USA – NEVADA Law and Practice Contributed by: Brian Steadman, Alexander LeVeque, Jeffrey Luszeck and Craig Friedel, Solomon Dwiggins Freer & Steadman
4.2 Succession Planning Dynasty Trust planning is the most popular tool for passing wealth and control from generation to gen - eration. Dynasty Trusts are primarily established to take advantage of federal gift, estate and generation- skipping transfer-tax benefits in a manner that can help limit tax liabilities, sometimes eliminating them. With a Nevada Dynasty Trust, assets that are subject to federal gift, estate and generation-skipping transfer taxation (or application of the federal estate tax life - time exemption) initially upon transfer to a trust can eliminate application of said taxes for future genera - tions if a trust is property structured, allowing many generations to enjoy gifted assets inheritance-tax free. Dynasty Trusts can also be designed to layer control in almost unlimited ways, through trusteeship, trust pro - tectors and trust advisors. These layers can include third parties who can mediate family disputes and/ or modify trust dispositive provisions, including divid - ing trusts, limiting problem beneficiary’s access and eliminating a beneficiary’s rights to force distributions. 4.3 Transfer of Partial Interest Nevada’s laws allow for incredible flexibility in creat - ing interests that are subject to conditions that allow for maximum discounts on lack of marketability and control. The state’s corporate statutes have been designed to allow for multiple restrictions to be built into interests, including restricted limited-liability com - panies, allowing for voting and non-voting interests, and delayed or conditional vesting of interests. Nevada’s attractive estate, trust, family offices and creditor-protection laws have increased trust-related disputes, which include, but are not limited to, the following. • Validity of estate planning documents – disputes may arise due to questions surrounding a settlor’s capacity, susceptibility to undue influence, fraud or mistake. • Unclear terms – unclear or ambiguous language contained within estate planning documents can 5. Wealth Disputes 5.1 Trends Driving Disputes
lead to disputes regarding interpretation of said documents. • Failure to communicate – communication between a fiduciary and beneficiaries is key, and failure to do communicate clearly, including failing to account for or produce other necessary documen - tation and information may lead to disputes. • Estate plan does not achieve intended goal – potential flaws in planning may lead to disputes. Such disputes can be resolved informally through a non-judicial settlement agreement prior to the initia - tion of litigation; however, if a resolution is not reached it often results in formal litigation that is ultimately ruled upon by a district court judge or, in some cir - cumstances, an arbitrator. 5.2 Mechanism for Compensation Nevada law recognises different types of damages that can be awarded in wealth disputes or disputes involving trusts, foundations or similar entities, as fol - lows. • Compensatory damages – type of monetary award intended to compensate a party for losses incurred as a result of another party’s wrongful conduct. Compensatory damages are intended to restore the injured party to their pre-injury state by cover - ing actual expenses and losses. • Punitive damages – to punish and deter egregious or malicious behaviour and deter a party (and others) from engaging in similar misconduct in the future. Nevada law imposes caps on punitive dam - ages in most cases. Specifically, if compensatory damages are USD100,000 or more, punitive dam - ages are limited to three times the compensatory damages, and if compensatory damages are less than USD100,000, punitive damages are capped at USD300,000. • Equitable remedies – it is also common in wealth disputes for remedies beyond monetary compen - sation to be sought and granted, including: (a) injunctions – an order precluding a fiduciary from taking specific actions; (b) disgorgement of fees – compelling a fiduciary to return a fee allowed under the estate plan - ning document or law; (c) rescission of documents or actions – rescind -
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