Highlighting content from the“Legislative Wrap-Up” issue of COMMUNIQUÉ (September 2019), the official publication of the Clark County Bar Association. See below for features written by members of Nevada’s legal community listed as follows:
- “Nevada’s Corporation and LLC Laws Improved by State Lawmakers” by Albert Kovacs and Deborah Lobo
- “Probate & Trust Updates from AB 286” by Alan D. Freer and Jeffrey P. Luszeck
- “2019 Legislation Results in Further Protection of Animals in Nevada” by Jennifer L. Braster
- “Summaries from 8-2-19” by Joe Tommasino
Additional content may be found in the 32 pages of the full color issue of the publication (print and PDF versions), including these special features:
- “Learn Something New in Your Communiqué!” By Clark County Bar President Jason P. Stoffel
- View from the Bench: “AB 43 Adds Judges to Improve Access to Justice for Clark County Children and Families” by Chief Judge Linda Marie Bell
- Bar Activities
- Member Moves
- New Members
- Court News
- The Marketplace
Special thanks to the following advertisers for their support of COMMUNIQUÉ (September 2019):
- Advanced Resolution Management
- Aldrich Law Firm, LTD.
- Ara Shirinian Mediation
- Bank of Nevada
- Dawson & Lordahl PLLC
- Greenberg Traurig, LLP
- Jason D. Mills & Associates
- Las Vegas Legal Video
- Law Firm of Jeffrey Burr, Ltd.
- Legal Wings
- Marquis Aurbach Coffing
- MediLegal, Inc.
- Netflow Technologies
- Solomon Dwiggins & Freer, Ltd.
- Portraits to You
- State Bar of Nevada
- The Greg Gordillo Law Firm, LLC, New Vision Law
- Welt Law
© 2019 The content on this page was originally published in COMMUNIQUÉ*, the official publication of the Clark County Bar Association. (September 2019). All rights reserved. For permission to reprint this content, contact the publisher Clark County Bar Association, 717 S. 8th Street, Las Vegas, NV 89101. Phone: (702) 387-6011.
Nevada’s Corporation and LLC Laws Improved by State Lawmakers
By Albert Kovacs and Deborah Lobo
As Nevada has become a national leader in business legislation, among the likes of Delaware, lawmakers have sought to enhance and reinforce Nevada’s national business law position and reputation. During the latest legislative session, Nevada lawmakers passed Assembly Bill 207 (AB 207), sponsored by Assembly Speaker Jason Frierson, which aims to enhance the predictability in Title 7 of the Nevada Revised Statutes (NRS). Effective as of October 1, 2019, AB 207 garnered an array of support from Nevada’s business community.
An explanation of fiduciary duties in limited liability companies
AB 207 adds much-needed clarification regarding a critical governance issue regarding limited liability companies (LLCs). NRS Chapter 86, which governs LLCs, does not currently specify fiduciary duties for LLC members and managers, as NRS Chapter 78 does for directors and officers of corporations. Lacking such definitive statutory guidance, courts have been left unaided to decipher fiduciary duties principles and the potential for varied interpretation undercuts the legal predictability that the Nevada business community expects. AB 207 adds new provisions to NRS Chapter 86 to confirm that a manager or managing member of an LLC owes only the contractual duty of good faith and fair dealing, plus any other duties expressly prescribed by the company’s articles of organization or operating agreement. In furtherance of principles of contractual freedom at the heart of the LLC entity form, an LLC will be permitted by NRS 86.286 to expand, restrict, or eliminate any and all other duties of managers and members in the way that best suits the company’s business and management structure. Notably for existing Nevada LLCs, AB 207 applies prospectively to avoid disruption to existing businesses.
Expressly permitting corporations to include forum selection clauses
Although it has been common practice for corporations to include a forum selection clause in its governing documents, the NRS has been silent regarding the ability of a Nevada corporation to do so. AB 207 expressly codifies this practice, permitting a Nevada corporation to include such a clause in its articles of incorporation or bylaws mandating that certain claims regarding the internal affairs of the corporation be brought in specified courts, which must include the Nevada state district court.
