Pub. 2 2011 Issue 2

summer 2011 11 T he UTC, which can be found in Chapter Forty-Four D (44D) of the West Virginia Code of 1931, as amended, modifies some of the long-standing powers of a trustee and introduces the State to some strange new trustee ideas, not the least of which includes having a trustee manage trust funds on behalf of a dog or cat. Until now, the West Virginia fiduciary statutes have generally been addressed to all fiduciaries: executors, trustees, conservators, committees and the like. However, the introduction of the UTC now splits those fiduciary statutes into trustee sections and non-trustee sec- The West Virginia Legislature Enacts the Uniform Trust Code By Robert Kiss and Emily Lambright, Bowles Rice McDavid Graff & Love LLP Banking institutions across West Virginia will be facing a brave new world on July 1, 2011 when it comes to acting as a trust fiduciary. The traditional role of trustee is about to be shaken up due to the enactment of the Uniform Trust Code (the “UTC”) by the West Virginia Legislature in its year 2011 Regular Session. the concept of nonjudicial settlement agreements, which involves the relevant parties coming together to agree on a matter related to the trust. Nonjudicial settlement agreements can be used on day-to-day issues such as how to inter- pret a trust term or whether to grant the trustee the discretion from performing a certain act. They can also be used on weightier matters such as whether to terminate a trust. Nonjudicial settlement agreements can be, but are not required to be, submitted to the court and can be binding under some circumstances. Modifying and terminating an irrevoca- ble trust is another area where the UTC provides the trustee and trust beneficia- ries more flexibility. For example, when the grantor (or his Attorney-in-Fact) and all the beneficiaries of an irrevocable trust consent to modify or terminate the trust, a court must approve it, even if it would be inconsistent with a material purpose of the trust. Even without con- sent, the court can modify or terminate the trust due to unanticipated circum- stances or an inability to administer the trust effectively. Note that a trustee, with notice to the appropriate parties, can terminate an uneconomical trust (de- fined here as having a value of less than $100,000). Another example of flex- ibility provided by the UTC is that the court can retroactively modify the terms of a trust to achieve the grantor’s tax objectives. Given the state of flux that our federal estate tax system seems to be in, the ability to modify the trust for tax purposes is worth its weight in gold. A notable change from the previous law is that a trust is considered revocable under the UTC unless the trust ex- pressly states that it is irrevocable. Note, however, that provision is not retroac- tions. For practical purposes, that means that bank trust officers will need to know the new law under the UTC but stay familiar with the traditional fidu- ciary statutes as well because an estate is subject to the traditional rules, but a trust is subject to the UTC. Although that might seem like a burden, the flexibility that the UTC can offer an in- stitutional trustee can make it a benefit. Unlike the traditional rules associated with trusteeship, the UTC provides the trustee with more options than a court order to address some of the common problems plaguing trust management. For example, the UTC introduces