthis section are those concerning the administration and distribution oftrusts, the declaration of rights and the determination of other mattersinvolving trustees and beneficiaries of trusts, including petitions withrespect to a nontestamentary trust for any appropriate relief provided with respectto a testamentary trust in NRS 153.031.

2. A petition under this section may be filed inconjunction with a petition under NRS164.010 or at any time after the court has assumed jurisdiction under thatsection.

3. Upon the hearing, the court shall enter such orderas it deems appropriate. The order is final and conclusive as to all mattersdetermined and is binding in rem upon the trust estate and upon the interestsof all beneficiaries, vested or contingent, except that appeal to the SupremeCourt may be taken from the order within 30 days after notice of its entry byfiling notice of appeal with the clerk of the district court. The appellantshall mail a copy of the notice to each person who has appeared of record.

4. A proceeding under this section does not result incontinuing supervisory proceedings. The administration of the trust mustproceed expeditiously in a manner consistent with the terms of the trust,without judicial intervention or the order, approval or other action of anycourt, unless the jurisdiction of the court is invoked by an interested personor exercised as provided by other law.

(Added to NRS by 1999, 2375)

NRS 164.025 Noticeof death of settlor; filing of claim against trust estate; effect of failure tofile claim; notice to Department of Health and Human Services; notice ofrejected claim; effect of failure to bring suit after notice of rejected claim.

1. The trustee of a nontestamentary trust may afterthe death of the settlor of the trust cause to be published a notice in themanner specified in paragraph (b) of subsection 1 of NRS 155.020 and mail a copy of the noticeto known or readily ascertainable creditors.

2. The notice must be in substantially the followingform:

 

NOTICE TO CREDITORS

 

Notice is hereby given that the undersigned is the dulyappointed and qualified trustee of the ................ trust................., the settlor of that trust died on ................. Acreditor having a claim against the trust estate must file his claim with theundersigned at the address given below within 90 days after the firstpublication of this notice.

 

Dated......................................................

 

...........................................................................

Trustee

...........................................................................

Address

 

3. A person having a claim, due or to become due,against a settlor or the trust must file the claim with the trustee within 90days after the mailing, for those required to be mailed, or 90 days afterpublication of the first notice to creditors. Any claim against the trustestate not filed within that time is forever barred. After the expiration ofthe time, the trustee may distribute the assets of the trust to its beneficiarieswithout personal liability to any creditor who has failed to file a claim withthe trustee.

4. If the trustee knows or has reason to believe thatthe settlor received public assistance during his lifetime, the trustee shall,whether or not he gives notice to other creditors, give notice within 30 daysafter the death to the Department of Health and Human Services in the mannerprovided in NRS 155.010. If notice tothe Department is required by this subsection but is not given, the trustestate and any assets transferred to a beneficiary remain subject to the rightof the Department to recover public assistance received.

5. If a claim is rejected by the trustee, in whole orin part, the trustee must, within 10 days after the rejection, notify theclaimant of the rejection by written notice forwarded by registered orcertified mail to the mailing address of the claimant. The claimant must bringsuit in the proper court against the trustee within 60 days after the notice isgiven, whether the claim is due or not, or the claim is barred forever and thetrustee may distribute the assets of the trust to its beneficiaries without personalliability to any creditor whose claim is barred forever.

(Added to NRS by 1985, 967; A 1995, 2578; 1999, 2377; 2001, 2352; 2003, 886)

NRS 164.030 Petitionfor instructions: Notice; hearing; final order; appeal.

1. Any trustee whose appointment has been confirmed,as provided in NRS 164.010, at any timethereafter may petition the court for instructions in the administration of thetrust or for a construction of the trust instrument, or upon or after thefiling of a final account, for the settlement and allowance thereof.

2. Upon the filing of the petition the court shallmake an order fixing a time and place for hearing thereof, unless hearing hasbeen waived in writing by the beneficiaries of the trust.

3. Unless otherwise ordered by the court, notice ofthe hearing must be given as follows:

(a) The clerk shall set the petition for hearing;

(b) The petitioner must give notice stating the filingof the petition and the object and time of the hearing to all persons entitledto notice as provided in NRS 155.010;and

(c) The trustee filing such petition shall cause a copyof the order to be delivered to the beneficiaries of the trust as follows:

(1) By handing the notice or copy to thebeneficiary personally or to his guardian, or attorney of record; or

(2) By sending it by registered or certifiedmail with return receipt requested to such beneficiary, or his guardian orattorney of record, at the last known address of the addressee.

4. Upon the hearing the court shall make such order asit deems appropriate, which order is final and conclusive as to all mattersthereby determined and binding in rem upon the trust estate and upon theinterests of all beneficiaries, vested or contingent, except that appeal to theSupreme Court may be taken from the order within 30 days from the entry thereofby filing notice of appeal with the clerk of the district court, who shall maila copy of the notice to each adverse party who has appeared of record.

[3:22:1953](NRS A 1967, 354; 1969, 95, 484; 1971,1998; 1997, 1495)

NRS 164.033 Petitionconcerning conveyance, transfer or delivery of property of trust; notice ofhearing; order; appeal.

1. The trustee or an interested person may petitionthe court to enter an order:

(a) If the trustee is in possession of, or holds titleto, property and the property or an interest in it is claimed by another.

(b) If the trustee has a claim to property and anotherholds title to or is in possession of the property.

(c) If property of the trust is subject to a claim of acreditor of the settlor of the trust.

2. The court shall not grant a petition under thissection if it determines that the matter should be determined by civil action.

3. The petition must state facts showing that it isauthorized under this section, the grounds of the petition, and the name andaddress of each person entitled to notice of the petition.

4. Upon the filing of the petition, the clerk shallset it for hearing and the petitioner shall give notice of the hearing, atleast 30 days before the time set, to:

(a) All interested persons, including the AttorneyGeneral if the petition relates to a charitable trust, in the manner providedin NRS 155.010.

(b) Each person claiming an interest in, or havingtitle to or possession of the property, and any other person whose right, titleor interest in or to the property would be affected by the granting of thepetition, in the manner provided in NRS155.040.

(c) Any other person, and in the manner, directed bythe court.

5. Except as otherwise provided in subsection 2, ifthe court is satisfied that a conveyance, transfer, delivery or otherdisposition should be made, the court shall enter an order directing thetrustee or other person having title to or possession of the property toconvey, transfer or deliver it to the person entitled thereto or granting otherappropriate relief.

6. Any person aggrieved by an order entered pursuantto this section may appeal to the Supreme Court within 30 days after the noticeof the entry of the order by filing a notice of appeal with the clerk of thedistrict court. The appellant shall mail a copy of the notice to each personwho has appeared of record.

(Added to NRS by 1999, 2376)

NRS 164.037 Petitions:Notice and hearing. Except as otherwiseprovided in NRS 164.033, the clerk shallset a petition authorized by this chapter for hearing, and the petitioner shallgive notice to all interested persons for the period and in the manner providedin NRS 155.010. The notice must statethe filing of the petition, the object and the time of the hearing. For thepurposes of this section, interested person means a settlor, trustee,beneficiary or any other person to whom the court directs that notice be given.

(Added to NRS by 1999, 2375)

NRS 164.040 Poweror jurisdiction of court not abridged; court may take action necessary orproper to dispose of matter presented by petition.

1. NRS 164.010and 164.015 do not limit or abridge thepower or jurisdiction of the district court over trusts and trustees.

2. The court may enter any order or take any otheraction necessary or proper to dispose of the matters presented by a petition,including the appointment of a temporary trustee to administer the trust inwhole or in part.

[4:22:1953](NRS A 1999, 2378; 2001, 164)

POWER OVER PROPERTY

NRS 164.067 Powerto sell, convey or encumber.

1. When title to real or personal property is taken inthe name of a trustee, the trustee has the power to sell, convey or encumberthat property unless the deed or conveyance to the trustee specifically limitshis power to do so.

2. This section applies to property acquired by atrustee on or after July 1, 1979.

(Added to NRS by 1979, 408)

COMMON TRUST FUNDS (UNIFORM ACT)

NRS 164.070 Shorttitle. NRS164.070 to 164.100, inclusive, maybe cited as the Uniform Common Trust Fund Act.

[1:21:1955](NRS A 1999, 2379)

NRS 164.080 Establishment;investments; management.

1. Any bank or trust company qualified to act asfiduciary in this State, or in any other state if affiliated with a bank ortrust company qualified to act as fiduciary in this State, may:

(a) Establish common trust funds to furnish investmentsto itself and its affiliated bank or trust company as fiduciary or to itself,its affiliated bank or trust company and others, as cofiduciaries; and

(b) As fiduciary or cofiduciary, invest money which itlawfully holds for investment in interests in those common trust funds, if theinvestment is not prohibited by the instrument, judgment, decree or ordercreating the fiduciary relationship, and if, in the case of cofiduciaries, thebank or trust company procures the consent of its cofiduciaries to theinvestment.

