Can a person create a Nevada trust that protects his or her own assets from creditors?
Nevada law lets a person (the settlor) create a spendthrift trust that names the settlor as a beneficiary, subject to three conditions in NRS 166.040(1)(b). The trust document must be irrevocable, must not require that any income or principal be distributed to the settlor, and must not have been intended to hinder, delay or defraud known creditors. NRS 166.040(2) qualifies the distribution condition: a writing still meets it if the settlor holds certain listed rights, including a veto over distributions, a limited power of appointment, an interest in a charitable remainder trust, an annual payout capped at trust income under 26 U.S.C. § 643(b) or a retirement plan's required minimum distribution, a qualified annuity or unitrust interest in a grantor retained trust, use of a residence held in a qualified personal residence trust, distributions only in another person's discretion, or use of trust property.
When the settlor is a beneficiary, at least one trustee must be an individual who resides and is domiciled in Nevada, a trust company with an office in Nevada, or a bank with an office in Nevada that exercises trust powers.
The settlor may keep significant control. NRS 166.040(3) permits the settlor to remove and replace a trustee, direct trust investments and serve as a cotrustee, but not to make distributions to himself or herself without another person's consent. The settlor holds only the powers the trust instrument confers, and a side agreement or understanding with the trustee that grants the settlor more is void.
A lapse in administration after the trust is validly created does not undo it. In Klabacka v. Nelson, the Nevada Supreme Court held that breaching the formalities of a validly created self-settled spendthrift trust creates liability for the trustee rather than invalidating the trust.
Sources for this answer
NRS 166.040(1)(b) permits a spendthrift trust for the settlor's own benefit only if the writing is irrevocable, does not require distributions to the settlor, and was not intended to hinder, delay or defraud known creditors.
1. Any person competent by law to execute a will or deed may, by writing only, duly executed, by will, conveyance or other writing, create a spendthrift trust in real, personal or mixed property for the benefit of: (a) A person other than the settlor; (b) The settlor if the writing is irrevocable, does not require that any part of the income or principal of the trust be distributed to the settlor, and was not intended to hinder, delay or defraud known creditors; or (c) Both the settlor and another person if the writing meets the requirements of paragraph (b).
See NRS 166.040(1).
NRS 166.040(2) provides that a writing still meets NRS 166.040(1)(b) even if the settlor holds listed rights, including a distribution veto, a limited power of appointment, charitable remainder trust, capped unitrust, grantor retained annuity or unitrust and qualified personal residence trust interests, distributions only in another person's discretion, and use of trust property.
2. For the purposes of this section, a writing meets the requirements of paragraph (b) of subsection 1 even if under the terms of the writing: (a) The settlor may prevent a distribution from the trust; (b) The settlor holds a special lifetime or testamentary power of appointment that cannot be exercised in favor of the settlor, the settlor’s estate, a creditor of the settlor or a creditor of the settlor’s estate; (c) The settlor is a beneficiary of a trust that qualifies as a charitable remainder trust pursuant to 26 U.S.C. § 664, or any successor provision, even if the settlor has the right to release the settlor’s retained interest in such a trust, in whole or in part, in favor of one or more of the remainder beneficiaries of the trust; (d) The settlor is authorized or entitled to receive a percentage of the value of the trust each year as specified in the trust instrument of the initial value of the trust assets or their value determined from time to time pursuant to the trust instrument, but not exceeding: (1) The amount that may be defined as income pursuant to 26 U.S.C. § 643(b); or (2) With respect to benefits from any qualified retirement plan or any eligible deferred compensation plan, the minimum required distribution as defined in 26 U.S.C. § 4974(b); (e) The settlor is authorized or entitled to receive income or principal from a grantor retained annuity trust paying out a qualified annuity interest within the meaning of 26 C.F.R. § 25.2702-3(b) or a grantor retained unitrust paying out a qualified unitrust interest within the meaning of 26 C.F.R. § 25.2702-3(c); (f) The settlor is authorized or entitled to use real property held under a qualified personal residence trust as described in 26 C.F.R. § 25.2702-5(c), and any successor provision, or the settlor may possess or actually possesses a qualified annuity interest within the meaning of that term as described in 26 C.F.R. § 25.2702-3(b), and any successor provision; (g) The settlor is authorized to receive income or principal from the trust, but only subject to the discretion of another person; or (h) The settlor is authorized to use real or personal property owned by the trust.
See NRS 166.040(2)(a)–(h).
NRS 166.015(2) requires, when the settlor is a beneficiary, at least one trustee who is a Nevada resident and domiciliary, a trust company with a Nevada office, or a bank with a Nevada office that exercises trust powers.
2. If the settlor is a beneficiary of the trust, at least one trustee of a spendthrift trust must be: (a) A natural person who resides and has his or her domicile in this State; (b) A trust company that: (1) Is organized under federal law or under the laws of this State or another state; and (2) Maintains an office in this State for the transaction of business; or (c) A bank that: (1) Is organized under federal law or under the laws of this State or another state; (2) Maintains an office in this State for the transaction of business; and (3) Possesses and exercises trust powers.
See NRS 166.015(2).
NRS 166.040(3) permits the settlor of a Nevada spendthrift trust to hold other powers, including removing and replacing a trustee and directing investments, but not the power to make distributions to himself or herself without another person's consent.
3. Except for the power of the settlor to make distributions to himself or herself without the consent of another person, the provisions of this section shall not be construed to prohibit the settlor of a spendthrift trust from holding other powers under the trust, whether or not the settlor is a cotrustee, including, without limitation, the power to remove and replace a trustee, direct trust investments and execute other management powers.
See NRS 166.040(3).
NRS 166.045 limits a Nevada spendthrift trust settlor to the powers conferred by the trust instrument and voids any settlor-trustee agreement granting greater rights.
The settlor of a spendthrift trust has only those powers and rights that are conferred to the settlor by the trust instrument. An agreement or understanding, express or implied, between the settlor and the trustee that attempts to grant or permit the retention of greater rights or authority than is stated in the trust instrument is void.
See NRS 166.045.
Klabacka v. Nelson holds that breaching the formalities of a validly created Nevada self-settled spendthrift trust does not invalidate the trust but creates trustee liability.
Breaching trust formalities of an otherwise validly created SSST does not invalidate a spendthrift trust; rather, it creates liability upon the trustee(s) for that breach.
See Klabacka v. Nelson, 133 Nev. 164, 172, 394 P.3d 940 (2017).
Who counts as the settlor when someone else adds property to a Nevada spendthrift trust?
Under NRS 166.018(2), a person who contributes assets to a Nevada spendthrift trust is a settlor only as to the assets that person contributed, and not to the extent the person received consideration for them. The person who creates the trust is also a settlor, however the trust instrument describes that person.
Read together with NRS 166.040(1), which permits a spendthrift trust for a person other than the settlor, this per-asset definition suggests that one trust can hold self-settled property and third-party property side by side, with each contribution tested against its own contributor.
A separate rule addresses withdrawal rights. For purposes of NRS 163.5559, which governs claims of a settlor's creditors, a beneficiary is not treated as a settlor merely because a right to withdraw trust property lapses, is waived or is released, if the amount withdrawable in a calendar year does not exceed the greatest of the federal amounts in 26 U.S.C. § 2041(b)(2), § 2503(b) or § 2514(e).
