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AlaskaNevada
Creation of Trust

No specific provisions.

 

Trusts created after August 30, 2000 are presumed revocable unless expressly made irrevocable.

 

Revocable trust may be modified or revoked by complying with trust (and only by trust terms if trust stated exclusive method) provisions or a writing signed by settlor and delivered to trustee during settlor’s lifetime.

 

Cannot be revoked or modified by a Will.

 

An attorney-in-fact under a power of attorney cannot modify or revoke a revocable trust unless expressly permitted by the trust instrument.

 

 

If joint settlors and community property, follow community property statute. If not community property, each settlor may revoke or modify as to his contribution to the trust. {AS 13.36.340}

Trust can be established by declaration that property is held in trust, even without regard to formal title; by transfer to another as trustee; or by enforceable promise to make a trust.  {NRS 163.002}

 

Trust must have trust property to be valid, except can have testamentary devise to unfunded trusts.  {NRS 163.230}

 

Trust must have a beneficiary (or class), or must authorize a trustee or some other person to select the beneficiary or be a charitable trust, pet trust or public benefits trust.  {NRS 163.006}

 

Oral   trust   authorized   for   personal   property;

established by clear and convincing evidence. {NRS

163.009}

 

Trusts are irrevocable except to the extent that a right to amend or revoke the trust is expressly reserved by the settlor.  {NRS 163.004(2)}

Electronic TrustNo provision.

Electronic trust is valid if written, created and stored in an electronic record, contains electronic signature of settlor, and meets all requirements for valid trust. Electronic trust is deemed executed in Nevada if the electronic trust is:  (a) transmitted to and maintained

by a custodian designated in the trust at the place of business or residence of custodian located in Nevada; or (b) maintained by either the settlor or trustee at place of business or residence in Nevada.

 

A  testamentary  trust  cannot  be  electronic.  {NRS

163.0095}.

Trust ProvisionsNo similar provisions; but specific statutes allow the settlor to override statutory rules.

Except as provided by law, the terms of a trust may expand, restrict or otherwise vary the right and interests of beneficiaries in any manner that is not

illegal or against public policy, including, without limitation: (1) the right to be informed of the beneficiary’s interest for a period of time; (2) grounds for removal of a fiduciary; (3) investment diversification, (4) fiduciary’s powers; (5) standards of care; (6) rights of indemnification; and (7) the provisions of general applicability to trusts and trust

administration.

 

Trust cannot authorize exculpation or indemnification of a fiduciary for a fiduciary’s own willful misconduct or gross negligence or preclude court  from  removing  fiduciary  for  willful misconduct or gross negligence.  {NRS 163.004}

Trustees
Acceptance

Accept  by  following  terms  of trust,  or  accepting property, or exercising trustee powers or duties. {AS

13.36.071}

No provision; but petition may be filed to confirm trustee’s acceptance.  {NRS 164.010}
Co-Trustees

Can be modified by terms of trust.

 

Default is unanimous consent but trustees can agree to act by majority.

 

Remaining trustees can act if vacancy.

Can be modified by trust or court.

 

 

If three or more trustees, default is majority rule. If two trustees, must be unanimous.

 

A co-trustee must act unless unavailable due to incapacity, illness, absence, disqualification or has property  delegated  function  to  co-trustee.    {AS

13.36.072(a)}

 

Dissenting trustee who has joined in decision is not liable to the beneficiaries if the dissenting trustee joins because of a requirement for unanimous trustee consent.   Dissent must be in writing and must be presented to a co-trustee and a legally competent beneficiary or a representative.

 

A trustee who is not authorized to exercise a power is not liable for the exercise by a co-trustee of the power or the failure to exercise that power.   {AS

13.36.110}

 

Dissenting trustee not liable for not joining in the decision, not liable if joined in decision at direction of other trustees; if dissent is in writing.

 

This section does not excuse a co-trustee from liability for inactivity in administration of the trust or for failure to attempt to prevent a breach.

 

If trustees cannot exercise power consistent with statute, interested person may ask court for instructions. {NRS 163.110}

Trustee

Delegation

Unless prohibited by trust, a co-trustee may delegate, by written instrument, authority to a co-trustee.

 

Can be revoked unless made irrevocable.

 

Co-trustee who properly delegates authority to another trustee does not need to act on delegated matter.  {AS 13.36.072(b)}

No similar provision; except for delegation under

Uniform Prudent Investor Act (see below).

Directed

Trustee/Trusts

Trust can confer trustee power on one trustee to the exclusion of the other trustees.

 

Excluded  trustee  not  liable  for  complying  with direction.

A directed fiduciary (fiduciary with no power to take action under trust) is mandated by trust and has no discretion to act otherwise; is directed or prohibited from taking acting by directing trust adviser; is not liable for complying with direction of directing trust adviser, whether the direction is to act or not, failing

Excluded  trustee  has  no  obligation  to  inquire  or investigate action of directed trustee.

 

Trustee with power to act has sole fiduciary liability and sole obligation to account to beneficiaries.  {AS

13.36.072(c)}

to take action proposed by a directed fiduciary if the action     required     the     approval,     consent     or

authorization of a person who did not provide the approval, consent or authorization, or was contingent upon a condition that was not met or satisfied.

 

A directed fiduciary is not liable for any obligation to perform or investigate investment recommend- ation to the extent the investment is made by a directing trust adviser. {NRS 163.5549}

Trust Protector

Trust may appoint a trust protector and trust protector has powers set out in trust instrument; can include power to remove and appoint trustee; modify

or amend a trust, increase or decrease interest of any beneficiary; and modify terms of a power of appointment.

 

Trust protector cannot add beneficiaries.

 

Subject to terms of trust, a trust protector is not liable as a trustee or fiduciary when performing the function of a trust protector. {AS 13.36.370}

Trust protector is any person whose appointment is provided for in the instrument. {NRS 163.5547}

 

Powers of trust protector governed by trust. Can include: power to remove and appoint a trustee, trust adviser, investment committee member; increase or decrease of interest of any beneficiary; modify or amend trust to achieve a more favorable tax status or respond to changes in the law; modify or amend trust to take advantage of change in rule against perpetuity or restraints on alienation or other state laws affecting distribution of trust or trust administration; terminate the trust, direct or veto trust distributions, change the location or governing law of the trust; review and approve trustee’s reports or accounting. Upon acceptance, trust protector is subject to the jurisdiction of the courts.  {NRS 163.5553; .5555}

 

Will be held to fiduciary standard if considered a

“directing trust adviser,” as discussed below.

Trust Advisor

(AK)/

Trust Adviser

(NV)

Settlor can appoint a person as an advisor to the trustee regarding property of the trust.

 

Unless trust provides otherwise, all power remains vested in the trustee and the trustee is not required to follow advice of advisor; advisor is not considered a fiduciary.

 

Trust can require trustee to follow advice of advisor and then advisor is considered a fiduciary.

 

Trustee is not liable for following advice and has no duty to inquire or investigate the advice.

 

Obligation to defend against a beneficiary claim based on the advice rests with the advisor.

{AS 13.36.375}

Trust can have distribution adviser and an investment adviser  with  powers  set  forth  in  NRS  163.5557.

{NRS 163.5537, 5543 and 5545}

 

 

Investment adviser powers include: directing trustee, in adviser’s  sole  discretion,  on  investments,  vote proxies, and select investment managers, or counselors, including the trustee, and delegate the powers of investment adviser.

 

Distribution   adviser   can   direct   all   distribution decisions.

 

A directing trust adviser means a trust adviser, trust protector or other person designated in the trust who has the authority to give directives that must be followed by the fiduciary.  Term does not include a trust adviser, trust protector or other person who gives recommendations that the fiduciary is not required to follow. {Sec. 42, 2015 Nevada Laws Ch.

524 (S.B. 484).

 

Trustee not liable for complying with direction of a directing trust adviser whether the direction is to act or not to act.  {NRS 163.5549}

 

If trust provides, directed fiduciary may continue to follow direction of trust adviser upon the incapacity or death of the settlor.  {NRS 163.555}

Successor Trustee

Appointment

Terms of trust govern.Trust provisions govern.