2. Any bank or trust company, qualified to act asfiduciary in the state in which it was chartered, which is not a member of theFederal Reserve System shall, in the operation of the common trust fund, complywith the regulations adopted by the supervisor of banking in the state in whichit was chartered and with the regulations adopted by the commissioner offinancial institutions in this State.

3. The Commissioner of Financial Institutions of theDepartment of Business and Industry may adopt regulations to carry out theprovisions of NRS 164.070 to 164.100, inclusive.

4. As used in this section, affiliated means two ormore banks or trust companies:

(a) In which at least 25 percent of their votingshares, excluding shares owned by the United States or by any company whollyowned by the United States, are directly or indirectly owned or controlled by aholding company; or

(b) In which the election of a majority of thedirectors is controlled in any manner by a holding company.

[2:21:1955](NRS A 1985, 972; 1987, 1875; 1993, 1510;1999, 2379)

NRS 164.090 Accountings. Unless ordered by a court of competent jurisdiction, thebank or trust company operating common trust funds is not required to render acourt accounting with regard to those funds, but it may, by petition to thecourt, secure approval of such an accounting on such conditions as the courtmay establish.

[3:21:1955](NRS A 1999, 2379)

NRS 164.100 Uniformityof interpretation. NRS 164.070 to 164.100, inclusive, must be so interpretedand construed as to effectuate their general purpose to make uniform the law ofthose states which enact them.

[4:21:1955](NRS A 1999, 2380)

TRANSFER OF SUPERVISION OF TRUSTS

NRS 164.130 Transferby court to another judicial district in this State or court outside Nevada. Upon petition by any person appointed by the court or otherwiseas trustee, with the concurrence of the beneficiary or beneficiaries, a courthaving jurisdiction of a trust may transfer supervision of the trust to anyjudicial district within the State, or to any court outside Nevada whichaccepts jurisdiction over the trust, when the convenience of beneficiaries,trustees, attorneys or other interested persons makes a transfer desirable.

(Added to NRS by 1967, 205; A 1977, 570; 1999, 2380)

CERTIFICATIONS OF TRUST IN LIEU OF TRUST INSTRUMENTS

NRS 164.400 Presentation;effect; form.

1. Except in connection with an application forbenefits pursuant to chapter 422 or 422A of NRS, a trustee may present acertification of trust to any person, in lieu of a copy of any trustinstrument, to establish the existence or terms of the trust. The trustee maypresent the certification voluntarily or at the request of the person with whomhe is dealing.

2. Such a certification must be in the form of anaffidavit signed and acknowledged by all of the currently acting trustees ofthe trust.

(Added to NRS by 1995, 211; A 2005, 22nd SpecialSession, 49)

NRS 164.410 Contents.

1. A certification of trust may confirm the followingfacts or contain the following information:

(a) The existence of the trust and date of execution ofany trust instrument;

(b) The identity of the settlor and each currentlyacting trustee;

(c) The powers of the trustee and any restrictionsimposed upon him in dealing with assets of the trust;

(d) The revocability or irrevocability of the trust andthe identity of any person holding a power to revoke it;

(e) If there is more than one trustee, whether all ofthe currently acting trustees must or less than all may act to exerciseidentified powers of the trustee;

(f) The identifying number of the trust and whether itis a social security number or an employer identification number; and

(g) The form in which title to assets of the trust isto be taken.

2. The certification must contain a statement that thetrust has not been revoked or amended to make any representations contained inthe certification incorrect, and that the signatures are those of all thecurrently acting trustees.

(Added to NRS by 1995, 211)

NRS 164.420 Dispositiveprovisions not required; person presented with certification may requestexcerpts from trust instrument designating trustee. Acertification of trust need not contain the dispositive provisions of thetrust, but the person to whom the certification is presented may require copiesof excerpts from any trust instrument which designate the trustee or conferupon him the power to act in the pending transaction.

(Added to NRS by 1995, 212)

NRS 164.430 Relianceupon facts contained in certification; enforceability.

1. A person who acts in reliance upon a certificationof trust without knowledge that the representations contained therein areincorrect is not liable to any person for so acting. A person who does not knowthat the facts contained in the certification are incorrect may assume withoutinquiry the existence of the facts contained in the certification. Knowledgemay not be inferred solely from the fact that a copy of all or part of a trustinstrument is held by the person relying upon the certification.

2. A transaction, and any lien created thereby,entered into by a trustee and a person acting in reliance upon a certificationof trust is fully enforceable against the assets of the trust unless the personknows that the trustee is acting outside the scope of the trust.

(Added to NRS by 1995, 212)

NRS 164.440 Failureto demand certification not improper act; liability. Apersons failure to demand a certification of trust may not be considered to bean improper act by him and no inference as to whether he has acted in goodfaith may be drawn from the failure to demand a certification of trust. Thissection creates no implication that a person is liable for acting in relianceupon a certification of trust under circumstances where the requirements of NRS 164.400 to 164.430, inclusive, are not satisfied.

(Added to NRS by 1995, 212)

UNIFORM MANAGEMENT-OF-INSTITUTIONAL-FUNDS ACT (UNIFORM ACT)

NRS 164.500 Shorttitle. NRS164.500 to 164.630, inclusive, maybe cited as the Uniform Management-of-Institutional-Funds Act.

(Added to NRS by 1997, 948)

NRS 164.510 Definitions. As used in NRS 164.500to 164.630, inclusive, the words andterms defined in NRS 164.520 to 164.570, inclusive, have the meaningsascribed to them in those sections.

(Added to NRS by 1997, 948)

NRS 164.520 Donativeinstrument defined. Donative instrumentmeans a will, trust, deed, grant, conveyance, agreement, memorandum, writing orother governing document, including the terms of any institutionalsolicitations from which an institutional fund resulted, under which propertyis transferred to or held by an institution as an institutional fund.

(Added to NRS by 1997, 948; A 1999, 2380)

NRS 164.530 Endowmentfund defined. Endowment fund means aninstitutional fund, or any part of the fund, not wholly expendable by theinstitution currently under the terms of the applicable donative instrument.

(Added to NRS by 1997, 948)

NRS 164.540 Governingboard defined. Governing board means thebody responsible for the management of an institution or institutional fund.

(Added to NRS by 1997, 948)

NRS 164.550 Historicalmonetary value defined. Historical monetaryvalue means the aggregate fair value in money of an endowment fund at the timeit became an endowment fund, each subsequent donation to the fund at the timeit is made, or each accumulation made pursuant to a direction in the applicabledonative instrument at the time the accumulation is added to the fund.

(Added to NRS by 1997, 948)

NRS 164.560 Institutiondefined. Institution means an organization,whether or not incorporated, organized and operated exclusively foreducational, religious, charitable or other eleemosynary purposes, or agovernmental organization to the extent that it holds funds exclusively for anyof these purposes.

(Added to NRS by 1997, 948)

NRS 164.570 Institutionalfund defined. Institutional fund means afund held by an institution for its exclusive use, benefit or purposes, butdoes not include a fund held for an institution by a trustee that is not aninstitution or a fund in which a beneficiary that is not an institution has aninterest other than possible rights that could arise upon violation or failureof the purposes of the fund.

(Added to NRS by 1997, 948)

NRS 164.580 Governingboard authorized to appropriate certain assets of endowment fund forexpenditure under certain circumstances; conclusivity of determination ofhistorical monetary value.

1. A governing board may appropriate for expenditurefor the uses and purposes for which an endowment fund is established so much ofthe net appreciation, realized and unrealized, in the fair value of the assetsof the fund over the historical monetary value of the fund as is prudent underthe standard established by NRS 164.620.This section does not limit the authority of the governing board to expendfunds as permitted under other law, the terms of the applicable donativeinstrument or the charter of the institution.

2. A determination of historical monetary value madein good faith by the institution is conclusive.

(Added to NRS by 1997, 948)

NRS 164.590 Exceptionto provision authorizing governing board to appropriate certain assets ofendowment fund; applicability.

1. NRS 164.580does not apply if the applicable donative instrument indicates the donorsintention that net appreciation may not be expended. A restriction upon the expenditureof net appreciation may not be implied from a designation of a gift as anendowment, or from a direction or authorization in the applicable donative instrumentto use only income, interest, dividends, or rents, issues or profits,or to preserve the principal intact, or a direction that contains other wordsof similar import.

