Source: https://secure.ssa.gov/apps10/poms.nsf/lnx/1507240051
Timestamp: 2018-01-23 08:05:31
Document Index: 505720405

Matched Legal Cases: ['§1002', '§4', '§1091', '§1107', '§1105', '§1097', '§1002', '§1003']

SSA - POMS: PR 07240.051 - Virgin Islands - 02/09/2009
PR 07240.051 Virgin Islands
In the Virgin Islands, the standard of conduct applied to investment decisions by persons holding property of another _1/ is based on the pre-UPIA, traditional “prudent man” rule. It states:
In acquiring, investing, reinvesting, exchanging, retaining, selling and managing property for the benefit of another, fiduciaries shall exercise the judgment and care under the circumstances then prevailing, which men of prudence, discretion and intelligence exercise in the management of their affairs, not in regard to speculation but in regard to the permanent disposition of their funds, considering the probable income as well as the probably safety of their capital.
15 V.I. Code Ann. §1002 (1996). The code further states that any investment is appropriate so long as prudent men of “discretion and intelligence” would invest in it with their own funds. Id.
There are no cases reported by local courts in the Virgin Islands interpreting this section. However, the code does provide direction to courts in situations where there are no cases to refer to.
1 V.I. Code Ann. §4 (1996).
Accordingly, a number of federal and Virgin Island courts have applied the law of the Restatement of Trusts to decide matters in trust law. See In the Matter of the Estate of Margarita Ziri Savian, 2000 WL 1310662 (D. Virgin Islands) (Restatement of Trusts applied to determine validity of trust); Smith v. Williams, 698 F.2d 611 (3d Cir. 1983) (affirming lower court ruling that applied Restatement of Trusts to find validity of express trust); Wallace v. Kilbride, 319 F.2d 760 (3rd Cir. 1963) (rules of Restatement of Trusts applied to determine resulting trust); In re Tutu Water Wells Contamination Litigation, 157 F.R.D. 367 (D. Virgin Islands, 1994) (applying Restatement of Trusts to hold trustee not required to identify himself in pleadings). Likewise, the Social Security Administration and representative payees making investment decisions in the Virgin Islands may be able to consider the more modern investment concepts reflected in the Third Restatement of Trusts and UPIA.
In addition, since lawsuits involving United States federal law and the law of the Virgin Islands are adjudicated by the U.S. District Court of the Virgin Islands and appealed to the Third Circuit Court of Appeals, the law of the states of New Jersey, Pennsylvania and Delaware may offer further guidance. New Jersey and Pennsylvania have enacted the UPIA.
Statutes and case law in the Virgin Islands are entirely silent on the question of whether parents may invest the property of their children differently than other payees.
Virgin Islands Trustee Rules
Trustees in the Virgin Islands must follow the terms and provisions of the governing instrument or oral instructions of the settlor regarding whether and how to invest funds. The statutes provide a series of miscellaneous rules which regulate express trusts and trustees. 15 V.I. Code Ann. §1091 (1996). Such trusts can be created orally or in writing, and the settlor has broad powers to relieve the trustee from, or to alter, or to add on to the duties, restrictions, and liabilities of the law. Id . at §1107. A trustee cannot mingle the funds of two or more trusts in a brokerage account or other investment and make withdrawals for his own or an unknown benefit. Id. at §1105. A trustee cannot buy or sell any property of the trust to himself. Id . at §1097.
The standard of conduct for trustees in the Virgin Islands is the traditional “prudent man” rule. See 15 V.I. Code Ann. §1002 (1996). The statute states that trustees may “acquire and retain ... every kind of investment, specifically including but not by way of limitation, bonds, debentures and other corporate obligations, and stocks, preferred or common...” so long as such action complies with the standard. Id. However, the express terms and provisions of the governing instrument will take precedence over the statutes. Id . at §1003.
Thus, in the Virgin Islands, a trust is created when a settlor gives oral or written instructions to a trustee permitting him to oversee property for the benefit of a third person. Likewise, a trust can be created by oral or written instructions to a representative payee permitting him or her to oversee the property of the beneficiary of social security benefits. The instructions on whether and how investments may be made of those funds can be expressly determined by the settlor, i.e. the Social Security Administration. In those instructions, the rules trustees in the Virgin Islands must follow can be expanded, restricted, or eliminated.
_1/ Provisions of this chapter, titled “Investments of Fiduciaries,” apply to “trustees, guardians and othe