§ 8.01-26.Assignment of causes of action.

Not every legal claim can be sold or transferred like property. Section 8.01-26 limits which causes of action are assignable in Virginia to two categories: causes of action for damage to real or personal property, whether the damage is direct or indirect, and causes of action ex contractu — those arising from a contract. Claims outside those categories, such as most personal injury claims, are not made assignable by this section.

The section then draws a distinction between assigning the claim itself and assigning what the claim might yield. It does not prohibit an injured party or that party’s estate from voluntarily assigning the proceeds, or anticipated proceeds, of a court award or settlement, in two situations: as security for new value given in consideration of the assignment, or into a self-settled trust for which the injured party is the beneficiary. So even where the underlying cause of action itself could not be assigned, the money it ultimately produces can still be pledged or directed in these ways.

The section adds that a self-settled trust of this kind may also support the charitable purpose of one or more organizations organized and operated under § 501(c)(3) of the Internal Revenue Code, allowing an injured party’s settlement planning to combine personal benefit with a charitable component.