The statute does not define consideration received, so how a contribution made in exchange for value, such as a reciprocal arrangement between family members, is allocated is not resolved by that definition, and no Nevada decision resolving that allocation was found in our review; the conservative course is to record each contribution, its contributor and any value given for it, and to treat a contribution made for value as self-settled by the person who gave that value. The source note dates the definition to the 2019 legislative session, and the captured text does not say whether it applies to contributions made before then; the conservative course is not to rely on per-contributor treatment for earlier contributions.
Sources for this answer
NRS 166.018 defines a settlor as the person who creates the spendthrift trust or any person who contributes assets, as to those assets, except to the extent of consideration received; the source note shows the definition was added in 2019.
“Settlor” means: 1. The person who creates a spendthrift trust however described in the trust instrument; or 2. Any person who contributes assets to the spendthrift trust as to the assets he or she contributed to the spendthrift trust except to the extent of consideration received therefor by that person. (Added to NRS by 2019, 1874) NRS 166.020 “Spendthrift trust” defined. “Spendthrift trust” means a trust in which by the terms thereof a valid restraint on the voluntary and involuntary transfer of the interest of the beneficiary is imposed.
See NRS 166.018 (source note), 166.020.
NRS 166.040(1) permits a spendthrift trust for a person other than the settlor, for the settlor if paragraph (b) is met, or for both.
1. Any person competent by law to execute a will or deed may, by writing only, duly executed, by will, conveyance or other writing, create a spendthrift trust in real, personal or mixed property for the benefit of: (a) A person other than the settlor; (b) The settlor if the writing is irrevocable, does not require that any part of the income or principal of the trust be distributed to the settlor, and was not intended to hinder, delay or defraud known creditors; or (c) Both the settlor and another person if the writing meets the requirements of paragraph (b).
See NRS 166.040(1).
NRS 163.5559(3) provides that a beneficiary is not deemed a settlor because a withdrawal right lapses, is waived or is released, if the annual withdrawable amount does not exceed the greatest of the listed federal amounts.
3. For purposes of this section, a beneficiary of a trust shall be deemed to not be a settlor of a trust because of a lapse, waiver or release of the beneficiary’s right to withdraw part or all of the trust property if the value of the property which could have been withdrawn by exercising the right of withdrawal in any calendar year does not, at the time of the lapse, waiver or release, exceed the greater of the amount provided in 26 U.S.C. § 2041(b)(2), 26 U.S.C. § 2503(b) or 26 U.S.C. § 2514(e), as amended, or any successor provision.
See NRS 163.5559(3).
How long does a creditor have to challenge a transfer into a Nevada asset protection trust?
A creditor whose claim existed when property was transferred into a Nevada spendthrift trust must sue within two years after the transfer or six months after it discovered or reasonably should have discovered the transfer, whichever is later, while a later creditor has two years.
A person is treated as discovering a transfer when a public record of it is made, including a recorded deed or a filed financing statement.
A timely suit is not enough by itself. The creditor must prove by clear and convincing evidence that the transfer was a fraudulent transfer under NRS chapter 112, or that it violated a legal obligation owed to that creditor under a contract or a valid court order enforceable by that creditor. Proof is creditor-specific and transfer-specific: one creditor's proof does not count for another creditor or invalidate another transfer.
Each transfer runs on its own clock. A later transfer is disregarded in deciding whether an action about an earlier transfer is timely, and any distribution is deemed to come from the most recent transfer. Once a creditor's action about a transfer would be barred, no action of any kind, including an action to enforce a judgment, may be brought against the trustee.
Chapter 112's own limitations periods, generally four years or one year after discovery, do not apply to transfers into a chapter 166 trust. The current Nevada Revised Statutes still title chapter 112 the Uniform Fraudulent Transfer Act.
A transfer of an asset that produces no public record, such as cash, securities or an LLC interest, has no statutory deemed-discovery date, so an existing creditor's six-month period runs only from when that creditor actually discovered or reasonably should have discovered the transfer. No Nevada appellate decision construing that discovery standard was found in our review.
The timing of a claim that has not yet been reduced to judgment is less settled. Chapter 166 borrows chapter 112's definition of creditor, a person who has a claim, and chapter 112 defines a claim to include contingent, unliquidated and disputed rights. On that text, a person injured before a transfer is probably an existing creditor under NRS 166.170(1)(a) even before any judgment, but no Nevada decision applying the definition to this question was found in our review.
Funding records that omit evidence of when existing creditors learned of an unrecorded transfer can leave the discovery deadline unresolved and prevent a reliable conclusion that a later challenge is barred.
Sources for this answer
NRS 166.170(1)(a) bars an action by a person who was a creditor when the transfer was made unless it is commenced within two years after the transfer or six months after the person discovered or reasonably should have discovered it.
NRS 166.170 Limitation of actions with respect to transfer of property to trust; certain transfers of property disregarded; limitation of actions against advisers to settlors or trustees and against trustees; transfers to trust. 1. A person may not bring an action with respect to a transfer of property to a spendthrift trust: (a) If the person is a creditor when the transfer is made, unless the action is commenced within: (1) Two years after the transfer is made; or (2) Six months after the person discovers or reasonably should have discovered the transfer,
See NRS 166.170(1)(a).
NRS 166.170(1)–(2) applies whichever existing-creditor period is later, gives a later creditor two years after the transfer, and deems a transfer discovered when a public record of it is made, such as a recorded deed or a filed financing statement.
whichever is later. (b) If the person becomes a creditor after the transfer is made, unless the action is commenced within 2 years after the transfer is made. 2. A person shall be deemed to have discovered a transfer at the time a public record is made of the transfer, including, without limitation, the conveyance of real property that is recorded in the office of the county recorder of the county in which the property is located or the filing of a financing statement pursuant to chapters 104 to 104C, inclusive, of NRS.
See NRS 166.170(1)(a)–(b), (2).
NRS 166.170(3) requires a creditor to prove by clear and convincing evidence a chapter 112 fraudulent transfer or a violation of a contract or valid court order owed to that creditor, and makes proof creditor-specific and transfer-specific.
3. A creditor may not bring an action with respect to transfer of property to a spendthrift trust unless a creditor can prove by clear and convincing evidence that the transfer of property was a fraudulent transfer pursuant to chapter 112 of NRS or that the transfer violates a legal obligation owed to the creditor under a contract or a valid court order that is legally enforceable by that creditor. In the absence of such clear and convincing proof, the property transferred is not subject to the claims of the creditor. Proof by one creditor that a transfer of property was fraudulent or wrongful does not constitute proof as to any other creditor and proof of a fraudulent or wrongful transfer of property as to one creditor shall not invalidate any other transfer of property.
See NRS 166.170(3).
NRS 166.170(7) disregards a later transfer when timing an action about an earlier transfer and deems distributions to come from the most recent transfer.