 

 

For Non-Charitable Trust – If No Trust Term: Unanimous agreement of qualified beneficiaries but

cannot appoint a beneficiary, or court appointment. Wholly Charitable Trust:

Terms  of  trust  or  person  selected  by  unanimous consent of charitable organizations, or the court.

 

Virtual representation under AS 13.06.120 applies.

{AS 13.36.073}

If the trust has no provision for appointment of successor trustee and a trust has no serving trustee,

the current beneficiaries of the trust, by unanimous vote, may name and appoint a successor trustee without the approval of the court so long as the successor trustee is not a person described in NRS

138.020 (e.g., convicted of a felony or a bank not licensed  to  do  business  in  Nevada)  and  is not  a “related or subordinate person” with respect to the

settlor or any beneficiary within the meaning of section 642(c) of the IRC.

 

If a current beneficiary is a minor, the minor’s guardian may vote on minor’s behalf and virtual representation under NRS 164.038 applies.   {Sec.

46.5 2015 Nevada Laws Ch. 524 (S.B. 484)}

 

Court may appoint a successor trustee upon petition.

{NRS 153.003}

Resignation

Terms of trust govern; if none, 30 days’ written

notice to qualified beneficiaries and all co-trustees or court approval. {AS 13.36.074}

Trustee  may  decline  to  act  upon  petition  to  the

court.{NRS 153.090}

Removal

Decision of trust protector, if granted that authority under terms of trust; or another person granted power to remove in the trust instrument.

 

Procedure in the trust instrument.

 

Court order on petition by settlor, a co-trustee, or qualified beneficiary, but only if no trust protector or procedure outlined in trust instrument.

Trust can provide grounds for removal of trustee.

{NRS 163.004(1)(b)}

 

Can file petition in court for removal.

 

Even if there is a trust protector, court can remove for serious breach of trust.

 

If there is not a trust protector or procedure, court can remove only if in best interests of all the beneficiaries and there is a lack of cooperation among co-trustees that substantially impairs the administration of trust, a trustee is unfit, or unwilling, or persistently fails to administer the trust, or there has been a substantial change of circumstances not anticipated by Settlor, removal requested by all qualified beneficiaries, and removal is not inconsistent with material purpose of the trust. {AS 13.36.076}

Bond Requirement

No  bond  is  required  unless  trust  requires  bond, reasonable request of beneficiary, or court order. Court can release or reduce bond requirements. {AS

13.36.083}

Court may require bond.  {NRS 153.120}
Trustee Expenses

Trust provision governs.   If none, trustee can be reimbursed out of trust property, with interest, for properly incurred administration expenses and expenses not properly incurred but that benefitted the trust and would result in unjust enrichment of the trust.

 

Trustee  has  lien  against  trust  for  advances.  {AS

13.36.078}

Trustee may pay taxes, assessment, compensation of the fiduciary, and other expenses incurred in the administration of the trust. {NRS 163.305}

 

Trustee can advance money for administration of trust and has lien against trust for advances. {NRS

163.325}

Trustee

Compensation

Trustee entitled to reasonable compensation.

Trustee  may  pay  on  settlement  of  each  account compensation to a trustee. Court shall allow trustee

compensation   as   just   and   reasonable.   {NRS

153.070}

If trust stated method or amount of compensation, and trustee compensated in accordance with trust,

compensation presumed reasonable.

 

Burden shifts to party challenging compensation to prove by preponderance of evidence that compen- sation is not reasonable.  {AS 13.36.055}

 

Same rule applies for compensation paid to advisors to trustee, such as accountant, attorneys and investment managers.

Trust Certification

Trust provision governs.  If none, trust certification authorized. {AS 13.36.079}

 

Details information to include in trust certification. Any trustee can sign trust certification.

Must state that the trust has not been revoked or amended to make any representation untrue.

 

Third party may excerpt from the trust.

 

Reliance on trust certification by person without knowledge that certification is false; not liable for damages as result of reliance. Transactions between trustee and third party acting in reliance upon certification fully enforceable against trust assets.

 

A person who demands a copy of the trust, in addition to the trust certification and excerpts, is

Trust certification authorized; must be in form of affidavit signed by all current acting trustees. {NRS

164.400}

 

Details optional information to include in certification; must include statement that the trust has not been revoked or amended to make any representation untrue. {NRS 164.410}

 

Can include a declaration regarding the situs or domicile of the trust and regarding the law that governs the validity, construction and administration of the trust.

 

Third party may request excerpts from trust.  {NRS

164.420}

 

Reliance on trust certification by person without knowledge that certification is false; not liable for damages as result of reliance. Transactions between

liable to the state for a civil penalty not to exceed

$1,000 plus the actual damages associated with the demand, if the court finds that the person did not act in good faith.

trustee  and  third  party  acting  in  reliance  upon certification  fully  enforceable  against  trust  assets

unless the person knows that that the trustee is acting outside authority. {NRS 164.430}

Trustee Duties
RegistrationTrustee must register the trust in the superior court in the judicial district of primary place of administration. {AS 13.36.005}

No court registration required; trustee, settlor or beneficiary may petition court for confirmation of appointment of trustee of an inter-vivos trust; will subject trust to continuing jurisdiction of court, until request filed to remove trust from court jurisdiction.

{NRS 164.010}

Notification

Trustee shall keep the beneficiaries reasonably informed of trust and its administration.

 

Within 30 days of acceptance, must notify, in writing, current beneficiaries and, if possible, one or more persons who can virtually represent future beneficiaries under AS 13.06.120.

 

Information required is the place the trust is registered and the name and address of trustee.  {AS

13.36.080}

 

 

Upon    reasonable    request,    must    provide    the beneficiary a copy of trust provisions that affect beneficiary’s interest and relevant information about the trust assets and trust administration.

 

Upon reasonable request, a beneficiary is entitled to statement of accounts annually and on termination of trust, or change in trustee.

Optional notice provision for a revocable trust that becomes irrevocable on death of settlor or terms of trust.   Trustee can notify beneficiaries of the trust (including  to  heirs  advising  that  they  are  not

beneficiaries); notice may include a statement (bold,

12-point) that person has 120 days to contest the trust or be forever barred.  No action to contest trust can be brought after 120 days of notice unless party can prove  he  did  not  receive  actual  notice.    {NRS

164.021}

Exemption from

Notice

Settlor can exempt trustee from notice provisions and providing information to beneficiaries who are not

entitled to a mandatory distribution (notice is also required to a future beneficiary who actually receives a distribution).

 

Exemption can be stated in trust or separate document.

 

Exemption ends at the earlier of the settlor’s death or court order or incapacity order. {AS 13.36.080}

Trust can restrict or eliminate the right of a beneficiary  to  be  informed  of  the  beneficiary’s

interest for a period of time. {NRS 163.004}

 

Trust can exempt trustee from providing notice, account and copy of trust to beneficiaries, but court may override that exemption upon demand by a beneficiary, and can order confidential reports (see below).  {NRS 165.137}

Governing Law

Trust can include Alaska law governing provision. Alaska  law  governs  validity,  construction,  and

administration of trust.

 

Some trust assets must be deposited in the state. Trustee must be a qualified person.

Minimum duties: maintain records, prepare or arrange for tax returns (on exclusive or non- exclusive basis). {AS 13.36.035(c)}

Trust can provide that Nevada law governs validity and construction of a trust.

 

Nevada law will apply if (1) a person designated by the trust has the right to designate the governing law; or (2) the trust does not provide for the governing law or no designation has been made, and the settlor or the trustee was a resident of Nevada at the time the trust was created or at the time the trust became irrevocable.

 

Person not domiciled in Nevada may have the right to designate the governing law for validity and construction of the trust if properly designated under the trust.

 

 

The court may assume jurisdiction for a proceeding affecting a trust if there is a clear and sufficient nexus between a trust and Nevada unless another court has assumed jurisdiction, the trust instrument expressly

provides that the situs is outside Nevada, or another situs has been designated.

