Wednesday, July 2, 2014
In Virginia, plaintiffs may have their case dismissed if a certain period of time has expired (called a statue of limitations). As it pertains to Trusts, a Trust beneficiary may not commence a legal proceeding against a Trustee for a breach if a year has expired since the Trustee has adequately disclosed the existence of a potential claim.
If there is no adequate disclosure, then the statute of limitations for trust breaches is generally five years from the first of the following to occur;
1. The removal, resignation, or death of the trustee;
2. The termination of the beneficiary's interest in the trust; or
3. The termination of the trust.
However, in circumstances of fraud, the statute of limitations can be extended. Because the statute of limitations may vary, and the time that the clock begins to run depends on the circumstances. It is critical that a beneficiary act quickly when they determine that a breach of trust had occurred.
If you are a Trustee who is worried they have committed a breach of Trust, and wants to minimize their exposure, or a beneficiary who believes a breach of Trust has occurred, please contact us.
Virginia Code Section 64.2-796
A. A beneficiary may not commence a proceeding against a trustee for breach of trust more than one year after the date the beneficiary or a representative of the beneficiary was sent a report that adequately disclosed the existence of a potential claim for breach of trust and informed the beneficiary of the time allowed for commencing a proceeding.
B. A report adequately discloses the existence of a potential claim for breach of trust if it provides sufficient information so that the beneficiary or representative knows of the potential claim or should have inquired into its existence.
C. If subsection A does not apply, a judicial proceeding by a beneficiary against a trustee for breach of trust shall be commenced within five years after the first to occur of:
1. The removal, resignation, or death of the trustee;
2. The termination of the beneficiary's interest in the trust; or
3. The termination of the trust.
D. Whenever fraud has been perpetrated in connection with any proceeding or in any statement filed under this chapter, or if fraud is used to avoid or circumvent the provisions or purposes of this chapter, any person injured thereby may obtain appropriate relief against the perpetrator of the fraud or restitution from any person benefiting from the fraud, whether innocent or not, except for a bona fide purchaser. Any proceeding shall be commenced within two years after the fraud is discovered, but no proceeding may be brought against one not a perpetrator of the fraud later than five years after the time the fraud is committed. This section does not apply to remedies for fraud practiced on a decedent during his lifetime that affects the succession of his estate.
E. The provisions of this section shall not operate to reduce the period of limitations applicable to actions and suits governed by § 8.01-245.