Terms Used In Virginia Code 64.2-1065

• Common law: The legal system that originated in England and is now in use in the United States. It is based on judicial decisions rather than legislative action.
• Decedent: A deceased person.
• Distribution: means a payment or transfer by a fiduciary to a beneficiary in the beneficiary's capacity as a beneficiary, made under the terms of the trust, without consideration other than the beneficiary's right to receive the payment or transfer under the terms of the trust. See Virginia Code 64.2-1033
• Estate: includes the property of the decedent as the estate is originally constituted and the property of the estate as it exists at any time during administration. See Virginia Code 64.2-1033
• Fiduciary: A trustee, executor, or administrator.
• Fiduciary: includes a trustee, trust director under the Uniform Directed Trust Act (§ Virginia Code 64.2-1033
• Gift: A voluntary transfer or conveyance of property without consideration, or for less than full and adequate consideration based on fair market value.
• Income: includes a part of receipts from a sale, exchange, or liquidation of a principal asset, to the extent provided in Articles 4 (§ 64.2-1064, after application of subdivision 2 of § 64.2-1064;

  2. The fiduciary‘s compensation calculated on principal as a fee for acceptance, distribution, or termination;

  3. A payment of an expense to prepare for or execute a sale or other disposition of property;

  4. A payment on the principal of a trust debt;

  5. A payment of an expense of an accounting, judicial or nonjudicial proceeding, or other matter that involves primarily principal, including a proceeding to construe the terms of the trust or protect property;

  6. A payment of a premium for insurance, including title insurance, not described in subdivision 4 of § 64.2-1064, of which the fiduciary is the owner and beneficiary;

  7. A payment of an estate or inheritance tax or other tax imposed because of the death of a decedent, including penalties, apportioned to the trust; and

  8. A payment:

  a. Related to environmental matters, including:

  (1) Reclamation;

  (2) Assessing environmental conditions;

  (3) Remedying and removing environmental contamination;

  (4) Monitoring remedial activities and the release of substances;

  (5) Preventing future releases of substances;

  (6) Collecting amounts from persons liable or potentially liable for the costs of activities described in subdivisions (1) through (5);

  (7) Penalties imposed under environmental laws or regulations;

  (8) Other actions to comply with environmental laws or regulations;

  (9) Statutory or common law claims by third parties; and

  (10) Defending claims based on environmental matters; and

  b. For a premium for insurance for matters described in subdivision a.

  B. If a principal asset is encumbered with an obligation that requires income from the asset to be paid directly to a creditor, the fiduciary shall transfer from principal to income an amount equal to the income paid to the creditor in reduction of the principal balance of the obligation.

  C. Notwithstanding any other provision of law and unless the terms of the trust provide to the contrary, a trustee may pay from the principal of the trust from time to time (i) the federal or state income taxes, or both, imposed upon the settlor on income of the trust that is not distributed to the settlor or (ii) such amounts that are required to reimburse the settlor for any federal or state income taxes, or both, imposed on the settlor on income of the trust that is not distributed to the settlor. The trustee shall not have the power to make payments pursuant to this subsection with respect to any trust where a charitable income, estate, or gift tax deduction has been allowed, in whole or in part, for the contributions to such trust if the exercise of such power would limit or reduce the amount of such deduction.

  2022, c. 354.