Many Nevada couples own substantial assets inside revocable living trusts — estate planning vehicles designed to avoid probate and facilitate asset management. A common misconception is that assets inside a trust are somehow protected from division in a divorce. In Nevada, transferring community property into a revocable living trust does not change its character as community property — it remains subject to equal division at divorce. Understanding how trusts interact with Nevada’s community property laws is essential for anyone going through a Las Vegas divorce involving trust assets. Hauser Family Law advises clients on trust asset division in Nevada divorce proceedings.
Revocable Living Trusts — Basic Structure
A revocable living trust is an estate planning document in which the creator (the grantor or settlor) transfers ownership of assets to the trust, retains the power to revoke or amend the trust during their lifetime, and names themselves as the initial trustee to maintain day-to-day control. Because the grantor retains control and the right to revoke the trust entirely, the law treats the grantor as still owning the assets for most purposes — including for creditor claims and for divorce purposes. A joint revocable living trust created by a married couple typically transfers all of the couple’s community property into the trust, with both spouses serving as co-trustees. The trust document generally specifies that the trust assets are community property.
Community Property Remains Community Property Inside a Trust
Under NRS 123.220 and NRS 163.413, transferring community property into a revocable living trust does not convert that property from community to separate property. The character of the asset (community or separate) follows the asset into the trust. If a house purchased with community funds was transferred into a joint revocable trust during the marriage, it remains community property subject to 50/50 division at divorce — the trust is merely a legal wrapper, not a conversion mechanism. Similarly, if one spouse transferred their separate property (inherited money, pre-marital savings) into the couple’s joint revocable trust without an express written agreement preserving the separate character, they risk having that separate property treated as a gift to the community — commingling issues arise when separate property is placed into a joint trust without clear documentation.
Trustee Authority During Divorce Proceedings
When both spouses are co-trustees of a joint revocable trust and they file for divorce, a practical problem immediately arises: both spouses nominally have trustee authority over the trust assets, but the ATROs that take effect at filing prohibit either spouse from unilaterally selling or transferring trust assets without the other’s consent. If one spouse is the sole trustee of their own separate revocable trust that contains community property, that spouse may attempt to use trustee authority to access or transfer assets — courts will treat such transfers as ATRO violations and potential waste requiring remediation in the property division. Often, divorcing couples need court orders specifying which spouse can exercise trustee authority during the divorce proceeding, or appointing a neutral third-party trustee to manage trust assets pending division.
Irrevocable Trusts and Third-Party Trusts
Irrevocable trusts are treated differently than revocable trusts in divorce because the grantor has permanently given up control of the assets transferred into them. However, if the irrevocable trust was funded with community property without the other spouse’s knowing consent, a court may find that the transfer was an improper dissipation of community assets. Third-party trusts — trusts created by a parent or grandparent for one spouse’s benefit — are typically separate property as gifts under NRS 123.130, provided the trust distributions have not been commingled with community funds in ways that make tracing impossible.
Contact Hauser Family Law — Las Vegas Trust and Divorce Attorney
Divorces involving revocable living trusts, family trusts, and complex estate planning structures require attorneys who understand both Nevada family law and trust law. Hauser Family Law works with estate planning counsel to ensure trust assets are correctly characterized and divided in Nevada divorce proceedings. Contact us for a free consultation in Las Vegas or Henderson.