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2023 Nevada Revised Statutes › Chapter 164 - Administration of Trusts › NRS 164.770 - Delegation of functions by trustee; standard of care owed by agent; trustee immunity from liability; jurisdiction over agent.

1. A trustee may delegate functions of investment and management that a prudent trustee of comparable skills could properly delegate under the circumstances. The trustee shall exercise reasonable care, skill and caution in:
(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 agent’s actions in order to verify the agent’s performance and compliance with the terms of the delegation.
2. In performing a delegated function, an agent owes a duty to the trust to exercise reasonable care to comply with the terms of the delegation.
3. A trustee who complies with the requirements of subsection 1 is not liable to the beneficiaries or to the trust for the decisions or actions of the agent to whom the function was delegated.
4. By accepting the delegation of a function from the trustee of a trust that is subject to the law of this state, an agent submits to the jurisdiction of the courts of this state.
(Added to NRS by 2003, 1968)
2023 Nevada Revised Statutes › Chapter 164 - Administration of Trusts › NRS 164.775 - Terms and language of trust which authorize certain investments or strategies.

The following terms or comparable language in the terms of a trust, unless otherwise limited or modified, authorizes any investment or strategy permitted under NRS 164.700 to 164.775, inclusive: "investments permissible by law for investment of trust funds," "legal investments," "authorized investments," "using the judgment and care under the circumstances then prevailing that persons of prudence, discretion and intelligence exercise in the management of their own affairs, not in regard to speculation but in regard to the permanent disposition of their funds, considering the probable income 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)
2023 Nevada Revised Statutes › Chapter 164 - Administration of Trusts › NRS 164.785 - Definitions.

As used in NRS 164.780 to 164.925, inclusive:
1. "Accounting period" means a calendar year unless another 12-month period is selected by a fiduciary. The term includes a portion of a calendar year or other 12-month period that begins when an income interest begins or ends when an income interest ends.
2. "Beneficiary" includes, in the case of a decedent’s estate, an heir, legatee and devisee and, in the case of a trust, an income beneficiary and a remainder beneficiary.
3. "Fiduciary" includes an executor, administrator, successor personal representative, special administrator and a person performing substantially the same function.
4. "Income" means money or property that a fiduciary receives as current return from a principal asset. The term includes a portion of receipts from a sale, exchange or liquidation of a principal asset, to the extent provided in NRS 164.825 to 164.895, inclusive.
5. "Income beneficiary" means a person to whom net income of a trust is or may be payable.
6. "Income interest" means the right of an income beneficiary to receive all or part of net income, whether the terms of the trust require it to be distributed or authorize it to be distributed in the trustee’s discretion.
7. "Mandatory income interest" means the right of an income beneficiary to receive net income that the terms of the trust require the fiduciary to distribute.
8. "Net income" means the total receipts allocated to income during an accounting period minus the disbursements made from income during the period, plus or minus transfers under NRS 164.780 to 164.925, inclusive, to or from income during the period.
9. "Principal" means property held in trust for distribution to a remainder beneficiary when the trust terminates.
10. "Remainder beneficiary" means a person entitled to receive principal when an income interest ends.
(Added to NRS by 2003, 1969)
2023 Nevada Revised Statutes › Chapter 164 - Administration of Trusts › NRS 164.790 - Allocation of receipt or disbursement to principal when terms of trust and provisions of NRS do not provide rule.

In allocating receipts and disbursements to or between principal and income, and with respect to any matter within the scope of NRS 164.800 to 164.820, inclusive, a fiduciary shall add a receipt or charge a disbursement to principal to the extent that the terms of the trust and NRS 164.780 to 164.925, inclusive, do not provide a rule for allocating the receipt or disbursement to or between principal and income.
(Added to NRS by 2003, 1969)
2023 Nevada Revised Statutes › Chapter 164 - Administration of Trusts › NRS 164.797 - Administration of unitrust: Duties of trustee; valuation of assets of trust.

After a trust is converted into a unitrust:
1. A trustee shall follow an investment policy seeking a total return for the investments held by the trust whether or not the return is derived from appreciation of capital, from earnings and distributions of capital or from a combination thereof.
2. A trustee shall make regular distributions in accordance with the trust instrument and the provisions of this section.
3. Under the terms of the trust, the term "income" means an annual distribution from the trust equal to not less than 3 percent and not more than 5 percent of the net fair market value of the trust’s assets. The value of the trust assets must be determined at the end of the calendar year by averaging, over the preceding 3 years or during the period of the trust’s existence, whichever is less, both the income and the principal assets of the trust.
(Added to NRS by 2009, 797)
2023 Nevada Revised Statutes › Chapter 164 - Administration of Trusts › NRS 164.798 - Administration of unitrust: Powers of trustee; manner of distributions.

