Testamentary Trusts

Testamentary Trusts are trusts established under a decedent's last will and testament. For example, it is common for parents of young children to establish trusts for holding assets until their children reach an age that they believe is appropriate for them to receive the assets directly. In the interim a trustee would manage and disburse the funds as needed for support, medical needs, education, and other purposes as provided under the terms of the trust. Under Virginia law, testamentary trusts are subject to court supervision and administration and accounting of the trust assets.

 

Certain Exceptions

There are other types of trust that are not subject to court supervision. Also, under certain circumstances testamentary trust inventory and accounting obligations may be waived under Virginia law. The trusts discussed in this article refer to testamentary trusts that are subject to court supervision and accountings.

 

Trustee Qualification

A testamentary trustee must qualify with the Clerk of the Circuit Court in much the same way as an executor qualifies for a decedent's estate, and upon qualification the trustee receives a certificate of qualification evidencing their appointment and authority to act as trustee with respect to the trust assets.

 

Trust Inventory

A testamentary trustee must file an inventory of trust assets with the commissioner of accounts within four months after the first date that the trustee receives trust assets.The instructions provided to trustees at the time of their qualification are a very good source if information for preparing and filing the trust inventory. The values to be used for the trust assets identified on the inventory is the fair market value as of the date the trustee receives the assets. The instructions for preparing the Inventory provide more detailed information.

 

First Trust Accounting

As discussed in the Instructions, the first accounting must cover the period from the date of the trustee's qualification with the Clerk of Court through December 31 of the same year; and must be filed on or before May 1 of the following year.

 

Second and Subsequent Trust Accountings

Second and subsequent accountings will cover the calendar year (January 1 through December 31 each year) and must be filed on or before the following May.

 

Final Trust Accountings

Unlike estate accountings, which may be completed when the executor or administrator has completed the estate administration, the administration of the trust will be determined based on the terms of the trust, and the date upon which final distribution of the trust asset is made and completed. In some cases, the term of administration may be for an extended period of time.