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ROLE AND RESPONSIBILITIES OF A TRUSTEE IN VIRGINIA

ROLE AND RESPONSIBILITIES OF A TRUSTEE IN VIRGINIA

Our last blog entry focused on the role of an Executor, and the duties and processes under Virginia law.  This blog post focuses on the role of a Trustee and the duties and processes under Virginia law.

A Trustee is described as: “The person appointed, or required by law, to execute a trust; one in whom an estate, interest, or power is vested, under an express or implied agreement to administer or exercise it for the benefit or to the use of another.”  Blacks Law Dictionary.  What does this mean?  In short, the Trustee is a person appointed, under law, to act on behalf of the Trust in a fiduciary capacity.  A fiduciary: “The term is derived from the Roman law, and means (as a noun) a person holding the character of a trustee, or a character analogous to that of a trustee, in respect to the trust and confidence involved in it and the scrupulous good faith and candor which it requires. Thus, a person is a fiduciary who is invested with rights and powers to be exercised for the benefit of another person.”  Id.  (Emphasis mine).  The Trustee’s duties are to the Trust, and to the beneficiaries of the Trust.

The Trust document, be it a Revocable or Irrevocable Trust, grants many of the rights and powers to be exercised that the Trustee, with “scrupulous good faith and candor”, must complete.  Other sources of rights and powers come from Virginia statutes, court cases, and rarely local regulations.  The difficulties tend to rise in the language of the Trust document itself.  The powers can be broadly granted, or very narrowly tailored to the specific facts that the creator of the Trust envisions.  It is tremendously important to review the Trust document carefully prior to making any complex decision, because sometimes it is easy to assume that power is granted by the Trust document, when in fact it is not permitted.

The Trustee tends to have several other duties, unless permitted to be waived, to the State of Virginia.  This includes the yearly Accounting and Inventory.  Accountings at their most basic level can be thought of as a balance sheet for the Trust.  Depending on the complexity of the Trust, it may be prudent to retain a qualified accountant to handle the Trust’s Accounting.  Inventories are simpler in that they show all the assets of the Trust.

PROCESS OF BEING APPOINTED AS TRUSTEE

There are several ways to be appointed as Trustee under a Trust.  The simplest is creating your own Revocable Trust and naming yourself as Trustee.  This path has many benefits.  As the creator of the Revocable Trust, you get to decide the extent of the power granted to the Original Trustee (you) and the Successor Trustee.  You can grant a set of powers to be granted to the acting Trustee, whether they are the original Trustee or Successor Trustee.  Alternatively, you can grant yourself certain powers while deciding on a different set of powers for your Successor Trustee.  There are separate discussions on Revocable and Irrevocable Trusts, here and here.

The next way that you can be appointed under a Trust is when you are the Successor Trustee.  In this instance, your options as to the powers granted are limited to discussions with the creator of the Trust to ensure that certain powers are granted prior to the creator of the Trust stepping down.  Otherwise, your powers are exactly what the creator of the Trust drafted.

The last way that you can be appointed under a Trust is by court authority, unless there is a process described in the Trust itself.  Sometimes, the Trustees, both original and successor, under the Trust are unable or unwilling to act in such a duty.  In that case, a petition is filed with the relevant circuit court to establish a new Trustee.  A formal proceeding is filed, and notices are given to all beneficiaries of the respective Trust, and there is a judicial determination on whether the petitioner should be the new Trustee.

It is highly advisable to discuss with a competent attorney when dealing with a Trust. Call our office today at 540-443-9255, or email at [email protected] to discuss your estate planning needs with an experienced estate planning attorney.