Bill > HB1513

This bill modifies existing Virginia law concerning qualified self-settled spendthrift trusts, which are irrevocable trusts created during a person's lifetime where the person who created the trust (the settlor) can retain certain interests while still protecting the assets from creditors. Primarily, the bill clarifies that a trustee can reimburse the settlor for certain tax liabilities, including federal and state income taxes, from the trust's income or principal, as long as the trust instrument allows it and it complies with specific provisions of the Internal Revenue Code (IRC), which are federal tax laws. The bill also adds a condition that a trustee generally cannot make such reimbursements if they are related or subordinate to the settlor (as defined by the IRC) 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 document explicitly permits it. Additionally, the bill removes outdated and redundant language regarding the order in which a new trustee is appointed if there's a vacancy in the role of a qualified trustee, simplifying the process.