Senate Bill No. 196–Senator Care

 

February 24, 2003

____________

 

Referred to Committee on Judiciary

 

SUMMARY—Enacts Uniform Prudent Investor Act and Uniform Principal and Income Act (1997). (BDR 13‑1107)

 

FISCAL NOTE:  Effect on Local Government: No.

                           Effect on the State: No.

 

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EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted.

 

AN ACT relating to trusts; adapting the Uniform Prudent Investor Act and the Uniform Principal and Income Act (1997) to each other and the structure of Nevada Revised Statutes; and providing other matters properly relating thereto.

 

THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN

SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

 

1-1  Section 1. Chapter 164 of NRS is hereby amended by adding

1-2  thereto the provisions set forth as sections 2 to 44, inclusive, of this

1-3  act.

1-4  Sec. 2.  As used in sections 2 to 44, inclusive, of this act:

1-5  1.  “Fiduciary” means a trustee or, to the extent that sections

1-6  15 to 44, inclusive, of this act apply to an estate, a personal

1-7  representative.

1-8  2.  “Terms of a trust” means the manifestation of the intent of

1-9  a settlor or decedent with respect to the trust, expressed in a

1-10  manner that admits of its proof in a judicial proceeding, whether

1-11  by written or spoken words or by conduct.

1-12      Sec. 3.  In performing his duties under sections 2 to 44,

1-13  inclusive, of this act, a fiduciary:

1-14      1.  Shall administer a trust or estate in accordance with the

1-15  terms of the trust or the will, even if there is a different provision

1-16  in sections 2 to 44, inclusive, of this act;

1-17      2.  May administer a trust or estate by the exercise of a

1-18  discretionary power of administration given to the fiduciary by the

2-1  terms of the trust or the will, even if the exercise of the power

2-2  produces a result different from a result required or permitted by

2-3  sections 2 to 44, inclusive, of this act; and

2-4  3.  Shall administer a trust or estate in accordance with

2-5  sections 2 to 44, inclusive, of this act if the terms of the trust or the

2-6  will do not contain a different provision or do not give the

2-7  fiduciary a discretionary power of administration.

2-8  Sec. 4.  A trustee shall invest and manage the trust property

2-9  solely in the interest of the beneficiaries.

2-10      Sec. 5.  1.  If a trust has two or more beneficiaries, the

2-11  trustee shall act impartially in investing and managing the trust

2-12  property, taking into account any differing interests of the

2-13  beneficiaries.

2-14      2.  In exercising the power to adjust under section 18 of this

2-15  act or a discretionary power of administration regarding a matter

2-16  within the scope of sections 15 to 44, inclusive, of this act, whether

2-17  granted by the terms of a trust, a will or sections 15 to 44,

2-18  inclusive, of this act, a fiduciary shall administer a trust or estate

2-19  impartially, based on what is fair and reasonable to all the

2-20  beneficiaries, except to the extent that the terms of the trust or the

2-21  will clearly manifest an intention that the fiduciary shall or may

2-22  favor one or more of the beneficiaries. A determination in

2-23  accordance with sections 15 to 44, inclusive, of this act is

2-24  presumed to be fair and reasonable to all the beneficiaries.

2-25      Sec. 6.  Sections 2 to 14, inclusive, of this act may be cited as

2-26  the Uniform Prudent Investor Act.

2-27      Sec. 7.  A trustee who invests and manages trust property

2-28  owes a duty to the beneficiaries of the trust to comply with the

2-29  prudent investor rule as set forth in sections 2 to 14, inclusive, of

2-30  this act but a trustee is not liable to a beneficiary to the extent that

2-31  the trustee acted in reasonable reliance on the terms of the trust.

2-32      Sec. 8.  1.  A trustee shall invest and manage trust property

2-33  as a prudent investor would, considering the terms, purposes,

2-34  requirements for distribution, and other circumstances of the

2-35  trust. In satisfying this standard, the trustee shall exercise

2-36  reasonable care, skill and caution.

2-37      2.  A trustee’s decisions concerning investment and

2-38  management as applied to individual assets must be evaluated not

2-39  in isolation but in the context of the trust portfolio as a whole and

2-40  as part of an overall strategy of investment having objectives for

2-41  risk and return reasonably suited to the trust.

2-42      3.  Among circumstances that a trustee shall consider in

2-43  investing and managing trust property are such of the following as

2-44  are relevant to the trust or its beneficiaries:

2-45      (a) General economic conditions;

3-1  (b) The possible effect of inflation or deflation;

3-2  (c) The expected tax consequences of decisions or strategies;

3-3  (d) The role that each investment or course of action plays

3-4  within the overall trust portfolio;

3-5  (e) The expected total return from income and the

3-6  appreciation of capital;

3-7  (f) Other resources of the beneficiaries;

3-8  (g) Needs for liquidity, regularity of income, and preservation

3-9  or appreciation of capital; and

3-10      (h) An asset’s special relationship or special value, if any, to

3-11  the purposes of the trust or to one or more of the beneficiaries.

3-12      4.  A trustee shall make a reasonable effort to verify facts

3-13  relevant to the investment and management of trust property.

3-14      5.  A trustee may invest in any kind of property or type of

3-15  investment consistent with the standards of sections 2 to 14,

3-16  inclusive, of this act, which may include financial assets, interests

3-17  in closely held enterprises, tangible and intangible personal

3-18  property, and real property.

3-19      6.  A trustee who has special skills or expertise, or is named

3-20  trustee in reliance upon his representation that he has special

3-21  skills or expertise, has a duty to use those special skills or

3-22  expertise.

3-23      Sec. 9.  A trustee shall diversify the investments of the trust

3-24  unless he reasonably determines that, because of special

3-25  circumstances, the purposes of the trust are better served without

3-26  diversifying.

3-27      Sec. 10.  Within a reasonable time after accepting a

3-28  trusteeship or receiving trust property, a trustee shall review the

3-29  trust property and make and carry out decisions concerning the

3-30  retention and disposition of assets, in order to bring the trust

3-31  portfolio into compliance with the purposes, terms, requirements

3-32  for distribution and other circumstances of the trust, and with the

3-33  requirements of sections 2 to 14, inclusive, of this act.

3-34      Sec. 11.  In investing and managing trust property, a trustee

3-35  may only incur costs that are appropriate and reasonable in

3-36  relation to the property, the purposes of the trust and the skills of

3-37  the trustee.

3-38      Sec. 12.  Compliance with the prudent investor rule is

3-39  determined in light of the facts and circumstances existing at the

3-40  time of a trustee’s decision or action and not by hindsight.

3-41      Sec. 13.  1.  A trustee may delegate functions of investment

3-42  and management that a prudent trustee of comparable skills could

3-43  properly delegate under the circumstances. He shall exercise

3-44  reasonable care, skill and caution in:

3-45      (a) Selecting an agent;

4-1  (b) Establishing the scope and terms of the delegation,

4-2  consistent with the purposes and terms of the trust; and

4-3  (c) Periodically reviewing the agent’s actions in order to verify

4-4  the agent’s performance and compliance with the terms of the

4-5  delegation.

4-6  2.  In performing a delegated function, an agent owes a duty

4-7  to the trust to exercise reasonable care to comply with the terms of

4-8  the delegation.

