07/18/2019 by Summer Associate Gaela Normile*, with the assistance of Attorney Anita O. Poston
Crisis potentially averted, Virginia law now allows a court to reform the terms of a deceased person’s trust or will. Although the issue of mistaken estate planning was first addressed by the Virginia General Assembly in 2005, the legislation only specified the reformation of mistaken trusts. However, similar legislation was enacted this past year that provides a legal remedy to reform a will to correct a mistake.
Regarding trusts, the Virginia General Assembly enacted Va. Code §§ 64.2-733 and 64.2-734 in 2005. Under Va. Code § 64.2-733, the court may “reform the terms of a trust, even if unambiguous, to conform the terms to the settlor’s intention” if it is proved by clear and convincing evidence. Similarly, Va. Code § 64.2-734 provides that the court may modify the terms of a trust to achieve the settlor’s tax objectives as long as the modified terms are not contrary to the settlor’s probable intention. Therefore, beneficiaries of a trust may petition the court to reform the trust to accomplish the settlor’s goals, even after the settlor’s death.
In 2018, the Virginia General Assembly adopted legislation giving courts the ability to reform wills as well. Under Va. Code § 64.2-404.1, the court may reform the terms of a decedent’s will or any codicil, even if unambiguous, to conform to the decedent’s intended terms “if it is proved by clear and convincing evidence that both the decedent’s intent and the terms of the will were affected by a mistake of fact or law, whether in expression or inducement.” Moreover, the terms of a decedent’s will may be modified to “achieve the decedent’s tax objectives in a manner that is not contrary to the decedent’s probable intention.” However, it is important to note that an action to reform a will under this statute must be filed within one year from the decedent’s date of death.
Ultimately, Va. Code §§ 64.2-404.1, 64.2-733, and 64.2-734 may create an opportunity to reform a will or trust to correct a mistake and potentially prevent assets from being distributed contrary to the intent of the settlor or decedent. Moreover, these statutes provide an opportunity to save a trust or estate from unintentional adverse tax consequences. Families seeking to reform a will or trust to correct a mistake or achieve the decedent’s tax objectives should consult with an attorney in a timely manner to determine whether these statutes could provide a mechanism to accomplish such goals.
*Gaela Normile is a summer associate with Vandeventer Black. She is a third-year law student at Penn State Law.