HB2636 amends Virginia’s rules on the assignment of causes of action. Under current law, only claims for damage to real or personal property and contract claims are assignable; the bill keeps that core rule in place. It also clarifies that an injured party, or the party’s estate, may voluntarily assign the proceeds or expected proceeds of a court award or settlement in two limited situations: as security for new value given in exchange for the assignment, or into a self-settled trust for which the injured party is the beneficiary.
The bill further provides that a self-settled trust receiving such proceeds may also support the charitable purpose of one or more organizations recognized under section 501(c)(3) of the Internal Revenue Code. In practical terms, the measure creates a narrow exception allowing settlement or judgment proceeds to be directed into certain trust arrangements and charitable structures, while leaving the general prohibition on assigning most causes of action unchanged.
Impact
HB2636 updates Code of Virginia § 8.01-26 by preserving the existing limits on assignment of causes of action while expressly authorizing voluntary assignment of settlement or judgment proceeds in specified circumstances. The bill affects injured parties, estates, litigants, and trust/estate planning arrangements, and it may be relevant to attorneys structuring settlements, creditor-security transactions, and self-settled trusts. It does not broadly expand assignability of claims themselves, but it does create a statutory safe harbor for certain post-recovery transfers.
Sentiment
The bill appears to have been broadly supported and noncontroversial. It advanced unanimously through a House subcommittee, the House Courts of Justice Committee, the full House, the Senate Courts of Justice Committee, and the Senate, with unanimous votes at each recorded stage. The House also agreed to Senate amendments by a wide margin, suggesting general bipartisan acceptance of the measure’s limited and technical nature.
Contention
No significant opposition is reflected in the available record. The main policy issue is the scope of the exception to Virginia’s traditional limits on assigning causes of action: the bill allows voluntary assignment of proceeds, not the underlying claim, and only for new value or into a self-settled trust, including one that may support charitable purposes. Any potential concern would likely center on whether these exceptions could affect settlement practices, creditor protection, or litigation finance, but no recorded debate or dissent is provided.