4-9  3.  A trustee who complies with the requirements of subsection

4-10  1 is not liable to the beneficiaries or to the trust for the decisions

4-11  or actions of the agent to whom the function was delegated.

4-12      4.  By accepting the delegation of a function from the trustee

4-13  of a trust that is subject to the law of this state, an agent submits to

4-14  the jurisdiction of the courts of this state.

4-15      Sec. 14.  The following terms or comparable language in the

4-16  terms of a trust, unless otherwise limited or modified, authorizes

4-17  any investment or strategy permitted under sections 2 to 14,

4-18  inclusive, of this act: “investments permissible by law for

4-19  investment of trust funds,” “legal investments,” “authorized

4-20  investments,” “using the judgment and care under the

4-21  circumstances then prevailing that persons of prudence, discretion

4-22  and intelligence exercise in the management of their own affairs,

4-23  not in regard to speculation but in regard to the permanent

4-24  disposition of their funds, considering the probable income as well

4-25  as the probable safety of their capital,” “prudent man rule,”

4-26  “prudent trustee rule,” “prudent person rule” and “prudent

4-27  investor rule.”

4-28      Sec. 15.  Section 2, subsection 2 of section 5 and sections 15

4-29  to 44, inclusive, of this act may be cited as the Uniform Principal

4-30  and Income Act (1997).

4-31      Sec. 16.  As used in sections 15 to 44, inclusive, of this act:

4-32      1.  “Accounting period” means a calendar year unless

4-33  another 12-month period is selected by a fiduciary. The term

4-34  includes a portion of a calendar year or other 12-month period

4-35  that begins when an income interest begins or ends when an

4-36  income interest ends.

4-37      2.  “Beneficiary” includes, in the case of a decedent’s estate,

4-38  an heir, legatee and devisee and, in the case of a trust, an income

4-39  beneficiary and a remainder beneficiary.

4-40      3.  “Fiduciary” includes an executor, administrator, successor

4-41  personal representative, special administrator and a person

4-42  performing substantially the same function.

4-43      4.  “Income” means money or property that a fiduciary

4-44  receives as current return from a principal asset. The term

4-45  includes a portion of receipts from a sale, exchange or liquidation

5-1  of a principal asset, to the extent provided in sections 24 to 38,

5-2  inclusive, of this act.

5-3  5.  “Income beneficiary” means a person to whom net income

5-4  of a trust is or may be payable.

5-5  6.  “Income interest” means the right of an income

5-6  beneficiary to receive all or part of net income, whether the terms

5-7  of the trust require it to be distributed or authorize it to be

5-8  distributed in the trustee’s discretion.

5-9  7.  “Mandatory income interest” means the right of an income

5-10  beneficiary to receive net income that the terms of the trust require

5-11  the fiduciary to distribute.

5-12      8.  “Net income” means the total receipts allocated to income

5-13  during an accounting period minus the disbursements made from

5-14  income during the period, plus or minus transfers under sections

5-15  15 to 44, inclusive, of this act to or from income during the period.

5-16      9.  “Principal” means property held in trust for distribution to

5-17  a remainder beneficiary when the trust terminates.

5-18      10.  “Remainder beneficiary” means a person entitled to

5-19  receive principal when an income interest ends.

5-20      Sec. 17.  In allocating receipts and disbursements to or

5-21  between principal and income, and with respect to any matter

5-22  within the scope of sections 19 to 23, inclusive, of this act, a

5-23  fiduciary shall add a receipt or charge a disbursement to principal

5-24  to the extent that the terms of the trust and sections 15 to 44,

5-25  inclusive, of this act do not provide a rule for allocating the receipt

5-26  or disbursement to or between principal and income.

5-27      Sec. 18.  1.  A trustee may adjust between principal and

5-28  income to the extent he considers necessary if he invests and

5-29  manages trust assets as a prudent investor, the terms of the trust

5-30  describe the amount that may or must be distributed to a

5-31  beneficiary by referring to the trust’s income, and he determines,

5-32  after applying the rules in sections 3 and 17 of this act, that he is

5-33  unable to comply with subsection 2 of section 5 of this act.

5-34      2.  In deciding whether and to what extent to exercise the

5-35  power conferred by subsection 1, a trustee shall consider all

5-36  factors relevant to the trust and its beneficiaries, including the

5-37  following factors to the extent they are relevant:

5-38      (a) The nature, purpose and expected duration of the trust;

5-39      (b) The intent of the settlor;

5-40      (c) The identity and circumstances of the beneficiaries;

5-41      (d) The needs for liquidity, regularity of income, and

5-42  preservation and appreciation of capital;

5-43      (e) The assets held in the trust, the extent to which the assets

5-44  consist of financial assets, interests in closely held enterprises,

5-45  tangible and intangible personal property, or real property, the

6-1  extent to which an asset is used by a beneficiary, and whether an

6-2  asset was purchased by the trustee or received from the settlor;

6-3  (f) The net amount allocated to income under the other

6-4  provisions of sections 15 to 44, inclusive, of this act and the

6-5  increase or decrease in the value of the principal assets, which the

6-6  trustee may estimate as to assets for which market values are not

6-7  readily available;

6-8  (g) Whether and to what extent the terms of the trust give the

6-9  trustee the power to invade principal or accumulate income or

6-10  prohibit him from invading principal or accumulating income,

6-11  and the extent to which he has exercised a power from time to time

6-12  to invade principal or accumulate income;

6-13      (h) The actual and anticipated effect of economic conditions

6-14  on principal and income and effects of inflation and deflation;

6-15  and

6-16      (i) The anticipated tax consequences of an adjustment.

6-17      3.  A trustee may not make an adjustment:

6-18      (a) That diminishes the income interest in a trust that requires

6-19  all the income to be paid at least annually to a surviving spouse

6-20  and for which an estate tax or gift tax marital deduction would be

6-21  allowed, in whole or in part, if the trustee did not have the power

6-22  to make the adjustment;

6-23      (b) That reduces the actuarial value of the income interest in a

6-24  trust to which a person transfers property with the intent to qualify

6-25  for a gift tax exclusion;

6-26      (c) That changes the amount payable to a beneficiary as a

6-27  fixed annuity or a fixed fraction of the value of the trust assets;

6-28      (d) From any amount that is permanently set aside for

6-29  charitable purposes under a will or the terms of a trust unless both

6-30  income and principal are so set aside;

6-31      (e) If possessing or exercising the power to make an

6-32  adjustment causes a natural person to be treated as the owner of

6-33  all or part of the trust for income tax purposes, and the natural

6-34  person would not be treated as the owner if the trustee did not

6-35  possess the power to make an adjustment;

6-36      (f) If possessing or exercising the power to make an

6-37  adjustment causes all or part of the trust assets to be included for

6-38  estate tax purposes in the estate of a natural person who has the

6-39  power to remove a trustee or appoint a trustee, or both, and the

6-40  assets would not be included in the estate of the natural person if

6-41  the trustee did not possess the power to make an adjustment;

6-42      (g) If the trustee is a beneficiary of the trust; or

6-43      (h) If the trustee is not a beneficiary, but the adjustment would

6-44  benefit him directly or indirectly.