 

Clear and sufficient nexus exists if:

(a) The trust owns real property in Nevada;

(b) The trust owns personal property, wherever situated, if the trustee or co-trustee is a resident of     Nevada,     incorporated     or authorized to do business in Nevada, a trust company licensed under chapter 669 of NRS; a       family   trust   company   or   a   national association having an office in Nevada;

(c) One or more beneficiaries of the trust reside in Nevada; or

(d) At least part of the administration of the trust occurs in Nevada.

 

If relying on a co-trustee for (b) and (d), such co- trustee must have the authority to maintain records for the trust and to prepare income tax returns for the trust, even if such authority may also be exercised by another co-trustee. {Sec. 61, 2015 Nevada Laws Ch.

524 (S.B. 484)}

Change Place of

Administration

Alaska law governs the administration of the trust and the court has jurisdiction while the trust is administered in Alaska unless:

(1) The trust specifies that the law of another

jurisdiction governs the administration of the trust;

See above.

 

Court has jurisdiction over a trust if part or all of administration is in Nevada, a qualified trustee has the authority to maintain records for the trust and to prepare income tax returns for the trust, even if such authority may also be exercised by another co- trustee.

(2) The trust expressly precludes a change in the choice of law for the administration of the

trust; and

(3) Expressly states that a change for the choice of administration of a trust may not occur, even if there is an Alaska trustee.

 

A trust is considered administered in Alaska if governing instrument so states; the principal office of the trustee having custody of the trust’s principal and records is located in this state, unless trustee elects to maintain administration in the state whose law governs; the only trustee who is acting to administer the trust is a qualified person, a majority of all trustees consists of qualified persons; or a majority of the trustees are not qualified persons and a majority of the trustees, including at least one qualified           trustee,    executes    an    acknowledged instrument electing Alaska as the primary place of administration. The election must be filed in a court of the state whose law is specified in the governing instrument.  {AS 13.36.035(f)-(h)}

Change SitusSitus of foreign trust moved to Alaska when meets requirements of AS 13.36.035(c) and qualified person registers trust.See above under governing law.
Qualified Trustee

Qualified trustee includes:

 

An individual residing and domiciled in Alaska;

No separate definition, but governing law provision requires that a co-trustee be a licensed trust company under Nevada law, at least a part of the administration of the trust occurs in Nevada, and the trustee has the authority to maintain trust records and

A trust company organized under state law and that has its principal place of business in Alaska; or

 

A bank organized under state law or a national bank with trust powers and has its principal place of business in Alaska. {AS 13.36.390(3)}

prepare tax returns on a non-exclusive basis.  {See

Sec. 61, 2015 Nevada Laws Ch. 524 (S.B. 484)}

 

A self-settled trust must have at least one trustee who is a natural person who resides and has his domicile in Nevada; a trust company that is organized under federal law or the laws of another state and maintains an office in this State for the transaction of business; or a bank with trust powers and maintains an office in Nevada to transact business.  {NRS 166.015}

Accounting

No specific requirement to provide an accounting unless stated in trust.  Must provide, upon request, a copy of the terms of the trust that describes or affects

beneficiary’s interest and with relevant information about the assets of the trust. Upon request, a beneficiary is entitled to a statement of the accounts of the trust annually and on termination of the trust or change of the trustee.  {AS 13.36.080}

 

Settlor may provide for exemption from requirements for a period of time that is the shorter of the settlor’s death or a judicial determination of incapacity; but exemption does not apply to a beneficiary  entitled  to  a  mandatory  distribution.

{AS 13.36.080}

Unless the trust states otherwise, within 75 days after trustee receives possession of trust property, trustee shall serve a copy of an inventory to each interested

person and each beneficiary to whom the trustee is required to account pursuant to the statute. {NRS

165.030}

 

If trust does not expressly alter rules, upon demand, trustee must provide an account to each current beneficiary and each remainder beneficiary (but not remote beneficiary) (these are defined terms) but subject to the right to petition the court for instruction,  except as follows:

– Account  provided  only  to  settlor  who  retained power    of   revocation   (unless   court-appointed guardian or a person having the right of revocation demands an account on behalf of the settlor or court determines settlor is incompetent or is susceptible to undue influence and orders account to be provided).

– Account only to person holding a broad power of appointment (defined as ability to appoint to powerholder without any restrictions  or  limited power of appointment to any person).

Trustee is not required to provide a beneficiary information that does not affect that beneficiary’s interest in the trust and may redact the account.

Account not required to a beneficiary of an irrevocable trust while that beneficiary’s only interest in the trust is a discretionary interest (trustee has discretion to determine whether a distribution should be made, when and the amount of the distribution).  {Sec. 73, 2015 Nevada Laws Ch. 524 (S.B. 484)}

Beneficiary may waive right to an account.

Trust may restrict or eliminate a beneficiary’s right to be informed of trust interest for a period of time.

{NRS 163.004}

A required account must be delivered within 90 days after the end of the period of account; electronic mail is authorized; unless required by the trust, only need to account once per year.

Beneficiary Demands for Account

Statute details how beneficiary must demand an account. Trustee must respond within 14 days either

accepting or rejecting the demand for an account or advising the beneficiary of intent to petition the court

for instructions.

 

If rejecting the request, trustee must give written notice of grounds for rejection and that beneficiary has 60 days in which to petition the court; if petition is not filed, beneficiary is barred from further right to demand.

 

If accepting the request, must provide account within

60 days of request.

 

If trustee fails to either accept or reject request, or file petition for instruction, the request is deemed rejected. {NRS 165.141}

 

Beneficiary cannot demand an account that is deemed final, as set forth under “limitation period.”

 

Statute provides court procedure for review of trustee’s rejection of a beneficiary’s demand for an account.  {NRS 165.143}

Limitation Period

Beneficiary who receives a report and is notified about the location and ability to examine the trust records must bring action against trustee within three (3) years of receipt of the report, even if the report

lacks adequate disclosure.

 

Trustee can petition court for approval of report.

Account deemed approved and final:

(1) By a beneficiary who received a copy of the account if no written objection is delivered to the trustee within 90 days after the trustee provided the account; or

(2) By all beneficiaries who are not required to receive an account, such as non-vested and contingent    beneficiaries,    remote    benefi-

Sixty (60) days’ notice of the hearing provided to beneficiaries.

 

Beneficiaries must file and serve claims within forty- five (45) days of receiving notice or claims are barred.

 

 

Report  must  adequately disclose the existence of potential claims.

 

 

Trustee can provide notice (statute specifies language and font) to beneficiaries that claims must be brought within six (6) months of receiving the report or are barred. Report must adequately disclose the existence of potential claims.

 

 

No limitation period for claims brought by a beneficiary against a trustee for fraud committed by the trustee. {AS 13.36.100}

ciaries, minor beneficiaries, and unborn or unknown   beneficiaries   if   the   account   is

deemed approved and final by a beneficiary who has a similar, but preceding interest, in the trust, under virtual representation statute, or as to any beneficiary who has waived an account.

 

Account is deemed final upon approval of the court, subject to right of appeal.

 

Cost of preparing an account must be paid from the trust, and allocated to income and principal as provided in trust, or if silent, in accordance with principal and income act.   {Sec. 76, 2015 Nevada Laws Ch. 524 (S.B. 484)}

 

Unless court finds trustee acted in good faith, trustee is personally liable for failing to provide an account for all costs reasonably incurred to enforce terms of trust or the statute, including reasonable attorney’s fees and costs. Trustee cannot use trust funds to pay this liability. Trustee not personally liable if there is good cause to not provide the account; trustee may use trust assets to petition court for instruction.

Confidential

Accounts

No provisions.

If the court finds that a beneficiary is entitled to an account but the trust authorizes or directs the trustee

not to provide an account, the court can order the trustee to prepare and file a confidential report with court and one or more reviewers retained by beneficiary.