7. If more than one transfer is made to a spendthrift trust: (a) The subsequent transfer to the spendthrift trust must be disregarded for the purpose of determining whether a person may bring an action pursuant to subsection 1 with respect to a prior transfer to the spendthrift trust; and (b) Any distribution to a beneficiary from the spendthrift trust shall be deemed to have been made from the most recent transfer made to the spendthrift trust.
See NRS 166.170(7).
NRS 166.170(8) bars any action against the trustee, including judgment enforcement, once a creditor's action about the transfer would be time-barred.
8. Notwithstanding any other provision of law, no action of any kind, including, without limitation, an action to enforce a judgment entered by a court or other body having adjudicative authority, may be brought at law or in equity against the trustee of a spendthrift trust if, as of the date the action is brought, an action by a creditor with respect to a transfer to the spendthrift trust would be barred pursuant to this section.
See NRS 166.170(8).
NRS 166.170(10)(b) gives creditor the meaning in NRS 112.150(4).
10. As used in this section: (a) “Adviser” means any person, including, without limitation, an accountant, attorney or investment adviser, who gives advice concerning or was involved in the creation of, transfer of property to, or administration of the spendthrift trust or who participated in the preparation of accountings, tax returns or other reports related to the trust. (b) “Creditor” has the meaning ascribed to it in subsection 4 of NRS 112.150.
See NRS 166.170(10).
NRS 112.150(3)–(4) defines a claim to include unliquidated, contingent, unmatured and disputed rights to payment, and a creditor as a person who has a claim.
3. “Claim” means a right to payment, whether or not the right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured. 4. “Creditor” means a person who has a claim.
See NRS 112.150(3)–(4).
NRS 112.230 sets chapter 112's four-year and one-year limitations periods and states that they do not apply to a transfer to a chapter 166 spendthrift trust.
1. A claim for relief with respect to a fraudulent transfer or obligation under this chapter is extinguished unless action is brought: (a) Under paragraph (a) of subsection 1 of NRS 112.180, within 4 years after the transfer was made or the obligation was incurred or, if later, within 1 year after the transfer or obligation was or could reasonably have been discovered by the claimant; (b) Under paragraph (b) of subsection 1 of NRS 112.180 or subsection 1 of NRS 112.190, within 4 years after the transfer was made or the obligation was incurred; or (c) Under subsection 2 of NRS 112.190, within 1 year after the transfer was made or the obligation was incurred. 2. This section does not apply to a claim for relief with respect to a transfer of property to a spendthrift trust subject to chapter 166 of NRS.
See NRS 112.230(1)–(2).
NRS 112.140 provides that chapter 112 may be cited as the Uniform Fraudulent Transfer Act.
This chapter may be cited as the Uniform Fraudulent Transfer Act.
See NRS 112.140.
Can a former spouse or child collect support from a Nevada asset protection trust?
Nevada recognizes no general child-support or spousal-support exception to the protection of a self-settled spendthrift trust, because the Nevada Supreme Court expressly rejected that exception in Klabacka v. Nelson, a case involving support obligations not known when the trust was created.
Chapter 166 contains no provision exempting support, tort or government claims from spendthrift protection. NRS 166.120(2) instead bars trustee payments to anyone other than the beneficiary under legal process, whether the claim arises from contract, tort or duty.
The protection has four limits.
Transfer-specific challenges. Under NRS 166.170(3), a creditor may proceed against a transfer into the trust if it proves by clear and convincing evidence that the transfer was a fraudulent transfer under NRS chapter 112, or that it violated a legal obligation owed to that creditor under a contract or a valid court order enforceable by that creditor. In Klabacka, the divorce decree did not qualify because it required the trustees to violate NRS 166.120, and the court noted that the record did not show a fraudulent transfer under NRS 166.170(3).
Obligations known at creation. The Klabacka holding covers obligations not known when the trust was created, and the court noted that the legislative history treats child support known at creation as a debt that would not be free from attachment. NRS 166.040(1)(b) separately conditions a self-settled trust on its not having been intended to hinder, delay or defraud known creditors. Whether a support order already in place when the trust is funded can reach the trust, through that condition or through the court-order route above, is not settled by any decision found in our review.
Community property. The spendthrift restraints do not protect the nonbeneficiary spouse's community property share of property inside the trust.
Medicaid recovery. Nevada's statute on liability of nonprobate transferees states that nothing in it exempts property from a state statute authorizing recovery of Medicaid benefits paid. Whether those recovery statutes reach a chapter 166 trust after the settlor dies was outside the authorities in our review.
Sources for this answer
Klabacka v. Nelson holds that a Nevada self-settled spendthrift trust could not be ordered to pay support arrears for obligations not known when the trust was created, and expressly rejects the Restatement (Third) of Trusts section 59 support exception.
Here, Eric's child- and spousal-support obligations were not known at the time the trust was created. Accordingly, the district court abused its discretion in ordering Eric's Trust to pay Eric's child- and spousal-support arrears. We further conclude the child- and spousal-support exception articulated in section 59 of the Third Restatement of Trusts is inconsistent with Nevada's statutory framework and the legislative history of NRS Chapter 166, and we expressly reject that exception here.
See Klabacka v. Nelson, 133 Nev. 164, 178, 394 P.3d 940 (2017).
NRS 166.120(2) requires spendthrift trust payments to go only to or for the beneficiary, not to anyone under legal process, whether in connection with any contract, tort or duty.
2. Payments by the trustee to the beneficiary, whether such payments are mandatory or discretionary, must be made only to or for the benefit of the beneficiary and not by way of acceleration or anticipation, nor to any assignee of the beneficiary, nor to or upon any order, written or oral, given by the beneficiary, whether such assignment or order be the voluntary contractual act of the beneficiary or be made pursuant to or by virtue of any legal process in judgment, execution, attachment, garnishment, bankruptcy or otherwise, or whether it be in connection with any contract, tort or duty.
See NRS 166.120(2).
Klabacka v. Nelson states that the legislative history of chapter 166 treats child support known when the trust was created as a debt that would not be free from attachment.
The legislative history explicitly mentions child support as an example of a debt that would not be free from attachment if known at the time the trust was created.
See Klabacka v. Nelson, 133 Nev. 164, 177, 394 P.3d 940 (2017).
NRS 166.040(1)(b) permits a spendthrift trust for the settlor only if the writing was not intended to hinder, delay or defraud known creditors.
1. Any person competent by law to execute a will or deed may, by writing only, duly executed, by will, conveyance or other writing, create a spendthrift trust in real, personal or mixed property for the benefit of: (a) A person other than the settlor; (b) The settlor if the writing is irrevocable, does not require that any part of the income or principal of the trust be distributed to the settlor, and was not intended to hinder, delay or defraud known creditors; or (c) Both the settlor and another person if the writing meets the requirements of paragraph (b).
See NRS 166.040(1)(b).
NRS 166.170(3) lets a creditor proceed against a transfer to a spendthrift trust on clear and convincing proof that the transfer was a fraudulent transfer under chapter 112 or violates a legal obligation owed to that creditor under a contract or a valid court order it can enforce.
