Alexandria, VA Estate Planning Blog

Wednesday, July 2, 2014

Trustee Duties: Trustee Duty to Invest

Upon acceptance of a trusteeship, the trustee shall administer the trust and invest trust assets in good faith, in accordance with its terms and purposes and the interests of the beneficiaries, and in accordance with the VA Code.

In administering, managing and investing trust assets, the trustee may have to comply with the provisions of the Uniform Prudent Investor Act and the Uniform Principal and Income Act.

If you have questions about the Prudent Investor Rule or the Principal and income Act, or believe that your Trustee has violated the prudent investor rule, please contact us.

Wednesday, July 2, 2014

Court Removal of Trustee

Removal of a Trustee: Charitable Trust
The settlor, a cotrustee, or a beneficiary, or, in the case of a charitable trust, the Attorney General may petition the court to remove a trustee, or a trustee may be removed by the court on its own initiative.

Removal of a Trustee: Generally
The court may remove a trustee if:

1. The trustee has committed a serious breach of trust;
2. Lack of cooperation among cotrustees substantially impairs the administration of the trust;
3. Because of unfitness, unwillingness, or persistent failure of the trustee to administer the trust effectively, the court determines that removal of the trustee best serves the interests of the beneficiaries; or
4. There has been a substantial change of circumstances or removal is requested by all of the qualified beneficiaries, the court finds that removal of the trustee best serves the interests of all of the beneficiaries and is not inconsistent with a material purpose of the trust, and a suitable cotrustee or successor trustee is available

Wednesday, July 2, 2014

Trustee Liability for Breach of Trust

Personal Trustee Liability: Trust Reliance
A Trustee who acts in reasonable reliance on the terms of the Trust as expressed in the Trust instrument is not liable to a beneficiary for a breach of Trust to the extent the breach resulted from the reliance.

However, a term of a Trust relieving a trustee of liability for breach of Trust is unenforceable to the extent that it:

1. Relieves the Trustee of liability for breach of Trust committed in bad faith or with reckless indifference to the purposes of the Trust or the interests of the beneficiaries; or
2. Was inserted as the result of an abuse by the Trustee of a fiduciary or confidential relationship to the settlor.

Note: An exculpatory term drafted or caused to be drafted by the Trustee is invalid as an abuse of a fiduciary or confidential relationship unless the Trustee proves that the existence and contents of the exculpatory term were adequately communicated to the settlor.

Personal Trustee Liability: Beneficiary Consent or Ratification
Also, a trustee is not liable to a beneficiary for breach of trust if the beneficiary consented to the conduct constituting the breach, released the trustee from liability for the breach, or ratified the transaction constituting the breach, unless:

The consent, release, or ratification of the beneficiary was induced by improper conduct of the trustee; or
At the time of the consent, release, or ratification, the beneficiary did not know of the beneficiary's rights or of the material facts relating to the breach.

Personal Trustee Liability: Contract
Except as otherwise provided in the contract, a trustee is not personally liable on a contract properly entered into in the trustee's fiduciary capacity in the course of administering the trust if the trustee in the contract disclosed the fiduciary capacity.

A trustee is personally liable for torts committed in the course of administering a trust, or for obligations arising from ownership or control of trust property, including liability for violation of environmental law, only if the trustee is personally at fault.

A claim based on a contract entered into by a trustee in the trustee's fiduciary capacity, on an obligation arising from ownership or control of trust property, or on a tort committed in the course of administering a trust, may be asserted in a judicial proceeding against the trustee in the trustee's fiduciary capacity, whether or not the trustee is personally liable for the claim.

If you have any questions about Trustee liability or breach of Trust, please contact us.

Wednesday, July 2, 2014

Breach of Trust: Damages & Attorneys Fees

When a Trustee has committed a breach of Trust, that Trustee, as a remedy available to the court (See Additional Remedies) is liable to the beneficiaries for the greater of the following: 

The amount need to restore the value of the trust property and trust distributions to what they should have been, or
The amount of any profit made by the Trustee from the breach. The Trustee is liable for the greater of the two above amounts, as opposed to the lesser. However, the beneficiary will need to establish that (i) a breach has occurred and (ii) that the breach has resulted in a loss in trust property, improper trust distributions or an economic benefit to the Trustee. 

Trustees have many duties that they owe beneficiaries and frequently are in breach. If you are a Trustee and would like a consultation on your duties, or a beneficiary who believes that a breach has occurred, please contact us.
Read more . . .

Wednesday, July 2, 2014

Trust Law Suits: Statute of Limitations

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. 
Read more . . .

Wednesday, July 2, 2014

Trustee Duties: Remedies for Trustee Breach of Trust

Trustees have duties they owe to a beneficiary. If the Trustee violates those duties, then a breach of Trust may have occurred. 

When a breach of Trust has occurred, the court may compel the Trustee to perform certain duties, enjoin the Trustee from committing a breach of Trust, or compel the Trustee to pay money, restore property, or take other actions intended to redress the breach.
Read more . . .

Wednesday, July 2, 2014

Subjecting Trusts & Trust Beneficiaries to Virginia Jurisdictional Law

Obtaining jurisdiction over the person of a Trustee or trust beneficiary is fairly easily accomplished in Virginia. 

By accepting the trusteeship of a trust having its principal place of administration in the Commonwealth or by moving the principal place of administration to the Commonwealth, the trustee submits personally to the jurisdiction of the courts of the Commonwealth regarding any matter involving the trust.
Read more . . .

Wednesday, July 2, 2014

Trustee Vacancy: What Happens Next?

A vacancy in a trusteeship occurs if:

1. A person designated as trustee rejects the trusteeship;
2. A person designated as trustee cannot be identified or does not exist;
3. A trustee resigns;
4. A trustee is disqualified or removed;
5. A trustee dies; or
6. An individual serving as trustee is adjudicated an incapacitated person.
Read more . . .

Wednesday, July 2, 2014

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. 
Read more . . .

Wednesday, July 2, 2014

Trust Document: Certificate of Trust

What does a Certificate of Trust do? 
A certificate of trust is a basic ancillary trust document designed to protect the privacy of the trust and its terms. 

Why use a Certificate of Trust? 
By using a certificate of trust, you may be able to keep the trust more private. In addition, you may be able to pass liability on to a party requesting trust information. 

When should you use a Certificate of Trust? 
If a bank, financial advisor, or other person requests a copy of the trust instrument, you should consider offering them a certificate of trust in lieu of providing them any copies of the trust pages. 
Read more . . .

Saturday, June 21, 2014

Last Will & Testament: Execution Requirements

The most difficult document to execute properly is a Last Will & Testament. In addition, because Wills may pass a lifetime of earnings to a persons most cherished loved ones, it is also the most important. 

Amazingly, many people fail to execute a Last Will & Testament or fail to hire an attorney to draft the document. Unless you are a competent estate planning attorney, you should not draft a Will. Also, it is exceedingly foolish to use a Will from a form book or online store. 

If you have a Will executed from a form book, or online, you should ensure that the following will execution requirements are fulfilled. Notwithstanding, the Will may be nonetheless still invalid or ineffective. 

Read more . . .

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