The following issues are often addressed by the Commissioner’s office:

1. Is a “trust under agreement” controlled by the Henrico Circuit Court Clerk’s office and/or the Commissioner of Accounts?
2. How do I qualify as trustee of a trust under a will?
3. Are my duties as trustee different from those as executor?
4. Do I have to file accountings with the Commissioner of Accounts as trustee?
5. Do I have to maintain a separate trust account for the testamentary trust?
6. May the trust make loans?
7. When does the trust terminate?
8. Are there any statutory provisions for the termination of a trust?

Questions and Answers

1. Is a “trust under agreement” controlled by the Henrico Circuit Court Clerk’s office and/or  the Commissioner of Accounts?

   A trust under agreement is a private agreement by an individual creating a trust during the creator’s lifetime and is not subject to supervision by the Henrico Circuit Court or by the Commissioner of Account’s office.  There is no requirement for qualification of the trustee.  The trustee is appointed by the trust agreement.  The authority of the trustee to act arises upon the execution of the trust agreement by the creator of the trustee, and the trustee’s powers are as set forth in the trust document.  Succession of trustees is controlled by the trust document.  If a trust has exhausted all named trustees (by death, incapacity or resignation), petition to the Henrico County Circuit Court will allow the Circuit Court to provide a successor trustee.

2. How do I qualify as trustee of a trust under a will?
   
   The qualification of a trustee under a decedent’s last will and testament may be accomplished at the time of qualification of the executor of the estate or at a later time by appearance at the Clerk’s office of Henrico County Circuit Court.  Many times the trustee does not qualify until the time for funding of the trust by distribution from the estate by the executor.  Prior to receiving a distribution from the estate, the trustee named in the will must qualify, if he or she has not previously qualified, as trustee, and post bond (with or without surety as dictated by the last will and testament).

3. Are my duties as trustee different from those as executor?
   
   Yes.  While each fiduciary has a duty of trust and holds a special fiduciary relationship to the decedent, the duties of an executor are different from those of a trustee and the roles must be kept separate.  The executor is charged with the administration of the estate and distribution to the trustee as provided in the last will and testament. The executor then files a final estate account. The trustee then performs in a fiduciary capacity to carry out the intent of the decedent specifically set forth in the trust established under the decedent’s last will and testament.  The powers of the trustee are specifically set forth in the will or incorporated by reference to the appropriate Virginia statutes on fiduciaries.

4. Do I have to file accountings for the Commissioner of Accounts as trustee?
   
   If specific language is present in the will waiving accountings or the beneficiaries consent under a testamentary trust in a will probated on or after July 1, 2010, and the trustee complies with the provisions of Section 64.2-1307, Code of Virginia (1950), as amended, accountings are waived and the Commissioner’s office is not involved.  The beneficiaries of the trust may, at some subsequent time, make written demand for the filing of accountings by the trustee.

   The Commissioner’s office does not send out a letter reminding the trustee of the obligations under Section 64.2-1307 where a will or the statute provides for the waiver of accountings.  The trustee, in order to satisfactorily comply with that statutory provision, shall within ninety (90) days of qualification as trustee, file with Commissioner of Accounts:

   1. A $25.00 statutory filing fee;
   2. A copy of the trustee’s notice of intent not to file accounts given to each adult beneficiary;
   3. A written statement of compliance with Section 64.2-1307(a) signed by the trustee; or
   4. Written consents from those entitled as current income and/or principal beneficiaries.

      The Commissioner of Accounts office does not grant extensions for the filing as required within the 90 days of qualification.  If the trustee has not complied within 90 days, the only way the trustee is relieved of future accounts is to obtain the written consents of all beneficiaries to whom income or principal could be currently distributed and the trustee filing such written consents with the Commissioner of Accounts with the $25.00 filing fee as provided by statute.  Please note the written consents shall be notarized to be effective.

      Additionally, please note that if the 90 day period has expired and the trustee thereafter submits to the Commissioner of Accounts written consents signed by the beneficiaries waiving future accounts, any inventory or account which is due by the trustee at the time  the written consents are filed shall be filed nonetheless.  The waiver is not retroactive and applies only to future accounts.  Therefore, if the period for the filing of an inventory (4 months from the date of funding of trust) has passed at the time the trustee submits written consent by the beneficiaries waiving future accounts, the trustee nonetheless shall file the initial inventory with the Commissioner’s office and pay the required filing fees.  The same would be true if an accounting is then due at the time the written consents are submitted.

5. Do I have to maintain a separate trust account for the testamentary trust?
   
   Yes. You are required to segregate all assets of the trust from any personal assets or the estate account.  The trust is required to obtain a separate Federal Employer Identification Number for tax filings.  You shall not use the estate account or any personal account for the deposit of assets owned by the trust.

6. May the trust make loans?
   
   Generally the trust may make loans if it is secured by proper collateral and it is prudent and a proper rate of interest is obtained.  However, unsecured loans made by the trust would generally be imprudent.  Additionally, loans to the trustee or any relative of the trustee would be self dealing and would be totally improper.

7. When does the trust terminate?
   
   The trust terminates when the purpose for the trust has been accomplished.  Generally, this is a specified date or age of a beneficiary or a specified event.  At the time the trust purpose has been satisfied, the trustee is obligated to make distribution to those entitled to distribution under the trust and terminate the trust by the filing of a final account with the Commissioner of Accounts.

   The trust itself may give discretion to the trustee to terminate a trust which has become unproductive or uneconomical and where the cost of maintaining the trust outweighs the benefits of the trust to the beneficiary.  This language must be contained within the trust document itself.  Without that language, except as described hereafter, the trustee does not have the authority or discretion to terminate a trust without a Court Order. NOTE: See the answer to question number 8.
   

8. Are there any statutory provisions for the termination of a trust?
   
   The Henrico County Commissioner of Accounts may allow for the termination of an uneconomic testamentary trust pursuant to the provisions of Section 64.2-732 of the Code of Virginia (1950), as amended (Uniform Trust Code).  This Code provision allows for the termination of an uneconomic trust of $100,000.00 or less, unless the termination is contrary to the express intent of the testator in the establishment of the trust.   You should consult with the Commissioner of Accounts if, as trustee, it is your desire to terminate a testamentary trust valued at less than $100,000.00 on these grounds, as compliance with the statute and the prior approval of the Commissioner or Court are required.