2005 Nevada Revised Statutes - Chapter 166 — Spendthrift Trusts

CHAPTER 166 - SPENDTHRIFT TRUSTS

GENERAL PROVISIONS

NRS 166.010 Shorttitle.

NRS 166.015 Applicabilityof chapter; requirement of trustee if settlor is beneficiary of trust.

NRS 166.020 Spendthrifttrust defined.

NRS 166.025 Terms:Writing or written.

CREATION OF SPENDTHRIFT TRUSTS

NRS 166.040 Writingrequired; competency of settlor.

NRS 166.050 Nospecific language necessary for creation of trust.

PRINCIPLES GOVERNING CONSTRUCTION

NRS 166.070 Principlesenumerated in NRS 166.080 to 166.150, inclusive.

NRS 166.080 Beneficiariesto be named.

NRS 166.090 Provisionfor support.

NRS 166.100 Income.

NRS 166.110 Discretionof trustee.

NRS 166.120 Restraintson alienation.

NRS 166.130 Legalestate of beneficiary in corpus.

NRS 166.140 Perpetuities.

NRS 166.150 Accumulationof income.

NRS 166.160 Settlormay make different provisions.

MISCELLANEOUS PROVISONS

NRS 166.170 Limitationof actions with respect to transfer of property to trust.

_________

GENERAL PROVISIONS

NRS 166.010 Shorttitle. This chapter may be referred to by theshort title of Spendthrift Trust Act of Nevada, and such reference will besufficient for all purposes.

[7:86:1939; 1931 NCL 6880.06]

NRS 166.015 Applicabilityof chapter; requirement of trustee if settlor is beneficiary of trust.

1. Unless the writing declares to the contrary,expressly, this chapter governs the construction, operation and enforcement, inthis State, of all spendthrift trusts created in or outside this State if:

(a) All or part of the land, rents, issues or profitsaffected are in this State;

(b) All or part of the personal property, interest ofmoney, dividends upon stock and other produce thereof, affected, are in thisState;

(c) The declared domicile of the creator of aspendthrift trust affecting personal property is in this State; or

(d) At least one trustee qualified under subsection 2has powers that include maintaining records and preparing income tax returnsfor the trust, and all or part of the administration of the trust is performedin this State.

2. If the settlor is a beneficiary of the trust, atleast one trustee of a spendthrift trust must be:

(a) A natural person who resides and has his domicilein this State;

(b) A trust company that:

(1) Is organized under federal law or under thelaws of this State or another state; and

(2) Maintains an office in this State for thetransaction of business; or

(c) A bank that:

(1) Is organized under federal law or under thelaws of this State or another state;

(2) Maintains an office in this State for thetransaction of business; and

(3) Possesses and exercises trust powers.

3. Except as otherwise provided in subsection 1, thischapter also governs the construction, operation and enforcement, outside ofthis State, of all spendthrift trusts created in this State, except so far asprohibited by valid laws of other states. Unless the writing declares to thecontrary, expressly, it shall be deemed to be made in the light of this chapterand all other acts relating to spendthrift trusts enacted in this State.

[4:86:1939; 1931 NCL 6880.03](NRS A 1999, 1236)(Substitutedin revision for NRS 166.060)

NRS 166.020 Spendthrifttrust defined. For the purposes of thischapter, a spendthrift trust is defined to be a trust in which by the termsthereof a valid restraint on the voluntary and involuntary transfer of theinterest of the beneficiary is imposed. It is an active trust not governed orexecuted by any use or rule of law of uses.

[1:86:1939; 1931 NCL 6880]

NRS 166.025 Terms:Writing or written. As used in thischapter, unless the context otherwise requires, when the term writing orwritten is used in reference to a will, trust or instrument, the termincludes an electronic will as defined in NRS132.119 and an electronic trust as defined in NRS 163.0015.

(Added to NRS by 2001, 2353)

CREATION OF SPENDTHRIFT TRUSTS

NRS 166.040 Writingrequired; competency of settlor.