3. A creditor may not bring an action with respect to transfer of property to a spendthrift trust unless a creditor can prove by clear and convincing evidence that the transfer of property was a fraudulent transfer pursuant to chapter 112 of NRS or that the transfer violates a legal obligation owed to the creditor under a contract or a valid court order that is legally enforceable by that creditor. In the absence of such clear and convincing proof, the property transferred is not subject to the claims of the creditor.
See NRS 166.170(3).
Klabacka v. Nelson holds that the divorce decree was not a legally enforceable court order under NRS 166.170(3) because it required the trustees to violate NRS 166.120, and notes that the record did not show a fraudulent transfer under NRS 166.170(3).
The court order at issue here, the decree, is not legally enforceable because it requires Eric or the trustees of Eric's Trust to violate NRS 166.120. We note the record here does not indicate that a fraudulent transfer under NRS 166.170(3) occurred between the SSSTs.
See Klabacka v. Nelson, 133 Nev. 164, 175 n.5, 394 P.3d 940 (2017).
Klabacka v. Nelson states that spendthrift restraints do not apply to the nonbeneficiary spouse's community property share of property inside the trust.
To clarify: because the nonbeneficiary spouse retains a property interest in community property contained within the spendthrift trust, the restraints on the court-ordered alienation of spendthrift trust assets would not apply to the nonbeneficiary spouse's community property share of that property.
See Klabacka v. Nelson, 133 Nev. 164, 178 n.6, 394 P.3d 940 (2017).
NRS 111.779(13) states that nothing in the nonprobate-transferee liability statute exempts property from a Nevada statute authorizing recovery of Medicaid benefits paid.
13. Nothing in this section exempts any real or personal property from any statute of this State that authorizes the recovery of money owed to the Nevada Health Authority as a result of the payment of benefits from Medicaid.
See NRS 111.779(13).
Does it matter whether married spouses in Nevada use one joint asset protection trust or separate trusts?
When Nevada spouses choose between one joint self-settled trust and separate trusts, Nevada's rule letting the trust instrument preserve the community or separate character of transferred property applies only to an irrevocable trust benefiting both spouses. In either structure, a divorce court must trace trust assets to find any community property. The court must divide that community property equally unless it states in writing a compelling reason for an unequal division.
One joint trust. NRS 123.125(1) applies when both spouses are distribution beneficiaries. The trust instrument may provide that transferred property remains community or separate property during the marriage, and property distributed from such a trust keeps that character. A party claiming that property transferred into a trust changed from community to separate, or the reverse, must prove the change by clear and convincing evidence. In a divorce, the court must divide community property equally, including community property transferred into such a trust over which the court has jurisdiction, unless it states in writing a compelling reason for an unequal division.
Separate trusts. In Klabacka v. Nelson, each spouse had a self-settled spendthrift trust, and the court held the spouses' written agreements valid and unambiguous. The court held that their separate property agreement was a valid transmutation agreement that converted community property into separate property. That result rests on the Nevada rule that property acquired during marriage is community property unless a written agreement between the spouses provides otherwise. Funding either structure with community property also engages the control rules: neither spouse may give away community property without the other's consent, and a deed of community real property requires both spouses to join and acknowledge it.
A spouse is a beneficiary only if named or clearly referred to as one in the trust writing.
The tracing mandate had practical consequences in the same divorce. In Nelson v. Eighth Judicial District Court, decided April 1, 2021, the Nevada Supreme Court said Klabacka had not determined that all trust assets were separate property and directed an injunction over trust property subject to a claim of community interest.
One statutory question is open. NRS 123.125(1) applies by its terms only when both spouses are distribution beneficiaries, and subsection 3 says the section does not affect the character of property transferred into a trust in any other manner. Read together, a trust benefiting only one spouse appears to fall outside the character-preservation rule, leaving character to other rules such as a written agreement; whether subsection 2's clear-and-convincing standard still applies to such a trust is not resolved by the text or by any decision found in our review.
Funding records that do not identify the source of each contribution, separate or community, make it difficult to identify the community share inside a self-settled trust that remains exposed to division in a divorce.
Sources for this answer
NRS 123.125 lets a trust instrument for an irrevocable trust of which both spouses are distribution beneficiaries preserve the community or separate character of transferred property, requires clear and convincing evidence of transmutation of property transferred into a trust, and does not affect other transfers.
1. A trust instrument may provide that community property or separate property transferred into an irrevocable trust of which both spouses are distribution beneficiaries, as defined in NRS 163.415, remains community property or separate property, as applicable, during the marriage. Any community property or separate property, including, without limitation, any income, appreciation and proceeds thereof, that is distributed or withdrawn from a trust instrument containing such a provision remains community property or separate property, as applicable. 2. A spouse or other party in a case must establish by clear and convincing evidence the transmutation of community property or separate property that is transferred into a trust from, as applicable: (a) Community property to separate property; or (b) Separate property to community property. 3. The provisions of this section do not affect the character of community property or separate property that is transferred into a trust in any manner other than as described in this section.
See NRS 123.125(1)–(3).
Klabacka v. Nelson requires a divorce court to trace assets inside self-settled spendthrift trusts and to divide equally any community property found there.
Accordingly, we conclude the district court erred by not tracing the assets contained within the trusts, either through a reliable expert or other available means. Separate property contained within the spendthrift trusts is not subject to attachment or execution, as discussed below. However, if community property exists within the trusts, the district court shall make an equal distribution of that community property.
See Klabacka v. Nelson, 133 Nev. 164, 173, 394 P.3d 940 (2017).
NRS 125.150(1)(b) requires an equal disposition of community property in a divorce, including community property transferred into an irrevocable trust under NRS 123.125, absent a written compelling reason.
1. In granting a divorce, the court: (a) May award such alimony to either spouse, in a specified principal sum or as specified periodic payments, as appears just and equitable; (b) Shall, to the extent practicable, make an equal disposition of the community property of the parties, including, without limitation, any community property transferred into an irrevocable trust pursuant to NRS 123.125 over which the court acquires jurisdiction pursuant to NRS 164.010, except that the court may make an unequal disposition of the community property in such proportions as it deems just if the court finds a compelling reason to do so and sets forth in writing the reasons for making the unequal disposition; and (c) Shall provide an explanation, or ensure that an explanation has been provided, to the parties of any provision relating to the disposition of pension or retirement benefits that will be included in the decree of divorce or any related order.
See NRS 125.150(1).
Klabacka v. Nelson holds that the spouses' separate property agreement and their respective self-settled spendthrift trusts were valid, unambiguous written instruments.
Both the SPA and the parties' respective SSSTs were signed, written agreements. We hold the written instruments at issue here are all valid and the terms therein are unambiguous.
See Klabacka v. Nelson, 133 Nev. 164, 394 P.3d 940 (2017).
Klabacka v. Nelson holds that the spouses' separate property agreement was a valid transmutation agreement converting community property into separate property.
We conclude the SPA is a valid transmutation agreement and that the parties' community property was converted into separate property.
See Klabacka v. Nelson, 133 Nev. 164, 171, 394 P.3d 940 (2017).
NRS 123.220 makes property acquired after marriage community property unless, among other exceptions, a written agreement between the spouses provides otherwise.