2. This rule of construction applies to donativeinstruments executed or in effect before, on or after October 1, 1997.

(Added to NRS by 1997, 949)

NRS 164.600 Additionalinvestments. In addition to an investment otherwiseauthorized by law or by the applicable donative instrument, and without restrictionto investments a fiduciary may make, a governing board, subject to any specificlimitations set forth in the applicable donative instrument or in theapplicable law other than law relating to investments by a fiduciary, may:

1. Invest and reinvest an institutional fund in anyreal or personal property deemed advisable by the governing board, whether ornot it produces a current return, including mortgages, stocks, bonds,debentures and other securities of profit or nonprofit corporations, shares inor obligations of associations, partnerships or natural persons, andobligations of any government or governmental subdivision or instrumentality;

2. Retain property contributed by a donor to aninstitutional fund for as long as the governing board deems advisable;

3. Include all or any part of an institutional fund inany pooled or common fund maintained by the institution; and

4. Invest all or part of an institutional fund in anyother pooled or common fund available for investment, including shares orinterests in regulated investment companies, mutual funds, common trust funds,investment partnerships, real estate investment trusts or similar organizationsin which funds are commingled and investments are determined by persons otherthan the governing board.

(Added to NRS by 1997, 949)

NRS 164.610 Powersof governing board: Delegation of authority to invest institutional funds;employment of certain persons to provide advisory or managerial services. Except as otherwise provided by the applicable donativeinstrument or by applicable law relating to governmental institutions or funds,a governing board may:

1. Delegate to its committees, officers or employeesof the institution or the fund, or agents, including investment counsel, theauthority to act in place of the board in investment and reinvestment ofinstitutional funds;

2. Contract with independent investment advisers,investment counsel or managers, banks, or trust companies, so to act; and

3. Authorize the payment of compensation for advisoryor managerial services.

(Added to NRS by 1997, 949)

NRS 164.620 Standardof care for exercise of certain powers by governing board; additionalconsiderations.

1. In the administration of the powers to appropriateappreciation, to make and retain investments, and to delegate management of theinvestment of institutional funds or of property held as an investment, membersof a governing board shall exercise ordinary care and prudence, appropriate tothe character of the institution, under the facts and circumstances prevailingat the time of the action or decision. In so doing, they shall consider presentand future needs of the institution in carrying out its educational, religious,charitable or other eleemosynary purposes, present and anticipated financialrequirements, expected total return on its investments, price level trends andgeneral economic conditions.

2. Each investment must be considered in its relationto other investments made or contemplated.

(Added to NRS by 1997, 949)

NRS 164.630 Releaseby governing board of certain restrictions on use or investment ofinstitutional fund: Requirements; limitations.

1. With the written consent of the donor, a governingboard may release, in whole or in part, a restriction imposed by the applicabledonative instrument on the use or investment of an institutional fund.

2. If the written consent of a donor cannot beobtained by reason of his death, disability, unavailability or impossibility ofidentification, the governing board may apply in the name of the institution tothe district court for release of a restriction imposed by the applicabledonative instrument on the use or investment of an institutional fund. TheAttorney General must be notified of the application and given an opportunityto be heard. If the court finds that the restriction is obsolete, inappropriateor impracticable, it may by order release the restriction in whole or in part.A release under this subsection may not change an endowment fund to a fund thatis not an endowment fund.

3. A release under this section may not allow a fundto be used for purposes other than the educational, religious, charitable orother eleemosynary purposes of the institution affected.

4. This section does not limit the application of thedoctrine of applying a charitable gift as nearly as possible in conformity withthe intention of the donor.

(Added to NRS by 1997, 950)

MANAGEMENT AND INVESTMENT OF PROPERTY

General Provisions

NRS 164.700 Definitions. As used in NRS 164.700to 164.925, inclusive:

1. Fiduciary means a trustee or, to the extent that NRS 164.780 to 164.925, inclusive, apply to an estate, apersonal representative.

2. Terms of a trust means the manifestation of theintent of a settlor or decedent with respect to the trust, expressed in amanner that admits of its proof in a judicial proceeding, whether by written orspoken words or by conduct.

(Added to NRS by 2003, 1965)

Uniform Prudent Investor Act (Uniform Act)

NRS 164.705 Shorttitle. NRS164.700 to 164.775, inclusive, maybe cited as the Uniform Prudent Investor Act.

(Added to NRS by 2003, 1967)

NRS 164.710 Administrationof trust or estate by fiduciary in accordance with its terms or in accordancewith provisions of NRS. In performing hisduties under NRS 164.700 to 164.925, inclusive, a fiduciary:

1. Shall administer a trust or estate in accordancewith the terms of the trust or the will, even if there is a different provisionin NRS 164.700 to 164.925, inclusive;

2. May administer a trust or estate by the exercise ofa discretionary power of administration given to the fiduciary by the terms ofthe trust or the will, even if the exercise of the power produces a resultdifferent from a result required or permitted by NRS 164.700 to 164.925, inclusive; and

3. Shall administer a trust or estate in accordancewith NRS 164.700 to 164.925, inclusive, if the terms of thetrust or the will do not contain a different provision or do not give thefiduciary a discretionary power of administration.

(Added to NRS by 2003, 1965)

NRS 164.715 Actingin interest of beneficiaries. A trustee shallinvest and manage the trust property solely in the interest of thebeneficiaries.

(Added to NRS by 2003, 1966)

NRS 164.720 Trusthaving two or more beneficiaries; impartial administration of trust or estate.

1. If a trust has two or more beneficiaries, thetrustee shall act impartially in investing and managing the trust property,taking into account any differing interests of the beneficiaries.

2. In exercising the power to adjust under NRS 164.795 or a discretionary power ofadministration regarding a matter within the scope of NRS 164.780 to 164.925, inclusive, whether granted by theterms of a trust, a will or NRS 164.780to 164.925, inclusive, a fiduciary shalladminister a trust or estate impartially, based on what is fair and reasonableto all the beneficiaries, except to the extent that the terms of the trust orthe will clearly manifest an intention that the fiduciary shall or may favorone or more of the beneficiaries. A determination in accordance with NRS 164.780 to 164.925, inclusive, is presumed to be fairand reasonable to all the beneficiaries.

(Added to NRS by 2003, 1966)

NRS 164.725 Noticeof proposed action: Authorized; to whom notice must be sent; content; objectionto proposed action; liability of trustee; court order to take action overobjection; burden of proof; notice when action not taken.

1. As used in this section, action includes a courseof action and a decision on whether or not to take action.

2. A trustee may provide a notice of proposed actionregarding any matter governed by NRS 164.700to 164.925, inclusive.

3. If a trustee provides a notice of proposed action,the trustee shall mail the notice of proposed action to every adult beneficiarywho, at the time the notice is provided, receives, or is entitled to receive,income under the trust or who would be entitled to receive a distribution ofprincipal if the trust were terminated. A notice of proposed action need not beprovided to a person who consents in writing to the proposed action. A consentto a proposed action may be executed before or after the proposed action istaken.

4. The notice of proposed action must state:

(a) That the notice is provided pursuant to thissection;

(b) The name and mailing address of the trustee;

(c) The name and telephone number of a person with whomto communicate for additional information regarding the proposed action;

(d) A description of the proposed action and anexplanation of the reason for taking the action;

(e) The time within which objection to the proposedaction may be made, which must be not less than 30 days after the notice of proposedaction is mailed; and

(f) The date on or after which the proposed action isto be taken or is to be effective.

5. A beneficiary may object to the proposed action bymailing a written objection to the trustee at the address and within the timestated in the notice.

6. If no beneficiary entitled to receive notice of aproposed action objects to the proposed action and the other requirements ofthis section are met, the trustee is not liable to any present or futurebeneficiary with respect to that proposed action.

7. If the trustee received a written objection to theproposed action within the period specified in the notice, the trustee or abeneficiary may petition the court for an order to take the action as proposed,take the action with modification or deny the proposed action. A beneficiarywho failed to object to the proposed action is not estopped from opposing theproposed action. The burden is on a beneficiary to prove that the proposedaction should not be taken or should be modified.

8. If the trustee decides not to take a proposedaction for which notice has been provided, the trustee shall notify thebeneficiaries of his decision not to take the proposed action and the reasonsfor his decision. The trustee is not liable to any present or futurebeneficiary with respect to the decision not to take the proposed action. Abeneficiary may petition the court for an order to take the action as proposed.The burden is on the beneficiary to prove that the proposed action should betaken.

9. If the proposed action for which notice has beenproved is an adjustment to principal and income pursuant to NRS 164.795, the sole remedy a court mayorder, pursuant to subsections 7 and 8, is to make the adjustment, to make theadjustment with a modification or to order the adjustment not to be made.

(Added to NRS by 2003, 1966)

NRS 164.730 Noduty to make adjustment between principal and income; trustee immunity fromliability.