1. A trustee of a unitrust may, in the trustee’s discretion, determine:
(a) The effective date of a conversion to a unitrust;
(b) The provisions for prorating a unitrust distribution for a beneficiary whose right to payments commences or ceases during a calendar year;
(c) The frequency of unitrust distributions during a calendar year;
(d) The effect of other payments from or contributions to the trust on the trust’s value;
(e) How frequently to value nonliquid assets and whether to estimate the value of nonliquid assets;
(f) Whether to omit from the calculations of the trust property occupied or possessed by a beneficiary; and
(g) Any other matters necessary for the proper functioning of the unitrust.
2. Expenses which would be deducted from income if the trust were not a unitrust may not be deducted from the unitrust distribution. Unless otherwise provided by the trust instrument, the unitrust distribution must be paid from income. To the extent income is insufficient to pay a distribution, the distribution must be paid from realized short-term capital gains. To the extent income and realized short-term capital gains are insufficient, the distribution must be paid from realized long-term capital gains. To the extent none of these funds are sufficient, the distribution must be paid from the principal of the trust.
(Added to NRS by 2009, 797)
2023 Nevada Revised Statutes › Chapter 164 - Administration of Trusts › NRS 164.799 - Trustee or beneficiary authorized to petition court to take certain actions concerning unitrust.

A trustee or a beneficiary of a unitrust may petition the court to:
1. Select an income distribution percentage different from 3 to 5 percent.
2. Provide for a distribution of net income as would be determined if the trust were not a unitrust, in excess of the unitrust distribution if such distribution is necessary to preserve a tax benefit.
3. Average the value of the trust assets over a period other than 3 years.
4. Reconvert a unitrust to a trust.
(Added to NRS by 2009, 798)
2023 Nevada Revised Statutes › Chapter 164 - Administration of Trusts › NRS 164.805 - Distribution of 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 a portion of the net income equal to the beneficiary’s fractional interest in undistributed principal assets, using values as of the date of distribution. If a fiduciary makes more than 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 fiduciary has received after the date of death or terminating event or earlier date of distribution but has not distributed as of the current date of distribution.
2. In determining a beneficiary’s share of net income, the following rules apply:
(a) The beneficiary is entitled to receive a portion of the net income equal to the beneficiary’s fractional interest in the undistributed principal assets immediately before the date of distribution, including assets that later may be sold to meet principal obligations.
(b) The beneficiary’s fractional interest in the undistributed principal assets must be calculated without regard to property specifically given to a beneficiary and property required to pay pecuniary amounts not in trust.
(c) The beneficiary’s fractional interest in the undistributed principal assets must be calculated on the basis of the aggregate value of those assets as of the date of distribution without reducing the value by any unpaid principal obligation.
(d) The date of distribution for purposes of this section may be the date as of which the fiduciary calculates the value of the assets if that date is reasonably near the date on which assets are actually distributed.
3. If a fiduciary does not distribute all the collected but undistributed net income to each person as of a date of distribution, the fiduciary shall maintain appropriate records showing the interest of each beneficiary in that net income.
4. A trustee may apply the rules in this section, to the extent that the trustee considers it appropriate, to net gain or loss realized after the date of death or terminating event or earlier date of distribution from the disposition of a principal asset if this section applies to the income from the asset.
(Added to NRS by 2003, 1972)
2023 Nevada Revised Statutes › Chapter 164 - Administration of Trusts › NRS 164.810 - Date on which income interest begins; date on which asset becomes subject to trust or successive income interest; date on which income interest ends.

1. An income beneficiary is entitled to net income from the date on which the income interest begins. An income interest begins on the date specified in the terms of the trust or, if no date is specified, on the 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 the case of an asset that is transferred to a trust during the transferor’s life;
(b) On the date of a testator’s death in the case of an asset that becomes subject to a trust by reason of a will, even if there is an intervening period of administration of the testator’s estate; or
(c) On the date of the death of a natural person in the case of an asset that is transferred to a fiduciary by a third party because of the death of the natural person.
3. An asset becomes subject to a successive income interest on the day after the preceding income interest ends, as determined under subsection 4, even if there is an intervening period of administration to wind up the preceding income interest.
4. An income interest ends on the day before an income beneficiary dies or another terminating event occurs, or on the last day of a period during which there is no beneficiary to whom a trustee may distribute income.
(Added to NRS by 2003, 1973)
2023 Nevada Revised Statutes › Chapter 164 - Administration of Trusts › NRS 164.815 - Allocation of certain income receipts and disbursements; due dates for certain payments and distributions.