 

Reviewers must  submit  report  to  the  court  as  to whether the trust has been properly administered or accounted for with applicable law, the trust and GAAP, trustee can object to report. If court finds a problem, can order an account be provided to beneficiary or grant other relief.  {NRS 165.145}

Notice of Proposed Action/Binding DecisionsNo provisions; other than trustee may issue a report detailing action under AS 13.36.100 to commence the limitation period.

A trustee, trust protector or trust adviser may provide notice of a proposed action.

 

Notice goes to every adult beneficiary who, at the time notice is provided, is entitled to receive a distribution or would receive a distribution of principal if the trust were to terminate.

 

Specifies required information.

 

 

Can include a time in which any objection to proposed notice must be made, which cannot be less than 30 days from date notice is mailed.

 

If no beneficiary who is entitled to notice objects, the trustee is not liable to any present or future beneficiary with respect to that proposed action.

 

If there is an objection, trustee can petition the court; burden is on the beneficiary to prove that the proposed action should not be taken.

If trustee elects not to take proposed action, must notify beneficiaries of change and is not liable for not

taking the action.

Trustee Powers

Powers of a Trustee are attached to office, not personal to trustee. {AS 13.36.105}

 

Settlor or beneficiary may alter, eliminate, expand or restrict  trustee’s  duties,  as  noted  below.     {AS

13.36.192-.194}

 

Court has power to relieve trustee from duties and restrictions for cause shown and can wholly or partially excuse trustee who acted honestly and reasonably from liability.

 

General Powers listed in statute {AS 13.36.107} Trustee has all powers unless changed by trust. Trustee has all powers granted by trust.

Specific Powers: {AS 13.36.109} (not all are listed).

 

Collect, hold and retain trust property, even if it includes property in which the trustee is personally interested.

 

Accept additions to the trust from the settlor or another person.

Continue or participate in the operation of a business and can change legal form of business, reorganize or liquidate.

 

Acquire, dispose of, divide, exchange, improve, subdivide, and abandon property.

 

Corporate trustee can sell publicly traded stocks and bonds and treasury obligations between trusts in which the corporate trustee is the trustee.

 

Inspect property for environmental contamination. Encumber trust property even for a term beyond term of trust; borrow money for a trust purpose.

 

Lease property or grant an option involving trust property even for a term beyond term of trust.

 

Oil and gas exploration and leasing authority.

 

Vote shares and take all actions as a shareholder or member of an entity.

 

Insure the trust property and the trustee against third parties.

 

Defend, prosecute and settle claims involving the trust.

 

Employ accountant, attorneys and investment advisers as needed, even if affiliated with trustee.

Same  rule;  can  be  changed  by  trust  instrument.

{NRS 163.100}

 

Trustee  has  powers  granted  by  statute,  trust  and court. {NRS 163.023}

Court can’t grant power not authorized by statute. The statutory powers are incorporated into trust even

if not set out in trust instrument. {NRS 163.260}

 

Can also be incorporated into any other instrument appointing a fiduciary.

 

 

 

 

 

 

 

Specific Powers: {NRS 163.265} (not all powers are listed here)

 

Retain trust property even if retention of the property would not be appropriate for fiduciary to hold. {NRS

163.265}

 

Sell,  exchange  or  otherwise  dispose  of  property.

{NRS 163.270}

Manage real property. {NRS 163.300}

 

Invest and reinvest trust assets as fiduciary deems advisable, including purchasing life insurance, stocks, bonds, real property.   A fiduciary may delegate authority to invest but the fiduciary is not thereby relieved of any liability that exists in the absence of delegation. {NRS 163.275}

 

Can invest without diversification; but see below regarding  uniform  prudent  investor  rule.    {NRS

163.280}

 

Continue,  change  or  terminate  business.  {NRS

163.285}   If trustee has duty to account, does not have to separately account for business.

 

Form entities.  {NRS 163.290}

 

Borrow money on behalf of trust.  {NRS 163.320} A corporate trustee may borrow from its own bank department.

 

Vote shares. {NRS 163.330}

 

Employ and compensate persons to assist with administration of trust, including accountants, lawyers, brokers, investment bankers. Trustee is not liable for any neglect, omission, misconduct or default  of  representative  if  he  was  selected  and

 

Make loans to trust beneficiaries who are currently eligible for or entitled to a distribution of income or principal (“eligible beneficiaries”) on fair and reasonable terms.

 

Guarantee loans from third parties to eligible beneficiaries or eligible third-party entity (entity owned 50% or more by trust or one or more eligible beneficiaries).

 

Trustee can make marital deduction election and can make generation skipping tax election.

 

Trustee can divide trusts for tax purposes or if division is in best interest of the beneficiaries. Can be unequal division if the terms of the separate trusts are substantially identical to the terms of the original trust. {AS 13.36.169}  Allocation of assets is based on value at time of division.

retained with due care on the part of the fiduciary.

{NRS 163.380}

 

Except as otherwise provided by the trust, trustee may combine two or more trusts into a single trust or divide a trust into two or more separate trusts if the combination or division does not:

(1) Impair the rights of any beneficiary;

(2) Substantially  affect  the  accomplishment  of the purpose of the trust or trusts;

(3) Violate    the    rule    against    perpetuities applicable to the trust.

 

The combination or division must be made only after giving notice of the proposed action and following statutory notice procedure.  The notice must include a summary of the anticipated tax consequences, if any, of the proposed combination or division.  {Sec.

40, 2015 Nevada Laws Ch. 524 (S.B. 484)}

 

Trustee can change the name of an irrevocable trust or give the trust a name except to the extent it would be materially detrimental to the administration of the trust or the trust purposes.  {Sec. 40, 2015 Nevada Laws Ch. 524 (S.B. 484)}

Treat Distribution

From Capital

Gains

Consider discretionary distribution as being made from  capital  gains  realized  during  the  year.  {AS

13.36.107(29)}

Fiduciary may cause gains from sale or exchange of trust assets, as determined for federal income tax

purposes, to be taxed as a part of a distribution of income, including, without limitation, income which has been increased by an adjustment from principal to income under the principal and income act, a

unitrust distribution or a distribution of principal to a beneficiary.  {Sec. 46, 2015 Nevada Laws Ch. 524

(S.B. 484)}

Distribution

Powers

Make distributions to a beneficiary or to another person on behalf of the beneficiary even if the beneficiary is not under a legal disability.

 

Make distributions of property and money in divided or undivided interests, pro rata, or otherwise and to adjust resulting differences in value.

 

The probate distribution rules also apply to distributions from a revocable trust following death of Settlor. {AS 13.36.335}

 

 

No statutory provisions for distributing in cash or in kind (except revocable trust through application of probate provisions).

Make distribution to minor or incapacitated person directly to person, apply directly to payment for HESM of person, to legal or natural guardian, to

another person, whether or not court appointed guardian, having care and custody of person. Trustee must exercise due care in selecting person to receive distribution. {NRS 163.400}

 

Make distributions of capital assets (wholly or partially) in kind or in cash, in divided and undivided interests and determine value of capital assets, determination binding unless clearly capricious, erroneous and inequitable. {NRS 163.395}

 

 

Each affected beneficiary must consent if property or money is distributed without proration, unless trust specifically authorizes otherwise.  {NRS 163.027}

 

Trustee not required to consider a beneficiary’s assets  or  resources  in  determining  distribution.

{NRS 163.4175}

 

If the trust contains a discretionary interest that allows unequal distributions among beneficiaries or to the exclusion of other beneficiaries, trustee may distribute all of the trust to one beneficiary in the trustee’s discretion.  {NRS 163.419}

Trustee Liability

{AS 13.36.110}

Trustee voting corporate stock is liable for a loss for failure to use reasonable care in deciding how to vote the stock only if personally at fault. {AS 13.36.120}

 

Trustee may be removed or denied compensation as a result of violation of statutory duties and a beneficiary, co-trustee or successor trustee can treat the violation as a breach of trust. {AS 13.36.198}

Similar rule; trustee owning corporate stock can vote by proxy, liable for loss for failure to use reasonable

care  in  deciding  how  to  vote  the  stock.    {NRS

163.080}

 

Trustee may be removed or denied compensation as a result of violation of statutory duties and can treat violation as a breach of trust.  {NRS 163.190}. Interested  person  may  bring  court  proceeding  if trustee commits or threatens to commit a breach of trust; remedies include removal, reduce or eliminate compensation; equitable lien or constructive trust on trust property.  {NRS 163.115}

Trustee

Exoneration

Trustee entitled to exoneration or reimbursement for personal liability for a tort committed in administration of trust if not personally at fault for the liability.