1. The provisions of NRS164.700 to 164.925, inclusive, donot impose or create a duty of a trustee to make an adjustment betweenprincipal and income pursuant to the provisions of NRS 164.795.

2. A trustee shall not be liable for:

(a) Not considering whether to make such an adjustment;or

(b) Deciding not to make such an adjustment.

(Added to NRS by 2003, 1967)

NRS 164.735 Applicability. Except as specifically provided in a trust instrument, awill or NRS 164.700 to 164.925, inclusive, the provisions of NRS 164.700 to 164.925, inclusive, apply to any trust orestate of a decedent existing on or after October 1, 2003.

(Added to NRS by 2003, 1967)

NRS 164.740 Dutyto comply with prudent investor rule; trustee acting in reliance on trust termsimmune from liability. A trustee who investsand manages trust property owes a duty to the beneficiaries of the trust tocomply with the prudent investor rule as set forth in NRS 164.700 to 164.775, inclusive, but a trustee is notliable to a beneficiary to the extent that the trustee acted in reasonablereliance on the terms of the trust.

(Added to NRS by 2003, 1967)

NRS 164.745 Satisfactionof prudent investor standard; evaluation of decisions; consideration ofcircumstances; verification of facts; types of investments; special skills orexpertise of trustee.

1. A trustee shall invest and manage trust property asa prudent investor would, considering the terms, purposes, requirements fordistribution, and other circumstances of the trust. In satisfying thisstandard, the trustee shall exercise reasonable care, skill and caution.

2. A trustees decisions concerning investment andmanagement as applied to individual assets must be evaluated not in isolationbut in the context of the trust portfolio as a whole and as part of an overallstrategy of investment having objectives for risk and return reasonably suitedto the trust.

3. Among circumstances that a trustee shall considerin investing and managing trust property are such of the following as arerelevant to the trust or its beneficiaries:

(a) General economic conditions;

(b) The possible effect of inflation or deflation;

(c) The expected tax consequences of decisions orstrategies;

(d) The role that each investment or course of actionplays within the overall trust portfolio;

(e) The expected total return from income and theappreciation of capital;

(f) Other resources of the beneficiaries;

(g) Needs for liquidity, regularity of income, andpreservation or appreciation of capital; and

(h) An assets special relationship or special value,if any, to the purposes of the trust or to one or more of the beneficiaries.

4. A trustee shall make a reasonable effort to verifyfacts relevant to the investment and management of trust property.

5. A trustee may invest in any kind of property ortype of investment consistent with the standards of NRS 164.700 to 164.775, inclusive, which may include financialassets, interests in closely held enterprises, tangible and intangible personalproperty, and real property.

6. A trustee who has special skills or expertise, oris named trustee in reliance upon his representation that he has special skillsor expertise, has a duty to use those special skills or expertise.

(Added to NRS by 2003, 1967)

NRS 164.750 Diversificationof investments. A trustee shall diversify theinvestments of the trust unless he reasonably determines that, because ofspecial circumstances, the purposes of the trust are better served withoutdiversifying.

(Added to NRS by 2003, 1968)

NRS 164.755 Dutyto bring trust portfolio into compliance with terms and circumstances of trustand provisions of NRS within reasonable time. Withina reasonable time after accepting a trusteeship or receiving trust property, atrustee shall review the trust property and make and carry out decisionsconcerning the retention and disposition of assets, in order to bring the trustportfolio into compliance with the purposes, terms, requirements fordistribution and other circumstances of the trust, and with the requirements ofNRS 164.700 to 164.775, inclusive.

(Added to NRS by 2003, 1968)

NRS 164.760 Incurringcosts. In investing and managing trustproperty, a trustee may only incur costs that are appropriate and reasonable inrelation to the property, the purposes of the trust and the skills of thetrustee.

(Added to NRS by 2003, 1968)

NRS 164.765 Determinationof compliance with prudent investor rule. Compliancewith the prudent investor rule is determined in light of the facts and circumstancesexisting at the time of a trustees decision or action and not by hindsight.

(Added to NRS by 2003, 1968)

NRS 164.770 Delegationof functions by trustee; standard of care owed by agent; trustee immunity fromliability; jurisdiction over agent.

1. A trustee may delegate functions of investment andmanagement that a prudent trustee of comparable skills could properly delegateunder the circumstances. He shall exercise reasonable care, skill and cautionin:

(a) Selecting an agent;

(b) Establishing the scope and terms of the delegation,consistent with the purposes and terms of the trust; and

(c) Periodically reviewing the agents actions in orderto verify the agents performance and compliance with the terms of thedelegation.

2. In performing a delegated function, an agent owes aduty to the trust to exercise reasonable care to comply with the terms of thedelegation.

3. A trustee who complies with the requirements ofsubsection 1 is not liable to the beneficiaries or to the trust for thedecisions or actions of the agent to whom the function was delegated.

4. By accepting the delegation of a function from thetrustee of a trust that is subject to the law of this state, an agent submitsto the jurisdiction of the courts of this state.

(Added to NRS by 2003, 1968)

NRS 164.775 Termsand language of trust which authorize certain investments or strategies. The following terms or comparable language in the terms ofa trust, unless otherwise limited or modified, authorizes any investment orstrategy permitted under NRS 164.700 to 164.775, inclusive: investmentspermissible by law for investment of trust funds, legal investments,authorized investments, using the judgment and care under the circumstancesthen prevailing that persons of prudence, discretion and intelligence exercisein the management of their own affairs, not in regard to speculation but inregard to the permanent disposition of their funds, considering the probableincome as well as the probable safety of their capital, prudent man rule,prudent trustee rule, prudent person rule and prudent investor rule.

(Added to NRS by 2003, 1968)

Uniform Principal and Income Act (1997) (Uniform Act)

NRS 164.780 Shorttitle. NRS164.700, subsection 2 of NRS 164.720and NRS 164.780 to 164.925, inclusive, may be cited as theUniform Principal and Income Act (1997).

(Added to NRS by 2003, 1969)

NRS 164.785 Definitions. As used in NRS 164.780to 164.925, inclusive:

1. Accounting period means a calendar year unlessanother 12-month period is selected by a fiduciary. The term includes a portionof a calendar year or other 12-month period that begins when an income interestbegins or ends when an income interest ends.

2. Beneficiary includes, in the case of a decedentsestate, an heir, legatee and devisee and, in the case of a trust, an incomebeneficiary and a remainder beneficiary.

3. Fiduciary includes an executor, administrator,successor personal representative, special administrator and a person performingsubstantially the same function.

4. Income means money or property that a fiduciaryreceives as current return from a principal asset. The term includes a portionof receipts from a sale, exchange or liquidation of a principal asset, to theextent provided in NRS 164.825 to 164.895, inclusive.

5. Income beneficiary means a person to whom netincome of a trust is or may be payable.

6. Income interest means the right of an incomebeneficiary to receive all or part of net income, whether the terms of thetrust require it to be distributed or authorize it to be distributed in thetrustees discretion.

7. Mandatory income interest means the right of anincome beneficiary to receive net income that the terms of the trust requirethe fiduciary to distribute.

8. Net income means the total receipts allocated toincome during an accounting period minus the disbursements made from incomeduring the period, plus or minus transfers under NRS 164.780 to 164.925, inclusive, to or from income duringthe period.

9. Principal means property held in trust fordistribution to a remainder beneficiary when the trust terminates.

10. Remainder beneficiary means a person entitled toreceive principal when an income interest ends.

(Added to NRS by 2003, 1969)

NRS 164.790 Allocationof receipt or disbursement to principal when terms of trust and provisions ofNRS do not provide rule. In allocatingreceipts and disbursements to or between principal and income, and with respectto any matter within the scope of NRS164.800 to 164.820, inclusive, afiduciary shall add a receipt or charge a disbursement to principal to theextent that the terms of the trust and NRS164.780 to 164.925, inclusive, donot provide a rule for allocating the receipt or disbursement to or betweenprincipal and income.

(Added to NRS by 2003, 1969)

NRS 164.795 Adjustmentbetween principal and income; consideration of factors; adjustment prohibitedunder certain circumstances; release of power to adjust; effect of terms oftrust that limit power to adjust.

1. A trustee may adjust between principal and incometo the extent he considers necessary if he invests and manages trust assets asa prudent investor, the terms of the trust describe the amount that may or mustbe distributed to a beneficiary by referring to the trusts income, and hedetermines, after applying the rules in NRS164.710 and 164.790, that he isunable to comply with subsection 2 of NRS164.720.

