Investing Trust Property in Nevada

Part of my Nevada Trusts Guide.

By Ronald W. Brilliant, Attorney at Law · Licensed in Idaho, Nevada & California · Last reviewed: September 2026 against Nevada Revised Statutes chapters 153, 162B and 163 through 166A (current through the 2025 legislative session)

In This GuideNevada TrustsTopic 4 of 10: Investing Trust Property

Except as otherwise provided in NRS chapter 669A, a Nevada trustee who invests and manages trust property owes the beneficiaries a duty to follow the prudent investor rule (NRS 164.740). That rule comes from Nevada’s version of the Uniform Prudent Investor Act, found at NRS 164.700 to 164.775 (NRS 164.705). This page explains what the rule requires, how the trust document can change it, how income and principal are handled, and the separate rules for common trust funds and charitable institutional funds.

These rules matter to anyone serving as trustee and to beneficiaries who want to understand how trust money should be handled. The trustee’s broader powers and duties are covered on the Trustee Duties and Powers page.

The Trust Document Comes First

In performing duties under NRS 164.700 to 164.925, a fiduciary must administer a trust according to its terms, even if the statutes provide differently (NRS 164.710(1)). A fiduciary may also exercise a discretionary power of administration given by the trust terms, even if the result differs from what the statutes would require or permit (NRS 164.710(2)). The statutory rules apply when the trust terms do not contain a different provision or do not give the fiduciary a discretionary power of administration (NRS 164.710(3)).

Nevada law specifically allows a trust instrument to vary the circumstances, if any, in which a fiduciary must diversify investments (NRS 163.004(1)(c)). Certain phrases in a trust, such as “legal investments,” “authorized investments,” “prudent man rule,” “prudent person rule” or “prudent investor rule,” authorize any investment or strategy permitted under the prudent investor rule, unless otherwise limited or modified (NRS 164.775).

Nevada also has a set of investment powers that are built into trust instruments unless the settlor expressly provides otherwise (NRS 163.260(1)). These include the power to keep property received for as long as the fiduciary deems advisable (NRS 163.265), to invest and reinvest in stocks, bonds, real or personal property, investment trusts, common trust funds and other property the fiduciary deems advisable (NRS 163.275(1)), and to make investments that concentrate more of the property in one type of investment or one company than would otherwise be considered appropriate (NRS 163.280).

What the Prudent Investor Rule Requires

A trustee must invest and manage trust property as a prudent investor would, considering the terms, purposes, distribution requirements and other circumstances of the trust, and must exercise reasonable care, skill and caution (NRS 164.745(1)). Decisions about individual assets are judged in the context of the whole portfolio, as part of an overall investment strategy with risk and return objectives reasonably suited to the trust (NRS 164.745(2)).

Among the circumstances a trustee must consider, where relevant to the trust or its beneficiaries, are (NRS 164.745(3)):

• General economic conditions;
• The possible effect of inflation or deflation;
• The expected tax consequences of decisions or strategies;
• The role each investment plays within the overall trust portfolio;
• The expected total return from income and the appreciation of capital;
• Other resources of the beneficiaries;
• Needs for liquidity, regularity of income, and preservation or appreciation of capital; and
• An asset’s special relationship or special value, if any, to the purposes of the trust or to one or more beneficiaries.

A trustee must make a reasonable effort to verify facts relevant to investing and managing trust property (NRS 164.745(4)). A trustee may invest in any kind of property or type of investment consistent with the prudent investor standards, including financial assets, interests in closely held enterprises, tangible and intangible personal property, and real property (NRS 164.745(5)). A trustee who has special skills, or who was named trustee in reliance on the trustee’s representation of having them, has a duty to use them (NRS 164.745(6)).

Diversification

A trustee must diversify trust investments unless the trustee reasonably determines that, because of special circumstances, the trust’s purposes are better served without diversifying (NRS 164.750). A trustee is not liable to a beneficiary to the extent the trustee acted in reasonable reliance on the terms of the trust or a court order and determined in good faith not to diversify under NRS 164.750 (NRS 164.740).

Reviewing the Portfolio at the Start

Within a reasonable time after accepting a trusteeship or receiving trust property, a trustee must review the trust property and make and carry out decisions about keeping or disposing of assets (NRS 164.755). The goal is to bring the portfolio into compliance with the trust’s purposes, terms, distribution requirements and other circumstances, and with the prudent investor rule (NRS 164.755).

