USA – NEVADA Law and Practice Contributed by: Brian K. Steadman, Alexander LeVeque, Jeffrey Luszeck and Craig Friedel, Solomon Dwiggins Freer & Steadman
for or produce other necessary documentation 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 – rescinding estate planning documents or actions under - taken by a fiduciary; (d) accounting – requiring a complete accounting from a fiduciary for any and all actions under - taken; or
(e) removal of a fiduciary – sometimes the actions of a fiduciary are so severe it warrants the removal of a fiduciary. 6. Roles and Responsibilities of Fiduciaries 6.1 Prevalence of Corporate Fiduciaries The use of corporate fiduciaries is common in Nevada, with the number of such entities growing each year. While no statute or case law explicitly imposes a heightened standard of conduct on corporate fiduci - aries, Nevada trial courts often subject their exercise of discretion to greater scrutiny than that of individual fiduciaries. 6.2 Fiduciary Liabilities Under Nevada law (NRS 163.004), a trust instrument may limit a trustee’s liability, provided the limitation is neither unlawful nor contrary to public policy. To date, the Supreme Court of Nevada has not directly addressed whether the veil of a trust can be pierced. Notably, in Magliarditi v TransFirst Group , Inc ., 135 Nev. 681, 450 P.3d (2019) (unpublished), the Court expressly declined to answer a certified question from the US District Court for the District of Nevada regard - ing whether the alter ego doctrine applies to trusts generally – and to spendthrift trusts in particular. 6.3 Fiduciary Regulation In 2003, the Nevada Legislature enacted the Uniform Prudent Investor Act (NRS 164.705, et seq) which cre - ates a clear framework for fiduciaries to follow, mini - mising fiduciary liability. Absent contrary trust terms, it requires a trustee to invest and manage assets with the care, skill, and caution a prudent investor would use, judged in the context of the trust’s overall port - folio and its purposes, terms, and distribution require - ments, rather than by evaluating individual invest - ments in isolation; it also imposes a duty to diversify unless the trustee reasonably determines diversifica - tion does not serve the trust’s purposes, permits dele - gation of investment functions, and allows the trustee to consider factors like tax implications and benefi - ciary circumstances rather than requiring strict adher - ence to modern portfolio theory optimisation. NRS 164.740 further provides that a trustee who acted in
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