2. In deciding whether and to what extent to exercisethe power conferred by subsection 1, a trustee shall consider all factorsrelevant to the trust and its beneficiaries, including the following factors tothe extent they are relevant:

(a) The nature, purpose and expected duration of thetrust;

(b) The intent of the settlor;

(c) The identity and circumstances of thebeneficiaries;

(d) The needs for liquidity, regularity of income, andpreservation and appreciation of capital;

(e) The assets held in the trust, the extent to whichthe assets consist of financial assets, interests in closely held enterprises,tangible and intangible personal property, or real property, the extent towhich an asset is used by a beneficiary, and whether an asset was purchased bythe trustee or received from the settlor;

(f) The net amount allocated to income under the otherprovisions of NRS 164.780 to 164.925, inclusive, and the increase ordecrease in the value of the principal assets, which the trustee may estimateas to assets for which market values are not readily available;

(g) Whether and to what extent the terms of the trustgive the trustee the power to invade principal or accumulate income or prohibithim from invading principal or accumulating income, and the extent to which hehas exercised a power from time to time to invade principal or accumulate income;

(h) The actual and anticipated effect of economicconditions on principal and income and effects of inflation and deflation; and

(i) The anticipated tax consequences of an adjustment.

3. A trustee may not make an adjustment:

(a) That diminishes the income interest in a trust thatrequires all the income to be paid at least annually to a surviving spouse andfor which an estate tax or gift tax marital deduction would be allowed, inwhole or in part, if the trustee did not have the power to make the adjustment;

(b) That reduces the actuarial value of the incomeinterest in a trust to which a person transfers property with the intent toqualify for a gift tax exclusion;

(c) That changes the amount payable to a beneficiary asa fixed annuity or a fixed fraction of the value of the trust assets;

(d) From any amount that is permanently set aside forcharitable purposes under a will or the terms of a trust unless both income andprincipal are so set aside;

(e) If possessing or exercising the power to make anadjustment causes a natural person to be treated as the owner of all or part ofthe trust for income tax purposes, and the natural person would not be treatedas the owner if the trustee did not possess the power to make an adjustment;

(f) If possessing or exercising the power to make anadjustment causes all or part of the trust assets to be included for estate taxpurposes in the estate of a natural person who has the power to remove atrustee or appoint a trustee, or both, and the assets would not be included in theestate of the natural person if the trustee did not possess the power to makean adjustment;

(g) If the trustee is a beneficiary of the trust; or

(h) If the trustee is not a beneficiary, but theadjustment would benefit him directly or indirectly.

4. If paragraph (e), (f), (g) or (h) of subsection 3applies to a trustee and there is more than one trustee, a cotrustee to whomthe provision does not apply may make the adjustment unless the exercise of thepower by the remaining trustee or trustees is not permitted by the terms of thetrust.

5. A trustee may release the entire power conferred bysubsection 1 or may release only the power to adjust from income to principalor the power to adjust from principal to income if he is uncertain aboutwhether possessing or exercising the power will cause a result described inparagraphs (a) to (f), inclusive, or (h) of subsection 3 or if he determinesthat possessing or exercising the power will or may deprive the trust of a taxbenefit or impose a tax burden not described in subsection 3. The release maybe permanent or for a specified period, including a period measured by the lifeof a natural person.

6. Terms of a trust that limit the power of a trusteeto make an adjustment between principal and income do not affect theapplication of this section unless it is clear from the terms of the trust thatthe terms are intended to deny the trustee the power of adjustment conferred bysubsection 1.

(Added to NRS by 2003, 1969)

NRS 164.800 Applicablerules after death of decedent or end of income interest in trust. After a decedent dies, in the case of an estate, or afteran income interest in a trust ends, the following rules apply:

1. A fiduciary of an estate or of a terminating incomeinterest shall determine the amount of net income and net principal receiptsreceived from property specifically given to a beneficiary under the rules in NRS 164.810 to 164.925, inclusive, which apply to trusteesand the rules in subsection 5. He shall distribute the net income and netprincipal receipts to the beneficiary who is to receive the specific property.

2. A fiduciary shall determine the remaining netincome of a decedents estate or a terminating income interest under the rulesin NRS 164.810 to 164.925, inclusive, which apply to trusteesand by:

(a) Including in net income all income from propertyused to discharge liabilities;

(b) Paying from income or principal, in his discretion,fees of attorneys, accountants and fiduciaries, court costs and other expensesof administration, and interest on death taxes, but he may pay those expensesfrom income of property passing to a trust for which he claims an estate taxmarital or charitable deduction only to the extent that the payment of thoseexpenses from income will not cause the reduction or loss of the deduction; and

(c) Paying from principal all other disbursements madeor incurred in connection with the settlement of a decedents estate or thewinding up of a terminating income interest, including debts, funeral expenses,disposition of remains, family allowances, and death taxes and relatedpenalties that are apportioned to the estate or terminating income interest bythe will, the terms of the trust, or applicable law.

3. A fiduciary shall distribute to a beneficiary whoreceives a pecuniary amount outright the interest or any other amount providedby the will, the terms of the trust, or applicable law from net incomedetermined under subsection 2 or from principal to the extent that net incomeis insufficient. If a beneficiary is to receive a pecuniary amount outrightfrom a trust after an income interest ends and no interest or other amount isprovided for by the terms of the trust or applicable law, the fiduciary shall distributethe interest or other amount to which the beneficiary would be entitled underapplicable law if the pecuniary amount were required to be paid under a will.

4. A fiduciary shall distribute the net incomeremaining after distributions required by subsection 3 in the manner describedin NRS 164.805 to all other beneficiaries,including a beneficiary who receives a pecuniary amount in trust, even if heholds an unqualified power to withdraw assets from the trust or other presentlyexercisable general power of appointment over the trust.

5. A fiduciary may not reduce principal or incomereceipts from property described in subsection 1 because of a payment describedin NRS 164.900 or 164.905 to the extent that the will, theterms of the trust, or applicable law requires him to make the payment fromassets other than the property or to the extent he recovers or expects torecover the payment from a third party. The net income and principal receiptsfrom the property are determined by including all the amounts the fiduciaryreceives or pays with respect to the property, whether those amounts accrued orbecame due before, on, or after the date of a decedents death or an incomeinterests terminating event, and by making a reasonable provision for amountsthat he believes the estate or terminating income interest may become obligatedto pay after the property is distributed.

(Added to NRS by 2003, 1971)

NRS 164.805 Distributionof net income to beneficiaries; rules for determining share of net income.

1. Each beneficiary described in subsection 4 of NRS 164.800 is entitled to receive aportion of the net income equal to his fractional interest in undistributed principalassets, using values as of the date of distribution. If a fiduciary makes morethan one distribution of assets to beneficiaries to whom this section applies,each beneficiary, including one who does not receive part of the distribution,is entitled, as of each date of distribution, to the net income the fiduciaryhas received after the date of death or terminating event or earlier date ofdistribution but has not distributed as of the current date of distribution.

2. In determining a beneficiarys share of net income,the following rules apply:

(a) He is entitled to receive a portion of the netincome equal to his fractional interest in the undistributed principal assetsimmediately before the date of distribution, including assets that later may besold to meet principal obligations.

(b) His fractional interest in the undistributedprincipal assets must be calculated without regard to property specificallygiven to a beneficiary and property required to pay pecuniary amounts not intrust.

(c) His fractional interest in the undistributedprincipal assets must be calculated on the basis of the aggregate value ofthose assets as of the date of distribution without reducing the value by anyunpaid principal obligation.

(d) The date of distribution for purposes of thissection may be the date as of which the fiduciary calculates the value of theassets if that date is reasonably near the date on which assets are actuallydistributed.

3. If a fiduciary does not distribute all thecollected but undistributed net income to each person as of a date ofdistribution, he shall maintain appropriate records showing the interest ofeach beneficiary in that net income.

4. A trustee may apply the rules in this section, tothe extent that he considers it appropriate, to net gain or loss realized afterthe date of death or terminating event or earlier date of distribution from thedisposition of a principal asset if this section applies to the income from theasset.

(Added to NRS by 2003, 1972)

NRS 164.810 Dateon which income interest begins; date on which asset becomes subject to trustor successive income interest; date on which income interest ends.

1. An income beneficiary is entitled to net incomefrom the date on which the income interest begins. An income interest begins onthe date specified in the terms of the trust or, if no date is specified, onthe date an asset becomes subject to a trust or successive income interest.

2. An asset becomes subject to a trust:

(a) On the date it is transferred to the trust in thecase of an asset that is transferred to a trust during the transferors life;

(b) On the date of a testators death in the case of anasset that becomes subject to a trust by reason of a will, even if there is anintervening period of administration of the testators estate; or

(c) On the date of the death of a natural person in thecase of an asset that is transferred to a fiduciary by a third party because ofthe death of the natural person.

3. An asset becomes subject to a successive incomeinterest on the day after the preceding income interest ends, as determinedunder subsection 4, even if there is an intervening period of administration towind up the preceding income interest.