Costs and Hindsight

In investing and managing trust property, a trustee may incur only costs that are appropriate and reasonable in relation to the property, the trust’s purposes and the trustee’s skills (NRS 164.760). Whether a trustee complied with the prudent investor rule is judged by the facts and circumstances that existed at the time of the decision or action, not by hindsight (NRS 164.765).

Loyalty and Impartiality

A trustee must invest and manage trust property solely in the interest of the beneficiaries (NRS 164.715). If a trust has two or more beneficiaries, the trustee must act impartially in investing and managing the property, taking into account their differing interests (NRS 164.720(1)).

When exercising a power to adjust between principal and income, or a discretionary power over principal-and-income matters, a fiduciary must act impartially, based on what is fair and reasonable to all beneficiaries, unless the trust or will clearly shows an intent that the fiduciary shall or may favor one or more beneficiaries (NRS 164.720(2)). A determination made in accordance with NRS 164.780 to 164.925 is presumed fair and reasonable to all beneficiaries (NRS 164.720(2)).

Delegating Investment Decisions

A trustee may delegate investment and management functions that a prudent trustee of comparable skills could properly delegate under the circumstances (NRS 164.770(1)). The trustee must use reasonable care, skill and caution in selecting the agent, setting the scope and terms of the delegation, and periodically reviewing the agent’s actions (NRS 164.770(1)). A trustee who meets those requirements is not liable to the beneficiaries or the trust for the agent’s decisions or actions (NRS 164.770(3)).

The agent owes the trust a duty to use reasonable care to comply with the terms of the delegation (NRS 164.770(2)). By accepting a delegation from the trustee of a trust subject to Nevada law, the agent submits to the jurisdiction of Nevada courts (NRS 164.770(4)).

A trust instrument may also appoint an investment trust adviser, whose powers may include directing the trustee on buying, selling, keeping or encumbering trust property and on investing principal and income (NRS 163.5557(2)(a)). A trustee acting at the direction of such an adviser may have limited liability, as explained on the Trustee Duties and Powers page (NRS 163.5549).

Notice of Proposed Action

A trustee may give beneficiaries a notice of proposed action on any matter governed by NRS 163.556 or NRS 164.700 to 164.925 (NRS 164.725(2)). Except as otherwise provided in the trust instrument, a trustee, trust protector or trust adviser may also give this notice on any aspect of trust administration within his or her authority (NRS 164.725(2)).

The notice must be mailed to every adult beneficiary who receives or is entitled to receive income, or who would receive principal if the trust were terminated (NRS 164.725(3)). It need not go to a person who consents to the action in writing (NRS 164.725(3)). The notice must state (NRS 164.725(4)):

• That it is provided under NRS 164.725;
• The trustee’s name and mailing address;
• The name and telephone number of a contact person for more information;
• A description of the proposed action and the reason for it;
• The time for objecting, which must be at least 30 days after the notice is mailed; and
• The date on or after which the action will be taken or become effective.

A beneficiary objects by mailing a written objection to the person who gave notice, at the address and within the time stated (NRS 164.725(5)). If no beneficiary entitled to notice objects and the other requirements are met, the trustee is not liable to any present or future beneficiary for that action (NRS 164.725(6)). If a timely objection is received, the trustee, trust protector, trust adviser or a beneficiary may ask the court to approve, modify or deny the action, and the beneficiary has the burden of proving the action should not be taken or should be modified (NRS 164.725(7)).

Principal and Income

Nevada’s Uniform Principal and Income Act (1997) contains rules for allocating a trust’s receipts and disbursements to or between principal and income (NRS 164.780, 164.790). “Income” means money or property a fiduciary receives as current return from a principal asset, and “principal” means property held in trust for distribution to a remainder beneficiary when the trust ends (NRS 164.785(4), (9)). If neither the trust terms nor the statutes provide a rule for a receipt or disbursement, the fiduciary must allocate it to principal (NRS 164.790).

Power to Adjust

A trustee may adjust between principal and income to the extent the trustee considers necessary if three conditions are met: the trustee invests and manages trust assets as a prudent investor; the trust describes the amount to be distributed by referring to the trust’s income; and the trustee determines, after applying NRS 164.710 and 164.790, that he or she is unable to comply with the impartiality requirement of NRS 164.720(2) described above (NRS 164.795(1)). The trustee must consider all relevant factors, including those listed in the statute (NRS 164.795(2)).