 

Even if personally at fault, trustee entitled to exoneration or reimbursement if increases value of trust property, but only to amount of increase.

 

Does not apply to trustees of charitable trusts. {AS

13.36.180}

Trustee entitled to exoneration or reimbursement for personal liability for a tort committed in administration of trust if the tort was a common incident of the kind of business activity in which the trustee was properly engaged for the trust or if not a common incident, neither the trustee nor any officer of employee of the trustee was guilty of personal

fault.

 

 

Even if personally at fault, trustee entitled to exoneration or reimbursement if increases value of trust property to the extent of the increase.

 

Does not alter rules for trustees of charitable trust.

{NRS 163.130}

Limitations on

Trustee

Corporate trustee may not lend trust funds to itself or an  affiliate,  director,  officer  or  employee.    {AS

13.36.140}

This restriction cannot be waived by the settlor or beneficiary {AS 13.36.192; .194} Court may authorize.

State or federal regulated corporate trustee may deposit with itself trust funds being held pending investment, distribution or payment of debts if the corporate trustee pays the interest earned on the funds and maintains in its trust department, as security for the deposit, a separate fund consisting of securities that are legal for trust investments and that are at all times equal in total market value to the amount of the deposit; this is not required if the deposit is insured. {AS 12.36.145}

Restriction cannot be waived by the settlor or beneficiary.

A trustee cannot lease, buy or sell to or from itself or a related person. {AS 13.36.150} Restriction cannot be waived by settlor or beneficiary of trust, however trust can expressly authorize this power. Court can authorize.

Corporate trustee cannot buy its own or affiliate’s securities. {AS 13.36.160}

Corporate trustee may not lend funds to itself or an affiliate, director, officer or employee unless provided in a trust and consented to by all beneficiaries of the trust or performed in accordance with a notice of proposed action or approved by court.  Otherwise,  restrictions  cannot  be  altered.

{NRS 163.030; 163.160} Same rule. {NRS 163.040}

Same rule.  Court can authorize, trust can authorize and all beneficiaries may consent. {NRS 163.050}

Same limitation, can be authorized by court or trust instrument. {NRS 163.070}

Settlor/ Beneficiary to

Relieve Trustee of

Duties/Liabilities

Settlor or Beneficiary may relieve a trustee of any or all   duties,   restrictions   and   liabilities   otherwise

imposed except cannot alter restrictions on buying or selling trust assets from self or related parties, lending trust money to self or related parties or restrictions  on  depositing  money  with  self.  {AS

13.36.192; .194}

Settlor or Beneficiary may relieve a trustee of any or all   duties,   restrictions   and   liabilities   otherwise

imposed except cannot alter restrictions on buying and selling trustee assets from self or related parties, lending trust money to self or related parties, or restrictions on depositing money with self.   {NRS

163.160}

Decanting

Permissible changes depends on unlimited v. limited discretion.

 

Unlimited Discretion: eliminate beneficiary; grant power of appointment, extend duration of trust, make administrative changes.

 

Limited Discretion (ascertainable standard): Beneficiaries and standard must remain the same.

 

Can change standard to decant to a special needs or supplemental needs trust.

 

Cannot grant new power of appointment.

 

Must include same power of appointment as in first trust.

 

Can extend duration of trust; can change standard for distribution for the term extended beyond the original term of the trust.

 

(limitations on all trustees)

Cannot decant if would eliminate marital or charitable deduction.

Cannot reduce or eliminate a current right to a mandatory distribution of income or principal if the right has come into existence.

Can reduce or eliminate a mandatory right during extended duration of the trust.

Can reduce or eliminate a mandatory right if appointing to a special needs trust or supplemental needs trust.

Cannot increase trustee compensation or decrease, indemnify, or exonerate trustee liability.

Applies to Alaska trusts and non-Alaska trusts that choose to administer trust in Alaska.

Notice to at least one qualified beneficiary, the settlor and person entitled to remove and replace trustee is required.

Notice to a qualified beneficiary is not required if settlor  exempted  trustee  from  notice  under  AS

13.36.080.

Virtual representation applies.

Permissible changes are the same regardless of unlimited or limited discretion.

 

Second trust may only have as beneficiaries one or more of the beneficiaries of the first trust, including beneficiaries to whom a distribution of income or principal may be made in the future from the original trust at the time or upon the happening of an event (allows for acceleration of remainder interests). A permissible appointee of a power of appointment in the second trust is not considered a beneficiary of the second trust.

 

Second trust may grant a general or limited power of appointment to one or more beneficiaries of the second trust who are beneficiaries of the first trust.

 

Second trust may eliminate an income interest of a beneficiary unless the first trust is a trust for which a marital deduction was taken, a trust for which a charitable deduction was taken, or a grantor-retained annuity or unitrust.

Second trust cannot eliminate a power of withdrawal that may be exercised at the time of the proposed appointment.

 

Property specifically allocated to a beneficiary in the first trust must be specifically allocated in the second trust.

 

Cannot decant if property held for the benefit of one or more beneficiaries under the first and second trusts has a lower value than the value of the property under the first trust; unless the benefit provided is limited to a specific amount or periodic payment of a specific amount and the value of the property held in either or both trusts is actuarially adequate to provide the benefit.

 

A trustee who is a beneficiary of the first trust cannot decant to a second trust if the trustee does not have discretion to make distributions to himself; the trustee’s discretion to make distributions is limited by an ascertainable standard and under the second trust, it is not limited by an ascertainable standard, or the trustee’s discretion to make distributions to himself can only be exercised with the consent of a co-trustee or a person holding an adverse interest and under the second trust the trustee’s discretion is not limited by an ascertainable standard and may be exercised without consent, or the trustee of the first trust does not have discretion to make distributions that   will   discharge   the   trustee’s   legal   support

Consent not required.

 

Notice does not affect limitation period.

{AS 13.36.159}

obligations but under the second trust, the discretion is not limited.

 

A trustee who may be removed by the beneficiaries and replaced with a trustee that is related to or subordinated to a beneficiary may not appoint to a second trust to the extent that the exercise of the authority by such trustee would have the effect of increasing the distributions that can be made from the second trust to such beneficiary or group of beneficiaries that held the power to remove and replace the trustee, unless the distributions are limited in the second trust by an ascertainable standard.

 

Notice of decanting is not required but is permissive. Can use notice provisions under NRS 164.725 to commence limitation period.

 

Applies to a trust that is governed by, sitused in, or administered under the laws of Nevada, including trusts moved from another state. {NRS 163.556}

Penalty Clause

A provision in a trust penalizing a beneficiary for challenging acts of the trustee or other fiduciary, or for instituting any other proceedings relating to the trust is enforceable even if probable cause exists for

the proceeding. {AS 13.36.335}

Except as stated below, no-contest clause must be enforced by court.  Must be construed to carry out settlor’s intent.

 

No-contest clause is not enforceable if beneficiary seeks only to enforce the terms of the trust, enforce the beneficiary’s legal rights related to the trust, or

obtain a ruling with respect to the construction or legal effect of the trust.

 

Not enforceable if beneficiary seeks to invalidate a trust if the legal action is instituted in good faith and based on probable cause.  {NRS 163.00195}

Modification of

Trusts

Irrevocable trusts may be modified or terminated with court approval for unanticipated circumstances, achieve settlor’s tax objectives, and by consent of qualified beneficiaries.   {AS 13.36.345, .355 and

.360}

 

Court may reform a trust to conform to settlor’s intent if there is a mistake of fact or law, and intent established by clear and convincing evidence.  {AS

13.36.350}

No specific provisions; court retains jurisdiction over all matters affecting trusts.