7-1  4.  If paragraph (e), (f), (g) or (h) of subsection 3 applies to a

7-2  trustee and there is more than one trustee, a cotrustee to whom the

7-3  provision does not apply may make the adjustment unless the

7-4  exercise of the power by the remaining trustee or trustees is not

7-5  permitted by the terms of the trust.

7-6  5.  A trustee may release the entire power conferred by

7-7  subsection 1 or may release only the power to adjust from income

7-8  to principal or the power to adjust from principal to income if he is

7-9  uncertain about whether possessing or exercising the power will

7-10  cause a result described in paragraphs (a) to (f), inclusive, or (h)

7-11  of subsection 3 or if he determines that possessing or exercising

7-12  the power will or may deprive the trust of a tax benefit or impose a

7-13  tax burden not described in subsection 3. The release may be

7-14  permanent or for a specified period, including a period measured

7-15  by the life of a natural person.

7-16      6.  Terms of a trust that limit the power of a trustee to make

7-17  an adjustment between principal and income do not affect the

7-18  application of this section unless it is clear from the terms of the

7-19  trust that the terms are intended to deny the trustee the power of

7-20  adjustment conferred by subsection 1.

7-21      7.  A trustee incurs no liability by choosing not to exercise the

7-22  discretionary power conferred by this section.

7-23      Sec. 19.  After a decedent dies, in the case of an estate, or

7-24  after an income interest in a trust ends, the following rules apply:

7-25      1.  A fiduciary of an estate or of a terminating income interest

7-26  shall determine the amount of net income and net principal

7-27  receipts received from property specifically given to a beneficiary

7-28  under the rules in sections 21 to 44, inclusive, of this act which

7-29  apply to trustees and the rules in subsection 5. He shall distribute

7-30  the net income and net principal receipts to the beneficiary who is

7-31  to receive the specific property.

7-32      2.  A fiduciary shall determine the remaining net income of a

7-33  decedent’s estate or a terminating income interest under the rules

7-34  in sections 21 to 44, inclusive, of this act which apply to trustees

7-35  and by:

7-36      (a) Including in net income all income from property used to

7-37  discharge liabilities;

7-38      (b) Paying from income or principal, in his discretion, fees of

7-39  attorneys, accountants and fiduciaries, court costs and other

7-40  expenses of administration, and interest on death taxes, but he

7-41  may pay those expenses from income of property passing to a trust

7-42  for which he claims an estate tax marital or charitable deduction

7-43  only to the extent that the payment of those expenses from income

7-44  will not cause the reduction or loss of the deduction; and

8-1  (c) Paying from principal all other disbursements made or

8-2  incurred in connection with the settlement of a decedent’s estate

8-3  or the winding up of a terminating income interest, including

8-4  debts, funeral expenses, disposition of remains, family allowances,

8-5  and death taxes and related penalties that are apportioned to the

8-6  estate or terminating income interest by the will, the terms of the

8-7  trust, or applicable law.

8-8  3.  A fiduciary shall distribute to a beneficiary who receives a

8-9  pecuniary amount outright the interest or any other amount

8-10  provided by the will, the terms of the trust, or applicable law from

8-11  net income determined under subsection 2 or from principal to the

8-12  extent that net income is insufficient. If a beneficiary is to receive

8-13  a pecuniary amount outright from a trust after an income interest

8-14  ends and no interest or other amount is provided for by the terms

8-15  of the trust or applicable law, the fiduciary shall distribute the

8-16  interest or other amount to which the beneficiary would be entitled

8-17  under applicable law if the pecuniary amount were required to be

8-18  paid under a will.

8-19      4.  A fiduciary shall distribute the net income remaining after

8-20  distributions required by subsection 3 in the manner described in

8-21  section 20 of this act to all other beneficiaries, including a

8-22  beneficiary who receives a pecuniary amount in trust, even if he

8-23  holds an unqualified power to withdraw assets from the trust or

8-24  other presently exercisable general power of appointment over the

8-25  trust.

8-26      5.  A fiduciary may not reduce principal or income receipts

8-27  from property described in subsection 1 because of a payment

8-28  described in section 39 or 40 of this act to the extent that the will,

8-29  the terms of the trust, or applicable law requires him to make the

8-30  payment from assets other than the property or to the extent he

8-31  recovers or expects to recover the payment from a third party. The

8-32  net income and principal receipts from the property are

8-33  determined by including all the amounts the fiduciary receives or

8-34  pays with respect to the property, whether those amounts accrued

8-35  or became due before, on, or after the date of a decedent’s death

8-36  or an income interest’s terminating event, and by making a

8-37  reasonable provision for amounts that he believes the estate or

8-38  terminating income interest may become obligated to pay after the

8-39  property is distributed.

8-40      Sec. 20.  1.  Each beneficiary described in subsection 4 of

8-41  section 19 of this act is entitled to receive a portion of the net

8-42  income equal to his fractional interest in undistributed principal

8-43  assets, using values as of the date of distribution. If a fiduciary

8-44  makes more than one distribution of assets to beneficiaries to

8-45  whom this section applies, each beneficiary, including one who

9-1  does not receive part of the distribution, is entitled, as of each date

9-2  of distribution, to the net income the fiduciary has received after

9-3  the date of death or terminating event or earlier date of

9-4  distribution but has not distributed as of the current date of

9-5  distribution.

9-6  2.  In determining a beneficiary’s share of net income, the

9-7  following rules apply:

9-8  (a) He is entitled to receive a portion of the net income equal

9-9  to his fractional interest in the undistributed principal assets

9-10  immediately before the date of distribution, including assets that

9-11  later may be sold to meet principal obligations.

9-12      (b) His fractional interest in the undistributed principal assets

9-13  must be calculated without regard to property specifically given to

9-14  a beneficiary and property required to pay pecuniary amounts not

9-15  in trust.

9-16      (c) His fractional interest in the undistributed principal assets

9-17  must be calculated on the basis of the aggregate value of those

9-18  assets as of the date of distribution without reducing the value by

9-19  any unpaid principal obligation.

9-20      (d) The date of distribution for purposes of this section may be

9-21  the date as of which the fiduciary calculates the value of the assets

9-22  if that date is reasonably near the date on which assets are

9-23  actually distributed.

9-24      3.  If a fiduciary does not distribute all the collected but

9-25  undistributed net income to each person as of a date of

9-26  distribution, he shall maintain appropriate records showing the

9-27  interest of each beneficiary in that net income.

9-28      4.  A trustee may apply the rules in this section, to the extent

9-29  that he considers it appropriate, to net gain or loss realized after

9-30  the date of death or terminating event or earlier date of

9-31  distribution from the disposition of a principal asset if this section

9-32  applies to the income from the asset.

9-33      Sec. 21.  1.  An income beneficiary is entitled to net income

9-34  from the date on which the income interest begins. An income

9-35  interest begins on the date specified in the terms of the trust or, if

9-36  no date is specified, on the date an asset becomes subject to a trust

9-37  or successive income interest.