Establishing alter ego standards for limited liability companies
The “alter ego” doctrine for corporations has long been codified in NRS Chapter 78, providing courts the standards to “pierce the veil” of the corporation to impose liability on stockholders in extenuating circumstances. Although the Supreme Court of Nevada expressly held that the alter ego doctrine applies to LLCs in Gardner v. Henderson Water Park, LLC, 399 P.3d 350 (Nev. 2017), NRS Chapter 86 lacked a statutory counterpart. AB 207 codifies the alter ego concept by adding a new provision to NRS Chapter 86 that mirrors the corporate statute.
Senate Bill 427: further conceptual changes to corporations
The Executive Committee of the Business Law Section of the State Bar of Nevada, a team with decades of combined experience navigating, interpreting, and applying Nevada’s business laws, helped to craft and support the passage of AB 207, as well as Senate Bill 427 (SB 427), another corporate reform bill. Among several other amendments, SB 427 reaffirms the right of stockholders to inspect certain records of a Nevada corporation, but clarifies both the scope and process of stockholder demands in order to help protect Nevada corporations from impermissibly broad and unduly onerous document requests made for speculative or improper purposes.
Additionally, although boards of directors have customarily set a record date for dividends, NRS 78.288 has not explicitly included provisions relating to a record date. SB 427 now explicitly provides boards of directors with such authority. SB 427 also amends NRS 77.370(3) to remove an extraneous affidavit requirement in connection with the resignation of a registered agent.
Albert Kovacs is a shareholder and Deborah Lobo is an associate with Brownstein Hyatt Farber Schreck.
Probate & Trust Updates from AB 286
By Alan D. Freer and Jeffrey P. Luszeck
AB 286, which becomes effective October 1, 2019, makes various changes to probate and trust law that fall into four broad categories: (1) creditors and exemptions; (2) estate planning; (3) administration of estates and trusts; and (4) litigation and contested matters.
Creditors and exemptions
In regards to creditors and exemptions, Sections 1.5, 2, 3, and 7 of AB 286 amend NRS 21.075, 21.090, 31.045, and 115.050, respectively, to clarify that the creditor protection for the homestead exemption amount of $550,000 also applies to the proceeds payable to a defendant or spouse from the execution of sale; however, Section 6.5 places limitations that the proceeds from the sale of a homestead are exempt from execution if: (1) reinvested in another property of like kind for which the declaration of a homestead will be made; and (2) said property is identified within 45 days and taken possession of within 180 days after the sale of the homestead.
Further, Section 35 amends NRS 164.025 to provide notice to creditors for claims against the settlor of an inter vivos revocable trust.
AB 286 also provides several amendments relating to estate planning. Section 10 amends NRS 134.160 to make Nevada inheritance law uniform with respect to whether an heir is half-blood or whole-blood.
Section 24 amends NRS 163.004 by allowing a settlor to grant one or more persons the authority to amend or revoke a trust if authorized under the terms of the trust. Further, Section 32 removes the prohibition against a trustee from appointing property of an original trust to a second trust where property held for the benefit of one or more beneficiaries under both the original and second trust has a lower value than the value of the property held for the benefit of such beneficiaries under the original trust.
Lastly, and perhaps the most substantial change in this category, Section 33 amends NRS 163.590 to permit a settlor to refer to a written statement or list to dispose of any personal property not otherwise disposed of by the trust in the same manner for which personal property can be disposed of including, money, evidence of indebtedness, documents of title, security, and property used in a trade or business.
Administration of estates and trusts
AB 286 also amends and streamlines estate and trust administration. Section 1 brings the filing fee threshold in line with amounts for summary administration and decreases the filing fees for estates less than $300,000 from $352 to $99. Section 8 amends NRS 123.125 to codify Nevada caselaw that a spouse or other party must establish by clear and convincing evidence the transmutation of community property or separate property transferred into a trust.
Sections 11 and 12 amend NRS 136.010 and NRS 136.090 by making uniform the permissible forum of resident and non-resident decedents and allowing any district court to assume jurisdiction of a decedent’s estate after considering the convenience of the forum to certain parties. Further, the district court that first assumes jurisdiction of the settlement of an estate has exclusive jurisdiction of that estate.
The most notable shift is the change in presumption that a lost will was intentionally destroyed by a testator. Section 13 amends NRS 136.240 to now create a rebuttable presumption that a lost or destroyed will may be admitted to probate if it is clearly and distinctly provided by two or more credible witnesses.