1. A trustee shall allocate an income receipt or disbursement other than one to which subsection 1 of NRS 164.800 applies to principal if its due date occurs before a decedent dies in the case of an estate or before an income interest begins in the case of a trust or successive income interest.
2. A trustee shall allocate an income receipt or disbursement to income if its due date occurs on or after the date on which a decedent dies or an income interest begins and it is a periodic due date. An income receipt or disbursement must be treated as accruing from day to day if its due date is not periodic or it has no due date. The portion of the receipt or disbursement accruing before the date on which a decedent dies or an income interest begins must be allocated to principal and the balance must be allocated to income.
3. An item of income or an obligation is due on the date the payor is required to make a payment. If a date for payment is not stated, there is no due date for the purposes of NRS 164.780 to 164.925, inclusive. Distributions to shareholders or other owners from an entity to which NRS 164.825 applies are deemed to be due on the date fixed by the entity for determining who is entitled to receive the distribution or, if no date is fixed, on the date of declaration of the distribution. A due date is periodic for receipts or disbursements that must be paid at regular intervals under a lease or an obligation to pay interest or if an entity customarily makes distributions at regular intervals.
(Added to NRS by 2003, 1973)
2023 Nevada Revised Statutes › Chapter 164 - Administration of Trusts › NRS 164.820 - Payment of undistributed income upon end of mandatory income interest; prorating final payment upon end of obligation to pay fixed annuity or fixed fraction of value of trust’s assets.

1. As used in this section, "undistributed income" means net income received before the date on which an income interest ends. The term does not include an item of income or expense that is due or accrued or net income that has been added or is required to be added to principal under the terms of the trust.
2. When a mandatory income interest ends, the trustee shall pay to a mandatory income beneficiary who survives that date, or the estate of a deceased mandatory income beneficiary whose death causes the interest to end, his or her share of the undistributed income that is not disposed of under the terms of the trust unless the trustee has an unqualified power to revoke more than 5 percent of the trust immediately before the income interest ends. In the latter case, the undistributed income from the portion of the trust that may be revoked must be added to principal.
3. When a trustee’s obligation to pay a fixed annuity or a fixed fraction of the value of the trust’s assets ends, the trustee shall prorate the final payment if and to the extent required by applicable law to accomplish a purpose of the trust or its settlor relating to income, gift, estate or other tax requirements.
(Added to NRS by 2003, 1973)
2023 Nevada Revised Statutes › Chapter 164 - Administration of Trusts › NRS 164.830 - Allocation of amount received as distribution of income to income; allocation of distribution of principal to principal; purchase of interest in trust that is investment entity.

A trustee shall allocate to income an amount received as a distribution of income from a trust or an estate in which the trust has an interest other than a purchased interest, and a trustee shall allocate to principal an amount received as a distribution of principal from such a trust or estate. If a trustee purchases an interest in a trust that is an investment entity, or a decedent or donor transfers an interest in such a trust to a trustee, NRS 164.825 or 164.895 applies to a receipt from the trust.
(Added to NRS by 2003, 1974)
2023 Nevada Revised Statutes › Chapter 164 - Administration of Trusts › NRS 164.835 - Accounting separately for business or other activity.

1. If a trustee who conducts a business or other activity determines that it is in the best interest of all the beneficiaries to account separately for the business or activity instead of accounting for it as part of the trust’s general accounting records, the trustee may maintain separate accounting records for its transactions, whether or not its assets are segregated from other trust assets.
2. A trustee who accounts separately for a business or other activity may determine the extent to which its net cash receipts must be retained for working capital, the acquisition or replacement of fixed assets, and other reasonably foreseeable needs of the business or activity, and the extent to which the remaining net cash receipts are accounted for as principal or income in the trust’s general accounting records. If a trustee sells assets of the business or other activity, other than in the ordinary course of the business or activity, the trustee shall account for the net amount received as principal in the trust’s general accounting records to the extent the trustee determines that the amount received is no longer required in the conduct of the business.
3. Activities for which a trustee may maintain separate accounting records include:
(a) Retail, manufacturing, service and other traditional 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)
2023 Nevada Revised Statutes › Chapter 164 - Administration of Trusts › NRS 164.840 - Allocation of 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 a transferor during the transferor’s lifetime, a decedent’s estate, a trust with a terminating income interest, or a payor under a contract naming the trust or its trustee as beneficiary;
2. Money or other property received from the sale, exchange, liquidation or change in form of a principal asset, including realized profit, subject to NRS 164.780 to 164.925, inclusive;
3. Amounts recovered from third parties to reimburse the trust because of disbursements described in paragraph (g) of subsection 1 of NRS 164.905 or for other reasons to the extent not based on the loss of income;
4. Proceeds of property taken by eminent domain, but a separate award made for the loss of income with respect to an accounting period during which a current income beneficiary had a mandatory income interest is income;
5. Net income received in an accounting period during which 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)
2023 Nevada Revised Statutes › Chapter 164 - Administration of Trusts › NRS 164.845 - Allocation of receipts from rental property to income; treatment of refundable deposit.

