Qualification as a Trustee
Living Trust (Trust Under Agreement)
The trustee of a trust under agreement (also referred to as a Living Trust because it was created by the decedent before death and not created in the will) is not required to account to the Commissioner of Accounts and is not required to qualify before the Court as trustee. (NOTE: There have been rare instances where the trust under agreement specifically requires the trustee to account to the Commissioner of Accounts, in which case accounting is required).The trustee of a trust under agreement is appointed by the person creating the trust and assumes his obligations upon the creation of the trust or a later date as specified by the trust document. He has an obligation to account to the trust beneficiaries, not the Commissioner of Accounts.
For a trust created under the last will and testament of a decedent, qualification as trustee of the testamentary trust is required in the Clerk’s office of the Henrico Circuit Court, and in the absence of a properly executed waiver of accounting requirements, the trustee also has the duty to account to the Commissioner of Accounts. Qualification as trustee may be at the same time as qualification of the executor of the estate, or may occur at a later time when assets are ready to be distributed by the executor of the estate to the testamentary trustee.
The testamentary trustee and executor are often one and the same person, but just as often are not the same person.
Separate reporting requirements are required of trustees as opposed to executors of estates.
Special Needs Trust
Often the Court approves the creation and funding of a Special Needs Trust, usually associated with the appointment of a conservator for an incapacitated adult, although it may be created as a stand alone trust. The Special Needs Trust is usually created for the purpose of providing supplemental support (above normal support and maintanance) for the incapacitated, which is not provided for and funded through government programs, in particular Medicaid. The trust allows discretionary disbursements without risking the loss of entitlement to the government program funding. Compliance with Medicaid regulations is a necessity.
These trusts are usually funded with assets of the incapacitated which the Court authorizes to be transferred from a conservatorship to the Trust. Once all the conservatorship assets have been transferred to the trust, the Trustee will file trust accounts instead of conservatorship accounts. If there are assets still in the conservatorship as well as assets in the Special Needs Trust, a conservatorship account will be filed reflecting the Trust as a sub-account within the conservatorship. Of course, if the trust is created without a conservator being appointed, a trust account is the proper filing.
The use of the trust assets and discretion which the Special Needs Trustee has been granted are spelled out by the specific terms of the Trust and should be strictly followed.
Unless accountings are waived by the Court in the order creating the trust, the filing dates, forms, documentation and inventory and accounting obligations of special needs trust trustees appointed by the Court are the same as for trustees of a testamentary trust, so the commentary and forms on this website will likewise apply to the Special Needs Trust.
Special Needs Trusts may be created outside of the Court’s jurisdiction by a third party. Normally, these trusts have no requirement for accounting with the Commissioner of Accounts, however, the trust should be reviewed to see if there is a specific accounting obligation stated in the trust agreement.
If you are in doubt about your obligations and authority under the special needs trust agreement, you should consult with the attorney who prepared the agreement.