139 Nev., Advance Opinion 5 1 1
IN THE COURT OF APPEALS OF THE STATE OF NEVADA
MARIA LOPEZ, No. 84950-COA
Appellant,
vs.
PEDRO LOPEZ,
MED
Respondent. NOV 3 0 202
EL iO TH A. BRO'
CL UP RT
BY
EF DEPUTi CLERK
Appeal from a district court decree of divorce. Eighth Judicial
District Court, Family Division, Clark County; Dawn Throne, Judge.
Affirmed.
McFarling Law Group and Emily McFarling, Las Vegas,
for Appellant.
Leavitt Law Firrn and Dennis M. Leavitt and Frank A. Leavitt, Las Vegas,
for Respondent.
BEFORE THE COURT OF APPEALS, GIBBONS, C.J., and BULLA and
WESTBROOK, JJ.
O.PINION
By the Court, GIBBONS, C.J.:
In this appeal, we examine the district court's authority in a
divorce action to resolve community property disputes over property held in
a revocable inter vivos trust. Our analysis brings us to an issue of first
impression: whether a revocable inter vivos trust holding community
property must be named as a necessary party in a divorce action where the
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divorcing spouses are co-trustees, co-settiors, and beneficiaries. Because we
conclude that the spouses are the materially interested parties, and that
divorce revokes every devise given by a settlor to their former spouse in a
revocable inter vivos trust, we hold that the parties are not required to name
such a revocable inter vivos trust as a necessary party in a divorce action
where the spouses are co-settlors, co-trustees, and beneficiaries. We
accordingly uphold the district court's distribution decisions and,
ultimatelY, affirm its decree of-divorce. -
FACTS .AND PROCEDURAL HISTORY
Appellant Maria Lopez and respondent Ped.ro Lopez were
married in Mexico in 1995. • After they were married-, the parties moved to
the United States and created the P & D Family Trust, a revocable inter
vivos trust over which they, as co-settlors and •co.-trustees, retained the right
to revoke, alter, or amend at any point •during their lifetimes.' During their
marriage, . the parties collectively placed eight properties into the P & D
Family Trust. Of those• eight.. properties, Maria. and Pedro had jointly,
ptirchased seven; -they rented out six and uSed one as their • marital
residence. Maria's father purchased the • eighth property And gave it to
Maria's brother. • That property is currently titled the hathe of both.
Maria's brother and the family trust.2 Maria, a licensed realtor,: managed
the six rental properties and oversaw rent cOliection. •
'Maria and Pedro, and their children in. the co-trustees' discretion, are
the trust beneficiaries.
2 The district court excluded this jointlY titled property from itS
community property distributions, and we therefore do not include. it in our
references to trust property..
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Around 2008, Maria and Pedro defaulted on their mortgage
payments for three of the trust properties that they controlled (Grizzly
Forest, Abrams Avenue, and San Gervasio). After defaulting, Maria and
Pedro sold Grizzly Forest and Abrams Avenue via short sales to third-party
buyers with whom they had close relationships, and they financed these
short sales with personal funds. Specifically, Maria and Pedro gave Maria's
sister $280,000 to purchase Grizzly Forest and a close family friend $80,000
to purchase Abrams Avenue. Maria contends that the funds came from her
separate property, while Pedro argues that the funds came from their
community assets. Almost immediately after Maria's sisterand the partieS'
friend purchased the properties, they gifted the properties back to Maria, in
her name alone, titled as her sole and separate property. As to San
Gervasio, Maria alleges that she used her inheritance to pay off the
mortgage, after which Pedro signed over his community interest• in. the
property to Maria.3 Pedro denies conveying his interest in San Gervasio tó
Maria and alleges that Maria forged his signature on the deed.4
Throughout the parties' marriage, Maria and Pedro each
maintained separate and joint bank accounts. The parties, particularly
Maria, were neither forthcoming nor transparent regarding their funds--
31n its decree of divorce, the district court referred to Maria as San
Gervasio's short sale buyer. However, it is undisputed that Maria paid off
the San Gervasio mortgage and did not purchase the property via a short
sale. Thus, the court's characterization of Maria as a short sale buyer is
inaccurate, but this does not change our analysis or conclu.sion.