To the extent that a trustee accounts for receipts from rental property pursuant to this section, the trustee shall allocate to income an amount received as rent of real or personal property, including an amount received for cancellation 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 for future periods, must be added to principal and held subject to the terms of the lease and is not available for distribution to a beneficiary until the trustee’s contractual obligations have been satisfied with respect to that amount.
(Added to NRS by 2003, 1976)
2023 Nevada Revised Statutes › Chapter 164 - Administration of Trusts › NRS 164.850 - Allocation of interest on obligation to pay money to trustee to income; allocation of amount received from disposition of certain obligations to principal; applicability of provisions.

1. An amount received as interest, whether determined at a fixed, variable or floating rate, on an obligation to pay money to the trustee, 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 amount received from the sale, redemption or other disposition of an obligation to pay money to the trustee more than 1 year after it is purchased or acquired by the trustee, including an obligation whose purchase price or value when it is acquired is less than its value at maturity. If the obligation matures within 1 year after it is purchased or acquired by the trustee, an amount received in excess of its purchase price or its value when acquired by the trust must be allocated to income.
3. This section does not apply to an obligation to which NRS 164.865, 164.870, 164.875, 164.880, 164.890 or 164.895 applies.
(Added to NRS by 2003, 1976)
2023 Nevada Revised Statutes › Chapter 164 - Administration of Trusts › NRS 164.855 - Allocation of 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, a trustee shall allocate to principal the proceeds of a life insurance policy or other contract in which the trust or its trustee is named as beneficiary, including a contract that insures the trust or its trustee against loss for damage to, destruction of, or loss of title to a trust asset. The trustee shall allocate dividends on an insurance policy to income if the premiums on the policy are paid from income, and to principal if the premiums are paid from principal.
2. A trustee shall allocate to income proceeds of a contract that insures the trustee against loss of occupancy or other use by an income beneficiary, loss of income, or, subject to NRS 164.835, 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)
2023 Nevada Revised Statutes › Chapter 164 - Administration of Trusts › NRS 164.860 - Allocation of entire amount to principal if allocation between principal and income under certain circumstances is insubstantial.

If a trustee 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 may allocate the entire amount to principal unless one of the circumstances described in subsection 3 of NRS 164.795 applies to the allocation. This power may be exercised by a cotrustee in the circumstances described in subsection 4 of NRS 164.795 and may be released for the reasons and in the manner described in subsection 5 of NRS 164.795. An allocation is presumed to be insubstantial if:
1. The amount of the allocation would increase or decrease net income in an accounting period, as determined before the allocation, by less than 10 percent; or
2. The value of the asset producing the receipt for which the allocation would be made is less than 10 percent of the total value of the trust’s assets at the beginning of the accounting period.
(Added to NRS by 2003, 1976)
2023 Nevada Revised Statutes › Chapter 164 - Administration of Trusts › NRS 164.870 - Allocation of receipts from liquidating assets to income and principal.

1. As used in this section, "liquidating asset" means an asset whose value will diminish or terminate because the asset is expected to produce receipts for a period of limited duration. The term includes a leasehold, patent, copyright, royalty right and right to receive payments during a period of more than 1 year under an arrangement that does not provide for the payment of interest on the unpaid balance. The term does not include a payment subject to NRS 164.865, resources subject to NRS 164.875, timber subject to NRS 164.880, an activity subject to NRS 164.890, an asset subject to NRS 164.895, or any asset for which the trustee establishes a reserve for depreciation under NRS 164.910.
2. A trustee shall allocate to income 10 percent of the receipts from a liquidating asset and the balance to principal.
(Added to NRS by 2003, 1977)
2023 Nevada Revised Statutes › Chapter 164 - Administration of Trusts › NRS 164.875 - Allocation of receipts from interest in minerals to income or to income and principal; allocation of receipts from interest in water to income or to income and principal; applicability.