9-38      2.  An asset becomes subject to a trust:

9-39      (a) On the date it is transferred to the trust in the case of an

9-40  asset that is transferred to a trust during the transferor’s life;

9-41      (b) On the date of a testator’s death in the case of an asset that

9-42  becomes subject to a trust by reason of a will, even if there is an

9-43  intervening period of administration of the testator’s estate; or

10-1      (c) On the date of the death of a natural person in the case of

10-2  an asset that is transferred to a fiduciary by a third party because

10-3  of the death of the natural person.

10-4      3.  An asset becomes subject to a successive income interest

10-5  on the day after the preceding income interest ends, as determined

10-6  under subsection 4, even if there is an intervening period of

10-7  administration to wind up the preceding income interest.

10-8      4.  An income interest ends on the day before an income

10-9  beneficiary dies or another terminating event occurs, or on the last

10-10  day of a period during which there is no beneficiary to whom a

10-11  trustee may distribute income.

10-12     Sec. 22.  1.  A trustee shall allocate an income receipt or

10-13  disbursement other than one to which subsection 1 of section 19 of

10-14  this act applies to principal if its due date occurs before a decedent

10-15  dies in the case of an estate or before an income interest begins in

10-16  the case of a trust or successive income interest.

10-17     2.  A trustee shall allocate an income receipt or disbursement

10-18  to income if its due date occurs on or after the date on which a

10-19  decedent dies or an income interest begins and it is a periodic due

10-20  date. An income receipt or disbursement must be treated as

10-21  accruing from day to day if its due date is not periodic or it has no

10-22  due date. The portion of the receipt or disbursement accruing

10-23  before the date on which a decedent dies or an income interest

10-24  begins must be allocated to principal and the balance must be

10-25  allocated to income.

10-26     3.  An item of income or an obligation is due on the date the

10-27  payor is required to make a payment. If a date for payment is not

10-28  stated, there is no due date for the purposes of sections 15 to 44,

10-29  inclusive, of this act. Distributions to shareholders or other owners

10-30  from an entity to which section 24 of this act applies are deemed to

10-31  be due on the date fixed by the entity for determining who is

10-32  entitled to receive the distribution or, if no date is fixed, on the

10-33  date of declaration of the distribution. A due date is periodic for

10-34  receipts or disbursements that must be paid at regular intervals

10-35  under a lease or an obligation to pay interest or if an entity

10-36  customarily makes distributions at regular intervals.

10-37     Sec. 23.  1.  As used in this section, “undistributed income”

10-38  means net income received before the date on which an income

10-39  interest ends. The term does not include an item of income or

10-40  expense that is due or accrued or net income that has been added

10-41  or is required to be added to principal under the terms of the trust.

10-42     2.  When a mandatory income interest ends, the trustee shall

10-43  pay to a mandatory income beneficiary who survives that date, or

10-44  the estate of a deceased mandatory income beneficiary whose

10-45  death causes the interest to end, his share of the undistributed

11-1  income that is not disposed of under the terms of the trust unless

11-2  he has an unqualified power to revoke more than 5 percent of the

11-3  trust immediately before the income interest ends. In the latter

11-4  case, the undistributed income from the portion of the trust that

11-5  may be revoked must be added to principal.

11-6      3.  When a trustee’s obligation to pay a fixed annuity or a

11-7  fixed fraction of the value of the trust’s assets ends, he shall

11-8  prorate the final payment if and to the extent required by

11-9  applicable law to accomplish a purpose of the trust or its settlor

11-10  relating to income, gift, estate or other tax requirements.

11-11     Sec. 24.  1.  As used in this section, “entity” means a

11-12  corporation, partnership, limited-liability company, regulated

11-13  investment company, real estate investment trust, common trust

11-14  fund or any other organization in which a trustee has an interest

11-15  other than a trust or estate to which section 25 of this act applies,

11-16  a business or activity to which section 26 of this act applies or an

11-17  asset-backed security to which section 38 of this act applies.

11-18     2.  Except as otherwise provided in this section, a trustee shall

11-19  allocate to income money received from an entity.

11-20     3.  A trustee shall allocate the following receipts from an

11-21  entity to principal:

11-22     (a) Property other than money;

11-23     (b) Money received in one distribution or a series of related

11-24  distributions in exchange for part or all of a trust’s interest in the

11-25  entity;

11-26     (c) Money received in total or partial liquidation of the entity;

11-27  and

11-28     (d) Money received from an entity that is a regulated

11-29  investment company or a real estate investment trust if the money

11-30  distributed is a capital gain dividend for federal income tax

11-31  purposes.

11-32     4.  Money is received in partial liquidation:

11-33     (a) To the extent that the entity, at or near the time of a

11-34  distribution, indicates that it is a distribution in partial liquidation;

11-35  or

11-36     (b) If the total amount of money and property received in a

11-37  distribution or series of related distributions is greater than 20

11-38  percent of the entity’s gross assets, as shown by the entity’s year-

11-39  end financial statements immediately preceding the initial receipt.

11-40     5.  Money is not received in partial liquidation, nor may it be

11-41  taken into account under paragraph (b) of subsection 4, to the

11-42  extent that it does not exceed the amount of income tax that a

11-43  trustee or beneficiary must pay on taxable income of the entity

11-44  that distributes the money.

12-1      6.  A trustee may rely upon a statement made by an entity

12-2  about the source of character of a distribution if the statement is

12-3  made at or near the time of distribution by the entity’s board of

12-4  directors or other person or group of persons authorized to

12-5  exercise powers to pay money or transfer property comparable to

12-6  those of a corporation’s board of directors.

12-7      Sec. 25.  A trustee shall allocate to income an amount

12-8  received as a distribution of income from a trust or an estate in

12-9  which the trust has an interest other than a purchased interest,

12-10  and a trustee shall allocate to principal an amount received as a

12-11  distribution of principal from such a trust or estate. If a trustee

12-12  purchases an interest in a trust that is an investment entity, or a

12-13  decedent or donor transfers an interest in such a trust to a trustee,

12-14  section 24 or 38 of this act applies to a receipt from the trust.

12-15     Sec. 26.  1.  If a trustee who conducts a business or other

12-16  activity determines that it is in the best interest of all the

12-17  beneficiaries to account separately for the business or activity

12-18  instead of accounting for it as part of the trust’s general

12-19  accounting records, he may maintain separate accounting records

12-20  for its transactions, whether or not its assets are segregated from

12-21  other trust assets.

12-22     2.  A trustee who accounts separately for a business or other

12-23  activity may determine the extent to which its net cash receipts

12-24  must be retained for working capital, the acquisition or

12-25  replacement of fixed assets, and other reasonably foreseeable

12-26  needs of the business or activity, and the extent to which the

12-27  remaining net cash receipts are accounted for as principal or

12-28  income in the trust’s general accounting records. If a trustee sells

12-29  assets of the business or other activity, other than in the ordinary

12-30  course of the business or activity, he shall account for the net

12-31  amount received as principal in the trust’s general accounting

12-32  records to the extent he determines that the amount received is no

12-33  longer required in the conduct of the business.

12-34     3.  Activities for which a trustee may maintain separate

12-35  accounting records include:

12-36     (a) Retail, manufacturing, service and other traditional

12-37  business activities;

12-38     (b) Farming;

12-39     (c) Raising and selling livestock and other animals;

12-40     (d) Management of rental properties;

12-41     (e) Extraction of minerals and other natural resources;

12-42     (f) Timber operations; and

12-43     (g) Activities to which section 37 of this act applies.