4At trial, the district court questioned Pedro regarding a grant,
bargain, and sale deed that purported to convey Pedro's interest in . San
Gervasio to Maria. Notably, h.owever, the record does not contain this deed.
The only San Gervasio deed in the record is a subsequent quitclaim deed
that Maria signed but Pedro did not. •
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each made several transfers from the joint accounts to their separate
accounts without telling the other. Shortly before the divorce, Maria also
deviated from her historical practice of depositing rental payments into the
parties' joint accounts and instead began placing the proceeds in her
separate accounts.
Pedro filed for divorce in April 2021. During the case
management conference (CMC), the district court urged the parties to
comply with their mandatory NRCP 16.2 financial disclosure requirenients
and produce accurate •and thorough financial disclosure forms (FDFs).5
Throughout the CMC and later hearings, Maria represented that the
Grizzly Forest, Abrams Avenue, and San Gervasio properties were her
separate property and should not be included in the court's community
property distribution decisions. She also argued that the district court did
5Pursuant to NRCP 16.2(c)(1), each party• must complete, file, and
serve a General Financial Disclosure Form "within 30 days of service of the
summons and complaint, unless" the court requires, or the parties request,
a Detailed Financial Disclosure Form (DFDF) pursuant to 16.2(c)(2). Here,
the district court did not require, and the parties did not request, a DFDF,
but NRCP 16.2 and the court's admonitions subjected the parties to relevant
discovery. Concurrent with the filing of the financial disclosure form, each
party must also provide "financial statement(s), document(s), receipt(s), .or
other information or evidence relied upon to support the figure represented
on the form." NRCP 16.2(d)(2). Specifically, each "party must provide
copies of all monthly or periodic bank, checking, savings, brokerage,
investment, cryptocurrency, and security aCcount statements in which . any
party has . . . an interest," as well as "credit card [and] debt statements,"
real property documents, property debt statements, loan applications,
promissory notes, deposits, receivables, retirernent assets, insurance and
insurance policies, the values of all real property, tax returns, proof of
income, personalty, and "a copy of every other document or exhibit . . . that
a party expects to offer as evidence at. trial in any manner." NRCP
16.2(d)(3)(A)- (P).
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not have the authority to make distributions of the family trust's_ assets
because it did not have jurisdiction over the family trust. Additionally,
Maria claimed a prenuptia] agreement existed that the parties signed in
Mexico; the agreement supposedly demonstrated that Maria had $80,00.0 in
personal savings and a $250,000 inheritance from her father that were to
remain her separate property throughout t.he marriage. Pedro denied the
agreement's existence and expressed his concern that Maria would attempt
to fabricate a document with her Sister: an attorn.ey in. MeXiCo, to use at
trial. The district court repeatedly cautioned Maria that she would need to
produce the prenuptial agreement before trial with an official translation
for the coUrt to admit it into evidence. The district court also expressed
frustration that neither party had engaged in sufficient discovery;
subpoenaed bank records; or obtained .formal appraisals for their real
property, which at that point had approximately $3 'million in equity..
Prior• to trial, the distriCt •court held a hearing •to resolve all
pending motions. At that hearing,. the district court found that.both Maria'S
and Pedro's FDFs were inadequate and did not provide -the court With a
sufficient basis from which it • could distribute the parties' CoMmUnity
assets. The district court noted that any party claiming family trust
property to be his or her separate property would need to overcome the
presumption.of community property by clear and convincing evidence. The
district court also acknowledged Pédro's concern that Maria had Yet to
produce the prenuptial agreement.