1. To the extent that a trustee accounts for receipts from an interest in minerals or other natural resources pursuant to this section, the trustee shall allocate them as follows:
(a) If received as nominal delay rental or nominal annual rent on a lease, a receipt must be allocated to income.
(b) If received from a production payment, a receipt must be allocated to income if and to the extent that the agreement creating the production payment provides a factor for interest or its equivalent. The balance must be allocated to principal.
(c) If an amount received as a royalty, shut-in-well payment, take-or-pay payment, bonus or delay rental is more than nominal, 90 percent must be allocated to principal and the balance to income.
(d) If an amount is received from a working interest or any other interest not provided for in paragraph (a), (b) or (c), 90 percent of the net amount received must be allocated to principal and the balance to income.
2. An amount received on account of an interest in water that is renewable must be allocated to income. If the water is not renewable, 90 percent of the amount must be allocated to principal and the balance to income.
3. NRS 164.780 to 164.925, inclusive, apply whether or not a decedent or donor was extracting minerals, water, or other natural resources before the interest became subject to the trust.
4. If a trust owns an interest in minerals, water or other natural resources on October 1, 2003, the trustee may allocate receipts from the interest as provided in NRS 164.780 to 164.925, inclusive, or in the manner used by the trustee before October 1, 2003. If the trust acquires an interest in minerals, water or other natural resources after October 1, 2003, the trustee shall allocate receipts from the interest as provided in NRS 164.780 to 164.925, inclusive.
(Added to NRS by 2003, 1977)
2023 Nevada Revised Statutes › Chapter 164 - Administration of Trusts › NRS 164.880 - Allocation of net receipts from sale of timber and related products to income or principal, or both; applicability.

1. To the extent that a trustee accounts for receipts from the sale of timber and related products pursuant to this section, the trustee shall allocate the net receipts:
(a) To income to the extent that the amount of timber removed from the land does not exceed the rate of growth of the timber during the accounting periods in which a beneficiary has a mandatory income interest;
(b) To principal to the extent that the amount of timber removed from the land exceeds the rate of growth of timber or the net receipts are from the sale of standing timber;
(c) To or between income and principal if the net receipts are from the lease of timberland or from a contract to cut timber from land owned by a trust, by determining the amount of timber removed from the land 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 allocated pursuant to subsection 1, a trustee shall deduct and transfer to principal a reasonable amount for depletion.
3. NRS 164.780 to 164.925, inclusive, apply whether or not a decedent or transferor was harvesting timber from the property before it became subject to the trust.
4. If a trust owns an interest in timberland on October 1, 2003, the trustee may allocate net receipts from the sale of timber and related products as provided in NRS 164.780 to 164.925, inclusive, or in the manner used by the trustee before October 1, 2003. If the trust acquires an interest in timberland after October 1, 2003, the trustee shall allocate net receipts from the sale of timber and related products as provided in NRS 164.780 to 164.925, inclusive.
(Added to NRS by 2003, 1978)
2023 Nevada Revised Statutes › Chapter 164 - Administration of Trusts › NRS 164.885 - Request of spouse if marital deduction is allowed and amounts transferred from principal to income and distributed are insufficient to obtain marital deduction; proceeds from sale or disposition of assets generally principal.

1. If a marital deduction is allowed for all or part of a trust whose assets consist substantially of property that does not provide the 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 spouse from principal pursuant to the terms of the trust are insufficient to provide the spouse with the beneficial enjoyment required to obtain the marital deduction, the spouse may require the trustee to make property productive of income, convert property within a reasonable time, or exercise the power conferred 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, proceeds from the sale or other disposition of an asset are principal without regard to the amount of income the asset produces during any accounting period.
(Added to NRS by 2003, 1978)
2023 Nevada Revised Statutes › Chapter 164 - Administration of Trusts › NRS 164.890 - Allocation of receipts from and disbursements made in connection with transactions in derivatives to principal; allocation of amount received for granting certain options to principal.

1. As used in this section, "derivative" means a contract of financial instrument or a combination of contracts and financial instruments which gives a trust the right or obligation to participate in some or all changes in the price of a tangible or intangible asset or group of assets, or changes in a rate, an index of prices or rates, or other market indicator for an asset or a group of assets.
2. To the extent that a trustee accounts for transactions in derivatives pursuant to this section, the trustee shall allocate to principal receipts from and disbursements made in connection with those transactions.
3. If a trustee grants an option to buy property from the trust, whether or not the trust owns the property when the option is granted, grants an option that permits another person to sell property to the trust, or acquires an option to buy property for the trust or an option to sell an asset owned by the trust, and the trustee or other owner of the asset is required to deliver the asset if the option is exercised, an amount received for granting the option must be allocated to principal. An amount paid to acquire the option must be paid from principal. A gain or loss realized upon the exercise of an option, including an option granted to a settlor of the trust for services rendered, must be allocated to principal.
(Added to NRS by 2003, 1979)
2023 Nevada Revised Statutes › Chapter 164 - Administration of Trusts › NRS 164.895 - Allocation from proceeds of collateral financial assets to income and principal; allocation of payments in exchange for interest in asset-backed security to principal or to principal and income.