Termination of

Uneconomical

Trust

Trustee may terminate if trust is less than $50,000.

 

Court may modify or terminate a non-charitable trust or remove the trustee and appoint a different trustee, if the court determines that the value of the trust is insufficient to justify the cost of administration.

 

Trust is distributed in accordance with settlor’s probable intent. {AS 13.36.365}

After notice to the beneficiaries, trustee may terminate a trust if less than $100,000 or that is

uneconomical to administer, if the trustee concludes that the value of the trust is insufficient to justify the cost of administration.   An Interested Trustee may not exercise this power.

 

The court may modify or terminate a trust or remove and appoint a new trustee if the court determines that the value of the trust does not justify the cost of administration.

 

Trust is to be distributed in accordance with purposes of the trust.  {Sec. 46.5, 2015 Nevada Laws Ch. 524 (S.B. 484)}

Asset Protection

Spendthrift

Provision

Trust can include provision that provides that a beneficiary’s interest in the trust, including a beneficiary who is a settlor, may not be involuntarily or voluntarily transferred prior to payment or delivery to the beneficiary. Beneficiary’s use of real

or tangible personal property, in the exercise of trustee’s discretion, is not payment or delivery.

 

Spendthrift provision is considered a restriction under applicable bankruptcy laws.  {AS 34.40.110}.

 

A creditor (existing or later) of a beneficiary, who is not a settlor, cannot satisfy claim out of beneficial interest in trust, even if the beneficiary has the right to receive through the exercise of a person’s discretion, whether or not limited by a standard, a distribution of income or principal (or both). Applies even if settlor is trustee (but settlor cannot also be the beneficiary).

 

 

Spendthrift protection available even if beneficiary is sole trustee or a trust advisor.

Settlor can provide in trust that a beneficiary’s interest may not be transferred accelerated or otherwise assigned, voluntarily or involuntarily or by operation of law or any other process.

{NRS 166.120}. A trust containing such a provision

is   referred   to   as   a   “spendthrift   trust.”   {NRS

166.020}.

No specific language is required to create a spendthrift trust, sufficient if the terms of the trust manifest an intention to create such a trust. {NRS

166.050}

 

 

Payments from a trust, whether mandatory or discretionary, can be made only to the beneficiary or on behalf of the beneficiary and not by way of assignment or beneficiary order, or by way of any court order, including garnishment, levy or attachments.

 

Court has exclusive jurisdiction over any action to determine creditor’s rights to beneficiary’s interest in trust and must be brought under trust code.

 

Beneficiary has no power to assign or transfer or order the assignment of income.

 

 

The trust estate and income shall go to and be applied by the trustee solely for the benefit of the beneficiary free and clear of all obligations of the beneficiary.

Trustee is required to disregard and defeat any assignment or other act, voluntary or involuntary,

that is contrary to the spendthrift provision. {NRS

166.120} See also NRS 163.417, which authorizes a trustee to provide that a beneficial interest may not be transferred, voluntarily or involuntarily, before the trustee has delivered the interest to the beneficiary.

Governing Law/ Spendthrift Trusts

Applies to all trust that meet governing law provisions under AS 13.36.035(c) or whose place of administration is Alaska under AS 13.36.035(f)-(g) (see above for details)

 

Property that a donee of a power of appointment has is not subject to claims of donee’s creditors except to extent donee is permitted to appoint to donee or donee’s estate (or creditors thereof) and effectively exercises the power in favor of donee, donee’s estate (or creditors thereof).  {AS 34.40.115}

Spendthrift trust protection applies to all spendthrift trusts created in or outside of Nevada if

(1) All or part of the land or personal property is located in Nevada;

(2) The declared domicile of the creator affecting personal property is Nevada;

(3) As least one qualified trustee has powers that include maintaining records and preparing income tax returns for the trust, and all or part of the administration of the trust is performed in Nevada;

(4) If the settlor is a beneficiary, at least one trustee  must  be  a  qualified  trustee.  {NRS

166.015}

Limitation on

Creditor’s Rights/ Discretionary Interests Irrevocable Trusts

Discretionary interest is any interest subject to the discretion of trustee, even if limited by a standard

and even if words such as “sole” or “absolute” are not used.

 

Discretionary interest is not a property interest or enforceable right; mere expectancy that a creditor of a beneficiary cannot attach or otherwise reach.

A creditor of a beneficiary cannot force a distribution of a discretionary interest. A creditor cannot compel a trustee to exercise the discretion.

 

Even if a beneficiary has an outstanding creditor, trustee  may  pay  to  a  third  party  on  behalf  of  a beneficiary and is not liable to outstanding creditor. A creditor cannot maintain an action to interfere with trustee’s discretion.

 

 

A creditor cannot obtain any order of attachment or other relief to prevent a trustee from making a discretionary payment to a third party on behalf of the beneficiary.  But creditor is still allowed to seek relief for a fraudulent transfer under AS 13.40.110.

{AS 13.40.113}

Discretionary interest means that the trustee has discretion to determine whether a distribution should

be made, when and the amount of the distribution. If a trust provides for a support interest that also includes mandatory language but the mandatory language is qualified by discretionary language, the support interest is classified as a discretionary interest. {NRS 163.4185}.

A beneficiary who has a discretionary interest does not have an enforceable right to a distribution from the trust and a court may review the exercise of discretion only if the trustee acts dishonestly, with bad faith and willful misconduct.

Trustee given unfettered or absolute discretion, or similar words, has no duty to act reasonably in the exercise of that discretion.

Even if a beneficiary has an outstanding creditor, a trustee of a discretionary interest may pay any expense on the beneficiary’s behalf and may exhaust the income and principal of the trust for the benefit of such beneficiary. {NRS 163.419}

 

A creditor may not exercise and a court may not order the exercise of :

(1) A power of appointment or any other power held by a beneficiary;

(2) Any power held by a trust protector or any other person;

(3) A  trustee’s  discretion  to  (a)  distribute  any discretionary   interest;   (b)   distribute   any

mandatory interest which is past due directly to a creditor; (c) take any other authorized action;

(4) A  power  to  distribute  a  beneficial  interest solely because the beneficiary is a trustee.

Special Presumptions to Protect Trust Assets

Following factors will not defeat asset protection

{AS 34.40.110}:

(1) Beneficiary is sole trustee, co-trustee or trust advisor;

(2) Settlor can be a co-trustee or trust advisor but cannot  have   a   discretionary   power   to distribute if also a beneficiary;

(3) Settlor  can  retain  the  power  to  appoint  a trustee, trust protector or trust advisor or have power to remove and replace trustee or trust protector with a person who is not related or subordinated to settlor.

Following factors will not defeat asset protection

{AS 34.40.110}:

(1) Beneficiary is sole trustee, co-trustee or trust advisor;

(2) Settlor can be a co-trustee or trust advisor but cannot  have   a   discretionary   power   to distribute if also a beneficiary;

(3) Settlor  can  retain  the  power  to  appoint  a trustee, trust protector or trust advisor or have power to remove and replace trustee or trust protector with a person who is not related or subordinated to settlor.

Following factors, alone or in combination, must not be considered to be improper control or dominion over a trust to defeat asset protection:

(1) Beneficiary is serving as trustee;

(2) Settlor or beneficiary holds unrestricted right to remove or replace trustee;

(3) The   settlor   or   beneficiary   is   a   trust administrator, general   partner,   manager, owner, etc. of any business entity owned by the trust;

(4) The trustee is related by blood, adoption, or marriage to the settlor or beneficiary;

(5) The trustee is the settlor’s or beneficiary’s agent, accountant, lawyer, financial advisor or friend or business associate.

{NRS 163.4177}

 

Creditor must establish that a settlor is the “alter ego” of a trustee of an irrevocable trust by clear and convincing evidence.  The following factors, alone or in combination, cannot establish that settlor is alter ego of trustee:

(1) The      settlor      signed      checks,      made disbursements, or executed other documents related to the trust as the trustee and settlor is not the trustee if done so in isolated incidents.

