Code of Virginia

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Code of Virginia
Title 64.2. Wills, Trusts, and Fiduciaries
Chapter 7. Uniform Trust Code
12/3/2022

Article 8.2. Uniform Directed Trust Act.

§ 64.2-779.26. Definitions.

As used in this article, unless the context requires a different meaning:

"Breach of trust" includes a violation by a trust director or trustee of a duty imposed on that trust director or trustee by the terms of the trust, this article, or law of the Commonwealth other than this article pertaining to trusts.

"Directed trust" means a trust for which the terms of the trust grant a power of direction.

2020, c. 768.

§ 64.2-779.27. Application.

A. Except as otherwise provided in subsection B and § 64.2-779.28, this article applies to a trust that has its principal place of administration in the Commonwealth and that:

1. Is created on or after July 1, 2020;

2. Is amended by a settlor on or after July 1, 2020;

3. Is amended or modified on or after July 1, 2020, by a nonjudicial settlement agreement under § 64.2-709, by a second-trust instrument under the Uniform Trust Decanting Act (§ 64.2-779.1 et seq.), or by the court; or

4. In the case of any trust not described in subdivision A 1, A 2, or A 3, was made subject to subsection E of § 64.2-770, as it existed prior to the effective date of this article, by specific reference in the trust instrument.

B. In the case of a trust described in subdivision A 2 or A 3, this article applies only to a decision or action on or after the date of the first such amendment or modification.

C. Any trust, decision, or action to which this article does not apply shall be governed by the following rules:

1. If the terms of a trust confer upon a person other than the settlor of a revocable trust power to direct certain actions of the trustee, the trustee shall act in accordance with an exercise of the power unless the attempted exercise is manifestly contrary to the terms of the trust or the trustee knows the attempted exercise would constitute a serious breach of a fiduciary duty that the person holding the power owes to the beneficiaries of the trust.

2. The terms of a trust may confer upon a trustee or other person a power to direct the modification or termination of the trust.

3. A person, other than a beneficiary, who holds a power to direct is presumptively a fiduciary who, as such, is required to act in good faith with regard to the purposes of the trust and the interests of the beneficiaries. The holder of a power to direct is liable for any loss that results from breach of a fiduciary duty.

2020, c. 768.

§ 64.2-779.28. Exclusions.

A. This article does not apply to a:

1. Power of appointment;

2. Power to appoint or remove a trustee or trust director;

3. Power of a settlor over a trust to the extent the settlor has a power to revoke the trust;

4. Power of a beneficiary over a trust to the extent the exercise or nonexercise of the power affects the beneficial interest of:

a. The beneficiary; or

b. Another beneficiary represented by the beneficiary under Article 3 (§ 64.2-714 et seq.) with respect to the exercise or nonexercise of the power;

5. Power over a trust if:

a. The terms of the trust provide that the power is held in a nonfiduciary capacity; and

b. The power must be held in a nonfiduciary capacity to achieve the settlor's tax objectives under the United States Internal Revenue Code; or

6. Power over a trust if the terms of the trust provide that the Uniform Directed Trust Act does not apply to the trust.

B. Unless the terms of a trust provide otherwise, a power granted to a person to designate a recipient of an ownership interest in or power of appointment over trust property which is exercisable while the person is not serving as a trustee is a power of appointment and not a power of direction.

2020, c. 768.

§ 64.2-779.29. Powers of trust director.

A. Subject to § 64.2-779.30, the terms of a trust may grant a power of direction to a trust director.

B. Unless the terms of a trust provide otherwise:

1. A trust director may exercise any further power appropriate to the exercise or nonexercise of a power of direction granted to the trust director under subsection A; and

2. Trust directors with joint powers must act by majority decision.

2020, c. 768.

§ 64.2-779.30. Limitations on trust director.

A trust director is subject to the same rules as a trustee in a like position and under similar circumstances in the exercise or nonexercise of a power of direction or further power under subdivision B 1 of § 64.2-779.29 regarding:

1. A payback provision in the terms of a trust necessary to comply with the reimbursement requirements of Medicaid law in § 1917 of the Social Security Act, 42 U.S.C. § 1396p(d)(4)(A), as amended; and

2. A charitable interest in the trust, including notice regarding the interest to the Attorney General.

2020, c. 768.

§ 64.2-779.31. Duty and liability of trust director.

A. Subject to subsection B, with respect to a power of direction or further power under subdivision B 1 of § 64.2-779.29:

1. A trust director has the same fiduciary duty and liability in the exercise or nonexercise of the power:

a. If the power is held individually, as a sole trustee in a like position and under similar circumstances; or

b. If the power is held jointly with a trustee or another trust director, as a cotrustee in a like position and under similar circumstances; and

2. The terms of the trust may vary the trust director's duty or liability to the same extent the terms of the trust could vary the duty or liability of a trustee in a like position and under similar circumstances.