1. As used in this section, "asset-backed security" means an asset whose value is based upon the right it gives the owner to receive distributions from the proceeds of financial assets that provide collateral for the security. The term includes an asset that gives the owner the right to receive from the collateral financial assets only the interest or other current return or only the proceeds other than interest or current return. The term does not include an asset to which NRS 164.825 or 164.865 applies.
2. If a trust receives a payment from interest or other current return and from other proceeds of the collateral financial assets, the trustee shall allocate to income the portion of the payment which the payor identifies as being from interest or other current return and shall allocate the balance of the payment to principal.
3. If a trust receives one or more payments in exchange for the trust’s entire interest in an asset-backed security in one accounting period, the trustee shall allocate the payments to principal. If a payment is one of a series of payments that will result in the liquidation of the trust’s interest in the security over more than one accounting period, the trustee shall allocate 10 percent of the payment to income and the balance to principal.
(Added to NRS by 2003, 1979)
2023 Nevada Revised Statutes › Chapter 164 - Administration of Trusts › NRS 164.900 - Disbursements required to be made from income; reduction of amount charged against income.

1. A trustee shall make the following disbursements from income to the extent that they are not disbursements to which paragraph (b) or (c) of subsection 2 of NRS 164.800 applies:
(a) Except as otherwise provided in subsection 2 or otherwise ordered by the court, one-half of the regular compensation of the trustee and of any person providing investment advisory or custodial services to the trustee;
(b) Except as otherwise ordered by the court, one-half of all expenses for accountings, judicial proceedings, or other matters that involve both the income and remainder interests;
(c) All the other ordinary expenses incurred in connection with the administration, management or preservation of trust property and the distribution of income, including interest, ordinary repairs, regularly recurring taxes assessed against principal, and expenses of a proceeding or other matter that concerns primarily the income interest; and
(d) All recurring premiums on insurance covering the loss of a principal asset or the loss of income from or use of the asset.
2. If the amount charged to the income of an irrevocable trust pursuant to paragraph (a) of subsection 1 exceeds 15 percent of the income of the trust in the accounting period, the trustee shall exercise the authority in NRS 164.795 to equitably reduce the amount charged against income for that accounting period unless:
(a) The trustee, after taking into consideration the terms of the trust instrument, reasonably concludes that the reduction is not in the best interest of the beneficiaries of the trust;
(b) The reduction of the amount charged to income would violate the express terms of the trust instrument other than a general directive to comply with the Uniform Principal and Income Act (1997) or with a general provision that contains language similar to that found in paragraph (a) of subsection 1;
(c) The trustee is authorized under the terms of the trust instrument to distribute trust principal to each income beneficiary; or
(d) The trustee gives notice in compliance with NRS 164.725 of the intent not to make the adjustment and no current income beneficiary objects.
(Added to NRS by 2003, 1979; A 2007, 411; 2009, 801; 2011, 1470)
2023 Nevada Revised Statutes › Chapter 164 - Administration of Trusts › NRS 164.905 - Disbursements required to be made from principal.

1. A trustee shall make the following disbursements from principal:
(a) The remaining portion of the disbursements described in paragraph (a) of subsection 1 of NRS 164.900;
(b) All the trustee’s compensation calculated on principal as a fee for acceptance, distribution or termination, and disbursements made to prepare property for sale;
(c) Payments on the principal of a trust debt;
(d) Expenses of a proceeding that concerns primarily principal, including a proceeding to construe the trust or to protect the trust or its property;
(e) Premiums paid on a policy of insurance not described in paragraph (d) of subsection 1 of NRS 164.900 of 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 removing environmental contamination, monitoring remedial activities and the release of substances, preventing future releases of substances, collecting amounts from persons liable or potentially liable for the costs of those activities, penalties imposed under environmental laws or regulations and other payments made to comply with those laws or regulations, statutory or common law claims by third parties, and defending claims based on environmental matters.
2. If a principal asset is encumbered with an obligation that requires income from that asset to be paid directly to the creditor, the trustee shall transfer from principal to income an amount equal to the income paid to the creditor in reduction of the principal balance of the obligation.
(Added to NRS by 2003, 1980; A 2007, 412; 2011, 1471)
2023 Nevada Revised Statutes › Chapter 164 - Administration of Trusts › NRS 164.910 - Transfer of net cash receipts from principal asset subject to depreciation to principal.