At trial, Maria argued that the GriZzly Forest, Abrains.Avenue,
and San Gervasio properties were her separate property because she
finan.ced the Grizzly Forest a.nd -Abrams .Avenue short sales with separate
propertY and 'paid off the San •Gbrvasio mortgage with funds from her
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inheritance. The district court was unconvinced and found that Maria had
not produced adequate tracing evidence (through her NRCP 16.2
disclosures or otherwise) sufficient to show that the funds used to finance
the short sales and pay off the mortgage came from anywhere other than
the parties' community assets.6 The district court also conveyed its strong
belief that the parties had used "straw-buyers" to engage in mortgage fraud.
The judge emphasized her distaste for the parties' behavior and expressed
her distrust for both parties.
During Maria's cross-examination of Pedro, she questioned him
about the alleged prenuptial agreement, and Pedro flatly denied its
existence. After Pedro's denial, Maria proffered an unsigned physical
document, written in Spanish, purporting to be a copy of the alleged
prenuptial agreement. Pedro objected to its admission, and Maria
responded that she had been able to obtain the document from Mexico only
two days before trial. Maria did not explain why she did not disclose the
document to Pedro in those two days or how she was finally able to procure
it. Pedro argued that the document was untimely• and not properly
authenticated. The district court agreed, stating that because Maria had
not produced the document prior to trial as the court had instructed, and
because the document was in Spanish, with no signatures, and without any
translation, the document was inadmissible. The district court explained
that allowing Maria to cross-examine Pedro on an unproduced document
both parties' bank
6The district court also found that all assets in
accounts were community property because the accounts were created after
the marriage, there was significant commingling of community and alleged
separate funds in the accounts, and there was no tracing •evidence to
distinguish the alleged separate funds.
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that had not been properly authenticated or translated would amo nt to
trial by ambush.
When questioning Maria about the bank accounts, the d strict
court instructed Maria to open and display her online banking inform tion,
which revealed that Maria had understated the total amount i the
accounts by almost $342,000 during her testimony.7 The district court
called this a material misrepresentation that Maria made in an atte pt to
defraud Pedro.
In its findings of fact, conclusions of law, and decree of di orce,
the district court deemed all family trust properties to be comi unity
property and ordered them distributed equally between the parties be ause
neither party offered a compelling reason for an unequal distribution. This
appeal followed.
ANALYSIS
On appeal, Maria argues that the district court (1) did no have
authority to distribute the P & D Family Trust's assets; (2) made an un :qual
distribution of property and abused its discretion because it distribut d the
Grizzly Forest, Abrams Avenue, and San Gervasio properties as comm nity
property and not Maria's separate property; and (3) abused its disc etion
when it did not allow Maria to question Pedro on cross-examination bout
the alleged prenuptial agreement. Maria also claims (4) that, on re,. and,
• 'Maria claimed at trial that one of her separate accounts had a ound
$80,000 in it and that her other separate account had $10,000 n it.
However, at trial, the district court challenged Maria to reveal her nline
banking records, which showed that her accounts contained $3 ] 1,83 and
$120,115, respectively.
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this case should be reassigned to a new judge because of alleged prejudicial
comments the district court judge made during the tria.1.8
The district court had authority to distribute the P & D Family Trust's assets
Maria argues that the district court erred when it exercised
authority over the family trust's assets. Because the trust was a revocable
inter vivos trust established after marriage, and the parties were co-
settlors, co-trustees, and beneficiaries, we conclude that the distri.ct Court
did .not err in concluding it had authority to distribute trust assets. •
The trust's -distributions were 'immediately revoked upon divorce
Maria argues that. the district court did not have authority to
distribute the family - trust's assets because the trust was. not irrevocable.
Pedro responds that the family trust was revocable upon divorce and that
the district court automatically had authority to distribute the community
assets in the family trust upon its revocation.