12-44     Sec. 27.  A trustee shall allocate to principal:

13-1      1.  To the extent not allocated to income under sections 15 to

13-2  44, inclusive, of this act, assets received from a transferor during

13-3  the transferor’s lifetime, a decedent’s estate, a trust with a

13-4  terminating income interest, or a payor under a contract naming

13-5  the trust or its trustee as beneficiary;

13-6      2.  Money or other property received from the sale, exchange,

13-7  liquidation or change in form of a principal asset, including

13-8  realized profit, subject to sections 15 to 44, inclusive, of this act;

13-9      3.  Amounts recovered from third parties to reimburse the

13-10  trust because of disbursements described in paragraph (g) of

13-11  subsection 1 of section 40 of this act or for other reasons to the

13-12  extent not based on the loss of income;

13-13     4.  Proceeds of property taken by eminent domain, but a

13-14  separate award made for the loss of income with respect to an

13-15  accounting period during which a current income beneficiary had

13-16  a mandatory income interest is income;

13-17     5.  Net income received in an accounting period during which

13-18  there is no beneficiary to whom a trustee may or must distribute

13-19  income; and

13-20     6.  Other receipts as provided in sections 21, 22 and 23 of this

13-21  act.

13-22     Sec. 28.  To the extent that a trustee accounts for receipts

13-23  from rental property pursuant to this section, he shall allocate to

13-24  income an amount received as rent of real or personal property,

13-25  including an amount received for cancelation or renewal of a

13-26  lease. An amount received as a refundable deposit, including a

13-27  security deposit or a deposit that is to be applied as rent for future

13-28  periods, must be added to principal and held subject to the terms

13-29  of the lease and is not available for distribution to a beneficiary

13-30  until the trustee’s contractual obligations have been satisfied with

13-31  respect to that amount.

13-32     Sec. 29.  1.  An amount received as interest, whether

13-33  determined at a fixed, variable or floating rate, on an obligation to

13-34  pay money to the trustee, including an amount received as

13-35  consideration for prepaying principal, must be allocated to income

13-36  without any provision for amortization of premium.

13-37     2.  A trustee shall allocate to principal an amount received

13-38  from the sale, redemption or other disposition of an obligation to

13-39  pay money to him more than 1 year after it is purchased or

13-40  acquired by him, including an obligation whose purchase price or

13-41  value when it is acquired is less than its value at maturity. If the

13-42  obligation matures within 1 year after it is purchased or acquired

13-43  by the trustee, an amount received in excess of its purchase price

13-44  or its value when acquired by the trust must be allocated to

13-45  income.

14-1      3.  This section does not apply to an obligation to which

14-2  section 32, 33, 34, 35, 37 or 38 of this act applies.

14-3      Sec. 30.  1.  Except as otherwise provided in this section, a

14-4  trustee shall allocate to principal the proceeds of a life insurance

14-5  policy or other contract in which the trust or its trustee is named

14-6  as beneficiary, including a contract that insures the trust or its

14-7  trustee against loss for damage to, destruction of, or loss of title to

14-8  a trust asset. He shall allocate dividends on an insurance policy

14-9  to income if the premiums on the policy are paid from income, and

14-10  to principal if the premiums are paid from principal.

14-11     2.  A trustee shall allocate to income proceeds of a contract

14-12  that insures him against loss of occupancy or other use by an

14-13  income beneficiary, loss of income, or, subject to section 26 of this

14-14  act, loss of profits from a business.

14-15     3.  This section does not apply to a contract to which section

14-16  32 of this act applies.

14-17     Sec. 31.  If a trustee determines that an allocation between

14-18  principal and income required by section 32, 33, 34, 35 or 38 of

14-19  this act is insubstantial, the trustee may allocate the entire amount

14-20  to principal unless one of the circumstances described in

14-21  subsection 3 of section 18 of this act applies to the allocation. This

14-22  power may be exercised by a cotrustee in the circumstances

14-23  described in subsection 4 of section 18 of this act and may be

14-24  released for the reasons and in the manner described in subsection

14-25  5 of section 18 of this act. An allocation is presumed to be

14-26  insubstantial if:

14-27     1.  The amount of the allocation would increase or decrease

14-28  net income in an accounting period, as determined before the

14-29  allocation, by less than 10 percent; or

14-30     2.  The value of the asset producing the receipt for which the

14-31  allocation would be made is less than 10 percent of the total value

14-32  of the trust’s assets at the beginning of the accounting period.

14-33     Sec. 32.  1.  As used in this section, “payment” means a

14-34  payment that a trustee may receive over a fixed number of years or

14-35  during the life of one or more natural persons because of services

14-36  rendered or property transferred to the payor in exchange for

14-37  future payments. The term includes a payment made in money or

14-38  property from the payor’s general assets or from a separate fund

14-39  created by the payor, including a private or commercial annuity,

14-40  an individual retirement account, and a pension, profit-sharing,

14-41  stock-bonus or stock-ownership plan.

14-42     2.  To the extent that a payment is characterized as interest or

14-43  a dividend or a payment made in lieu of interest or a dividend, a

14-44  trustee shall allocate it to income. He shall allocate to principal

14-45  the balance of the payment and any other payment received in the

15-1  same accounting period that is not characterized as interest, a

15-2  dividend or an equivalent payment.

15-3      3.  If no part of a payment is characterized as interest, a

15-4  dividend or an equivalent payment, and all or part of the payment

15-5  is required to be made, a trustee shall allocate to income 10

15-6  percent of the part that is required to be made during the

15-7  accounting period and the balance to principal. If no part of a

15-8  payment is required to be made or the payment received is the

15-9  entire amount to which the trustee is entitled, he shall allocate the

15-10  entire payment to principal. For purposes of this subsection, a

15-11  payment is not “required to be made” to the extent that it is made

15-12  because the trustee exercises a right of withdrawal.

15-13     4.  If, to obtain an estate tax marital deduction for a trust, a

15-14  trustee must allocate more of a payment to income than provided

15-15  for by this section, he shall allocate to income the additional

15-16  amount necessary to obtain the marital deduction.

15-17     5.  This section does not apply to payments to which section 33

15-18  of this act applies.

15-19     Sec. 33.  1.  As used in this section, “liquidating asset”

15-20  means an asset whose value will diminish or terminate because the

15-21  asset is expected to produce receipts for a period of limited

15-22  duration. The term includes a leasehold, patent, copyright, royalty

15-23  right and right to receive payments during a period of more than 1

15-24  year under an arrangement that does not provide for the payment

15-25  of interest on the unpaid balance. The term does not include a

15-26  payment subject to section 32 of this act, resources subject to

15-27  section 34 of this act, timber subject to section 35 of this act, an

15-28  activity subject to section 37 of this act, an asset subject to section

15-29  38 of this act, or any asset for which the trustee establishes a

15-30  reserve for depreciation under section 41 of this act.

15-31     2.  A trustee shall allocate to income 10 percent of the receipts

15-32  from a liquidating asset and the balance to principal.

