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Alexandria, VA Estate Planning Blog

Wednesday, July 2, 2014

Mandatory Trust Rules: When Your Trust Terms Are Unenforceable

Mandatory Trust Rules: When Your Trust Terms Are Unenforceable
Serving as a Trustee can be a difficult thankless job that exposes the Trustee to significant liability. Because Trust rules are so complex and difficult to understand, all Trustees should retain an attorney when serving as Trustee of the Trust.

A perfect example of the complexity concerns weather the Trustee can rely on the Trust terms.

What happens when the Trust terms are contrary to the law?

Many Trustees assume that they can just follow the terms of the Trust and be in compliance with the law. However, many Trustees don’t realize that certain provisions of the law override the Trust Instrument.

For example, the Virginia Code 64.2-703 provides that the Code prevails over the Trust terms as it relates to:

1. The requirements for creating a valid Trust;
2. The duty of a Trustee to act in good faith and in accordance with the terms and purposes of the Trust and the interests of the beneficiaries;
3. The requirement that a Trust and its terms be for the benefit of its beneficiaries, and that the Trust have a purpose that is lawful, not contrary to public policy, and possible to achieve;
4. The power of the court to modify or terminate a Trust under §§ 64.2-728 through 64.2-734;
5. The effect of a spendthrift provision and the rights of certain creditors and assignees to reach a Trust as provided in Article 5 (§ 64.2-742 et seq.);
6. The power of the court under § 64.2-755 to require, dispense with, or modify or terminate a bond;
7. The power of the court under subsection B of § 64.2-761 to adjust a Trustee's compensation specified in the terms of the Trust that is unreasonably low or high;
8. The effect of an exculpatory term under § 64.2-799;
9. The rights under §§ 64.2-801 through 64.2-804 of a person other than a Trustee or beneficiary;
10. Periods of limitation for commencing a judicial proceeding; and

The power of the court to take such action and exercise such jurisdiction as may be necessary in the interests of justice.
Because Trust law is so complex, it is critical that the Trustee contact a Trust attorney before accepting the Trusteeship to have the Trust reviewed to see if the Trust terms are in conflict of the law.

If you would like us to review your Trust instrument to determine what terms conflict with the Virginia code, please contact us.



The Lenzi Law Firm, PLLC assists clients throughout Northern Virginia and Washington D.C. including Fort Washington, Falls Church, Ft. Myer, Vienna, Rosslyn, Springfield, Mount Vernon, Annandale, Fort Belvoir, Fairfax, Dunn Loring, Merrifield, McLean, Oakton, Reston, Burke, Great Falls, Fredericksburg, Stafford and Herndon in Arlington County, Alexandria County, & Fairfax County.



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