Source: https://tingenwilliams.com/2016/required-make-virginia-trust/5814
Timestamp: 2019-01-17 21:03:47
Document Index: 147273625

Matched Legal Cases: ['§ 64', '§ 64', '§ 64', '§ 64', '§ 64', '§ 64', '§ 64', '§ 64', '§ 64']

What is Required to Make a Virginia Trust? | Tingen & Williams
Trusts are an important estate-planning tool. Read below to learn what is required to successfully create a Virginia trust.
by Trent Powell, Esq. | Sep 12, 2016 | Virginia Trust and Estate Law
What is a Virginia Trust?
Including a Virginia trust in your estate plan can provide your loved ones with many financial benefits. Trusts are a relationship where one or more people manage property on the behalf of others. [1]
The person managing the trust is called the trustee and the person receiving the income from the trust is called the beneficiary. [2]
Trusts are generally more complex than other traditional estate planning tools. In addition to cash, a trust can consist of income producing property or assets. Income producing property includes land, stocks and bonds, and mutual funds.
The person managing the trust, the trustee, has the duty to manage the property in a way that is beneficial to the beneficiary. The trustee is a fiduciary, which means he or she must look out for the best interests of the beneficiary.
One of the reasons you might consider including a trust in your estate plan is because trusts pass outside the probate process. If you have income producing property, then it may be beneficial to create a trust for your loved one.
Ultimately, making a Virginia trust could be extremely helpful to the long term financial health of your loved ones.
What are the Requirements to make a Trust in Virginia?
Like many other states, Virginia has enacted the Uniform Trust Code. The Uniform Trust Code provides a comprehensive model for creating trust laws. The purpose of the Uniform Trust Code is to promote uniformity in the field of trusts in the United States.
The majority of jurisdictions have made the decision to adopt the Uniform Trust Code. Pursuant to the Uniform Trust Code adopted by the Virginia State legislature, there is a list of requirements to create a trust in Virginia. [3]
To create a valid trust, the settlor must have the capacity and intent to create a trust. [4] Additionally, the settlor must name a definite beneficiary and a trustee. [5] Finally, the sole beneficiary and sole trustee cannot be the same person. [6]
By following these requirements, you can look out for the long term financial health of your loved ones. These requirements are discussed in detail below.
1. The Settlor must have the Capacity to Create a Trust
The settlor is the person who creates the trust for the beneficiary. Technically speaking, the settlor creates a trust by splitting the title of property into different interests. These are both legal and equitable interests. Finally, the settlor imposes fiduciary duties upon the newly created interests.
However, in order to make a Virginia trust the settlor must have the capacity to create a trust. [7] This means that the settlor must have the proper mental capacity to create the trust by not suffering from any type of diminished mental health.
The exception is when the trust is created by the settlor’s agent under a power of attorney. [8] However, the power of attorney must expressly authorize the agent to create a trust on the settlor’s behalf.
2. The Settlor or his Agent Indicates an Intention to Create the Trust
The next requirement is that the settlor must intend to create a trust. [9] Further, the settlor must intend to split the legal and equitable title of the trust. Additionally, the settlor must intend to impose fiduciary duties on the holder of the legal trust. [10]
Finally, the settlor must intend for the beneficiary to enjoy the financial benefits of the trust. To put it simply, the settlor’s intent must be evident in all aspects of setting up the trust.
How does Virginia measure Intent?
The best way to measure the settlor’s intent is to put everything into writing. This will prevent confusion and allow the settlor to satisfy the statute of frauds requirement.
3. The Trust must have a Definite Beneficiary
In order for the trust to be valid, the trust must have a definite beneficiary. [11] This means that the financial benefits of the trust must pass to someone. The whole purpose of creating a trust is so that someone can enjoy the benefits of your income producing assets.
However, a trust does not have to be specifically created for a person. A trust can also be made for charities, animals, or just about any other legitimate purpose. [12] Above all, the key is that the income and other financial benefits of the trust must go somewhere.