1. As used in this section, "depreciation" means a reduction in value due to wear, tear, decay, corrosion or gradual obsolescence of a fixed asset having a useful life of more than 1 year.
2. A fiduciary may transfer to principal a reasonable amount of the net cash receipts from a principal asset that is subject to depreciation, but may not transfer any amount for depreciation:
(a) Of that portion of real property used or available for use by a beneficiary as a residence or of tangible personal property held or made available for the personal use or enjoyment of a beneficiary;
(b) During the administration of a decedent’s estate; or
(c) Under this section if a trustee is accounting under NRS 164.835 for the business or activity in which the asset is used.
3. An amount transferred to principal need not be held as a separate fund.
(Added to NRS by 2003, 1980)
2023 Nevada Revised Statutes › Chapter 164 - Administration of Trusts › NRS 164.915 - Transfer of amount from income to principal to make certain principal disbursements.

1. If a trustee makes or expects to make a principal disbursement described in this section, the trustee may transfer an appropriate amount from income to principal in one or more accounting periods to reimburse principal or to provide a reserve for future principal disbursements.
2. Principal disbursements to which subsection 1 applies include the following, but only to the extent that the trustee has not been and does not expect to be reimbursed by a third party:
(a) An amount chargeable to income but paid from principal because it is unusually large, including extraordinary repairs;
(b) A capital improvement to a principal asset, whether in 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 broker’s commissions;
(d) Periodic payments on an obligation secured by a principal asset to the extent that the amount transferred from income to principal for depreciation is less than the periodic payments; and
(e) Disbursements described in paragraph (g) of subsection 1 of NRS 164.905.
3. If the asset whose ownership gives rise to the disbursements becomes subject to a successive income interest after an income interest ends, a trustee may continue to transfer amounts from income to principal as provided in subsection 1.
(Added to NRS by 2003, 1981)
2023 Nevada Revised Statutes › Chapter 164 - Administration of Trusts › NRS 164.920 - Payment of taxes required to be paid by trustee.

1. A tax required to be paid by a trustee based on receipts allocated to income must be paid from income.
2. A tax required to be paid by a trustee based on receipts allocated to principal must be paid from principal, even if the tax is called an income tax by the taxing authority.
3. A tax required to be paid by a trustee on the trust’s share of an entity’s taxable income must be paid:
(a) From income to the extent that receipts from the entity are allocated only to income;
(b) From principal to the extent that receipts from the entity are allocated only to principal;
(c) Proportionately from principal and income to the extent that receipts from the entity are allocated to both income and principal; and
(d) From principal to the extent that the tax exceeds the total receipts from the entity.
4. After applying the provisions of subsections 1, 2 and 3, the trustee shall adjust income or principal receipts to the extent that the taxes on the trust are reduced because the trust receives a deduction for payments made to a beneficiary.
(Added to NRS by 2003, 1981; A 2009, 331)
2023 Nevada Revised Statutes › Chapter 164 - Administration of Trusts › NRS 164.925 - Adjustments between principal and income to offset shifting economic interests or tax benefits between income beneficiaries and remainder beneficiaries; reimbursement of principal if estate taxes are increased and income taxes are decreased under certain circumstances.

1. A fiduciary may make adjustments between principal and income to offset the shifting of economic interests or tax benefits between income beneficiaries and remainder beneficiaries which arise from:
(a) Elections and decisions, other than those described in subsection 2, that the fiduciary makes from time to time regarding tax matters;
(b) An income tax or any other tax that is imposed upon the fiduciary or a beneficiary as a result of a transaction involving or a distribution from the estate or the trust; or
(c) The ownership by an estate or trust of an interest in an entity whose taxable income, whether or not distributed, is includable in the taxable income of the estate, the trust or a beneficiary.
2. If the amount of an estate tax marital deduction or charitable contribution deduction is reduced because a fiduciary deducts an amount paid from principal for income tax purposes instead of deducting it for estate tax purposes, and as a result estate taxes paid from principal are increased and income taxes paid by an estate, trust or beneficiary are decreased, each estate, trust or beneficiary that benefits from the decrease in income tax shall reimburse the principal from which the increase in estate tax is paid. The total reimbursement must equal the increase in the estate tax to the extent that the principal used to pay the increase would have qualified for a marital deduction or charitable contribution deduction but for the payment. The proportionate share of the reimbursement for each estate, trust or beneficiary whose income taxes are reduced must be the same as its proportionate share of the total decrease in income tax. An estate or trust shall reimburse principal from income.
(Added to NRS by 2003, 1981)
2023 Nevada Revised Statutes › Chapter 164 - Administration of Trusts › NRS 164.940 - Nonjudicial settlement agreements: Enforceability; when void; matters that may be resolved.

