Private Client Services Update – 2013 Virginia Legislative Update – Trusts & Estates Law

    By William L. Holt, Sarah E. Messersmith, Estate, Trust & Wealth Transfer

    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 transferor’s lifetime rights to the property, but is effective to transfer title to the named beneficiary at the transferor’s 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 decedent’s 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 decedent’s 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 trustee’s power to make discretionary distributions for the trustee’s 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 trustee’s 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 Minor’s 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 child’s 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 Holt is an associate attorney at Kaufman & Canoles, where his practice focuses on estate planning, business law, real estate, and land use matters. Will is a member of the firm’s Private Client Services Group and the Real Estate Strategies Group. He is a graduate of the College of William & Mary’s Marshall-Wythe School of Law.

    Sarah Messersmith is an associate attorney at Kaufman & Canoles, where her practice focuses on wills, trusts and estates. Sarah’s work with clients ranges from the initial structuring and implementation of their estate plans to the resulting estate and trust administration. Her practice also includes working with owners of closely-held businesses and representation of clients in all aspects of real estate transactions. Sarah serves on the Board of Trustees of the Sarah Bonwell Hudgins Foundation and the Executive Council of the Virginia Bar Association Young Lawyers Division, and is a member of the Peninsula Estate Planning Council. She is a Peninsula native and works in the firm’s Hampton office.

    The contents of this publication are intended for general information only and should not be construed as legal advice or a legal opinion on specific facts and circumstances.

    The contents of this publication are intended for general information only and should not be construed as legal advice or a legal opinion on specific facts and circumstances. Copyright 2024.