15-33     Sec. 34.  1.  To the extent that a trustee accounts for receipts

15-34  from an interest in minerals or other natural resources pursuant

15-35  to this section, the trustee shall allocate them as follows:

15-36     (a) If received as nominal delay rental or nominal annual rent

15-37  on a lease, a receipt must be allocated to income.

15-38     (b) If received from a production payment, a receipt must be

15-39  allocated to income if and to the extent that the agreement

15-40  creating the production payment provides a factor for interest or

15-41  its equivalent. The balance must be allocated to principal.

15-42     (c) If an amount received as a royalty, shut-in-well payment,

15-43  take-or-pay payment, bonus or delay rental is more than nominal,

15-44  90 percent must be allocated to principal and the balance to

15-45  income.

16-1      (d) If an amount is received from a working interest or any

16-2  other interest not provided for in paragraph (a), (b) or (c), 90

16-3  percent of the net amount received must be allocated to principal

16-4  and the balance to income.

16-5      2.  An amount received on account of an interest in water that

16-6  is renewable must be allocated to income. If the water is not

16-7  renewable, 90 percent of the amount must be allocated to principal

16-8  and the balance to income.

16-9      3.  Sections 15 to 44, inclusive, of this act apply whether or

16-10  not a decedent or donor was extracting minerals, water, or other

16-11  natural resources before the interest became subject to the trust.

16-12     4.  If a trust owns an interest in minerals, water or other

16-13  natural resources on October 1, 2003, the trustee may allocate

16-14  receipts from the interest as provided in sections 15 to 44,

16-15  inclusive, of this act or in the manner used by the trustee before

16-16  October 1, 2003. If the trust acquires an interest in minerals, water

16-17  or other natural resources after October 1, 2003, the trustee shall

16-18  allocate receipts from the interest as provided in sections 15 to 44,

16-19  inclusive, of this act.

16-20     Sec. 35.  1.  To the extent that a trustee accounts for receipts

16-21  from the sale of timber and related products pursuant to this

16-22  section, the trustee shall allocate the net receipts:

16-23     (a) To income to the extent that the amount of timber removed

16-24  from the land does not exceed the rate of growth of the timber

16-25  during the accounting periods in which a beneficiary has a

16-26  mandatory income interest;

16-27     (b) To principal to the extent that the amount of timber

16-28  removed from the land exceeds the rate of growth of timber or the

16-29  net receipts are from the sale of standing timber;

16-30     (c) To or between income and principal if the net receipts are

16-31  from the lease of timberland or from a contract to cut timber from

16-32  land owned by a trust, by determining the amount of timber

16-33  removed from the land under the lease of contract and applying

16-34  the rules in paragraphs (a) and (b); or

16-35     (d) To principal to the extent that advance payments, bonuses

16-36  and other payments are not allocated pursuant to paragraph (a),

16-37  (b) or (c).

16-38     2.  In determining net receipts to be allocated pursuant to

16-39  subsection 1, a trustee shall deduct and transfer to principal a

16-40  reasonable amount for depletion.

16-41     3.  Sections 15 to 44, inclusive, of this act apply whether or

16-42  not a decedent or transferor was harvesting timber from the

16-43  property before it became subject to the trust.

16-44     4.  If a trust owns an interest in timberland on October 1,

16-45  2003, the trustee may allocate net receipts from the sale of timber

17-1  and related products as provided in sections 15 to 44, inclusive, of

17-2  this act or in the manner used by the trustee before October 1,

17-3  2003. If the trust acquires an interest in timberland after

17-4  October 1, 2003, the trustee shall allocate net receipts from the

17-5  sale of timber and related products as provided in sections 15 to

17-6  44, inclusive, of this act.

17-7      Sec. 36.  1.  If a marital deduction is allowed for all or part

17-8  of a trust whose assets consist substantially of property that does

17-9  not provide the surviving spouse with sufficient income from or

17-10  use of the trust assets, and if the amounts that the trustee transfers

17-11  from principal to income under section 18 of this act and

17-12  distributes to the spouse from principal pursuant to the terms of

17-13  the trust are insufficient to provide the spouse with the beneficial

17-14  enjoyment required to obtain the marital deduction, the spouse

17-15  may require the trustee to make property productive of income,

17-16  convert property within a reasonable time, or exercise the power

17-17  conferred by subsection 1 of section 18 of this act. The trustee may

17-18  decide which action or combination of actions to take.

17-19     2.  In cases not governed by subsection 1, proceeds from the

17-20  sale or other disposition of an asset are principal without regard to

17-21  the amount of income the asset produces during any accounting

17-22  period.

17-23     Sec. 37.  1.  As used in this section, “derivative” means a

17-24  contract of financial instrument or a combination of contracts and

17-25  financial instruments which gives a trust the right or obligation to

17-26  participate in some or all changes in the price of a tangible or

17-27  intangible asset or group of assets, or changes in a rate, an index

17-28  of prices or rates, or other market indicator for an asset or a group

17-29  of assets.

17-30     2.  To the extent that a trustee accounts for transactions in

17-31  derivatives pursuant to this section, he shall allocate to principal

17-32  receipts from and disbursements made in connection with those

17-33  transactions.

17-34     3.  If a trustee grants an option to buy property from the trust,

17-35  whether or not the trust owns the property when the option is

17-36  granted, grants an option that permits another person to sell

17-37  property to the trust, or acquires an option to buy property for the

17-38  trust or an option to sell an asset owned by the trust, and the

17-39  trustee or other owner of the asset is required to deliver the asset if

17-40  the option is exercised, an amount received for granting the option

17-41  must be allocated to principal. An amount paid to acquire the

17-42  option must be paid from principal. A gain or loss realized upon

17-43  the exercise of an option, including an option granted to a settlor

17-44  of the trust for services rendered, must be allocated to principal.

18-1      Sec. 38.  1.  As used in this section, “asset-backed security”

18-2  means an asset whose value is based upon the right it gives the

18-3  owner to receive distributions from the proceeds of financial assets

18-4  that provide collateral for the security. The term includes an asset

18-5  that gives the owner the right to receive from the collateral

18-6  financial assets only the interest or other current return or only

18-7  the proceeds other than interest or current return. The term does

18-8  not include an asset to which section 24 or 32 of this act applies.

18-9      2.  If a trust receives a payment from interest or other current

18-10  return and from other proceeds of the collateral financial assets,

18-11  the trustee shall allocate to income the portion of the payment

18-12  which the payor identifies as being from interest or other current

18-13  return and shall allocate the balance of the payment to principal.

18-14     3.  If a trust receives one or more payments in exchange for

18-15  the trust’s entire interest in an asset-backed security in one

18-16  accounting period, the trustee shall allocate the payments to

18-17  principal. If a payment is one of a series of payments that will

18-18  result in the liquidation of the trust’s interest in the security over

18-19  more than one accounting period, the trustee shall allocate 10

18-20  percent of the payment to income and the balance to principal.

