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Trust Administration Final Account

The final account of a fiduciary is subject to special scrutiny. First, the fiduciary must distribute all of the remaining assets of the trust. The account must show a zero balance on hand. Second, the distributions to the beneficiaries must conform to the requirements of the trust. Thus, the fiduciary must address any disproportionate distributions made in prior accounts and the fiduciary must satisfy all special distributions that the trust may direct. Often events outside the trust record affect distributions. If corporate beneficiaries go out of existence or if individual beneficiaries pass away prior to the decedent’s death, these facts may not be apparent on the face of the record. A simple statement of facts attached to the final account can greatly assist in the review and approval of that account.

The Uniform Trust Code provides that the trustee may terminate an uneconomic trust if the assets are less than $100,000.1 The provisions of the Uniform Trust Code concerning termination of small trusts appear consistent with prior statutory authority;however, there is a substantial increase in amount and the UTC requires limited oversight. Thus, in Fairfax, the commissioner has adopted a policy under which the commissioner may approve the termination of a supervised trust of $100,000 or less pursuant upon notice and presentation of a plan consistent with the settlor’s intent.2

In other circumstances, although Virginia has adopted the Uniform Trust Code,3 its application to testamentary trusts is expressly limited. Section 64.2-700 of the Uniform Trust Code states “This chapter also applies to testamentary trusts, except to the extent that specific provision is made for them in Part A (§ 64.2-1200 et seq.) of Subtitle IV or elsewhere in the Code of Virginia, or to the extent it is clearly inapplicable to them.” Thus, whether specific provisions of the Uniform Trust Code are applicable to testamentary trusts is a matter of interpretation.

In many cases, executors required to fund testamentary trusts and trustees of those trusts seek ways to provide alternate administration of these trust funds. The commissioner’s office can assist in several ways. Under § 64.2-1904 of the Virginia Code, a fiduciary may make a distribution for a minor directly to an account established pursuant to the Virginia Uniform Transfers to Minors Act (“VUTMA”)4 in any amount if expressly authorized in the will or trust. Similarly under § 64.2-105.17 of the Virginia Code, a fiduciary is authorized to transfer funds in any amount to a VUTMA account for a beneficiary who is a minor or under a disability. Under § 64.2-558, a commissioner is authorized to approve such distributions without regard to amount or value.

In the absence of authority in the will or trust, if the trust is for the benefit of minor children or the distribution is direct to the minor, under § 64.2-1905.A of the Virginia Code, a fiduciary may make a distribution for a minor to a VUTMA account. However, the statutory provision is limited to a distribution of $25,0005 absent Court approval. Under § 8.01-606 of the Virginia Code, if a person is due funds in the amount of $25,000 or less, the commissioner may direct the payment of those funds to the persons entitled to those amounts without the intervention of a fiduciary.

In Fairfax, the commissioner will permit the direct disbursement to a VUMTA account where a testamentary trust is created solely for beneficiaries who are minors, either under § 8.01-606, § 64.2-1904, or § 64.2-1905 or using § 64.2-105.17 where both the executor and the trustee concur.


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1  Va. Code Ann. § 64.2-732.

2  Trust Termination Policy

3  Va. Code Ann. §§ 64.2-700 to 808,

4  (Va. Code Ann. § 64.2-1900 to 2028)

5  Va. Code Ann. § 64.2-1905.C (effective July 1, 2014; prior thereto the limit was $10,000).





 



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