4. An income interest ends on the day before an incomebeneficiary dies or another terminating event occurs, or on the last day of aperiod during which there is no beneficiary to whom a trustee may distributeincome.

(Added to NRS by 2003, 1973)

NRS 164.815 Allocationof certain income receipts and disbursements; due dates for certain paymentsand distributions.

1. A trustee shall allocate an income receipt ordisbursement other than one to which subsection 1 of NRS 164.800 applies to principal if its duedate occurs before a decedent dies in the case of an estate or before an incomeinterest begins in the case of a trust or successive income interest.

2. A trustee shall allocate an income receipt ordisbursement to income if its due date occurs on or after the date on which adecedent dies or an income interest begins and it is a periodic due date. Anincome receipt or disbursement must be treated as accruing from day to day ifits due date is not periodic or it has no due date. The portion of the receiptor disbursement accruing before the date on which a decedent dies or an incomeinterest begins must be allocated to principal and the balance must beallocated to income.

3. An item of income or an obligation is due on thedate the payor is required to make a payment. If a date for payment is notstated, there is no due date for the purposes of NRS 164.780 to 164.925, inclusive. Distributions toshareholders or other owners from an entity to which NRS 164.825 applies are deemed to be due onthe date fixed by the entity for determining who is entitled to receive thedistribution or, if no date is fixed, on the date of declaration of thedistribution. A due date is periodic for receipts or disbursements that must bepaid at regular intervals under a lease or an obligation to pay interest or ifan entity customarily makes distributions at regular intervals.

(Added to NRS by 2003, 1973)

NRS 164.820 Paymentof undistributed income upon end of mandatory income interest; prorating finalpayment upon end of obligation to pay fixed annuity or fixed fraction of valueof trusts assets.

1. As used in this section, undistributed incomemeans net income received before the date on which an income interest ends. Theterm does not include an item of income or expense that is due or accrued ornet income that has been added or is required to be added to principal underthe terms of the trust.

2. When a mandatory income interest ends, the trusteeshall pay to a mandatory income beneficiary who survives that date, or theestate of a deceased mandatory income beneficiary whose death causes theinterest to end, his share of the undistributed income that is not disposed ofunder the terms of the trust unless he has an unqualified power to revoke morethan 5 percent of the trust immediately before the income interest ends. In thelatter case, the undistributed income from the portion of the trust that may berevoked must be added to principal.

3. When a trustees obligation to pay a fixed annuityor a fixed fraction of the value of the trusts assets ends, he shall proratethe final payment if and to the extent required by applicable law to accomplisha purpose of the trust or its settlor relating to income, gift, estate or othertax requirements.

(Added to NRS by 2003, 1973)

NRS 164.825 Allocationof money received from entity to income; allocation of receipts from entity toprincipal; partial liquidation; reliance upon statement about source ofcharacter of distribution.

1. As used in this section, entity means acorporation, partnership, limited-liability company, regulated investmentcompany, real estate investment trust, common trust fund or any otherorganization in which a trustee has an interest other than a trust or estate towhich NRS 164.830 applies, a business oractivity to which NRS 164.835 applies oran asset-backed security to which NRS164.895 applies.

2. Except as otherwise provided in this section, atrustee shall allocate to income money received from an entity.

3. A trustee shall allocate the following receiptsfrom an entity to principal:

(a) Property other than money;

(b) Money received in one distribution or a series ofrelated distributions in exchange for part or all of a trusts interest in theentity;

(c) Money received in total or partial liquidation ofthe entity; and

(d) Money received from an entity that is a regulatedinvestment company or a real estate investment trust if the money distributedis a capital gain dividend for federal income tax purposes.

4. Money is received in partial liquidation:

(a) To the extent that the entity, at or near the timeof a distribution, indicates that it is a distribution in partial liquidation;or

(b) If the total amount of money and property receivedin a distribution or series of related distributions is greater than 20 percentof the entitys gross assets, as shown by the entitys year-end financialstatements immediately preceding the initial receipt.

5. Money is not received in partial liquidation, normay it be taken into account under paragraph (b) of subsection 4, to the extentthat it does not exceed the amount of income tax that a trustee or beneficiarymust pay on taxable income of the entity that distributes the money.

6. A trustee may rely upon a statement made by anentity about the source of character of a distribution if the statement is madeat or near the time of distribution by the entitys board of directors or otherperson or group of persons authorized to exercise powers to pay money ortransfer property comparable to those of a corporations board of directors.

(Added to NRS by 2003, 1974)

NRS 164.830 Allocationof amount received as distribution of income to income; allocation ofdistribution of principal to principal; purchase of interest in trust that isinvestment entity. A trustee shall allocate toincome an amount received as a distribution of income from a trust or an estatein which the trust has an interest other than a purchased interest, and a trusteeshall allocate to principal an amount received as a distribution of principalfrom such a trust or estate. If a trustee purchases an interest in a trust thatis an investment entity, or a decedent or donor transfers an interest in such atrust to a trustee, NRS 164.825 or 164.895 applies to a receipt from thetrust.

(Added to NRS by 2003, 1974)

NRS 164.835 Accountingseparately for business or other activity.

1. If a trustee who conducts a business or otheractivity determines that it is in the best interest of all the beneficiaries toaccount separately for the business or activity instead of accounting for it aspart of the trusts general accounting records, he may maintain separateaccounting records for its transactions, whether or not its assets aresegregated from other trust assets.

2. A trustee who accounts separately for a business orother activity may determine the extent to which its net cash receipts must beretained for working capital, the acquisition or replacement of fixed assets,and other reasonably foreseeable needs of the business or activity, and theextent to which the remaining net cash receipts are accounted for as principalor income in the trusts general accounting records. If a trustee sells assetsof the business or other activity, other than in the ordinary course of thebusiness or activity, he shall account for the net amount received as principalin the trusts general accounting records to the extent he determines that theamount received is no longer required in the conduct of the business.

3. Activities for which a trustee may maintainseparate accounting records include:

(a) Retail, manufacturing, service and othertraditional business activities;

(b) Farming;

(c) Raising and selling livestock and other animals;

(d) Management of rental properties;

(e) Extraction of minerals and other natural resources;

(f) Timber operations; and

(g) Activities to which NRS 164.890 applies.

(Added to NRS by 2003, 1975)

NRS 164.840 Allocationof assets, money, property and other receipts to principal. A trustee shall allocate to principal:

1. To the extent not allocated to income under NRS 164.780 to 164.925, inclusive, assets received from atransferor during the transferors lifetime, a decedents estate, a trust witha terminating income interest, or a payor under a contract naming the trust orits trustee as beneficiary;

2. Money or other property received from the sale,exchange, liquidation or change in form of a principal asset, includingrealized profit, subject to NRS 164.780to 164.925, inclusive;

3. Amounts recovered from third parties to reimbursethe trust because of disbursements described in paragraph (g) of subsection 1of NRS 164.905 or for other reasons tothe extent not based on the loss of income;

4. Proceeds of property taken by eminent domain, but aseparate award made for the loss of income with respect to an accounting periodduring which a current income beneficiary had a mandatory income interest isincome;

5. Net income received in an accounting period duringwhich there is no beneficiary to whom a trustee may or must distribute income;and

6. Other receipts as provided in NRS 164.810, 164.815 and 164.820.

(Added to NRS by 2003, 1975)

NRS 164.845 Allocationof receipts from rental property to income; treatment of refundable deposit. To the extent that a trustee accounts for receipts fromrental property pursuant to this section, he shall allocate to income an amountreceived as rent of real or personal property, including an amount received forcancellation or renewal of a lease. An amount received as a refundable deposit,including a security deposit or a deposit that is to be applied as rent forfuture periods, must be added to principal and held subject to the terms of thelease and is not available for distribution to a beneficiary until thetrustees contractual obligations have been satisfied with respect to thatamount.

(Added to NRS by 2003, 1976)

NRS 164.850 Allocationof interest on obligation to pay money to trustee to income; allocation ofamount received from disposition of certain obligations to principal;applicability of provisions.

1. An amount received as interest, whether determinedat a fixed, variable or floating rate, on an obligation to pay money to thetrustee, including an amount received as consideration for prepaying principal,must be allocated to income without any provision for amortization of premium.

2. A trustee shall allocate to principal an amountreceived from the sale, redemption or other disposition of an obligation to paymoney to him more than 1 year after it is purchased or acquired by him,including an obligation whose purchase price or value when it is acquired isless than its value at maturity. If the obligation matures within 1 year afterit is purchased or acquired by the trustee, an amount received in excess of itspurchase price or its value when acquired by the trust must be allocated toincome.

