Nebraska adopted the Uniform Trust Code in 2003, making it one of the earlier adopters in the Midwest. The state follows the UTC closely and has updated its code over the years. One important distinction: Nebraska is one of only five states in the country with an inheritance tax, which can affect trust beneficiaries who are not close family members. Nebraska also allows dynasty trusts. The Nebraska Uniform Trust Code is found at Neb. Rev. Stat. Sections 30-3801 and following.
This guide applies to both revocable and irrevocable trusts in Nebraska.
Where Nebraska trust law lives
Nebraska's trust statutes are codified in Neb. Rev. Stat. Chapter 30, beginning at Section 30-3801. The code follows the standard UTC structure. Related provisions include the Nebraska Uniform Principal and Income Act and provisions in the Nebraska Probate Code that interact with trust law. Nebraska adopted the 1997 version of the Uniform Principal and Income Act in 2001.
Accounting and notice requirements
Nebraska follows the standard UTC notice framework under Section 30-3878 (UTC Section 813). Trustees must keep qualified beneficiaries reasonably informed about trust administration and must promptly respond to beneficiary requests for information.
Within 60 days of accepting trusteeship, the trustee must notify qualified beneficiaries of the trust's existence, the trustee's contact information, and the beneficiary's right to request a copy of the trust instrument and to receive accountings.
Annual reports are required to distributees, permissible distributees of income or principal, and other beneficiaries who request them. These reports must include trust property, liabilities, receipts, disbursements, the trustee's compensation, a listing of trust assets, and if feasible, their market values (Section 30-3878(c)). A beneficiary may waive the right to reports or other information (Section 30-3878(d)).
Nebraska includes a grandfathering provision: the 60-day acceptance notice and certain other reporting requirements do not apply to trustees who accepted trusteeship before January 1, 2006, to irrevocable trusts created before that date, or to revocable trusts that became irrevocable before that date (Section 30-3878(f)).
Nebraska courts have interpreted the duty to inform broadly. In the 2015 case Rafert v. Meyer, the Nebraska Supreme Court held that a trustee cannot wait until an annual report is due to inform beneficiaries if trust assets are in danger. The duty to share material facts is immediate when the trustee knows or should know of a threat to trust property.
Trustee duties
Nebraska trustees must administer the trust in good faith, in accordance with its terms and purposes, and in the interests of the beneficiaries (Section 30-3866). All standard UTC duties apply: loyalty, impartiality, prudent administration, and prudent investing. Trustees have broad powers, including all powers over trust property that an unmarried competent owner would have over individually owned property (Section 30-3880).
Compensation follows the trust instrument first, with reasonable compensation as the default.
What makes Nebraska different
Inheritance tax. Nebraska is one of only five states (along with Kentucky, Maryland, New Jersey, and Pennsylvania) that imposes an inheritance tax. Like Kentucky, this is a tax on the beneficiary receiving the assets, not on the estate itself. Close family members (spouses, parents, children, grandchildren, siblings) receive a generous exemption. More distant relatives and unrelated beneficiaries face tax rates that increase with the distance of the relationship. This is an important planning consideration for trusts that distribute assets to anyone outside the immediate family.
Dynasty trusts. Nebraska allows the creation of dynasty trusts. The Nebraska Statutory Rule Against Perpetuities Act was modified in 2002 to permit trusts in which the governing instrument states that the trust is not subject to the rule. This allows trusts to continue indefinitely under the right circumstances.
Broad trustee powers. Nebraska's Section 30-3880 grants trustees "all powers over the trust property which an unmarried competent owner has over individually owned property," plus any other powers appropriate for proper management and any additional powers conferred by the UTC. This is a broad grant of authority.
Immediate duty to inform of threats. Nebraska case law (Rafert v. Meyer, 2015) establishes that the duty to inform beneficiaries is not limited to annual reporting. If a trustee knows or should know that trust assets are in danger, the duty to inform beneficiaries is immediate. This is a higher standard than the statutory text alone might suggest.
No state estate tax. Nebraska does not impose a state estate tax. Only the federal estate tax and the state inheritance tax apply.
TrustHelm tip: Nebraska's inheritance tax can catch families off guard when trust distributions go to non-immediate family members. TrustHelm's beneficiary tracking and distribution records can help you stay organized and anticipate potential inheritance tax obligations before they arise.
The most common Nebraska trust mistakes
Not funding the trust. The most common trust mistake in every state: assets not properly transferred into the trust remain subject to probate.
Overlooking the inheritance tax. Families often assume that with no state estate tax, there is no state-level tax concern. Nebraska's inheritance tax applies to beneficiaries who are not close relatives, and the rates can be meaningful.
Not providing timely reports. Nebraska courts take the duty to inform seriously. Waiting until an annual report is due when you know trust assets are at risk is not sufficient. The obligation to share material facts is immediate.
Not knowing about the grandfathering provision. Trusts created before January 1, 2006 are exempt from some of the reporting requirements. Trustees and beneficiaries should know which rules apply to their specific trust.
Assuming all beneficiaries receive the same tax treatment. The inheritance tax rate varies significantly based on the beneficiary's relationship to the deceased trust creator. A distribution to a child faces very different tax treatment than a distribution to a friend or distant relative.
When to talk to an attorney
You should consult a Nebraska trust attorney if you need to understand how the inheritance tax affects your trust distributions, if you are considering a dynasty trust, if you have been named as trustee and want to understand your reporting obligations, or if you need to modify a trust to address changed circumstances.
If you need help finding a qualified estate planning attorney in your area, visit TrustHelm's Find an Attorney tool.
This guide is for educational purposes only and does not constitute legal advice. Consult a qualified attorney for decisions about your trust.