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Chapter 44 D     Entire Code
‹ Chapter 44C  |  Chapter 45 › Printer Friendly Versions
Chapter 44D  |  Article 44D - 5
WVC 44 D-
CHAPTER 44D. UNIFORM TRUST CODE.
WVC 44 D- 5 - ARTICLE 5. CREDITOR'S CLAIMS; SPENDTHRIFT AND DISCRETIONARY TRUSTS. WVC 44 D- 5 - 501 §44D-5-501. Rights of beneficiary's creditor or assignee.
     To the extent a beneficiary's interest is not subject to a spendthrift provision, the court may authorize a creditor or assignee of the beneficiary to reach the beneficiary's interest in a trust by execution or other process against the present or future distributions to or for the benefit of the beneficiary. The court may limit the award to relief as appropriate under the circumstances. WVC 44 D- 5 - 502 §44D-5-502. Spendthrift provision.
     (a) A spendthrift provision contained in a trust instrument is valid if it contains language substantially to the effect that it restrains both voluntary and involuntary transfers of a beneficiary's interest.

     (b) A term of a trust instrument providing that the interest of a beneficiary is held subject to a "spendthrift trust," or words

of similar import, is sufficient to restrain both voluntary and involuntary transfer of the beneficiary's interest.

     (c) A beneficiary may not transfer an interest in a trust in violation of a valid spendthrift provision, and, except as otherwise provided in this article, a creditor or assignee of the beneficiary may not reach the interest or a distribution by the trustee before its receipt by the beneficiary. WVC 44 D- 5 - 503 §44D-5-503. Exceptions to spendthrift provision.
     (a) In this section, "child" includes any person for whom an order or judgment for child support has been entered in this or another state.

     (b) A spendthrift provision is unenforceable against:

     (1) A beneficiary's child, who has a judgment or court order against the beneficiary for child support;

     (2) A judgment creditor who has provided services for the protection of a beneficiary's interest in the trust; and

     (3) A claim of this state or the United States to the extent a statute of this state or federal law so provides.

     (c) A claimant against whom a spendthrift provision cannot be enforced may obtain from a court an order attaching present or future distributions to or for the benefit of the beneficiary. The court may limit the award to such relief as is appropriate under the circumstances. WVC 44 D- 5 - 504 §44D-5-504. Discretionary trusts; effect of standard.
     (a) In this section, "child" includes any person for whom an order or judgment for child support has been entered in this or another state.

     (b) Except as otherwise provided in subsection (c) of this section, whether or not a trust instrument contains a spendthrift provision, a creditor of a beneficiary may not compel a distribution that is subject to the trustee's discretion, even if:

     (1) The discretion is expressed in the form of a standard of distribution; or

     (2) The trustee has abused the discretion.

     (c) To the extent a trustee has not complied with a standard of distribution or has abused a discretion:

     (1) A distribution may be ordered by the court to satisfy a judgment or court order against the beneficiary for child support of the beneficiary's child; and

     (2) The court shall direct the trustee to pay to the child, spouse or former spouse such amount as is equitable under the circumstances but not more than the amount the trustee would have been required to distribute to or for the benefit of the beneficiary had the trustee complied with the standard or not abused the discretion.

     (d) This section does not limit the right of a beneficiary to maintain a judicial proceeding against a trustee for an abuse of discretion or failure to comply with a standard for distribution.

     (e) A creditor may not reach the interest of a beneficiary who is also a trustee or cotrustee or otherwise compel a distribution, if the trustee's discretion to make distributions for the trustee's own benefit is limited by an ascertainable standard. WVC 44 D- 5 - 505 §44D-5-505. Creditor's claim against grantor.
     (a) Whether or not the terms of a trust instrument contain a spendthrift provision, the following rules apply:

     (1) During the lifetime of the grantor, the property of a revocable trust is subject to claims of the grantor's creditors.

     (2) During the lifetime of the grantor, with respect to an irrevocable trust, a creditor or assignee of the grantor may reach the maximum amount that can be distributed to or for the grantor's benefit. If a trust has more than one grantor, the amount the creditor or assignee of a particular grantor may reach may not exceed the grantor's interest in the portion of the trust attributable to that grantor's contribution.

     (3) After the death of a grantor, and subject to the grantor's right to direct the source from which liabilities will be paid, the property of a trust that was revocable at the grantor's death is subject to claims of, to the extent the grantor's probate estate is inadequate to satisfy them:

     (A) The costs and expenses of administration of the grantor's estate;

     (B) Reasonable funeral expenses;

     (C) Debts and taxes with preference under federal law;

     (D) Unpaid child support which is due and owing at the time of the decedent's death;

     (E) Debts and taxes with preference under other laws of the State of West Virginia;

     (F) Reasonable and necessary medical and hospital expenses of the last illness of the decedent, including compensation for persons attending the decedent during his or her last illness; and

     (G) All other claims.

     (b) For purposes of this section:

     (1) During the period the power may be exercised, the holder of a power of withdrawal is treated in the same manner as the grantor of a revocable trust to the extent of the property subject to the power; and

     (2) Upon the lapse, release or waiver of the power, the holder is treated as the grantor of the trust only to the extent the value of the property affected by the lapse, release or waiver exceeds the greater of the amount specified in Section 2041(b)(2), Section 2503(b) or Section 2514(e) of the Internal Revenue Code. WVC 44 D- 5 - 506 §44D-5-506. Overdue distribution.
     (a) In this section, "mandatory distribution" means a distribution of income or principal which the trustee is required to make to a beneficiary under the terms of the trust instrument, including a distribution upon termination of the trust. The term does not include a distribution subject to the exercise of the trustee's discretion even if:

     (1) The discretion is expressed in the form of a standard of distribution; or

     (2) The terms of the trust instrument authorizing a distribution couple language of discretion with language of direction.

     (b) Whether or not a trust contains a spendthrift provision, a creditor or assignee of a beneficiary may reach a mandatory distribution of income or principal, including a distribution upon termination of the trust, if the trustee has not made the distribution to the beneficiary within a reasonable time after the designated distribution date. WVC 44 D- 5 - 507 §44D-5-507. Personal obligations of trustee.
     Trust property is not subject to personal obligations of the trustee, even if the trustee becomes insolvent or bankrupt.

Note: WV Code updated with legislation passed through the 2014 1st Special Session
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