All property, other than that stated in NRS 123.130, acquired after marriage by either spouse or both spouses, is community property unless otherwise provided by: 1. An agreement in writing between the spouses. 2. A decree of separate maintenance issued by a court of competent jurisdiction. 3. NRS 123.190. 4. A decree issued or agreement in writing entered pursuant to NRS 123.259.
See NRS 123.220.
NRS 123.230(2)–(3) bars a gift of community property without the other spouse's consent and a conveyance of community real property unless both spouses join in and acknowledge the deed.
A spouse may, by written power of attorney, give to the other the complete power to sell, convey or encumber any property held as community property or either spouse, acting alone, may manage and control community property, whether the community property was acquired before, on or after July 1, 1975, with the same power of disposition as the acting spouse has over his or her separate property, except that: 1. Neither spouse may devise or bequeath more than one-half of the community property. 2. Neither spouse may make a gift of community property without the express or implied consent of the other. 3. Neither spouse may sell, convey or encumber the community real property unless both join in the execution of the deed or other instrument by which the real property is sold, conveyed or encumbered, and the deed or other instrument must be acknowledged by both.
See NRS 123.230(1)–(3).
NRS 166.080 provides that no spouse, former spouse, child or dependent is a spendthrift trust beneficiary unless named or clearly referred to in the writing.
The beneficiary or beneficiaries of such trust shall be named or clearly referred to in the writing. No spouse, former spouse, child or dependent shall be a beneficiary unless named or clearly referred to as a beneficiary in the writing.
See NRS 166.080.
Nelson v. Eighth Judicial District Court states that Klabacka did not determine all trust assets were separate property and requires a joint preliminary injunction over trust property with a claim of community interest.
Therefore, contrary to Eric's assertions, we did not determine that all assets in the trusts were separate property. Rather, our mandate in Klabacka, that the district court trace trust assets, demonstrates that at the time of the divorce decree, the LSN and ELN Trusts may have included property with a claim of community interest to which the JPI should extend. Accordingly, the district court must impose a JPI over all trust property with a claim of community interest.
See Nelson v. Eighth Judicial Dist. Ct. (Nev. Apr. 1, 2021) (granting writ of mandamus).
Klabacka v. Nelson states that spendthrift restraints do not apply to the nonbeneficiary spouse's community property share of property inside the trust.
To clarify: because the nonbeneficiary spouse retains a property interest in community property contained within the spendthrift trust, the restraints on the court-ordered alienation of spendthrift trust assets would not apply to the nonbeneficiary spouse's community property share of that property.
See Klabacka v. Nelson, 133 Nev. 164, 178 n.6, 394 P.3d 940 (2017).
If one spouse's will leaves property to the other spouse's Nevada asset protection trust, is that property self-settled?
Nevada's settlor definition points toward treating property that a deceased spouse's will adds to the surviving spouse's spendthrift trust as the deceased spouse's contribution, not as self-settled by the survivor, though no Nevada decision applying it was found in our review.
NRS 166.018(2) makes any person who contributes assets a settlor as to those assets, and NRS 166.040(1) allows a spendthrift trust to be created by will for a person other than the settlor. Read together, the surviving spouse would be a beneficiary of the deceased spouse's contribution but not its settlor, which makes that portion a third-party spendthrift interest rather than a self-settled one.
Community property limits what the will can contribute. Neither spouse may leave more than one-half of the community property by will, and at death the survivor's one-half interest becomes the survivor's separate property, while only the decedent's half is subject to estate administration. Property the survivor adds to the trust, including the survivor's half of former community property, is the survivor's own contribution and is self-settled as to the survivor.
The contributor is a settlor except to the extent of consideration received, and the statute does not say who is treated as the settlor of that portion. No Nevada decision found in our review addresses whether a court would look through to the survivor when the deceased spouse's gift was given in exchange for value from the survivor, such as under reciprocal estate plans; the conservative course is to treat any portion given for value as self-settled by the survivor.
Because the survivor created the trust and is a beneficiary, the trust as a whole still needs a qualifying Nevada trustee. The irrevocability, no-required-distribution and known-creditor conditions in NRS 166.040(1)(b) are framed around the writing, not each asset, so the text leaves undecided how they apply to the deceased spouse's contribution; the conservative course is to draft the survivor's trust to meet every NRS 166.040(1)(b) condition for all of its property.
How claims against the deceased spouse's estate reach property passing under the will into the trust was outside the authorities in our review; the conservative course is to treat that property as exposed to those claims until the estate's creditors have been paid.
Sources for this answer
NRS 166.018(2) makes any person who contributes assets to a spendthrift trust a settlor as to the assets that person contributed, except to the extent of consideration received.
“Settlor” means: 1. The person who creates a spendthrift trust however described in the trust instrument; or 2. Any person who contributes assets to the spendthrift trust as to the assets he or she contributed to the spendthrift trust except to the extent of consideration received therefor by that person.
See NRS 166.018.
NRS 166.040(1) permits a spendthrift trust to be created by will, conveyance or other writing for a person other than the settlor, and sets the conditions on the writing when the settlor is a beneficiary.
1. Any person competent by law to execute a will or deed may, by writing only, duly executed, by will, conveyance or other writing, create a spendthrift trust in real, personal or mixed property for the benefit of: (a) A person other than the settlor; (b) The settlor if the writing is irrevocable, does not require that any part of the income or principal of the trust be distributed to the settlor, and was not intended to hinder, delay or defraud known creditors; or (c) Both the settlor and another person if the writing meets the requirements of paragraph (b).
See NRS 166.040(1).
NRS 123.230(1) bars either spouse from devising or bequeathing more than one-half of the community property.
A spouse may, by written power of attorney, give to the other the complete power to sell, convey or encumber any property held as community property or either spouse, acting alone, may manage and control community property, whether the community property was acquired before, on or after July 1, 1975, with the same power of disposition as the acting spouse has over his or her separate property, except that: 1. Neither spouse may devise or bequeath more than one-half of the community property.
See NRS 123.230(1).
NRS 123.250(1) makes the surviving spouse's one-half interest in community property the survivor's separate property and subjects only the remaining half to the decedent's will and to estate administration.
1. Except as otherwise provided in subsection 2, upon the death of either spouse: (a) An undivided one-half interest in the community property is the property of the surviving spouse and his or her sole separate property. (b) The remaining interest: (1) Is subject to the testamentary disposition of the decedent or, in the absence of such a testamentary disposition, goes to the surviving spouse; and (2) Is the only portion subject to administration under the provisions of title 12 of NRS.
See NRS 123.250(1).
NRS 166.015(2) requires a qualifying Nevada trustee whenever the settlor is a beneficiary of the spendthrift trust.
2. If the settlor is a beneficiary of the trust, at least one trustee of a spendthrift trust must be: (a) A natural person who resides and has his or her domicile in this State; (b) A trust company that: (1) Is organized under federal law or under the laws of this State or another state; and (2) Maintains an office in this State for the transaction of business; or (c) A bank that: (1) Is organized under federal law or under the laws of this State or another state; (2) Maintains an office in this State for the transaction of business; and (3) Possesses and exercises trust powers.
See NRS 166.015(2).
Does holding trust assets or out-of-state land through an LLC change what a creditor can reach?
