Friday, November 19, 2010
In Ladysmith Rescue Squad, Inc. v. Newlin, 694 S.E.2d 604 (Va. 2010), the Supreme Court of Virginia refused to sanction the termination of a CRUT by commutation of the unitrust interest. The court held that modification of the trust was not proper under its version of UTC § 412(a) which allows modification which furthers the purposes of the trust made necessary “because of circumstances not anticipated by the settlor.” The only unanticipated circumstance here is the beneficiaries’ desire to have their money now rather than wait. The court also described the purposes of the trust as including to provide the beneficiaries of the unitrust interest with an income stream made secure from their creditors by the spendthrift provisions in the instrument. Commutation would completely frustrate that purpose.