18-21     Sec. 39.  A trustee shall make the following disbursements

18-22  from income to the extent that they are not disbursements to which

18-23  paragraph (b) or (c) of subsection 2 of section 19 of this act

18-24  applies:

18-25     1.  One-half of the regular compensation of the trustee and of

18-26  any person providing advisory or custodial services to the trustee

18-27  concerning investment;

18-28     2.  One-half of all expenses for accountings, judicial

18-29  proceedings, or other matters that involve both the income and

18-30  remainder interests;

18-31     3.  All the other ordinary expenses incurred in connection

18-32  with the administration, management or preservation of trust

18-33  property and the distribution of income, including interest,

18-34  ordinary repairs, regularly recurring taxes assessed against

18-35  principal, and expenses of a proceeding or other matter that

18-36  concerns primarily the income interest; and

18-37     4.  Recurring premiums on insurance covering the loss of a

18-38  principal asset or the loss of income from or use of the asset.

18-39     Sec. 40.  1.  A trustee shall make the following

18-40  disbursements from principal:

18-41     (a) The remaining one-half of the disbursements described in

18-42  subsections 1 and 2 of section 39 of this act;

18-43     (b) All the trustee’s compensation calculated on principal as a

18-44  fee for acceptance, distribution or termination, and disbursements

18-45  made to prepare property for sale;

19-1      (c) Payments on the principal of a trust debt;

19-2      (d) Expenses of a proceeding that concerns primarily

19-3  principal, including a proceeding to construe the trust or to protect

19-4  the trust or its property;

19-5      (e) Premiums paid on a policy of insurance not described in

19-6  subsection 4 of section 39 of this act of which the trust is the

19-7  owner and beneficiary;

19-8      (f) Estate, inheritance and other transfer taxes, including

19-9  penalties, apportioned to the trust; and

19-10     (g) Disbursements related to environmental matters, including

19-11  reclamation, assessing environmental conditions, remedying and

19-12  removing environmental contamination, monitoring remedial

19-13  activities and the release of substances, preventing future releases

19-14  of substances, collecting amounts from persons liable or

19-15  potentially liable for the costs of those activities, penalties imposed

19-16  under environmental laws or regulations and other payments

19-17  made to comply with those laws or regulations, statutory or

19-18  common law claims by third parties, and defending claims based

19-19  on environmental matters.

19-20     2.  If a principal asset is encumbered with an obligation that

19-21  requires income from that asset to be paid directly to the creditor,

19-22  the trustee shall transfer from principal to income an amount

19-23  equal to the income paid to the creditor in reduction of the

19-24  principal balance of the obligation.

19-25     Sec. 41.  1.  As used in this section, “depreciation” means a

19-26  reduction in value due to wear, tear, decay, corrosion or gradual

19-27  obsolescence of a fixed asset having a useful life of more than 1

19-28  year.

19-29     2.  A fiduciary may transfer to principal a reasonable amount

19-30  of the net cash receipts from a principal asset that is subject to

19-31  depreciation, but may not transfer any amount for depreciation:

19-32     (a) Of that portion of real property used or available for use by

19-33  a beneficiary as a residence or of tangible personal property held

19-34  or made available for the personal use or enjoyment of a

19-35  beneficiary;

19-36     (b) During the administration of a decedent’s estate; or

19-37     (c) Under this section if a trustee is accounting under section

19-38  26 of this act for the business or activity in which the asset is used.

19-39     3.  An amount transferred to principal need not be held as a

19-40  separate fund.

19-41     Sec. 42.  1.  If a trustee makes or expects to make a principal

19-42  disbursement described in this section, he may transfer an

19-43  appropriate amount from income to principal in one or more

19-44  accounting periods to reimburse principal or to provide a reserve

19-45  for future principal disbursements.

20-1      2.  Principal disbursements to which subsection 1 applies

20-2  include the following, but only to the extent that the trustee has

20-3  not been and does not expect to be reimbursed by a third party:

20-4      (a) An amount chargeable to income but paid from principal

20-5  because it is unusually large, including extraordinary repairs;

20-6      (b) A capital improvement to a principal asset, whether in the

20-7  form of changes to an existing asset or the construction of a new

20-8  asset, including special assessments;

20-9      (c) Disbursements made to prepare property for rental,

20-10  including tenant allowances, leasehold improvements and

20-11  broker’s commissions;

20-12     (d) Periodic payments on an obligation secured by a principal

20-13  asset to the extent that the amount transferred from income to

20-14  principal for depreciation is less than the periodic payments; and

20-15     (e) Disbursements described in paragraph (g) of subsection 1

20-16  of section 40 of this act.

20-17     3.  If the asset whose ownership gives rise to the

20-18  disbursements becomes subject to a successive income interest

20-19  after an income interest ends, a trustee may continue to transfer

20-20  amounts from income to principal as provided in subsection 1.

20-21     Sec. 43.  1.  A tax required to be paid by a trustee based on

20-22  receipts allocated to income must be paid from income.

20-23     2.  A tax required to be paid by a trustee based on receipts

20-24  allocated to principal must be paid from principal, even if the tax

20-25  is called an income tax by the taxing authority.

20-26     3.  A tax required to be paid by a trustee on the trust’s share

20-27  of an entity’s taxable income must be paid proportionately:

20-28     (a) From income to the extent that receipts from the entity are

20-29  allocated to income; and

20-30     (b) From principal to the extent that:

20-31         (1) Receipts from the entity are allocated to principal; and

20-32         (2) The trust’s share of the entity’s taxable income exceeds

20-33  the total receipts described in paragraph (a) and subparagraph (1).

20-34     4.  For the purposes of this section, receipts allocated to

20-35  principal or income must be reduced by the amount distributed to

20-36  a beneficiary from principal or income for which the trust receives

20-37  a deduction in calculating the tax.

20-38     Sec. 44.  1.  A fiduciary may make adjustments between

20-39  principal and income to offset the shifting of economic interests or

20-40  tax benefits between income beneficiaries and remainder

20-41  beneficiaries which arise from:

20-42     (a) Elections and decisions, other than those described in

20-43  subsection 2, that the fiduciary makes from time to time regarding

20-44  tax matters;

21-1      (b) An income tax or any other tax that is imposed upon the

21-2  fiduciary or a beneficiary as a result of a transaction involving or

21-3  a distribution from the estate or the trust; or

21-4      (c) The ownership by an estate or trust of an interest in an

21-5  entity whose taxable income, whether or not distributed, is

21-6  includable in the taxable income of the estate, the trust, or a

21-7  beneficiary.

21-8      2.  If the amount of an estate tax marital deduction or

21-9  charitable contribution deduction is reduced because a fiduciary

21-10  deducts an amount paid from principal for income tax purposes

21-11  instead of deducting it for estate tax purposes, and as a result

21-12  estate taxes paid from principal are increased and income taxes

21-13  paid by an estate, trust or beneficiary are decreased, each estate,

21-14  trust or beneficiary that benefits from the decrease in income tax

21-15  shall reimburse the principal from which the increase in estate tax

21-16  is paid. The total reimbursement must equal the increase in the

21-17  estate tax to the extent that the principal used to pay the increase

21-18  would have qualified for a marital deduction or charitable

21-19  contribution deduction but for the payment. The proportionate

21-20  share of the reimbursement for each estate, trust or beneficiary

21-21  whose income taxes are reduced must be the same as its

21-22  proportionate share of the total decrease in income tax. An estate

21-23  or trust shall reimburse principal from income.