Under NRS 86.401, a judgment creditor of a member of a Nevada limited-liability company may obtain only a charging order against the member's interest, even in a single-member company, and may not foreclose on that interest.
The Nevada Supreme Court held in Weddell v. H2O, Inc. that a charging-order creditor receives only a share of the economic interests, such as profits and distributions.
That charging-order limit governs collection against a member's interest. A creditor attacking the transfer into the trust uses a different set of remedies. Under NRS chapter 112, a creditor may obtain avoidance of the transfer, attachment of the asset transferred, an injunction, a receiver or other relief, and a judgment creditor may, if the court orders, levy execution on the asset transferred or its proceeds. Chapter 112 also allows a judgment for the value of the asset transferred, or the amount needed to satisfy the claim if less, against the first transferee or the person for whose benefit the transfer was made. How those avoidance remedies interact with the charging-order limit when a Nevada self-settled trust holds an LLC interest is not resolved by the authorities reviewed for this guide, and no Nevada decision addressing it was found in our review.
Two further points bear on that protection.
Alter ego. In a 2019 order answering certified questions, the Nevada Supreme Court held that a judgment creditor may use alter ego to make a third party liable on a judgment and that the doctrine applies to LLCs. The federal court had also asked whether alter ego applies to trusts and to spendthrift trusts. The court declined to answer those two questions because the record did not show the nature of the trusts. Separately, a settlor of an irrevocable trust is not the trustee's alter ego absent clear and convincing evidence.
Land versus an LLC interest. Under Nevada's LLC statute, a member's interest is personal property, and real property the company owns is held and conveyed in the company's name. Apart from a separate test based on Nevada administration, chapter 166's own applicability rule treats the two differently: it reaches land by its location in Nevada, but reaches personal property either by its location in Nevada or by the trust creator's declared Nevada domicile.
Land held directly in the trust may be judged under the law of the state where it sits. In United States v. Huckaby, a federal court in California addressed land the settlors had transferred directly into their trust. It treated whether a creditor could reach that land as a question for the law of the situs under Restatement (Second) of Conflict of Laws section 280, as the court quoted it, and applied California law because the land was in California.
Read together, these sources suggest that a trust holding a Nevada LLC interest instead of out-of-state land holds personal property, which chapter 166 reaches through the creator's declared Nevada domicile as well as through Nevada administration, and to which the land rule the Huckaby court quoted does not by its terms speak. Huckaby did not involve an LLC, and no decision applying that distinction to a Nevada trust was found in our review. NRS 86.401 is part of Nevada's LLC statute, and this guide's sources do not address charging orders against an LLC formed under another state's law.
An operating agreement or planning memorandum that describes the NRS 86.401 charging-order limit as shielding the company's own assets can misstate their exposure once a court finds the company to be the debtor's alter ego.
Sources for this answer
NRS 86.401 makes a charging order the exclusive remedy of a member's judgment creditor against the member's interest, whether the company has one member or more, and bars foreclosure on the interest.
1. On application to a court of competent jurisdiction by any judgment creditor of a member, the court may charge the member’s interest with payment of the unsatisfied amount of the judgment with interest. To the extent so charged, the judgment creditor has only the rights of an assignee of the member’s interest. 2. This section: (a) Provides the exclusive remedy by which a judgment creditor of a member or an assignee of a member may satisfy a judgment out of the member’s interest of the judgment debtor, whether the limited-liability company has one member or more than one member. No other remedy, including, without limitation, foreclosure on the member’s interest or a court order for directions, accounts and inquiries that the debtor or member might have made, is available to the judgment creditor attempting to satisfy the judgment out of the judgment debtor’s interest in the limited-liability company, and no other remedy may be ordered by a court.
See NRS 86.401(1)–(2)(a).
Weddell v. H2O, Inc. holds that a judgment creditor with a charging order has only an assignee's rights, receiving only a share of the economic interests in the limited-liability company.
We conclude that a judgment creditor has only the rights of an assignee of the member’s interest, receiving only a share of the economic interests in a limited-liability company, including profits, losses, and distributions of assets.
See Weddell v. H2O, Inc., 128 Nev. 94, 97, 271 P.3d 743 (2012).
NRS 112.210 lets a creditor obtain avoidance, attachment, an injunction, a receiver or other relief against a fraudulent transfer, and lets a judgment creditor levy execution on the asset transferred or its proceeds if the court orders.
1. In an action for relief against a transfer or obligation under this chapter, a creditor, subject to the limitations in NRS 112.220, may obtain: (a) Avoidance of the transfer or obligation to the extent necessary to satisfy the creditor’s claim; (b) An attachment or garnishment against the asset transferred or other property of the transferee pursuant to NRS 31.010 to 31.460, inclusive; and (c) Subject to applicable principles of equity and in accordance with applicable rules of civil procedure: (1) An injunction against further disposition by the debtor or a transferee, or both, of the asset transferred or of other property; (2) Appointment of a receiver to take charge of the asset transferred or of other property of the transferee; or (3) Any other relief the circumstances may require. 2. If a creditor has obtained a judgment on a claim against the debtor, the creditor, if the court so orders, may levy execution on the asset transferred or its proceeds.
See NRS 112.210.
NRS 112.220(2) lets a creditor recover judgment for the lesser of the value of the asset transferred or the amount needed to satisfy its claim, against the first transferee or the person for whose benefit the transfer was made, or certain subsequent transferees.
2. Except as otherwise provided in this section, to the extent a transfer is voidable in an action by a creditor under paragraph (a) of subsection 1 of NRS 112.210, the creditor may recover judgment for the value of the asset transferred, as adjusted under subsection 3 of this section, or the amount necessary to satisfy the creditor’s claim, whichever is less. The judgment may be entered against: (a) The first transferee of the asset or the person for whose benefit the transfer was made; or (b) Any subsequent transferee other than a transferee who took in good faith for value or from any subsequent transferee.
See NRS 112.220(2).
Magliarditi v. TransFirst Group, Inc. answers certified questions by holding that a judgment creditor may bring an alter ego claim to make a third party liable on a judgment and that alter ego applies to LLCs.
We conclude as to question one, that a judgment creditor may bring a claim for alter ego to make a third party liable on the judgment. As to questions two and three, we conclude that the alter ego doctrine applies to limited liability companies (LLCs) and partnerships.
See Magliarditi v. TransFirst Grp., Inc., No. 73889 (Nev. Oct. 21, 2019) (order answering certified questions and remanding).
Magliarditi v. TransFirst Group, Inc. sets out the federal court's certified questions four and five, which asked whether alter ego applies to trusts and to spendthrift trusts.
4. Does alter ego apply to trusts? 5. Does alter ego apply to spendthrift trusts?
See Magliarditi v. TransFirst Grp., Inc., No. 73889 (Nev. Oct. 21, 2019) (order answering certified questions and remanding).
Magliarditi v. TransFirst Group, Inc. declines to answer the certified questions on trusts and spendthrift trusts because the record did not show the nature of the trusts.
However, because it is unclear from the record the nature of the trusts at issue, we decline to answer certified questions four and five and remand to the United States District Court for the District of Nevada for further clarification.