3. This section does not apply to an obligation towhich NRS 164.865, 164.870, 164.875,164.880, 164.890 or 164.895 applies.

(Added to NRS by 2003, 1976)

NRS 164.855 Allocationof proceeds of life insurance policy and certain contracts to principal;allocation of dividends on insurance policy to income or principal.

1. Except as otherwise provided in this section, atrustee shall allocate to principal the proceeds of a life insurance policy orother contract in which the trust or its trustee is named as beneficiary,including a contract that insures the trust or its trustee against loss fordamage to, destruction of, or loss of title to a trust asset. He shall allocatedividends on an insurance policy to income if the premiums on the policy arepaid from income, and to principal if the premiums are paid from principal.

2. A trustee shall allocate to income proceeds of acontract that insures him against loss of occupancy or other use by an incomebeneficiary, loss of income, or, subject to NRS164.835, loss of profits from a business.

3. This section does not apply to a contract to which NRS 164.865 applies.

(Added to NRS by 2003, 1976)

NRS 164.860 Allocationof entire amount to principal if allocation between principal and income undercertain circumstances is insubstantial. If atrustee determines that an allocation between principal and income required by NRS 164.865, 164.870, 164.875,164.880 or 164.895 is insubstantial, the trustee mayallocate the entire amount to principal unless one of the circumstancesdescribed in subsection 3 of NRS 164.795applies to the allocation. This power may be exercised by a cotrustee in thecircumstances described in subsection 4 of NRS164.795 and may be released for the reasons and in the manner described insubsection 5 of NRS 164.795. Anallocation is presumed to be insubstantial if:

1. The amount of the allocation would increase ordecrease net income in an accounting period, as determined before theallocation, by less than 10 percent; or

2. The value of the asset producing the receipt forwhich the allocation would be made is less than 10 percent of the total value ofthe trusts assets at the beginning of the accounting period.

(Added to NRS by 2003, 1976)

NRS 164.865 Allocationof certain payments received because of services rendered or propertytransferred to payor in exchange for future payments to income or principal, orboth.

1. As used in this section, payment means a paymentthat a trustee may receive over a fixed number of years or during the life ofone or more natural persons because of services rendered or propertytransferred to the payor in exchange for future payments. The term includes apayment made in money or property from the payors general assets or from aseparate fund created by the payor, including a private or commercial annuity,an individual retirement account, and a pension, profit-sharing, stock-bonus orstock-ownership plan.

2. To the extent that a payment is characterized asinterest or a dividend or a payment made in lieu of interest or a dividend, atrustee shall allocate it to income. He shall allocate to principal the balanceof the payment and any other payment received in the same accounting periodthat is not characterized as interest, a dividend or an equivalent payment.

3. If no part of a payment is characterized asinterest, a dividend or an equivalent payment, and all or part of the paymentis required to be made, a trustee shall allocate to income 10 percent of thepart that is required to be made during the accounting period and the balanceto principal. If no part of a payment is required to be made or the paymentreceived is the entire amount to which the trustee is entitled, he shallallocate the entire payment to principal. For purposes of this subsection, a paymentis not required to be made to the extent that it is made because the trusteeexercises a right of withdrawal.

4. If, to obtain an estate tax marital deduction for atrust, a trustee must allocate more of a payment to income than provided for bythis section, he shall allocate to income the additional amount necessary toobtain the marital deduction.

5. This section does not apply to payments to which NRS 164.870 applies.

(Added to NRS by 2003, 1977)

NRS 164.870 Allocationof receipts from liquidating assets to income and principal.

1. As used in this section, liquidating asset meansan asset whose value will diminish or terminate because the asset is expectedto produce receipts for a period of limited duration. The term includes aleasehold, patent, copyright, royalty right and right to receive paymentsduring a period of more than 1 year under an arrangement that does not providefor the payment of interest on the unpaid balance. The term does not include apayment subject to NRS 164.865,resources subject to NRS 164.875, timbersubject to NRS 164.880, an activitysubject to NRS 164.890, an asset subjectto NRS 164.895, or any asset for whichthe trustee establishes a reserve for depreciation under NRS 164.910.

2. A trustee shall allocate to income 10 percent ofthe receipts from a liquidating asset and the balance to principal.

(Added to NRS by 2003, 1977)

NRS 164.875 Allocationof receipts from interest in minerals to income or to income and principal;allocation of receipts from interest in water to income or to income andprincipal; applicability.

1. To the extent that a trustee accounts for receiptsfrom an interest in minerals or other natural resources pursuant to thissection, the trustee shall allocate them as follows:

(a) If received as nominal delay rental or nominalannual rent on a lease, a receipt must be allocated to income.

(b) If received from a production payment, a receipt mustbe allocated to income if and to the extent that the agreement creating theproduction payment provides a factor for interest or its equivalent. Thebalance must be allocated to principal.

(c) If an amount received as a royalty, shut-in-wellpayment, take-or-pay payment, bonus or delay rental is more than nominal, 90percent must be allocated to principal and the balance to income.

(d) If an amount is received from a working interest orany other interest not provided for in paragraph (a), (b) or (c), 90 percent ofthe net amount received must be allocated to principal and the balance toincome.

2. An amount received on account of an interest inwater that is renewable must be allocated to income. If the water is notrenewable, 90 percent of the amount must be allocated to principal and thebalance to income.

3. NRS 164.780to 164.925, inclusive, apply whether ornot a decedent or donor was extracting minerals, water, or other naturalresources before the interest became subject to the trust.

4. If a trust owns an interest in minerals, water orother natural resources on October 1, 2003, the trustee may allocate receiptsfrom the interest as provided in NRS 164.780to 164.925, inclusive, or in the mannerused by the trustee before October 1, 2003. If the trust acquires an interestin minerals, water or other natural resources after October 1, 2003, thetrustee shall allocate receipts from the interest as provided in NRS 164.780 to 164.925, inclusive.

(Added to NRS by 2003, 1977)

NRS 164.880 Allocationof net receipts from sale of timber and related products to income orprincipal, or both; applicability.

1. To the extent that a trustee accounts for receiptsfrom the sale of timber and related products pursuant to this section, thetrustee shall allocate the net receipts:

(a) To income to the extent that the amount of timberremoved from the land does not exceed the rate of growth of the timber duringthe accounting periods in which a beneficiary has a mandatory income interest;

(b) To principal to the extent that the amount of timberremoved from the land exceeds the rate of growth of timber or the net receiptsare from the sale of standing timber;

(c) To or between income and principal if the netreceipts are from the lease of timberland or from a contract to cut timber fromland owned by a trust, by determining the amount of timber removed from theland under the lease of contract and applying the rules in paragraphs (a) and(b); or

(d) To principal to the extent that advance payments,bonuses and other payments are not allocated pursuant to paragraph (a), (b) or(c).

2. In determining net receipts to be allocatedpursuant to subsection 1, a trustee shall deduct and transfer to principal areasonable amount for depletion.

3. NRS 164.780to 164.925, inclusive, apply whether ornot a decedent or transferor was harvesting timber from the property before itbecame subject to the trust.

4. If a trust owns an interest in timberland onOctober 1, 2003, the trustee may allocate net receipts from the sale of timberand related products as provided in NRS164.780 to 164.925, inclusive, or inthe manner used by the trustee before October 1, 2003. If the trust acquires aninterest in timberland after October 1, 2003, the trustee shall allocate netreceipts from the sale of timber and related products as provided in NRS 164.780 to 164.925, inclusive.

(Added to NRS by 2003, 1978)

NRS 164.885 Requestof spouse if marital deduction is allowed and amounts transferred fromprincipal to income and distributed are insufficient to obtain maritaldeduction; proceeds from sale or disposition of assets generally principal.

1. If a marital deduction is allowed for all or partof a trust whose assets consist substantially of property that does not providethe surviving spouse with sufficient income from or use of the trust assets,and if the amounts that the trustee transfers from principal to income under NRS 164.795 and distributes to the spousefrom principal pursuant to the terms of the trust are insufficient to providethe spouse with the beneficial enjoyment required to obtain the maritaldeduction, the spouse may require the trustee to make property productive ofincome, convert property within a reasonable time, or exercise the powerconferred by subsection 1 of NRS 164.795.The trustee may decide which action or combination of actions to take.

2. In cases not governed by subsection 1, proceedsfrom the sale or other disposition of an asset are principal without regard tothe amount of income the asset produces during any accounting period.

(Added to NRS by 2003, 1978)

NRS 164.890 Allocationof receipts from and disbursements made in connection with transactions inderivatives to principal; allocation of amount received for granting certainoptions to principal.

