2013 Virginia Legislative Update – Trusts & Estates Law

    July 29, 2013, 03:33 PM

    The 2013 session of the Virginia General Assembly resulted in several important changes to trusts and estates law, most of which became effective July 1, 2013. Below are some of the more notable changes. Real Property Transfer on Death Act – Senate Bill 1093 Adopts the Uniform Real Property Transfer on Death Act as Virginia Code 64.2-621, et seq., permitting creation of a transfer on death (TOD) deed, which, when properly executed and recorded, has no effect on the transferors lifetime rights to the property, but is effective to transfer title to the named beneficiary at the transferors death. This legislation provides a very beneficial estate planning tool. A more detailed and thorough analysis of this new legislation will be addressed in a forthcoming PCS newsletter. Rights of Assignee of Ownership Interest in an LLC – Senate Bill 779 Amends Virginia Code 13.1-1039 to specifically allow an assignee of limited liability company (LLC) ownership interests to also automatically have the same rights as the assignor to participate in the LLC as a member, if the Operating Agreement so provides. A separate consent of the majority of the members is not required. This legislation was enacted as a statutory overruling of the 2011 Virginia Supreme Court decision in Ott v. Monroe, 719 S.E.2d 309 (Va. 2011). Credit Unions Under Small Estate Act – House Bill 1351 Amends Virginia Code 6.2-1367 to confirm that credit unions are subject to the Small Estate Act in the same manner as banks, to the extent that credit union compliance with the Small Estate Act is not in violation of federal law. Negotiable Instruments of a Decedent Under Small Estate Act – House Bill 1594 Amends Virginia Code 64.2-601 to allow a successor to a decedents assets (as defined in the Small Estate Act) to endorse and negotiate a check payable to the decedent if the check qualifies as a small asset (under $15,000) and the decedents total estate qualifies as a small estate (under $50,000). This legislation appears to create a useful mechanism, but its acceptance by financial institutions and compliance with federal banking laws are yet to be determined. Rule Against Perpetuities May be Waived as to Personal Property in Trust – Senate Bill 756 Amends Virginia Code 55-12.4 and 55-13.3 allowing the settlor of a trust to expressly provide within the trust that the statutory Rule Against Perpetuities does not apply to personal property owned by the trust. This law does not apply to real property owned by the trust. Ascertainable Standard for Distributions by Trustee – Senate Bill 758 Amends Virginia Code 64.2-776 and deems that a trustees power to make discretionary distributions for the trustees own personal benefit is automatically subject to an ascertainable standard unless the trust explicitly provides otherwise. This is intended to avoid the trust inadvertently triggering an estate tax at the time of the trustees death due to the trustee being deemed to have a general power of appointment over the trust assets. Guardianship and Conservatorship Issues – Senate Bill 759 Makes various changes to guardianship and conservatorship statutes, including: (i) permitting another person to initiate a guardianship proceeding before an incapacitated child turns 18 if there is no living parent; (ii) requiring the court to hold a hearing on the appointment of a guardian or conservator within 120 days from filing; and (iii) granting a court the ability to authorize a conservator, for good cause shown, to create and fund a trust for an incapacitated person. Deceased Minors Digital Accounts – Senate Bill 913 Enacts Virginia Code 64.2-109 and 64.2-110 permitting the personal representative of the estate of a deceased minor child to access the minor childs online accounts, including email accounts, blogs, and social media accounts like Facebook. Inadvertent References to Title 64.1 – House Bill 2197 Enacts Virginia Code 64.2-108.1 to protect against inadvertent references in estate planning documents to former Code sections now replaced by Title 64.2. The new statute provides that such document will be construed to refer to the new equivalent Title 64.2 provision. —Will L. Holt and Sarah E. Messersmith