See Magliarditi v. TransFirst Grp., Inc., No. 73889 (Nev. Oct. 21, 2019) (order answering certified questions and remanding).
NRS 163.418 provides that a settlor of an irrevocable trust is not deemed the trustee's alter ego absent clear and convincing evidence.
Absent clear and convincing evidence, a settlor of an irrevocable trust shall not be deemed to be the alter ego of a trustee of an irrevocable trust.
See NRS 163.418.
NRS 86.351(1) states that a member's interest in a Nevada limited-liability company is personal property.
The interest of each member of a limited-liability company is personal property.
See NRS 86.351(1).
NRS 86.311(1) requires real and personal property owned by a Nevada limited-liability company to be held, owned and conveyed in the company's name.
1. Except as otherwise provided in subsection 2, real and personal property owned or purchased by a company must be held and owned, and conveyance made, in the name of the company.
See NRS 86.311(1).
United States v. Huckaby finds that the settlors transferred the property directly into the trust.
On October 17, 2011, defendants transferred the Property into the Trust.
See United States v. Huckaby, No. 2:23-cv-00587-DAD-JDP (E.D. Cal. Mar. 3, 2026) (order granting summary judgment in part).
United States v. Huckaby treats whether a creditor can reach land held in a trust as distinct from construing the trust, and finds persuasive Restatement (Second) of Conflict of Laws section 280, as the court quoted it, which looks to the law applied by the courts of the situs.
However, the issue before the court is not a matter of interpreting the Trust but instead whether the land which is held in that trust can be reached by a plaintiff creditor. As to that question, the court finds § 280 to be persuasive in stating that “[w]hether the interest of a beneficiary of a trust of an interest in land is assignable by him and can be reached by his creditors, is determined by the law that would be applied by the courts of the situs.”
See United States v. Huckaby, No. 2:23-cv-00587-DAD-JDP (E.D. Cal. Mar. 3, 2026) (order granting summary judgment in part).
United States v. Huckaby applies California law to whether the land is subject to the judgment lien because the land is located in California.
Accordingly, because the Property is located in California, the court will apply California law in determining whether it is subject to enforcement of a judgment lien by plaintiff.
See United States v. Huckaby, No. 2:23-cv-00587-DAD-JDP (E.D. Cal. Mar. 3, 2026) (order granting summary judgment in part).
NRS 166.015(1) applies chapter 166 in Nevada to spendthrift trusts affecting land in Nevada, personal property in Nevada, personal property of a creator with a declared Nevada domicile, or a trust administered in part in Nevada by a qualified trustee.
1. Unless the writing declares to the contrary, expressly, this chapter governs the construction, operation and enforcement, in this State, of all spendthrift trusts created in or outside this State if: (a) All or part of the land, rents, issues or profits affected are in this State; (b) All or part of the personal property, interest of money, dividends upon stock and other produce thereof, affected, are in this State; (c) The declared domicile of the creator of a spendthrift trust affecting personal property is in this State; or (d) At least one trustee qualified under subsection 2 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 this State.
See NRS 166.015(1)(a)–(d).
Will courts outside Nevada respect a Nevada asset protection trust?
Courts outside Nevada have applied their own law instead of a trust's Nevada designation in two kinds of disputes found in our review, a creditor's claim against land held in the trust and divorce.
Nevada's statute is written for Nevada courts. Chapter 166 governs the construction, operation and enforcement of spendthrift trusts in this State when the trust has a listed Nevada connection, such as Nevada property, a declared Nevada domicile, or a qualified trustee performing administration in Nevada. NRS 166.120(2) requires an action to reach a beneficiary's interest to be brought in a specified Nevada proceeding and gives the court exclusive jurisdiction. Whether a court in another state, or a federal court, must defer to that exclusive-jurisdiction provision was not decided by any authority found in our review.
Land in another state: United States v. Huckaby. The trust's settlors were also its trustees and its sole lifetime beneficiaries. The defendants argued that Nevada law governed because the trust was designated a Nevada spendthrift trust by its terms. The federal court in California agreed that the trust is construed under Nevada law, citing Restatement (Second) of Conflict of Laws section 277 as it quoted it, but held that whether a creditor can reach the land is a separate question governed by the law of the situs under section 280, again as the court quoted it. Applying California law, it held the judgment liens enforceable against the land to the extent of the debtor's interest and concluded that the trust did not protect the property. It did not reach the government's alternative argument that the land was transferred about a month after an IRS levy was served. The order of March 3, 2026 is a federal trial-court ruling that binds no other court, and it did not consider a trust with an independent Nevada trustee or assets other than land.
Divorce: Utah decisions. In Dahl v. Dahl, the Utah Supreme Court said Utah generally enforces a trust's choice-of-law clause unless doing so would undermine a strong Utah public policy. It declined to apply Nevada law to the trust's revocability because doing so would prevent an equitable division of the marital estate. In Hillam v. Hillam, the Utah Court of Appeals applied Utah law to the enforcement of a trust whose agreement selected the Spendthrift Trust Act of Nevada, except for questions about the trust's creation. Hillam did not decide the former spouse's creditor-based claim to the trust assets, which it held unpreserved. Both decisions bind only Utah courts and are nonbinding guidance elsewhere.
Federal bankruptcy. The Bankruptcy Code lets a bankruptcy trustee avoid a debtor's transfer to a self-settled trust of which the debtor is a beneficiary if the transfer was made within 10 years before the bankruptcy petition with actual intent to hinder, delay or defraud a creditor. That ten-year period comes from federal law, not chapter 166. Read together, this suggests that a transfer beyond the reach of NRS 166.170's two-year and six-month periods can still be avoided in bankruptcy if the federal elements are proved, though no Nevada decision applying the two provisions together was found in our review.
Sources for this answer
NRS 166.015(1) provides that chapter 166 governs the construction, operation and enforcement, in Nevada, of spendthrift trusts created in or outside Nevada that have one of the listed Nevada connections.
1. Unless the writing declares to the contrary, expressly, this chapter governs the construction, operation and enforcement, in this State, of all spendthrift trusts created in or outside this State if: (a) All or part of the land, rents, issues or profits affected are in this State; (b) All or part of the personal property, interest of money, dividends upon stock and other produce thereof, affected, are in this State; (c) The declared domicile of the creator of a spendthrift trust affecting personal property is in this State; or (d) At least one trustee qualified under subsection 2 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 this State.
See NRS 166.015(1).
NRS 166.120(2) requires actions to reach a spendthrift trust beneficiary's rights to be brought in a chapter 153 or NRS 164.010 proceeding and gives the court exclusive jurisdiction over them.
Any action to enforce the beneficiary’s rights, to determine if the beneficiary’s rights are subject to execution, to levy an attachment or for any other remedy must be made only in a proceeding commenced pursuant to chapter 153 of NRS, if against a testamentary trust, or NRS 164.010, if against a nontestamentary trust. A court has exclusive jurisdiction over any proceeding pursuant to this section.
See NRS 166.120(2).
United States v. Huckaby describes the defendants as the trust's settlors, trustees and sole lifetime beneficiaries.
Defendants are the Trust’s settlors, trustees, and its sole beneficiaries during their lifetimes.