1. Except as otherwise provided in this section, a settlement agreement entered into by all indispensable parties, as described in subsection 1 of NRS 164.942 is enforceable with respect to the administration of a trust without approval by the court, as defined in NRS 132.116.
2. A nonjudicial settlement agreement is void to the extent it violates a material purpose of the trust and to the extent it includes terms and conditions that could not be properly approved by the court, as defined in NRS 132.116, under the law governing the trust instrument.
3. Matters that may be resolved by a nonjudicial settlement agreement include, without limitation:
(a) The investment or use of trust assets;
(b) The lending or borrowing of money;
(c) The addition, deletion or modification of a term or condition of the trust;
(d) The interpretation or construction of a term of the trust;
(e) The designation or transfer of the principal place of administration of the trust;
(f) The approval of a trustee’s report or accounting;
(g) The choice of law governing the construction of the trust instrument or administration of the trust, or both;
(h) Direction to a trustee to perform or refrain from performing a particular act;
(i) The granting of any necessary or desirable power to a trustee;
(j) The resignation or appointment of a trustee and the determination of a trustee’s compensation;
(k) The merger or division of trusts;
(l) The granting of approval or authority, for a trustee to make charitable gifts from a noncharitable trust;
(m) The transfer of a trust’s principal place of administration;
(n) Negating the liability of a trustee for an action relating to the trust and providing indemnification therefor; and
(o) The termination of the trust.
(Added to NRS by 2015, 3550)
2023 Nevada Revised Statutes › Chapter 164 - Administration of Trusts › NRS 164.942 - Nonjudicial settlement agreements: When effective; providing objections; notice of proposed action; failure to object constitutes acceptance; petitioning court for approval.

1. Except as otherwise provided in this section, a nonjudicial settlement agreement is effective when the agreement has been signed by all indispensable parties. A party who is represented by another person pursuant to NRS 164.038 shall be deemed to have signed an agreement when the person who represents that party has signed the agreement.
2. Except as otherwise provided in this section, if an indispensable party neither signs the agreement nor provides the trustee with a written objection, the trustee may follow the procedure provided in NRS 164.725 by giving a notice of proposed action to all indispensable parties who have not signed the settlement agreement, where the proposed action is to accept and comply with the nonjudicial settlement agreement.
3. Failure to object to the notice of proposed action constitutes acceptance of the settlement agreement. If the trustee is personally aware that an indispensable party, or a person representing that indispensable party under NRS 164.038, has not received the notice of proposed action, the trustee may not proceed to honor the agreement pursuant to subsection 6 of NRS 164.725, but may proceed under subsection 7 of NRS 164.725 as if that indispensable party had objected. Once all indispensable parties have agreed to a settlement agreement as provided in subsection 1 or 2, it is irrevocable.
4. Any indispensable party may petition the court for an order approving a nonjudicial settlement agreement under the procedure set forth in NRS 164.015. In order to approve a nonjudicial settlement, the court must find that the agreement complies with the requirements of this section and NRS 164.940.
5. For the purposes of this section, "indispensable parties" refers to all interested persons, as defined in NRS 132.185, whose consent would be required in order to achieve a binding settlement were the settlement to be approved by the court.
(Added to NRS by 2015, 3550)
2023 Nevada Revised Statutes › Chapter 164 - Administration of Trusts › NRS 164.950 - Distribution by trustee of community property in nontestamentary trust established by married settlors.

1. If two settlors who are married establish a nontestamentary trust jointly, and the trust provides for the pecuniary or fractional division of the community property held by the settlors upon the death of one of the settlors, the trustee has the authority to distribute the community property unless the trust instrument expressly provides otherwise. The trustee may distribute the community property on a non-pro rata basis so long as the fair market value of the distribution is, at the time of the distribution, the same as if the distribution were made pro rata. The provisions of this section do not affect the distribution of assets that are specifically allocated in the trust instrument to be distributed in kind.
2. As used in this section, "nontestamentary trust" has the meaning ascribed to it in NRS 163.0016.
(Added to NRS by 2009, 798; A 2015, 3555)