                                 CODE OF VIRGINIA

DEFINITIONS; VACANCIES; RIGHT TO WITHDRAW (§ 64.2-745.2)

A. As used in this article, unless the context requires a different meaning:
			&#8220;Independent qualified trustee&#8221; means a qualified trustee who is
not, and whose actions are not, subject to direction by:

   1. The settlor;

   2. Any natural person who is not a resident of the Commonwealth;

   3. Any entity that is not authorized by law to act as a trustee within the
   Commonwealth;

   4. The settlor&#8217;s spouse;

   5. A parent of the settlor;

   6. Any issue of the settlor;

   7. A sibling of the settlor;

   8. An employee of the settlor;

   9. A business entity in which the settlor&#8217;s holdings represent at least
   30 percent of the total voting power of all interests entitled to vote;

   10. A subordinate employee of the settlor; or

   11. A subordinate employee of a business entity in which the settlor is an
   executive.
   				&#8220;Qualified interest&#8221; means a settlor&#8217;s interest in a
   qualified self-settled spendthrift trust, to the extent that such interest
   entitles the settlor to receive distributions of income, principal, or both,
   in the sole discretion of an independent qualified trustee. A settlor may have
   a qualified interest in a qualified self-settled spendthrift trust and also
   have an interest in the same trust that is not a qualified interest, and the
   rules of &#xA7; 64.2-747 shall apply to each interest of the settlor in the
   same trust other than the settlor&#8217;s qualified interest.
   				&#8220;Qualified self-settled spendthrift trust&#8221; means a trust if:

   1. The trust is irrevocable;

   2. The trust is created during the settlor&#8217;s lifetime;

   3. There is, at all times when distributions could be made to the settlor
   pursuant to the settlor&#8217;s qualified interest, at least one beneficiary
   other than the settlor (i) to whom income may be distributed, if the
   settlor&#8217;s qualified interest relates to trust income, (ii) to whom
   principal may be distributed, if the settlor&#8217;s qualified interest
   relates to trust principal, or (iii) to whom both income and principal may be
   distributed, if the settlor&#8217;s qualified interest relates to both trust
   income and principal;

   4. The trust has at all times at least one qualified trustee, who may be, but
   need not be, an independent qualified trustee;

   5. The trust instrument expressly incorporates the laws of the Commonwealth to
   govern the validity, construction, and administration of the trust;

   6. The trust instrument includes a spendthrift provision, as defined in &#xA7;
   64.2-743, that restrains both voluntary and involuntary transfer of the
   settlor&#8217;s qualified interest; and

   7. The settlor does not have the right to disapprove distributions from the
   trust.
   				&#8220;Qualified trustee&#8221; means any person who is a natural person
   residing within the Commonwealth or a legal entity authorized by law to act as
   a trustee within the Commonwealth and who maintains or arranges for custody
   within the Commonwealth of some or all of the property that has been
   transferred to the trust by the settlor, maintains records within the
   Commonwealth for the trust on an exclusive or nonexclusive basis, prepares or
   arranges for the preparation within the Commonwealth of fiduciary income tax
   returns for the trust, or otherwise materially participates within the
   Commonwealth in the administration of the trust. A trustee is not a qualified
   trustee if such trustee&#8217;s authority to make distributions of income or
   principal or both are subject to the direction of someone who, were that
   person a trustee of the trust, would not meet the requirements to be a
   qualified trustee.

B. A vacancy in the position of qualified trustee that occurs for any reason,
whether or not there is then serving another trustee, shall be filled in the
following order of priority:

   1. By a person eligible to be a qualified trustee and who is designated
   pursuant to the terms of the trust to act as successor trustee;

   2. By a person eligible to be a qualified trustee and who is designated by
   unanimous agreement of the qualified beneficiaries; or

   3. By a person eligible to be a qualified trustee and who is appointed by the
   court pursuant to &#xA7;&#xA7; 64.2-1405 and 64.2-1406 or pursuant to &#xA7;
   64.2-712.

C. A vacancy in the position of independent qualified trustee that occurs for
any reason, whether or not there is then serving another trustee, shall be
filled in the following order of priority:

   1. By a person eligible to be an independent qualified trustee and who is
   designated pursuant to the terms of the trust to act as successor trustee;

   2. By a person eligible to be an independent qualified trustee and who is
   designated by unanimous agreement of the qualified beneficiaries; or

   3. By a person eligible to be an independent qualified trustee and who is
   appointed by the court pursuant to &#xA7;&#xA7; 64.2-1405 and 64.2-1406 or
   pursuant to &#xA7; 64.2-712.

D. A trust instrument shall not be deemed revocable on account of the inclusion
of any one or more of the following rights, powers, and interests:

   1. A power of appointment, exercisable by the settlor by will or other written
   instrument effective only upon the settlor&#8217;s death, other than a power
   to appoint to the settlor&#8217;s estate or the creditors of the
   settlor&#8217;s estate;

   2. The settlor&#8217;s qualified interest in the trust;

   3. The settlor&#8217;s right to receive income or principal pursuant to an
   ascertainable standard;

   4. The settlor&#8217;s potential or actual receipt of income or principal from
   a charitable remainder unitrust or charitable remainder annuity trust (each
   within the meaning of &#xA7; 664(d) of the Internal Revenue Code) and the
   settlor&#8217;s right, at any time, and from time to time, to release, in
   writing delivered to the qualified trustee, all or any part of the
   settlor&#8217;s retained interest in such trust;

   5. The settlor&#8217;s receipt each year of a percentage, not to exceed five
   percent, specified in the trust instrument of the initial value of the trust
   assets or their value determined from time to time pursuant to the trust
   instrument;

   6. The settlor&#8217;s right to remove a trustee and to appoint a new trustee;

   7. The settlor&#8217;s potential or actual use of real property held under a
   personal residence trust (within the meaning of &#xA7; 2702(c) of the Internal
   Revenue Code);

   8. The settlor&#8217;s potential or actual receipt or use of a qualified
   annuity interest (within the meaning of &#xA7; 2702 of the Internal Revenue
   Code);

   9. The ability of a qualified trustee, whether pursuant to discretion or
   direction, to pay, after the settlor&#8217;s death, all or any part of the
   settlor&#8217;s debts outstanding at the time of the settlor&#8217;s death,
   the expenses of administering the settlor&#8217;s estate, or any estate
   inheritance tax imposed on or with respect to the settlor&#8217;s estate; and

   10. A settlor&#8217;s potential or actual receipt of income or principal to
   pay, in whole or in part, income taxes due on trust income, or the direct
   payment of such taxes to the applicable tax authorities, pursuant to a
   provision in the trust instrument that expressly provides for the direct
   payment of such taxes or the reimbursement of the settlor for such tax
   payments.

E. A beneficiary who has the right to withdraw his entire beneficial interest in
a trust shall be treated as its settlor to the extent of such withdrawal right,
when such right to withdraw has lapsed, been released, or otherwise expired,
without regard to the limitations otherwise imposed by subsection B of &#xA7;
64.2-747.

HISTORY: 2012, c. 555, 55-545.03:3; 2012, c. 614; 2025, cc. 5, 22.