Nonjudicial settlement agreements have become increasingly popular in Nevada as a way to settle irrevocable trust disputes and address unforeseen circumstances outside of court, thus without the need for costly and time-consuming litigation.
NJSAs are agreements entered by the parties involved in a trust. The agreements can modify, interpret, or even terminate the trust. The statute provides a nonexhaustive list of matters that can be resolved by NJSAs. Among them are the modification and interpretation of the terms of the trust, the designation of the trust’s location and the choice of law governing the trust, the approval of the trustee’s various actions, and even the termination of the trust. However, the statute im-poses one important restriction – the NJSA cannot violate a material purpose of the trust as it is the main reason for the creation of the trust.
Agreements require the trustees, beneficiaries, and indispensable parties, further defined as “interested persons,” to settle on the terms of the agreement. An interested person is one whose rights or interest under a trust may be materially affected by a decision of a fiduciary, as determined by the trustees or a court.
The process for creating an NJSA in Nevada is relatively straightforward. First, all interested parties must agree to participate in the process. Sometimes, negotiations between the parties are necessary. Once the agreement has been reached, a proposed agreement is drafted. This document sets forth the terms of the agreement. The proposed agreement must be signed by all interested persons, and a copy must be provided to the trustee. Once it is executed, it becomes binding on all parties involved in the trust.
Additionally, Nevada law allows the parties to seek court confirmation of the agreement. Court confirmation is not legally required, but it can provide the parties with a peace of mind and a stamp of judicial approval. However, it also makes the agreement, and often the trust itself, a public record. Consequently, the need for privacy should be weighed against the need for judicial approval.
NJSAs can be a preferred method of trust dispute resolution in Nevada for several reasons. First, they are generally less expensive and less time-consuming than litigation. Trust litigation can take months or even years to resolve, whereas an agreement can be executed relatively quickly. Second, they allow the parties involved in a trust dispute to maintain greater control over the outcome. In litigation, the outcome is ultimately decided by a judge, whereas the agreements allow the parties to craft a solution that meets their individual needs. Finally, they are confidential if reached without the court approval. Unlike court proceedings, which are a matter of public record, agreements can be kept private.
Nonjudicial settlement agreements offer several advantages over traditional litigation, including lower costs, greater control over the outcome, and confidentiality. Nevada’s trust-friendly legal environment has made it a particularly attractive jurisdiction for the use of the agreements. Consequently, it is worth considering their use as a way to resolve the dispute efficiently and effectively.
Natalia Vander Laan is a Minden attorney.
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