The Nevada Supreme Court affirms in part and reverses an order issued by the Eighth Judicial District Court, Clark County regarding the administration of a discretionary trust and what disclosures must be made by the trustees to beneficiaries. The Court concludes that Nevada’s trust statutes do not require the trustees to provide an accounting to beneficiaries where their interests are discretionary. However, under the terms of the trust itself, the beneficiaries may request and receive copies of certain documents, inspect trust books and records, and may request annually a copy of the trust tax returns, inventory, and accounting. Accordingly, the Court affirms the district court’s ruling that the trustees must deliver certain trust documents to the beneficiaries and reverses the district court’s decision that the beneficiaries are not entitled to an accounting. The Supreme Court remands the case back to the district court to specify which sections of trust documents must be provided to the beneficiaries. In the Matter of the Trust Agreement, 23 Partners Trust I, an Irrevocable Trust, 138 Nev. Advance Opinions 84 (Supreme Court of Nevada, Case No. 82991., December 22, 2022).
Jon DeLuca created the 23 Partners Trust I as an irrevocable trust for the benefit of his children. After his death, the beneficiaries requested copies of the trust document and an accounting. The trustees refused to provide this information, and litigation ensued. The district court held the beneficiaries were not entitled to an accounting, but ordered the trustees to provide certain financials. The district court also concluded the beneficiaries were not entitled to the trust document but rather a copy of provisions affecting their rights. The trustees appealed, and the beneficiaries cross-appealed.
The Supreme Court first finds that Nevada statutes NRS 165.1207(1)(b)(5) and NRS 165.180 do not entitle beneficiaries with a discretionary interest in a trust to an accounting. However, in the case at hand, the specific terms of the trust provides for them to receive an annual accounting and gives them the right to inspect certain trust materials and books and records. In addition, the trust also provides that upon the request of a qualifying beneficiary, the trustee is to provide annual tax returns, inventories, and accountings. The Supreme Court finds the children are qualifying beneficiaries entitled to these items pursuant to the trust language itself. As such, the district court was correct to order they may receive these records. However, the district court was incorrect in concluding they were not entitled to an accounting.
Second, the Supreme Court finds that the district court did not abuse its discretion in ordering the trustees to provide portions of the trust instrument to the children. However, it did abuse its discretion in failing to identify which portions. A court should provide sufficient specificity in its orders where it directs a trustee to take certain actions.