IN THE MATTER OF FREI IRREVOCABLE TRUST DATED OCTOBER 29, 1996.
PREMIER TRUST, INC.; LAWRENCE HOWE; AND ELIZABETH MARY FREI, Respondents. STEPHEN BROCK, Appellant,
from a district court order allowing payments to be made from
a beneficiary's interest in a trust. Eighth Judicial
District Court, Clark County; Gloria Sturman, Judge.
Law Office of Mike Beede, PLLC, and Michael N. Beede and
Zachary Clayton, Las Vegas, for Appellant.
Gerrard Cox & Larsen and Douglas D. Gerrard and Richard
D. Chatwin, Henderson, for Respondent Premier Trust, Inc.
Hutchison & Steffen, LLC, and Michael K. Wall, Las Vegas,
for Respondents Lawrence Howe and Elizabeth Mary Frei.
THE COURT EN BANC.
opinion, we address whether an irrevocable spendthrift trust
may be modified by the survivor of two settlors and
interested beneficiaries. NRS Chapter 166, which governs
spendthrift trusts, does not address this issue. We have,
however, allowed modification of irrevocable trusts in
certain circumstances. See, e.g,, Ambrose v. First
Nat'l Bank of Nev., 87 Nev. 114, 119, 482 P.2d 828,
831 (1971) (holding that a sole beneficiary to an irrevocable
trust could terminate the trust when the spendthrift clause
was not valid and termination did not frustrate the purpose
of the trust). Moreover, Restatement (Second) of Trusts
§ 338 (Am. Law Inst. 1959) provides that an irrevocable
trust may be amended by a settlor and beneficiary as long as
any nonconsenting; beneficiaries' interests are not
prejudiced. We adopt Restatement (Second) of Trusts §
338 (Am. Law Inst. 1959) and hold that an irrevocable trust,
spendthrift or not, may be modified with the consent of the
surviving settlor(s) and any beneficiaries whose interests
will be directly prejudiced.
AND PROCEDURAL HISTORY
Frei, III, and his wife, Adoria, created the Frei Irrevocable
Trust in 1996 (1996 Trust). Emil and Adoria each had five
children from prior relationships, and all ten children were
named equal beneficiaries under the 1996 Trust. The 1996
Trust contained a restraint on alienation clause, making it a
spendthrift trust. Shortly after Adoria died in 2009, her
son, Stephen Brock, successfully petitioned to modify the
trust with Emil's consent (2009 modification). The
petition proposed to alter the language controlling
distribution of the trust property, granting any beneficiary
the right to compel distribution of his or her share of the
trust. Specifically, the proposed language provided in
Upon an election in writing by any child of ours delivered to
our Trustee, the trust share set aside for such child shall
forthwith terminate and our Trustee shall distribute all
undistributed net income and principal to such child outright
and free of the trust. I
Stephen's siblings and step-siblings were notified of the
modification petition, and none objected. Because no
interested party objected, the district court granted
Stephen's petition to modify the trust. Subsequently,
Premier Trust, Inc., became the co-trustee of the 1996 Trust.
2010, Stephen settled several lawsuits that Emil and his
children had brought against him for alleged mismanagement of
an alternate family trust (2010 settlement). Before agreeing
to the settlement, Stephen conferred with counsel and
responded to the district court's oral canvassing. In the
settlement, Stephen denied any wrongdoing, but he agreed to
pay $415, 000 through monthly payments to the alternate
family trust. Stephen also agreed to pledge his interest in
the 1996 Trust as security for his payment obligation.
Stephen made only one $5, 000 payment to the alternate family
Emil died in 2013, the other nine beneficiaries requested and
received their shares of the 1996 Trust funds. Stephen was
the only beneficiary who did not receive his share. The
trustees of the alternate trust demanded that Premier use
Stephen's share of the 1996 Trust to pay his 2010
settlement debt. Premier made three $100, 000 payments before
Stephen demanded that it stop. Stephen then filed the
underlying petition to construe the terms of the 1996 Trust,
compel repayment of the $300, 000 Premier paid out on his
behalf, and to remove Premier as trustee. The district court
denied Stephen's petition, finding that: (1) Stephen was
the only beneficiary whose interest was affected; (2) the
initial intent of the two settlors was to treat their
children as equal beneficiaries, and to allow Stephen to
renege on his promise would disadvantage the other nine
children; (3) the settlement money was to repay money that
would benefit the other beneficiaries of the 1996 Trust; and
(4) Emil and the other children relied upon Stephen's
promise in the 2010 settlement when dismissing the various
lawsuits against Stephen.
probate matter, we "defer to a district court's
findings of fact and will only disturb them if they are not
supported by substantial evidence." Waldman v.
Maini, 124 Nev. 1121, 1129, 195 P.3d 850, 856 (2008).
"Substantial evidence is evidence that a reasonable mind
might accept as adequate to support a conclusion."
In re Estate of Bethurem, 129 Nev. 869, 876, 313
P.3d 237, 242 (2013) (quoting Winchell v. Schiff,
124 Nev. 938, 944, 193 P.3d 946, 950 (2008)). We review legal
questions, including matters of statutory interpretation, de
novo. Waldman, 124 Nev. at 1129, 195 P.3d at 856.
2009 modification was a valid modification of the 1996 Trust,
and the 2010 settlement is valid
appeal, Stephen argues that the district court's finding
that the 2009 modification and the 2010 settlement were valid
modifications of the 1996 Trust was erroneous because
irrevocable trusts cannot be terminated and the death of a
settlor precludes modification of the trust. In response,
respondents argue that the trust modifications were effective
and a spendthrift clause becomes invalid once a beneficiary
is entitled to compel distribution of his or her share of the
law does not categorically preclude the modification of ...