Finally, Section 16 streamlines NRS 146.020’s spouse and minor children set aside provisions by removing the requirement that the decedent’s personal property can only be set aside after the inventory is filed.
Litigation and Contested Matters
Sections 14 and 23 further reflect the legislature’s commitment to the enforceability of no-contest clauses for wills (NRS 137.005) and trusts (NRS 163.00195) by confirming that a no-contest clause trust must be enforced by a court according to its terms, and refining the exceptions to enforce a no-contest clause.
Sections 15 and 22 of AB 286 authorize a probate court’s ex parte order protecting estate/trust assets to remain effective until further order of court, and for the court to impose a fine on an interested person who obtains an ex parte order without probable cause. Sections 25 and 27-31 make confirming changes.
Section 26 amends NRS 163.115 and adopts portions of Uniform Trust Code 706 to authorize an interested person, or a court on its own initiative, to request the removal of a trustee in certain circumstances, and for a court to assess attorneys’ fees and costs against the individual(s) that initiates a proceeding against a trustee without good cause.
Due to the breadth of AB 286, it is impossible to go through each amendment in detail. An executive summary of AB 286 prepared by the Legislative Committee of the Probate and Trust Law Section of the Nevada State Bar can be found at: https://www.leg.state.nv.us/App/NELIS/REL/80th2019/ExhibitDocument/OpenExhibitDocument?exhibitId=42661&fileDownloadName=AB%20286_Executive%20Summary_Legislative%20Committee%20of%20the%20Probate%20and%20Trust%20Sestion%20of%20the%20State%20Bar%20of%20Nevada.pdf.
Alan D. Freer is a member of the Las Vegas law firm of Solomon Dwiggins & Freer, Ltd., where he focuses his practice primarily on trust and estate litigation, business litigation, and guardianship litigation. Alan is a member of the State Bar of Nevada. He serves the bar as co-chair of the Probate and Trust Section’s Legislative Committee, a member of the Standing Committee on Ethics and Professional Responsibility and a mentor for new lawyers through the Transitioning Into Practice (TIP) program.
Jeffrey P. Luszeck is a member of the Las Vegas law firm of Solomon, Dwiggins & Freer Ltd., where he focuses his practice primarily on trust and estate litigation, and small business litigation. Jeffrey is a member of the State Bar of Nevada and serves as secretary of its Probate and Trust Section’s Legislative Committee and Vice Chair of its Publications Committee. Jeffrey is also a member of the CCBA’s Community Service Committee.
2019 Legislation Results in Further Protection of Animals in Nevada
By Jennifer L. Braster
In 2019, Nevada enacted new legislation banning cosmetics testing on animals. Nevada also amended existing law to assist detained individuals with their impounded animals and to protect those animals that have suffered from animal cruelty.
Following similar legislation passed in California, Nevada is now the second state to ban the sale of cosmetics tested on animals. Senate Bill 197 prohibits a manufacturer from importing, selling, or offering for sale in Nevada any cosmetic that the manufacturer knew or reasonably should have known involved animal testing. A violation of this statute constitutes a deceptive trade practice pursuant to NRS 598.0903 to 598.0999. While Nevada’s stance on banning animal testing is commendable, certain animal rights groups are concerned that exceptions in the statute allowing for animal testing will swallow the rule.
With respect to impounded animals, under existing law, if a person is arrested and detained, his or her pets will often be impounded. Issues have arisen with the county shelters housing these animals, and the lack of notice being provided to the owners as to where their animals have been taken. See NRS 171.1539.
Under these amendments, the state is obligated to provide notice as to the location of the impounded animals. The amendments further provide a vehicle to expeditiously determine by judicial process whether people arrested for animal cruelty are suitable to regain possession of those animals so the animals are not languishing in county shelters.
Jennifer L. Braster is a founding partner of Naylor & Braster. Jennifer practices primarily in the area of commercial litigation and has also represented clients with various animal law issues, including animal custody, enforcement of dangerous dog regulations, and civil rights, cases along with attorney Maggie McLetchie, involving the shootings of pet dogs.
COMMUNIQUÉ is published eleven times per year with an issue published monthly except for July by the Clark County Bar Association, P.O. Box 657, Las Vegas, NV 89125-0657. Phone: (702) 387-6011.
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