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Living trusts now automatically revised (not revoked) by divorce suits

Under HB 746, which became law July 1, transfers to a revocable living trust for the benefit of a spouse are revoked by a divorce or annulment. The trust is not revoked, just those transfers or benefits are.

The filing of a suit for divorce, annulment or separate maintenance does not revoke the transfers or benefits, but it does revoke any powers granted by the trust, such as a power of appointment (i.e., power to determine who else will get certain property), or the ability to serve as trustee or any other "fiduciary", such as trust director, advisor, guardian or conservator.

CodeĀ§ 64.2-412. D. Unless the trust instrument expressly provides otherwise, if a settlor creates a revocable trust and if, after such creation:

1. The settlor is divorced from the bond of matrimony or the settlor's marriage is annulled and the trust was revocable immediately before the divorce or annulment, then a provision of such revocable trust transferring property to or conferring any beneficial interest on the settlor's former spouse is revoked upon the divorce or the annulment of the settlor's marriage, and such property or beneficial interest shall be administered as if the former spouse failed to survive the divorce or annulment; or

2. An action is filed (i) for the divorce or annulment of the settlor's marriage to the settlor's spouse or for their legal separation or (ii) by either the settlor or the settlor's spouse for separate maintenance from the other, and the trust was revocable at the time of the filing, then a provision of such revocable trust conferring a power, including a power of appointment, on the spouse or nominating or appointing the spouse as a fiduciary, including trustee, trust director, conservator, or guardian, is revoked upon the filing, and such provision shall be interpreted as if the former spouse failed to survive the filing.

From H 746, Approved February 26, 2018

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