1. As used in this section, derivative means acontract of financial instrument or a combination of contracts and financialinstruments which gives a trust the right or obligation to participate in someor all changes in the price of a tangible or intangible asset or group ofassets, or changes in a rate, an index of prices or rates, or other market indicatorfor an asset or a group of assets.

2. To the extent that a trustee accounts fortransactions in derivatives pursuant to this section, he shall allocate toprincipal receipts from and disbursements made in connection with thosetransactions.

3. If a trustee grants an option to buy property fromthe trust, whether or not the trust owns the property when the option isgranted, grants an option that permits another person to sell property to thetrust, or acquires an option to buy property for the trust or an option to sellan asset owned by the trust, and the trustee or other owner of the asset isrequired to deliver the asset if the option is exercised, an amount receivedfor granting the option must be allocated to principal. An amount paid to acquirethe option must be paid from principal. A gain or loss realized upon theexercise of an option, including an option granted to a settlor of the trustfor services rendered, must be allocated to principal.

(Added to NRS by 2003, 1979)

NRS 164.895 Allocationfrom proceeds of collateral financial assets to income and principal;allocation of payments in exchange for interest in asset-backed security toprincipal or to principal and income.

1. As used in this section, asset-backed securitymeans an asset whose value is based upon the right it gives the owner toreceive distributions from the proceeds of financial assets that providecollateral for the security. The term includes an asset that gives the ownerthe right to receive from the collateral financial assets only the interest orother current return or only the proceeds other than interest or current return.The term does not include an asset to which NRS164.825 or 164.865 applies.

2. If a trust receives a payment from interest orother current return and from other proceeds of the collateral financialassets, the trustee shall allocate to income the portion of the payment whichthe payor identifies as being from interest or other current return and shallallocate the balance of the payment to principal.

3. If a trust receives one or more payments inexchange for the trusts entire interest in an asset-backed security in oneaccounting period, the trustee shall allocate the payments to principal. If apayment is one of a series of payments that will result in the liquidation ofthe trusts interest in the security over more than one accounting period, thetrustee shall allocate 10 percent of the payment to income and the balance toprincipal.

(Added to NRS by 2003, 1979)

NRS 164.900 Disbursementsrequired to be made from income. A trusteeshall make the following disbursements from income to the extent that they arenot disbursements to which paragraph (b) or (c) of subsection 2 of NRS 164.800 applies:

1. One-half of the regular compensation of the trusteeand of any person providing advisory or custodial services to the trusteeconcerning investment;

2. One-half of all expenses for accountings, judicialproceedings, or other matters that involve both the income and remainderinterests;

3. All the other ordinary expenses incurred inconnection with the administration, management or preservation of trustproperty and the distribution of income, including interest, ordinary repairs,regularly recurring taxes assessed against principal, and expenses of aproceeding or other matter that concerns primarily the income interest; and

4. Recurring premiums on insurance covering the loss ofa principal asset or the loss of income from or use of the asset.

(Added to NRS by 2003, 1979)

NRS 164.905 Disbursementsrequired to be made from principal.

1. A trustee shall make the following disbursementsfrom principal:

(a) The remaining one-half of the disbursementsdescribed in subsections 1 and 2 of NRS164.900;

(b) All the trustees compensation calculated onprincipal as a fee for acceptance, distribution or termination, anddisbursements made to prepare property for sale;

(c) Payments on the principal of a trust debt;

(d) Expenses of a proceeding that concerns primarilyprincipal, including a proceeding to construe the trust or to protect the trustor its property;

(e) Premiums paid on a policy of insurance notdescribed in subsection 4 of NRS 164.900of which the trust is the owner and beneficiary;

(f) Estate, inheritance and other transfer taxes,including penalties, apportioned to the trust; and

(g) Disbursements related to environmental matters,including reclamation, assessing environmental conditions, remedying and removingenvironmental contamination, monitoring remedial activities and the release ofsubstances, preventing future releases of substances, collecting amounts frompersons liable or potentially liable for the costs of those activities,penalties imposed under environmental laws or regulations and other paymentsmade to comply with those laws or regulations, statutory or common law claimsby third parties, and defending claims based on environmental matters.

2. If a principal asset is encumbered with an obligationthat requires income from that asset to be paid directly to the creditor, thetrustee shall transfer from principal to income an amount equal to the incomepaid to the creditor in reduction of the principal balance of the obligation.

(Added to NRS by 2003, 1980)

NRS 164.910 Transferof net cash receipts from principal asset subject to depreciation to principal.

1. As used in this section, depreciation means a reductionin value due to wear, tear, decay, corrosion or gradual obsolescence of a fixedasset having a useful life of more than 1 year.

2. A fiduciary may transfer to principal a reasonableamount of the net cash receipts from a principal asset that is subject todepreciation, but may not transfer any amount for depreciation:

(a) Of that portion of real property used or availablefor use by a beneficiary as a residence or of tangible personal property heldor made available for the personal use or enjoyment of a beneficiary;

(b) During the administration of a decedents estate;or

(c) Under this section if a trustee is accounting underNRS 164.835 for the business or activityin which the asset is used.

3. An amount transferred to principal need not be heldas a separate fund.

(Added to NRS by 2003, 1980)

NRS 164.915 Transferof amount from income to principal to make certain principal disbursements.

1. If a trustee makes or expects to make a principaldisbursement described in this section, he may transfer an appropriate amountfrom income to principal in one or more accounting periods to reimburse principalor to provide a reserve for future principal disbursements.

2. Principal disbursements to which subsection 1applies include the following, but only to the extent that the trustee has notbeen and does not expect to be reimbursed by a third party:

(a) An amount chargeable to income but paid fromprincipal because it is unusually large, including extraordinary repairs;

(b) A capital improvement to a principal asset, whetherin the form of changes to an existing asset or the construction of a new asset,including special assessments;

(c) Disbursements made to prepare property for rental,including tenant allowances, leasehold improvements and brokers commissions;

(d) Periodic payments on an obligation secured by aprincipal asset to the extent that the amount transferred from income toprincipal for depreciation is less than the periodic payments; and

(e) Disbursements described in paragraph (g) ofsubsection 1 of NRS 164.905.

3. If the asset whose ownership gives rise to thedisbursements becomes subject to a successive income interest after an incomeinterest ends, a trustee may continue to transfer amounts from income toprincipal as provided in subsection 1.

(Added to NRS by 2003, 1981)

NRS 164.920 Paymentof taxes required to be paid by trustee.

1. A tax required to be paid by a trustee based onreceipts allocated to income must be paid from income.

2. A tax required to be paid by a trustee based onreceipts allocated to principal must be paid from principal, even if the tax iscalled an income tax by the taxing authority.

3. A tax required to be paid by a trustee on thetrusts share of an entitys taxable income must be paid proportionately:

(a) From income to the extent that receipts from theentity are allocated to income; and

(b) From principal to the extent that:

(1) Receipts from the entity are allocated toprincipal; and

(2) The trusts share of the entitys taxableincome exceeds the total receipts described in paragraph (a) and subparagraph(1).

4. For the purposes of this section, receiptsallocated to principal or income must be reduced by the amount distributed to abeneficiary from principal or income for which the trust receives a deductionin calculating the tax.

(Added to NRS by 2003, 1981)

NRS 164.925 Adjustmentsbetween principal and income to offset shifting economic interests or taxbenefits between income beneficiaries and remainder beneficiaries;reimbursement of principal if estate taxes are increased and income taxes aredecreased under certain circumstances.

1. A fiduciary may make adjustments between principaland income to offset the shifting of economic interests or tax benefits betweenincome beneficiaries and remainder beneficiaries which arise from:

(a) Elections and decisions, other than those describedin subsection 2, that the fiduciary makes from time to time regarding taxmatters;

(b) An income tax or any other tax that is imposed uponthe fiduciary or a beneficiary as a result of a transaction involving or adistribution from the estate or the trust; or

(c) The ownership by an estate or trust of an interestin an entity whose taxable income, whether or not distributed, is includable inthe taxable income of the estate, the trust or a beneficiary.

2. If the amount of an estate tax marital deduction orcharitable contribution deduction is reduced because a fiduciary deducts anamount paid from principal for income tax purposes instead of deducting it forestate tax purposes, and as a result estate taxes paid from principal areincreased and income taxes paid by an estate, trust or beneficiary aredecreased, each estate, trust or beneficiary that benefits from the decrease inincome tax shall reimburse the principal from which the increase in estate taxis paid. The total reimbursement must equal the increase in the estate tax tothe extent that the principal used to pay the increase would have qualified fora marital deduction or charitable contribution deduction but for the payment.The proportionate share of the reimbursement for each estate, trust orbeneficiary whose income taxes are reduced must be the same as itsproportionate share of the total decrease in income tax. An estate or trustshall reimburse principal from income.

(Added to NRS by 2003, 1981)

 

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