(2) The settlor has made requests for distributions on behalf of a beneficiary.

(3) The settlor has made requests to the trustee to hold, purchase or sell trust property.

(4) The settlor has powers listed above in NRS

163.4177.  {NRS 163.418}

Asset Protection- Divorce

If trust contains a spendthrift provision, in the event of a divorce or dissolution of the marriage of a beneficiary, the beneficiary’s interest in the trust is

not considered property subject to division or cannot be part of a property division under applicable Alaska marital laws.

 

This does not apply to a beneficiary who is the settlor as to assets the settlor transferred to the self-settled trust after the date of the settlor’s marriage or within

30 days before the marriage unless the settlor gives written notice of the transfer to the other party. Parties to marriage may agree to alter these rules.

{AS 34.40.110(l)}

No specific rule but spendthrift statute provides that a beneficiary’s interest in a spendthrift trust cannot be transferred or attached by a court order or any

other process {NRS 166.120} but may be subject to claims of former spouse if claims brought within applicable limitation period.  {NRS 166.170}

Self-Settled Trusts

{AS 34.40.110) Creditor of settlor cannot reach trust

to satisfy creditor claims even if:

Settlor is a discretionary beneficiary of self-settled trust.

 

Settlor can be reimbursed for income taxes payable by the settlor on trust income or principal; payment can be made directly to the taxing authority (applies whether trustee makes payment under a mandatory or discretionary provision).

 

Settlor can have right to veto a distribution.

Settlor can possess a testamentary or lifetime non- general power of appointment or similar power.

 

Settlor can have rights in CRAT, CRUT, GRAT, GRUT and use of property in QPRT.

 

Settlor can have interest in an eligible individual retirement account even if distributions are mandated to settlor.

 

Settlor can have a unitrust interest in a trust, but not to exceed amount in 26 USC 643(b).

 

Settlor must execute an affidavit of solvency.

Creditor can’t satisfy claim against settlor from trust

if settlor’s only interest is a discretionary power granted to a person, other than the settlor, or to reimburse the settlor for any tax payable by the settlor on trust income or principal. {NRS 163.5559}

 

A beneficiary of a trust shall not be deemed a settlor because of a lapse, waiver or release of the beneficiary’s right of withdrawal to extent amount subject to withdrawal in any calendar year does not exceed the greater of the amount provided in 26 USC

3041(b)(2), 2503(b) or 2514(e).

Settlor may have right to prevent distribution from trust.

Settlor may hold a special lifetime or testamentary power of appointment that cannot be exercised in favor of settlor or settlor’s estate (or creditors thereof).

Settlor is beneficiary of a charitable remainder trust and can have the right to release settlor’s retained interest in favor of one or more of the remainder beneficiaries.

The settlor is entitled to receive a percentage of the value of the trust each year; but not exceeding the amount that may be defined as income under 26 USC

643(b).

Settlor’s right to receive minimum distributions from qualified retirement plan or eligible deferred compensation plan.

Settlor’s  rights  to  receive  distributions  under  a

GRAT or GRUT.

Settlor’s right to use real property held under a personal residence trust.

Settlor’s right to receive income or principal in discretion of another person.

Settlor is authorized to use real or personal property owned by the trust.

Time Limitations on Creditor Claims –

Exceptions

No creditor protection if at the time of the transfer, the settlor is in default by 30 or more days of making a payment due under a child support judgment or

order.

 

Only creditors of settlor can bring claim against assets transferred to trust.

 

Creditor must establish by clear and convincing evidence that the settlor’s transfer was made with the intent to defraud that particular creditor. A creditor’s express intent to protect the trust from a beneficiary’s future potential creditors is not evidence of an intent to defraud.

 

If a creditor claim is allowed can only apply to that part of the trust that is disallowed from protection.

 

Creditor who is a creditor of the settlor before the assets  are  transferred  to the  trust  must  bring  the action within the later of 4 years after the transfer is made or 1 year after the transfer is or reasonably should have been discovered if the creditor can establish, by a preponderance of the evidence, that the creditor asserted a specific claim against the settlor before the transfer or files another action against the settlor that asserts a claim based on an actor omission that occurred before the transfer and the action is filed within 4 years after the transfer.

 

A creditor that becomes a creditor of the settlor after the transfer must bring the action within 4 years after the transfer.

 

Protection for advisors, attorneys, accountants and trustees who prepared or assisted in preparing trust or any limited partnership or limited liability company that is subsequently transferred to the trust (limited  to  general  fraudulent  conveyance  laws).

{AS 36.40.110}

 

This is the exclusive remedy and Alaska court has exclusive jurisdiction.

Claim against spendthrift trust by creditor when transfer made must be commenced within 2 years of transfer or 6 months after the creditor discovers or

reasonably should have discovered the transfer, whichever is later.

 

If the creditor becomes a creditor after the transfer is made, action must be commenced within 2 years after the transfer is made.

 

Discovery of the transfer is deemed at the time a public record is made as to the transfer, including recording a deed transferring real property to the trust.

 

Creditor must prove by clear and convincing evidence that the transfer was fraudulent under the fraudulent transfer statute (intent to hinder, delay, or defraud creditors), or the transfer violated a legal obligation owed to a creditor under a contract or a valid court order that is legally enforceable against the creditor.

 

Proof of a fraudulent transfer by one creditor is not deemed proof by other creditors; proof as to one asset is not proof as to other assets transferred to trust.

Creditor cannot bring claim against an adviser to the settlor or trustee of a spendthrift trust unless can establish, by clear and convincing evidence, that the adviser acted in violation of the laws, knowingly and in bad faith and the adviser’s actions directly caused the damages suffered by the person.

 

A person, other than settlor or beneficiary, cannot bring claim against a trustee of a spendthrift trust unless it can be established by clear and convincing evidence that the trustee acted in violation of the laws, knowingly and in bad faith and trustee’s actions       caused       the       claimed       damages.

 

Special Rules:

Any subsequent transfer to a trust is disregarded in determining if creditor can bring claim relating to prior transfer to trust.

 

Any distribution to beneficiary shall be deemed made from the most recent transfer to the trust.

 

For purposes of decanting from one spendthrift trust to another spendthrift trust, the time of the transfer to the trust shall be deemed the time of the transfer to the original trust. {NRS 166.170}

 

If trust situs is transferred to Nevada and if the laws of the original state are similar for purposes of spendthrift trusts, the transfer to the trust shall have occurred  on  earliest  of  the  date  of  the  original

 

transfer or the date the applicate laws of the original state  were  substantially  similar  to  Nevada  law.

{NRS 166.180}

Rule Against

Perpetuity

Up to 1,000 years. {AS 34.27.051}Up to 365 years. {NRS 111.1031(2)(b)}

 

Miscellaneous Provisions

Virtual

Representation

Broad virtual representation allowed to bind minor,

incapacitated person, unborn person, or person whose identity is unknown, including without limitation (if no conflict of interest), minor by a parent, conservator, or guardian as to incapacitated person, agent under a power of attorney, beneficiary with similar interest.

 

Beneficiaries of class gifts can bind other members of the class and beneficiaries with prior interests can bind remainder beneficiaries.

 

Trust can designate a person to represent and bind another person.

 

 

Designation can be made in trust or separate document and can provide that person receives notice on behalf of the beneficiary, can be made by settlor or trust protector.

 

Cannot represent a beneficiary if serving as trustee.

A minor, incapacitated person, unborn person, or

person whose identity is unknown and not reasonably ascertainable may be represented by person who has a substantially similar interest with respect to the question or dispute provided there is no material conflict of interest.

 

 

 

Presumptive remainder beneficiary (beneficiary who would receive trust income or principal if trust were to terminate) can represent and bind a contingent remainder beneficiary if no material conflict of interest.