The Trust can be made for a Charity
A trust created for a charity is called a charitable trust. [13] In order to be valid a charitable the trust must be created for:
The relief of poverty or the advancement of education or religion;
The promotion of health or welfare;
The promotion of governmental or municipal purposes; or
Any other purpose that is beneficial to the community. [14]
Furthermore, it is important to name a specific charity to inherit the benefits of your trust. Unfortunately, if the terms of a charitable trust do not indicate a particular charity or a specific beneficiary, then the court gets to select a charitable purpose or beneficiary for the trust. [15]
However, the selection by the court must be consistent with the settlor’s intentions. [16]
A Trust can be made for an Animal
A trust can even be made for an animal. Basically, the animal can receive the financial benefits of a Virginia trust. [17] While it may sound extreme, a trust can be set up to look after the care of your family pet. The animal’s care would be paid for by the financial benefits of the trust. Furthermore, upon the animal’s death the trust would terminate. [18]
A Trust can also be made for other Non-Charitable Purposes
If you do not choose to name a person, animal, or charity as the beneficiary of your trust you are not out of options. In Virginia, you can create a trust for just about any other legitimate purpose. [19] For example, you can name a business as the beneficiary of your trust or some other type of non-charitable organization.
However, if do choose not to name an ascertainable beneficiary, then this type of trust’s life is limited to only 21 years. [20]
4. You have to Name a Trustee to Manage the Trust
Once you have named a beneficiary, you must also name a trustee to manage the trust. [21] The trustee is charged with ensuring that the beneficiary actually receives financial benefits from the trust.
The trustee takes an oath that upon acceptance of a trusteeship, the trustee shall administer the trust and invest trust assets in good faith. [22]
The trustee must perform his or her duties by looking out for the best interests of the beneficiary. [23]
It is important to remember that when naming a trustee to manage your newly created trust you want to choose someone who is both experienced and trustworthy.
5. The same Person is not the Sole Trustee and Sole Beneficiary
Finally, the sole trustee and sole beneficiary of a trust cannot be the same person. [24]
Trusts provide many financial benefits, but unfortunately the Uniform Trust Code does not allow the person who manages the assets to receive the benefits of the same trust they manage.
What are the Benefits of Creating a Virginia Trust?
There are many benefits that come from creating a Virginia trust.
As we mentioned before, using a trust may allow your assets to pass to your beneficiaries outside of probate court. While the validity of a will can be challenged in a probate court, creating a living trust allows your loved ones to avoid a lengthy and expensive probate proceeding.
There are also several tax benefits that trusts provide. For example, trusts may allow you to avoid some gift and other estate taxes. Additionally, you can better shield your assets in the event of a lawsuit.
Trusts also provide you more flexibility to choose how your assets are distributed at your death by placing conditions on how your assets are divided up. Furthermore, a trust provides you more privacy than other estate planning tools.
While wills are a part of the public record, a trust is not. This means that no one will see what assets are distributed to your loved ones upon your death.
Anyone can make a trust in Virginia as long as they follow the requirements as listed in the statute. The settlor must have the proper mental capacity and must intend to create the trust.
Furthermore, the settlor must name a beneficiary for the trust and a trustee to manage it. Finally, the sole beneficiary and sole trustee cannot be the same person.
As long as you follow these requirements, you are eligible to create your own Virginia trust. Hiring an experienced and competent estate planning attorney to help you create your estate plan is highly recommended.
[1] Va. Code § 64.2-700
[2] Va. Code § 64.2-701
[3] Va. Code § 64.2-720
[13] Va. Code § 64.2-723
[17] Va. Code § 64.2-726
[19] Va. Code § 64.2-727
[21] Va. Code § 64.2-720
[22] Va. Code § 64.2-763
[24] Va. Code § 64.2-720
Avoiding Family Disputes in Your Virginia Estate Plan