See United States v. Huckaby, No. 2:23-cv-00587-DAD-JDP (E.D. Cal. Mar. 3, 2026) (order granting summary judgment in part).
United States v. Huckaby records the defendants' argument that Nevada law governed because the trust was designated a Nevada spendthrift trust by its terms.
Defendants argue that the Trust is governed by Nevada law because it was designated as a Nevada Spendthrift Trust by its terms.
See United States v. Huckaby, No. 2:23-cv-00587-DAD-JDP (E.D. Cal. Mar. 3, 2026) (order granting summary judgment in part).
United States v. Huckaby agrees that the trust is construed in accordance with Nevada law, relying on Restatement (Second) of Conflict of Laws section 277 as the court quoted it.
To the extent that defendants argue that the Trust should be constructed in accordance with Nevada law, they are correct. The Restatement (Second) of Conflict of Laws § 277 provides that a “will or other instrument creating a trust of an interest in land is construed in accordance with the rules of construction of the state designated for this purpose in the instrument.”
See United States v. Huckaby, No. 2:23-cv-00587-DAD-JDP (E.D. Cal. Mar. 3, 2026) (order granting summary judgment in part).
United States v. Huckaby treats whether a creditor can reach land held in a trust as distinct from construing the trust, and finds persuasive Restatement (Second) of Conflict of Laws section 280, as the court quoted it, which looks to the law applied by the courts of the situs.
However, the issue before the court is not a matter of interpreting the Trust but instead whether the land which is held in that trust can be reached by a plaintiff creditor. As to that question, the court finds § 280 to be persuasive in stating that “[w]hether the interest of a beneficiary of a trust of an interest in land is assignable by him and can be reached by his creditors, is determined by the law that would be applied by the courts of the situs.”
See United States v. Huckaby, No. 2:23-cv-00587-DAD-JDP (E.D. Cal. Mar. 3, 2026) (order granting summary judgment in part).
United States v. Huckaby, applying California law on spendthrift trusts and real property, concludes that the judgment liens are enforceable against the property to the extent of the debtor's interest.
Accordingly, applying California law regarding the effectiveness of a spendthrift trust in shielding real property from creditors, the court concludes that the judgment liens here are enforceable against the Property to the extent that defendant Huckaby has an interest in that property.
See United States v. Huckaby, No. 2:23-cv-00587-DAD-JDP (E.D. Cal. Mar. 3, 2026) (order granting summary judgment in part).
United States v. Huckaby concludes that the trust does not protect the property from enforcement of a judgment lien.
The court also need not consider this assertion because it concludes that the trust does not protect the property from enforcement of a judgment lien.
See United States v. Huckaby, No. 2:23-cv-00587-DAD-JDP (E.D. Cal. Mar. 3, 2026) (order granting summary judgment in part).
United States v. Huckaby declines to address the government's argument that the property was placed in the trust about one month after service of the IRS levy.
Plaintiff also contends that, even if the court were to credit defendants’ argument in this regard, the property at issue was placed in the trust on October 17, 2011, approximately one month after plaintiff served defendant Huckaby with the IRS levy that would ultimately result in the judgment against him. (Doc. No. 46 at 4.) The court need not address this argument because it rejects defendants’ argument on the separate grounds stated above.
See United States v. Huckaby, No. 2:23-cv-00587-DAD-JDP (E.D. Cal. Mar. 3, 2026) (order granting summary judgment in part).
Dahl v. Dahl states that Utah generally enforces a trust's choice-of-law provision unless doing so would undermine a strong Utah public policy.
Under Utah choice-of-law rules, we will generally enforce a choice-of-law provision contained in a trust document, unless doing so would undermine a strong public policy of the State of Utah.
See Dahl v. Dahl, 2015 UT 23, ¶ 23 (Utah Jan. 30, 2015) (opinion as issued; later cited as 2015 UT 79, 459 P.3d 276).
Dahl v. Dahl holds that the court would ordinarily apply Nevada law to the trust's revocability but cannot do so without violating Utah public policy.
The central dispute between the parties in this case concerns the revocability of the Trust. This is an issue of trust construction to which we would ordinarily apply Nevada law. But we cannot apply Nevada law without violating Utah public policy.
See Dahl v. Dahl, 2015 UT 23, ¶ 24 (Utah Jan. 30, 2015) (opinion as issued; later cited as 2015 UT 79, 459 P.3d 276).
Dahl v. Dahl declines to enforce the trust's choice-of-law provision because Utah's policy of equitable distribution of marital assets requires construing the trust under Utah law.
Because Utah has a strong policy of equitable distribution of marital assets, we decline to enforce the Trust’s choice-of-law provision on the grounds that doing so would deny the district court the ability to achieve an equitable division of the marital estate. We therefore construe the Trust according to Utah law.
See Dahl v. Dahl, 2015 UT 23, ¶ 27 (Utah Jan. 30, 2015) (opinion as issued; later cited as 2015 UT 79, 459 P.3d 276).
Hillam v. Hillam holds that, despite a clause selecting the Spendthrift Trust Act of Nevada, Utah law governs enforcement of the trust's terms except for questions about its creation.
The Trust Agreement had a choice-of-law provision stating that the Trust was governed by the Spendthrift Trust Act of Nevada. But even so, we agree with the district court that, with the exception of questions relating to the creation of the Trust, Utah law applies to questions regarding the enforcement of its terms.
See Hillam v. Hillam, 2024 UT App 102, n.6, 554 P.3d 1137.
11 U.S.C. § 548(e)(1) lets a bankruptcy trustee avoid a debtor's transfer to a self-settled trust of which the debtor is a beneficiary, made within 10 years before the petition with actual intent to hinder, delay or defraud a creditor.
(1) In addition to any transfer that the trustee may otherwise avoid, the trustee may avoid any transfer of an interest of the debtor in property that was made on or within 10 years before the date of the filing of the petition, if— (A) such transfer was made to a self-settled trust or similar device; (B) such transfer was by the debtor; (C) the debtor is a beneficiary of such trust or similar device; and (D) the debtor made such transfer with actual intent to hinder, delay, or defraud any entity to which the debtor was or became, on or after the date that such transfer was made, indebted.
See 11 U.S.C. § 548(e)(1).
NRS 166.170(1)(a) bars an action by a person who was a creditor when the transfer was made unless it is commenced within two years after the transfer or six months after the person discovered or reasonably should have discovered it.
NRS 166.170 Limitation of actions with respect to transfer of property to trust; certain transfers of property disregarded; limitation of actions against advisers to settlors or trustees and against trustees; transfers to trust. 1. A person may not bring an action with respect to a transfer of property to a spendthrift trust: (a) If the person is a creditor when the transfer is made, unless the action is commenced within: (1) Two years after the transfer is made; or (2) Six months after the person discovers or reasonably should have discovered the transfer,
See NRS 166.170(1)(a).
Hillam v. Hillam holds the former spouse's debtor-creditor argument about the trust unpreserved.
But we see no place where she made the particular debtor-creditor argument that she’s now making on appeal. We therefore regard it as unpreserved.
See Hillam v. Hillam, 2024 UT App 102, ¶ 37, 554 P.3d 1137.