The statute lists situations where no adjustment may be made, including when the trustee is a beneficiary of the trust, or when the trustee is not a beneficiary but the adjustment would benefit the trustee directly or indirectly (NRS 164.795(3)). The statutes do not impose a duty to make an adjustment, and a trustee is not liable for not considering an adjustment or deciding not to make one (NRS 164.730).

Converting to a Unitrust

A unitrust is a trust that pays a beneficiary a certain percentage of the annually assessed fair market value of the trust property (NRS 164.700(3)). Unless the trust instrument expressly prohibits it, a trustee may convert a trust into a unitrust if all of the following apply (NRS 164.796(1)):

• The trustee determines conversion will better carry out the settlor’s intent and the trust’s purpose;
• The trustee gives written notice of the intended conversion, with the details the statute requires, to the beneficiaries described in the statute;
• There is at least one beneficiary presently eligible to receive income and at least one beneficiary who would become eligible to receive income if a current income interest ended; and
• No beneficiary delivers a written objection to the trustee within 60 days of the mailing of the notice.

If a beneficiary timely objects, the trustee may petition the court, which shall approve the conversion if it concludes the conversion will enable the trustee to better carry out the settlor’s intent and the trust’s purpose (NRS 164.796(2)). After conversion, “income” means an annual distribution of not less than 3 percent and not more than 5 percent of the net fair market value of the trust’s assets, averaged over the preceding 3 years or the trust’s existence, whichever is less (NRS 164.797(3)). A trustee or beneficiary may petition the court to select a different percentage, use a different averaging period, or reconvert the unitrust, among other things (NRS 164.799).

Common Trust Funds

Under the Uniform Common Trust Fund Act, a bank or trust company qualified to act as a fiduciary in Nevada (or a bank or trust company qualified in another state that is affiliated with one qualified in Nevada) may establish common trust funds and invest money it holds as fiduciary in them (NRS 164.080(1)). The investment must not be prohibited by the instrument, judgment, decree or order creating the fiduciary relationship, and if there are cofiduciaries, the bank or trust company must obtain their consent (NRS 164.080(1)(b)). Unless a court orders otherwise, the bank or trust company is not required to render a court accounting for those funds, but it may petition the court to approve one (NRS 164.090).

Charitable Institutional Funds

A separate law, the Uniform Prudent Management of Institutional Funds Act, applies to an “institutional fund,” meaning a fund held by an institution exclusively for charitable purposes (NRS 164.640, 164.655). An “institution” can include a trust that had both charitable and noncharitable interests, after all noncharitable interests have ended (NRS 164.653(3)).

• Standard of care: each person responsible for managing and investing an institutional fund must do so in good faith and with the care an ordinarily prudent person in a like position would exercise under similar circumstances (NRS 164.665(2)).
• Diversification: except as otherwise provided by a gift instrument, an institution must diversify unless it reasonably determines that, because of special circumstances, the fund’s purposes are better served without diversification (NRS 164.665(5)(d)).
• Spending from endowments: appropriating for expenditure in any year more than 7 percent of an endowment fund’s fair market value, calculated as the statute describes, creates a rebuttable presumption of imprudence (NRS 164.667(4)). Appropriating 7 percent or less does not create a presumption of prudence (NRS 164.667(4)(b)).
• Small, old restricted funds: if an institution determines a gift restriction is unlawful, impracticable, impossible to achieve or wasteful, it may release or modify the restriction 60 days after notifying the Attorney General if the fund is worth less than $25,000, more than 20 years have passed since it was established, and the property is used consistently with the gift’s charitable purposes (NRS 164.673(4)).

For more on charitable trusts generally, see Charitable and Special Purpose Trusts. A trustee’s investment activity is also reported in the trust’s accounts, as described on the Trustee Accountings page.

How I Can Help

I help Nevada trustees review what the trust document says about investments, understand how the prudent investor rule and principal-and-income rules apply, and prepare notices of proposed action. I also assist beneficiaries who have questions about how trust property is being invested or managed. Request a consultation to discuss your situation.

This page provides general information about Nevada trust law, based on the Nevada Revised Statutes as of the 2025 legislative session, and is not legal advice. Other Nevada laws, court rules, tax law, and case law also affect trusts. Every situation is different; consult an attorney about yours. Reading this page does not create an attorney-client relationship.