1. Any person competent by law to execute a will ordeed may, by writing only, duly executed, by will, conveyance or other writing,create a spendthrift trust in real, personal or mixed property for the benefitof:

(a) A person other than the settlor;

(b) The settlor if the writing is irrevocable, does notrequire that any part of the income or principal of the trust be distributed tothe settlor, and was not intended to hinder, delay or defraud known creditors;or

(c) Both the settlor and another person if the writingmeets the requirements of paragraph (b).

2. for the purposes of this section, a writing:

(a) Is irrevocable even if the settlor may prevent adistribution from the trust or holds a testamentary special power ofappointment or similar power.

(b) Does not require a distribution to the settlor ifhe may receive it only in the discretion of another person.

[2:86:1939; 1931 NCL 6880.01](NRS A 1999, 1236)

NRS 166.050 Nospecific language necessary for creation of trust. Nospecific language is necessary for the creation of a spendthrift trust. It issufficient if by the terms of the writing (construed in the light of thischapter if necessary) the creator manifests an intention to create such atrust.

[3:86:1939; 1931 NCL 6880.02]

PRINCIPLES GOVERNING CONSTRUCTION

NRS 166.070 Principlesenumerated in NRS166.080 to 166.150, inclusive. Unless the writing shall declare to the contrary,expressly, the construction, operation and enforcement of all spendthrifttrusts, heretofore or hereafter created in this state, shall be governed by theprinciples stated in NRS 166.080 to 166.150, inclusive, to the same effect asif they were written therein.

[Part 5:86:1939; 1931 NCL 6880.04]

NRS 166.080 Beneficiariesto be named. The beneficiary or beneficiariesof such trust shall be named or clearly referred to in the writing. No spouse,former spouse, child or dependent shall be a beneficiary unless named orclearly referred to as a beneficiary in the writing.

[Part 5:86:1939; 1931 NCL 6880.04]

NRS 166.090 Provisionfor support.

1. Provision for the beneficiary will be for thesupport, education, maintenance and benefit of the beneficiary alone, andwithout reference to or limitation by his needs, station in life, or mode oflife, or the needs of any other person, whether dependent upon him or not.

2. The existence of a spendthrift trust does notdepend on the character, capacity, incapacity, competency or incompetency ofthe beneficiary.

[Part 5:86:1939; 1931 NCL 6880.04]

NRS 166.100 Income. Provision for the beneficiary will extend to all of theincome from the trust estate, devoted for that purpose by the creator of thetrust, without exception or deduction, other than for:

1. Costs or fees regularly earned, paid or incurred bythe trustee for administration of or protection of the trust estate;

2. Taxes on the same; or

3. Taxes on the interest of the beneficiary thereof.

[Part 5:86:1939; 1931 NCL 6880.04]

NRS 166.110 Discretionof trustee.

1. In all cases where the creator of a spendthrifttrust shall indicate the sum to be applied for or paid to the beneficiary orshall make the application or payment of sums or further sums for or to thebeneficiary discretionary with the trustee, or shall make the amount thereofdiscretionary with the trustee, or shall give the trustee discretion to pay allor any part of the income to any one or more of the beneficiaries, suchdiscretionary power shall be absolute, whether any valid provision for the accumulationof income is made or not and whether it relates to the income from real orpersonal property.

2. Such discretion shall never be interfered with forany consideration of the needs, station in life or mode of life of thebeneficiary, or for uncertainty, or on any pretext whatever.

3. The giving of any such discretion does notinvalidate any spendthrift trust.

[Part 5:86:1939; 1931 NCL 6880.04]

NRS 166.120 Restraintson alienation.

1. A spendthrift trust as defined in this chapterrestrains and prohibits generally the assignment, alienation, acceleration andanticipation of any interest of the beneficiary under the trust by thevoluntary or involuntary act of the beneficiary, or by operation of law or anyprocess or at all. An exception is declared, however, when the trust does notprovide for the application for or the payment to any beneficiary of sums outof capital or corpus or out of rents, profits, income, earnings, or produce ofproperty, lands or personalty. In such cases, the corpus or capital of thetrust estate, or the interest of the beneficiary therein, may be anticipated,assigned or aliened by the beneficiary voluntarily, but not involuntarily or byoperation of law or by any process or involuntarily at all. The trust estate,or corpus or capital thereof, shall never be assigned, aliened, diminished orimpaired by any alienation, transfer or seizure so as to cut off or diminishthe payments, or the rents, profits, earnings or income of the trust estatethat would otherwise be currently available for the benefit of the beneficiary.

