163.00195 - Enforcement of no-contest clauses; exceptions.
163.00195 Enforcement of no-contest clauses; exceptions.
1. Except as otherwise provided in subsections 3 and 4, a no-contest clause in a trust must be enforced by the court.
2. A no-contest clause must be construed to carry out the settlor’s intent. Except to the extent the no-contest clause in the trust is vague or ambiguous, extrinsic evidence is not admissible to establish the settlor’s intent concerning the no-contest clause. The provisions of this subsection do not prohibit such evidence from being admitted for any other purpose authorized by law.
3. Notwithstanding any provision to the contrary in the trust, a beneficiary’s share must not be reduced or eliminated if the beneficiary seeks only to:
(a) Enforce the terms of the trust or any other trust-related instrument;
(b) Enforce the beneficiary’s legal rights related to the trust or any trust-related instrument; or
(c) Obtain a court ruling with respect to the construction or legal effect of the trust or any other trust-related instrument.
4. Notwithstanding any provision to the contrary in the trust, a beneficiary’s share must not be reduced or eliminated under a no-contest clause in a trust because the beneficiary institutes legal action seeking to invalidate a trust or any other trust-related instrument if the legal action is instituted in good faith and based on probable cause that would have led a reasonable person, properly informed and advised, to conclude that there was a substantial likelihood that the trust or other trust-related instrument was invalid.
5. As used in this section:
(a) “No-contest clause” means one or more provisions in a trust that express a directive to reduce or eliminate the share allocated to a beneficiary or to reduce or eliminate the distributions to be made to a beneficiary if the beneficiary takes action to frustrate or defeat the settlor’s intent as expressed in the trust or in a trust-related instrument.
(b) “Trust” means the original trust instrument and each amendment made pursuant to the terms of the original trust instrument.
(c) “Trust-related instrument” means any document purporting to transfer property to or from the trust or any document made pursuant to the terms of the trust purporting to direct the distribution of trust assets or to affect the management of trust assets, including, without limitation, documents that attempt to exercise a power of appointment.
(Added to NRS by 2009, 1637)