B. Unless the terms of a trust provide otherwise, if a trust director is licensed, certified, or otherwise authorized or permitted by law other than this article to provide health care in the ordinary course of the trust director's business or practice of a profession, to the extent the trust director acts in that capacity, the trust director has no duty or liability under this article.

C. The terms of a trust may impose a duty or liability on a trust director in addition to the duties and liabilities imposed under this section.

2020, c. 768.

§ 64.2-779.32. Duty and liability of directed trustee.

A. Subject to subsection B, a directed trustee shall take reasonable action to comply with a trust director's exercise or nonexercise of a power of direction or further power under subdivision B 1 of § 64.2-779.29, and the trustee is not liable for the action.

B. A directed trustee must not comply with a trust director's exercise or nonexercise of a power of direction or further power under subdivision B 1 of § 64.2-779.29 to the extent that by complying the trustee would engage in willful misconduct.

C. An exercise of a power of direction under which a trust director may release a trustee or another trust director from liability for breach of trust is not effective if:

1. The breach involved the trustee's or other trust director's willful misconduct;

2. The release was induced by improper conduct of the trustee or other trust director in procuring that release; or

3. At the time of the release, the trust director did not know the material facts relating to the breach.

D. A directed trustee that has reasonable doubt about its duty under this section may petition the court for instructions.

E. The terms of a trust may impose a duty or liability on a directed trustee in addition to the duties and liabilities under this section.

2020, c. 768.

§ 64.2-779.33. Duty to provide information to trust director or trustee.

A. Subject to § 64.2-779.34, a trustee shall provide information to a trust director to the extent the information is reasonably related both to:

1. The powers or duties of the trustee; and

2. The powers or duties of the trust director.

B. Subject to § 64.2-779.34, a trust director shall provide information to a trustee or another trust director to the extent the information is reasonably related both to:

1. The powers or duties of the trust director; and

2. The powers or duties of the trustee or other trust director.

C. A trustee that acts in reliance on information provided by a trust director is not liable for a breach of trust to the extent the breach resulted from the reliance, unless by so acting the trustee engages in willful misconduct.

D. A trust director that acts in reliance on information provided by a trustee or another trust director is not liable for a breach of trust to the extent the breach resulted from the reliance, unless by so acting the trust director engages in willful misconduct.

2020, c. 768.

§ 64.2-779.34. No duty to monitor, inform, or advise.

A. Unless the terms of a trust provide otherwise:

1. A trustee does not have a duty to:

a. Monitor a trust director; or

b. Inform or give advice to a settlor, beneficiary, trustee, or trust director concerning an instance in which the trustee might have acted differently than the trust director; and

2. By taking an action described in subdivision 1, a trustee does not assume the duty excluded by subdivision 1.

B. Unless the terms of a trust provide otherwise:

1. A trust director does not have a duty to:

a. Monitor a trustee or another trust director; or

b. Inform or give advice to a settlor, beneficiary, trustee, or another trust director concerning an instance in which the trust director might have acted differently than a trustee or another trust director; and

2. By taking an action described in subdivision 1, a trust director does not assume the duty excluded by subdivision 1.

2020, c. 768.

§ 64.2-779.35. Limitation of action against trust director.

A. An action against a trust director for breach of trust must be commenced within the same limitation period as under § 64.2-796 for an action for breach of trust against a trustee in a like position and under similar circumstances.

B. A report or accounting has the same effect on the limitation period for an action against a trust director for breach of trust that the report or accounting would have under § 64.2-796 in an action for breach of trust against a trustee in a like position and under similar circumstances.

2020, c. 768.

§ 64.2-779.36. Defenses in action against trust director.

In an action against a trust director for breach of trust, the trust director may assert the same defenses a trustee in a like position and under similar circumstances could assert in an action for breach of trust against the trustee.

2020, c. 768.

§ 64.2-779.37. Jurisdiction over trust director.

A. By accepting appointment as a trust director of a trust subject to this article, the trust director submits to personal jurisdiction of the courts of the Commonwealth regarding any matter related to a power or duty of the trust director.

B. This section does not preclude other methods of obtaining jurisdiction over a trust director.

2020, c. 768.

§ 64.2-779.38. Office of trust director.

Unless the terms of a trust provide otherwise, the rules applicable to a trustee apply to a trust director regarding the following matters:

1. Acceptance under § 64.2-754;

2. Giving of bond to secure performance under § 64.2-755;

3. Reasonable compensation under § 64.2-761;

4. Resignation under § 64.2-758;

5. Removal under § 64.2-759; and

6. Vacancy and appointment of successor under § 64.2-757.

2020, c. 768.