 

If a minor or incapacitated person cannot be represented as stated above, the custodial parent or guardian of estate may represent beneficiary in judicial and non-judicial proceedings and there is no material conflict of interest.  {NRS 164.038}

Cannot represent a beneficiary if person is also a beneficiary  unless  appointed  by  settlor,  is  the

settlor’s  spouse,  grandparent  or  descendant  of  a grandparent of the settlor or settlor’s spouse.

 

A person representing a beneficiary is not liable for action or omission to act made in good faith.

{AS 13.06.120}

ArbitrationNo provision

Arbitration provision is enforceable other than for disputes on the validity of all or a part of a will or trust; presumed to be binding arbitration, unless otherwise  stated.  Virtual  representation  applies.

{Sec. 60, 2015 Nevada Laws Ch. 524 (S.B. 484)}

Non-Judicial

Settlement

No  specific  provision  but  virtual  representation statute applies to non-judicial settlements.

Settlement agreement among indispensable parties is enforceable without court approval.   Agreement is void if it violates a material purpose of the trust.

{Sec. 62, 2015 Nevada Laws Ch. 54 (S.B. 484)}

 

Can address numerous issues, including the transfer of place of administration, change in governing law, merger or division of trusts and termination of trust, as well as negating the liability of a trustee and providing for indemnification.

 

Enforceable even if not signed by all indispensable parties if trustee gives notice of proposed action and no objection is filed.  Virtual representation applies.

Distribution of

Community Property/Joint Trust

Community property held in a community property trust or pursuant to a community property agreement

can be divided on a non pro rata or a pro rata basis. AS 34.77.155.

If two settlors create joint trust that provides for the pecuniary   or   fractions   division   of   community

property upon death of one settlor, the trustee has the authority to distribute the community property on a

non-pro rata basis so long as the fair market value of the distributions is, at the time of the distribution, the

same as if the distribution were made pro rata. {NRS

164.950}

Prudent Investor

Rule

Adopted Uniform Prudent Investor Act.

 

Trustee has duty to comply with prudent investor rule. Can be modified or eliminated by trust agreement.

 

Trustee is not liable to extent trustee acted in reasonable reliance on the provisions of the trust.

 

Trustee has duty to diversify investments unless the trustee reasonably determines that because of special circumstances, the trust purposes are better served without diversification.

 

Can delegate investment and management functions. Trustee is not liable to beneficiaries for actions of agent to whom the function was delegated so long as the trustee exercised reasonable care in selecting the agent, establishing scope and terms of delegation, and periodically reviewing agent’s actions.

Special rule regarding life insurance held in trust. Trustee does not have duty to evaluate the policy or

diversify the trust assets.

Adopted Uniform Prudent Investor Act.

 

Trustee has duty to comply with prudent investor rule.

 

Trustee is not liable to a beneficiary the extent that the trustee acted in reasonable reliance on the terms of the trust or a court order.  {NRS 164.740}

 

Trustee has duty to diversify investments unless the trustee reasonably determines that because of special circumstances, the trust purposes are better served without diversification.

 

Can delegate investment and management functions. Same rule as Alaska.

 

 

 

 

 

 

 

No special rule for life insurance policy held in trust.

Trustee, with notice to qualified beneficiaries, may elect to have this provision apply to life insurance

contracts.

 

Trustee not liable to beneficiaries if comply with statute.

{AS 13.36.273}

Principal and

Income Act

Adopted Uniform Principal and Income Act of 1997;

most recently revised by legislation in 2013.

 

Trust may set out provisions contrary to statute; including discretionary power of administration. No inference of impropriety if trustee exercises the granted discretion to make an allocation contrary to the Act. Trustee must act impartially and fairly to all beneficiaries. {AS 13.38.200}

Adopted Uniform Principal and Income Act of 1997.

 

Trust  may  set  out  provisions  contrary  to  statute;

otherwise trustee must follow Act. {NRS 164.790}

Principal and

Income Act/ Power to Adjust

Trustee has power to adjust between principal and income  by  allocating  an  amount  of  income  to

principal or an amount of principal to income to extent trustee considers appropriate if (1) the trust describes what may or shall be distributed to a beneficiary by referring to income; (2) the trustee determines that it cannot otherwise fairly and impartially administer the trust and may consider size of trust, duration of trust, liquidity, need for

distributions and preservation of principal, tax consequences and other listed factors.

 

Cannot make an adjustment if would diminish income interest for which a marital deduction was taken, would reduce actuarial value of income trust

Trustee has power to adjust between principal and income if the trustee invests and manages trust as

assets as a prudent investor, the trust describes what may be distributed to a beneficiary by referring to trust income and the trustee determines that it cannot otherwise fairly and impartially administer the trust (see NRS 164.720}.  Statute sets out factors trustee may consider (less factors listed than Alaska).

 

Similar limitations on trustee’s power to adjust as set forth in Alaska statute.

to which a gift tax exclusion is claimed, adjustment would change amount paid as a fixed annuity or a

fixed fraction of the trust; can’t take from amount permanently  set  aside  for  charitable purposes for which a charitable deduction was taken; can’t be held by a beneficiary or a person that would cause the trust to be taxed to the person or subject to estate or gift taxes or the trust has been converted to unitrust.

{AS 13.38.210}

Power to Convert to Unitrust

Trustee has power to convert a trust to a unitrust to better carry out the intent of the settlor.  Must give notice to all beneficiaries who are currently eligible

to receive a distribution and would be eligible if all current beneficiaries’ interests were to terminate. Sixty days to object; if no objection can convert to unitrust. {AS 13.38.300}

 

Trustee can petition court if there is not at least one sui juris beneficiary (current and remainder), or a beneficiary objects. {AS 13.38.310}

 

 

Statute lists factors to consider and the discretion granted to trustee (for example, amount of unitrust distribution (between 3% and 5%), effective date of conversion, frequency of unitrust distribution during the year, smoothing period. {AS 13.38.340}

 

Includes limitations on ability to convert (protect tax benefits, for example).  {AS 13.38.380}

Trustee has power to convert a trust to a unitrust to better carry out intent of settlor.   Same notice provisions  as  under  Alaska  statute.    Trustee  can

petition court if no beneficiaries eligible to receive notice or a beneficiary objects.  {NRS 164,796}.

 

“Income” is a unitrust distribution between 3% and

5%.  The value of the trust must be averaged over a period of 3 years or term of trust, whichever is less.

{NRS 164.797}. Trustee has discretion to determine, for example, the effective date of the conversion, frequency of unitrust distribution during the year, whether to omit certain property occupied or possessed by a beneficiary. {NRS 164.798}

 

Includes limitations on ability to convert (protect tax benefits, for example). {NRS 164.796}

 

Trustee or beneficiary may petition court for an order to select an income distribution different from 3% to

5%; average the value of the trust over a period other

Trustee has discretion to reconvert a unitrust.

than 3 years; reconvert the unitrust or provide for a distribution  greater  than  the  unitrust  amount  to

preserve a tax benefit.  {NRS 164.799}

Express Unitrust

Statute  authorizes  express  total  return  unitrusts

(amount fixed at not less than 3% or more than 5%).

No provision of express unitrusts.
Treat Gains as Part of DistributionTrustee may treat gains from the sale of capital assets of a unitrust as part of a distribution of principal to a beneficiary and must treat those gains consistently on unitrust books and tax returns as part of a distribution to a beneficiary. {AS 13.38.430}

Trustee may take action to treat gains from the sale of trust assets to be taxed for income tax purposes as part of a distribution of income, including income which has been increased by an adjustment from principal to income under NRS 164.795 (power to adjust), a unitrust distribution or a distribution of principal to a beneficiary.  {Sec. 46, 2015 Nevada

Laws Ch. 24 (S.B. 484)}

Charitable Trust ConversionCharitable trust may elect to be treated as total return trust and trustee may select the percentage of the trust to be treated as income but the percentage may not be less than 2% or more than 7%.   Value can be averaged over a period of three or more years as determined by trustee.  {AS 13.38.440-490}No  specific  provision;  should  be  allowed  under general conversion statute.

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