Bill > HB1513

This bill modifies existing Virginia law concerning qualified self-settled spendthrift trusts, which are irrevocable trusts established during a person's lifetime where the person who created the trust (the "settlor") can retain certain rights or interests while also being protected from creditors. The bill clarifies that a trustee can reimburse the settlor for certain tax liabilities, specifically federal or state income taxes attributable to the settlor being treated as the owner of trust assets, as defined by the Internal Revenue Code, unless the trust document states otherwise. It also adds a condition that a trustee cannot make such a reimbursement if they are considered "related or subordinate" to the settlor under tax law, or if the reimbursement would negatively impact any tax benefits associated with contributions to the trust, such as gift tax exclusions or marital or charitable deductions, unless the trust explicitly allows for it. Additionally, the bill removes outdated language regarding the order in which a new trustee is appointed if a vacancy occurs in a qualified trustee position.

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https://lis.virginia.gov/bill-details/20261/HB1513