NRS 111.781(1) establishes that.unless "otherwise provided by
the express terms of a governing instrument," divorce revokes any revocable
disposition òf• property made' to a former spouse, including diSPositions
made pursuant tò a trust. In re Colnian Family Revocable Living.Tr.; Dated
June*23, 2011, 136 Nev, 11.2, 113-14, 460 P.3d 452, 454 (2020) (suinmarizing
8Maria additionally argues that the district court abused its
discretion when. it used Zillow estimates that Pedro,presented instead of
actual appraisal values as the basis for its property valuations. However,
despite the district court's pretrial warnings that without appraisal.. values
it would be forced to either order the sale of the properties and divide the
proceeds or use Zillow estimates in lieu of appraisals, neither party obtained
appraisal values for trial. At trial, therefore, the parties stipulated toAhe
use of Zillow estimates to avoid the sale of the properties. Maria, a licensed
realtor, also declined to offer her opinion .on the value of the properties.
Thus, we conclude that the district court did not abuse its discretion by
using th.e Zillow estimates.
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NRS 111.781); see also NRS 163.565 (stating that unless otherwise
provided, divorce "revokes every devise, beneficial interest or d.esignation to
serve as trustee given by the settlor to the former spOuse of the settlor in a
revocable inter vivos trust"); NRS 133.115 (stating the same as applied to
wills—namely, that divorce operates to revoke "every devise, beneficial
interest or designation to serve as personal representative given to the
testator's former spouse in a will"). The theory underlying this principle is
that revocable trusts with dispositions between spouses generally become
ineffective once there remains no surviving spouse to benefit post-divorce.
See Colman, 136 Nev. at 112-13, 460 P.3d at 453. NRS 125.150(1)(b)
additionally grants courts in divorce actions express authority to make
equal dispositions of any community property transferred into irrevocable
trusts, which by their nature are much more restrictive than inter vivos
trusts.
Here, the parties did not offer the family trust as an exhibit at
trial, nor does it appear in the record on appeal, and we cannot verify its
provisions. Regardless, neither party argues that the trust's express terrns
would have precluded the district court from removing and distributing the
family trust's community property. Instead, Maria contends that, pursuant
to NRS 111.781 and NRS 125.150, district courts have express authority to
distribute community assets placed in irrevocable trusts but not those
placed in revocable inter vivos trusts. Yet, Maria's argument fails to
account for the distinct nature of revocable inter vivos trusts that makes
these statutes inapplicable. Unlike property transferred to irrevocable
trusts—and in contrast to the general principle that settlors no longer own
trust property once they transfer that property into a trust--property
transferred to or held in a revocable inter vivos trust is considered to remain
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with the settlor because "any interest of other beneficiaries is purely
potential and can evaporate at the settlor's whim." 90 C.J.S. Trusts § 254
(2020) (also noting that a "settlor may be the owner of property in a
revocable trust of which the settlor is the trustee"); see also Linthicurn v.
Rudi, 122 Nev. 1452, 1453, 148 P.3d 746, 747 (2006) (concluding that "a
beneficiary's interest in a revocable inter vivos trust is contingent at most");
see, e.g., Wishengrad v. Carrington Mortg. Servs., 139 Nev., Adv. Op. 13, 529
P.3d 880, 886 (2023) (noting that, with respect to real property held in a
revocable inter vivos trust, the trustees "hold legal title"• and the
beneficiaries "are the equitable owners"). Further, dispositions between
spouses from a revocable trust are immediately revoked upon divorce unless
the instrument expressly states otherwise. Colman, 136 Nev. at 114, 460
P.3d at 454. Thus, the district court automatically assumed the authority
to distribute the family trust's community assets contemporaneous with
Maria and Pedro's divorce.
The trust was not a necessary party to the divorce action,
Maria also implies that the family trust should have been joined
as a necessary party in order to distribute the trust's assets. NRCP 19
requires that all necessary parties be joined in an action, so long as the
party's joinder does not deprive the court of subject matter jurisdiction. A
necessary party includes a party without whom the court cannot accord
complete relief and a party whose interest in the action is such that the
party's ability to protect its interests will be impeded if that party is not
joined. NRCP 19(a)(1).