21-24     Sec. 45.  NRS 423.235 is hereby amended to read as follows:

21-25     423.235  1.  Except as otherwise provided in NRS 423.230, all

21-26  money received by a child in the Northern Nevada Children’s Home

21-27  or the Southern Nevada Children’s Home, including, but not limited

21-28  to, social security benefits, benefits paid to heirs of United States

21-29  employees and payments payable by the United States through the

21-30  Department of Veterans Affairs, must be held by the Superintendent

21-31  in trust for the child.

21-32     2.  The Superintendent as trustee shall accumulate such money

21-33  during the period the child is a ward of the State under the

21-34  provisions of [chapter 423 of NRS,] this chapter and shall invest

21-35  such money subject to the provisions of [NRS 164.050, 164.060 and

21-36  164.065.] sections 2 to 14, inclusive, of this act.

21-37     3.  The Superintendent shall:

21-38     (a) Keep a separate account for each child who receives money.

21-39     (b) Deduct from the account the costs for the care and support of

21-40  the child that are provided by the State, excluding any amount for

21-41  which a county is responsible. If the child is placed in foster care,

21-42  money in the account may be used for payments to a foster parent.

21-43  Any surplus remaining may be expended for extraordinary items

21-44  deemed beneficial to the child.

22-1      (c) Remit any surplus balance to the child or his parent or legal

22-2  guardian upon release from the school.

22-3      4.  The Superintendent may be removed as trustee of such

22-4  money only upon application to the district court for the county in

22-5  which the children’s home is located. The district court may, for

22-6  good cause shown and upon notice to the beneficiary, relieve the

22-7  Superintendent from his duties as trustee.

22-8      Sec. 46.  NRS 452.160 is hereby amended to read as follows:

22-9      452.160  1.  Endowment care funds must not be used for any

22-10  purpose other than to provide, through income only, for the reserves

22-11  authorized by law and for the endowment care of the cemetery in

22-12  accordance with the resolutions, bylaws, rules and regulations or

22-13  other actions or instruments of the cemetery authority.

22-14     2.  The funds must be invested and reinvested in:

22-15     (a) Bonds of the United States;

22-16     (b) Bonds of this state or the bonds of other states;

22-17     (c) Bonds of counties or municipalities of any state;

22-18     (d) With the approval of the Administrator, first mortgages or

22-19  first trust deeds on improved real estate;

22-20     (e) Deposits in any bank, credit union or savings and loan

22-21  association that is federally insured or insured by a private insurer

22-22  approved pursuant to NRS 678.755; or

22-23     (f) With the written approval of the Administrator, any

22-24  investment which would be proper under the provisions of [NRS

22-25  164.050.] sections 2 to 14, inclusive, of this act.

22-26  Pending investment as provided in this subsection, such funds may

22-27  be deposited in an account in any savings bank, credit union or

22-28  savings and loan association which is qualified to do business in the

22-29  State of Nevada and which is federally insured or insured by a

22-30  private insurer approved pursuant to NRS 678.755.

22-31     3.  Each cemetery authority operating an endowment care

22-32  cemetery shall submit to the Administrator annually, on a form

22-33  prescribed and adopted by the Administrator, a financial statement

22-34  of the condition of its endowment care fund. The statement must be

22-35  accompanied by a fee of $10. If the statement is not received by the

22-36  Administrator , he may, after giving 10 days’ notice, revoke the

22-37  cemetery authority’s certificate of authority.

22-38     Sec. 47.  NRS 452.720 is hereby amended to read as follows:

22-39     452.720  1.  Money held in trust for the endowment care of a

22-40  cemetery for pets must not be used for any purpose other than to

22-41  provide, through income only, for the reserves authorized by law

22-42  and for the endowment care of the cemetery in accordance with the

22-43  resolutions, bylaws, rules and regulations or other actions or

22-44  instruments of the cemetery authority.

22-45     2.  The money must be invested and reinvested in:

23-1      (a) Bonds of the United States;

23-2      (b) Bonds of this state or the bonds of other states;

23-3      (c) Bonds of counties or municipalities of any state;

23-4      (d) With the approval of the Administrator, first mortgages or

23-5  first trust deeds on improved real estate;

23-6      (e) Deposits in any bank, credit union or savings and loan

23-7  association that is federally insured or insured by a private insurer

23-8  approved pursuant to NRS 678.755; or

23-9      (f) With the written approval of the Administrator, any

23-10  investment which would be proper under the provisions of [NRS

23-11  164.050.] sections 2 to 14, inclusive, of this act.

23-12  Pending investment as provided in this subsection, such money may

23-13  be deposited in an account in any savings bank, credit union or

23-14  savings and loan association which is qualified to do business in this

23-15  state and which is federally insured or insured by a private insurer

23-16  approved pursuant to NRS 678.755.

23-17     3.  Each cemetery authority shall annually submit to the

23-18  Administrator, on a form prescribed and adopted by the

23-19  Administrator, a financial statement of the condition of its trust fund

23-20  for the endowment care of the cemetery. The statement must be

23-21  accompanied by a fee of $10. If the statement is not received by the

23-22  Administrator , he may, after giving 10 days’ notice, revoke the

23-23  cemetery authority’s certificate of authority.

23-24     Sec. 48.  NRS 150.235, 164.050, 164.060, 164.065, 164.140,

23-25  164.150, 164.160, 164.170, 164.180, 164.190, 164.200, 164.210,

23-26  164.220, 164.230, 164.240, 164.250, 164.260, 164.270, 164.280,

23-27  164.290, 164.300, 164.310, 164.320, 164.330, 164.340, 164.350,

23-28  164.360 and 164.370 are hereby repealed.

 

23-29  LEADLINES OF REPEALED SECTIONS

 

23-30     150.235  Use of income from securities or other property of

23-31   trust estate, life estate or estate for years created by will.

23-32     164.050  Standard of care in investing and managing

23-33   property.

23-34     164.060  Investments and loans secured by Federal Housing

23-35   Administrator.

23-36     164.065  Investments in farm loan bonds and other

23-37   obligations issued by federal land banks and banks for

23-38   cooperatives.

23-39     164.140  Short title.

23-40     164.150  Definitions.

24-1      164.160  “Income” defined.

24-2      164.170  “Income beneficiary” defined.

24-3      164.180  “Inventory value” defined.

24-4      164.190  “Principal” defined.

24-5      164.200  “Remainderman” defined.

24-6      164.210  “Trustee” defined.

24-7      164.220  Duty of trustee as to receipts and expenditures.

24-8      164.230  Charges.

24-9      164.240  When right to income arises; apportionment of

24-10   income.

24-11     164.250  Expenses of settlement of estate of decedent;

24-12   income earned during administration of estate.

24-13     164.260  Corporate distributions.

24-14     164.270  Premiums and discounts on bonds.

24-15     164.280  Business and farming operations.

24-16     164.290  Disposition of natural resources.

24-17     164.300  Timber.

24-18     164.310  Other property subject to depletion.

24-19     164.320  Underproductive property.

24-20     164.330  Charges against income.

24-21     164.340  Charges against principal.

24-22     164.350  Apportionment of regularly recurring charges

24-23   payable from income.

24-24     164.360  Applicability.

24-25     164.370  Uniformity of interpretation.

 

24-26  H