2. Payments by the trustee to the beneficiary shall bemade only to and into the proper hands of the beneficiary and not by way ofacceleration or anticipation, nor to any assignee of the beneficiary, nor to orupon any order, written or oral, given by the beneficiary, whether suchassignment or order be the voluntary contractual act of the beneficiary or bemade pursuant to or by virtue of any legal process in judgment, execution,attachment, garnishment, bankruptcy or otherwise, or whether it be inconnection with any contract, tort or duty.

3. The beneficiary shall have no power or capacity tomake any disposition whatever of any of the income by his order, voluntary orinvoluntary, and whether made upon the order or direction of any court orcourts, whether of bankruptcy or otherwise; nor shall the interest of thebeneficiary be subject to any process of attachment issued against thebeneficiary, or to be taken in execution under any form of legal processdirected against the beneficiary or against the trustee, or the trust estate,or any part of the income thereof, but the whole of the trust estate and theincome of the trust estate shall go to and be applied by the trustee solely forthe benefit of the beneficiary, free, clear, and discharged of and from any andall obligations of the beneficiary whatsoever and of all responsibilitytherefor.

4. The trustee of a spendthrift trust is required todisregard and defeat every assignment or other act, voluntary or involuntary,that is attempted contrary to the provisions of this chapter.

[Part 5:86:1939; 1931 NCL 6880.04]

NRS 166.130 Legalestate of beneficiary in corpus. A beneficiaryof a spendthrift trust has no legal estate in the capital, principal or corpusof the trust estate unless under the terms of the trust he or one derivingtitle from him is entitled to have it conveyed or transferred to himimmediately or after a term of years or after a life, and in the meantime theincome from the corpus is not to be paid to him or any other beneficiary.

[Part 5:86:1939; 1931 NCL 6880.04]

NRS 166.140 Perpetuities. A spendthrift trust may not continue for a period longerthan that allowed under NRS 111.103 to 111.1039, inclusive. The free alienationof the legal estate by the trustee may not be suspended for a period exceedingthe limit prescribed in any constitutional or statutory prohibition againstperpetuities existing in this State or in the state where the lands affected bythe trust are situate, but a contingent remainder in fee may be created on aprior remainder in fee, to take effect if the persons to whom the firstremainder is limited die under the age of 21 years, or upon any othercontingency by which the estate of those persons may be determined before theyattain that age.

[Part 5:86:1939; 1931 NCL 6880.04](NRS A 1999, 1237)

NRS 166.150 Accumulationof income. An accumulation of the income oftrust property may be directed in the will or other writing creating aspendthrift trust, for the benefit of one or more beneficiaries, to commencewithin the time permitted for the vesting of future interests and not to extendbeyond the period limiting the time within which the absolute power ofalienation of property may be suspended. If the direction is for a longer termthan is permitted by law, it is void only as to the excess time, whether thedirection be separable from the other clauses in the trust or not, and in suchcases of invalidity the income may be paid and distributed to the nextsucceeding beneficiary in interest.

[Part 5:86:1939; 1931 NCL 6880.04]

NRS 166.160 Settlormay make different provisions. The principlesstated in NRS 166.080 to 166.150, inclusive, shall not prevent thecreator of any spendthrift trust, by will or other writing, from making otheror different provisions provided he uses express, specific language to thatend.

[Part 5:86:1939; 1931 NCL 6880.04]

MISCELLANEOUS PROVISIONS

NRS 166.170 Limitationof actions with respect to transfer of property to trust. A person may not bring an action with respect to atransfer of property to a spendthrift trust:

1. If he is a creditor when the transfer is made,unless the action is commenced within:

(a) Two years after the transfer is made; or

(b) Six months after he discovers or reasonably shouldhave discovered the transfer,

whichever islater.

2. If he becomes a creditor after the transfer ismade, unless the action is commenced within 2 years after the transfer is made.

(Added to NRS by 1999, 1236)

 

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