In a divorce action, the spouses are the materially interested
parties. Where the spouses are the co-settlors, co-trustees, and
beneficiaries of a revocable inter vivos trust, the court's distribution of the
trust's joint assets will not impede the trust's interests because the
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necessary parties are already named in the litigation.° See, e.g., Tsai v. Hsu,
No. 50549, 2010 WL 3270973, at *4-5 (Nev. Apr. 29, 2010) (Order of
Affirmance) (concluding that a revocable inter vivos trust between spouses
was not a necessary party to a divorce proceeding because the husband and
wife (both co-trustees) were already parties to the litigation, and the district
court's distribution of the trust's assets did not substantially affect the
rights of nonparties).
Here, neither PedrO nor Maria filed a motiOn under NRCP19
to join the trust separately as a necessary party, and this court is therefore
not required to consider the -argument on appeal. 'Die/mond-Enters., Inc. v.
Lau, 113 Nev. 1376, 1378, 951 P.2d 73, 74 (1997); see also Rose, LLC v.
Treasure Island, LLC, 135 Nev. 145, 152-53, 445 P.3d 860, 866-67 (Ct. App.
2019) •(noting that in contrast to federal courts, Nevada . permits parties to
raise. NRCP 19 challenges for the first time on appeal, but only so long as
the parties raise the challenges in good •faith and not merely in resPOnse to
an adverse ruling);
However, even if considered on the merits, the trust in this case
is not a necessary party to the action because Maria and Pedro, like the co-
tnistees in Tsai, were both existing parties to the divorce action and . the
trust's co-trustees, co-settlors, and beneficiaries. The parties' status .as co-
trustees is particularly noteworthy. Legal proceedings involving a trust
must be "brought by or against the trustee§ in their own name[s]."
°This.case does not present a situation where the revo6.ble inter vivos
trust's settlor(s), trustee(s),. and beneficiary(ies) are unria:med third parties
who may have an interest in . the trust's assets if that trust were to become
sUbject to litigation. We therefore need not address whether a revocable
inter vivos trust would. be a necessary party to divorce Jitigation in that
scenario.
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Americold Realty Tr. v. Conagra Foods, Inc., 577 U.S. 378, 383 (2016).
Consequently, to join the trust would require naming Maria or Pedro in
their co-trustee capacities, which would be redundant because Maria and
Pedro were already parties to the litigation. See id.
Joining the family trust was also not a prerequisite for complete
relief, as neither Maria's nor Pedro's interests were impeded by not naming
the family trust as a separate party. In fact, the district court's disposition
of the trust's assets was a necessary part of the divorce's execution because
all revocable distributions between Maria and Pedro in the family trust
were revoked upon divorce. See NRS 111.781(1). Thus, we conclude that
the family trust was not a necessary party and failing to name the family
trust in the action did not preclude the district court's ability to distribute
the trust's assets.1()
Accordingly, we conclude that the district court had authority
to distribute the family trust's assets because the divorce revoked the trust's
distributions between Maria and Pedro, Maria and Pedro were the co-
settlors, co-trustees, and beneficiaries, and the trust was not a necessary
party.11
"'This conclusion is consistent with trust law, in which the United
States Supreme Court has clarified that "fflraditionally, a trust was not
considered a distinct legal entity, but a 'fiduciary relationship' between
multiple people." See Americold, 577 TJ.S. at 383 (quoting Klein v. Bryer,
177 A.2d 412, 413 (Md. 1962)).
11Maria also argues that the district court did not have authority to
distribute the family trust's assets because the trust was not a named party
pursuant to Klabacka v. Nelson, 133 Nev. 164, 394 P.3d 940 (2017). We
conclude that Klabacka is inapposite. Klabacka involved the jurisdictional
issue of whether a district court judge sitting in the family division had
subject matter jurisdiction over the divorcing parties' irrevocable self-
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