Today I listened to the ALI-ABA Webcast "Virtual Representation in Trust and Estate Dispute Resolution: Opportunities and Risks", You can check at the ALI-ABA website to find out when the online version will be available – i highly recommend it. This concept will be increasingly valuable in the resolution of trust and estates disputes. The ALI-ABA course description reads:
"Virtual representation," which has long-existed in the common law and is embodied in a variety of state statutory schemes, seeks to protect incapacitated, unborn, and unidentified beneficiaries who can’t protect themselves in trust and estate litigation. This doctrine has become an increasingly necessary tool to bind all parties whose interests are affected by the resolution of such disputes. As the use of "virtual representatives" to bind absent parties increases, the risks for parties involved in trust and estate disputes of not identifying an appropriate virtual representative have also increased.
Here is a segment of my outline from the PBI seminar on Developments in Fiduciary Litigation:
Virtual Representation PEF Code §§ 7721-7726
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Virtual Representation PEF Code §§ 7721-7726
History: "Virtual representation was a concept in Hanoverian Britain, based on the belief that men without the vote, such as persons in the colonies, or those in Britain who did not have the franchise, were "virtually represented" by Members of Parliament who had been elected by "similar" voters. There were some shopkeepers who voted for MPs, the theory went; therefore all shopkeepers were virtually represented. Men who owned property in North America voted for MPs—some, indeed, sat in Parliament. This, the advocates of virtual representation held, meant that American interests were virtually represented."
A. "Virtual" means " not in fact"
B. "The theory of virtual representation is that, if the interests of the representor and representee are closely aligned and are affected in the same way by the decision, the presence of the representor will be sufficient to make every argument that the represented party would make."
C. Representatives provided there is no conflict of interest [emphasis added] with respect to the matter at issue:
1. Guardian represents the ward
2. Agent under a power of attorney represents the principal
3. Living sui juris members of class represent other class members who are minors, unborn, unknown or unascertained
4. Predecessors in interest – where property will pass to a person or class upon the occurrence of a future event, but will pass to another person or class upon the occurrence of an additional future event, the class who would take on the first event represent those who would take on the second event
5. Unknown or unascertained beneficiaries – Person represents all minors or unborn individuals or persons whose identity or location is unknown or not reasonably ascertainable if the interest of the persons represented are substantially identical with respect to the particular question or dispute involved.
6. Donee of a general power of appointment – represents all potential appointees (objects) and all takers in default even if a conflict of interest exists
7. Donee of a limited power of appointment – represents all potential appointees (objects) and all takers in default who are also potential appointees.
B. Judicial proceedings
An order or decree binding the virtual representative is binding on the persons, or class of persons represented if the trustee notifies the representative in writing whom they represent and they do not decline representation and they act in good faith
C. Non-judicial proceedings
Notice, consent, approval, waiver or release by the representative is binding on the persons, or class of persons represented if the trustee notifies the representative in writing whom they represent and the do not decline representation and they act in good faith.