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Trust Administration Inventory

In all trusts, a fiduciary’s relationship with the commissioner begins with the filing of an inventory, which is due within four months after the later of qualification or first funding of the trust.1 The inventory provides a record of all assets under the fiduciary’s supervision and control. As all future actions are based upon this inventory, it is “of vital importance. It is the starting point and the basis upon which the accounting rests.”2 Correct addition and subtraction of the columns in the inventory will accelerate its review and approval.

Inventory assets should be valued at the fair market value as of the date of the funding of the trust, not the date the inventory was prepared. Estimated values are acceptable in the case of ordinary household goods. The fiduciary should obtain appraisals of personal property which has unusual value or is a collectible. Real estate may be listed at the assessed value for local real estate taxes or the fiduciary may submit an appraisal of its fair market value. Assets are listed at the gross value of the asset, without reduction for any debt, mortgage or lien against the property. The valuation of assets for inventory purposes has tax implications. The fiduciary may wish to consult with a tax advisor before filing the inventory.

The inventory form states that “[t]he Commissioner of Accounts has not independently verified the value of the items on the inventory or the fact that they are the only assets of the estate.”3 From the perspective of the commissioner, the inventory is presumed to be correct. There is controversy among the commissioners of account whether a commissioner has authority to conduct a hearing to determine objections to an inventory.4 The office of the Fairfax commissioner has consistently taken the position that objections to an inventory are proper matters to be heard pursuant to § 64.2-12095 and the commissioner’s approval of the inventory does not preclude an objection to its contents in the context of a hearing about the account. As the Code section refers specifically to an account, it is generally the practice of the Fairfax commissioner to at least require the filing of an account before convening a hearing pursuant to § 64.2-1209 concerning objections to an inventory. This gives the fiduciary an opportunity to make adjustments to the assets stated in the inventory in the account prior to the hearing.  Thus, it may be more than a year after qualification before the commissioner may hold a hearing on any objections to an inventory.

Under § 64.2-1300.E of the Virginia Code, in the case of after-discovered assets, a fiduciary has the option of filing an amended inventory or, with the permission of the commissioner, showing the after-discovered asset as an adjustment on the next regular account. In Fairfax, the commissioner routinely gives permission to show after-discovered assets on the next regular account, eliminating the need for most amended inventories.


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1  Va. Code Ann. § 64.2-1300.C.

2  Lamb, Virginia Probate Practice § 16 (1957).

3  Circuit Court Form CC-1670.

4  See Manual for Commissioner of Accounts § 5.801.

5  Virginia Code § 64.2-1209 provides “Any interested person, or the next friend of an interested person, may, before the commissioner of accounts, insist upon or object to anything which could be insisted upon or objected to by such interested person if the commissioner of accounts were acting under an order of a circuit court for the settlement of a fiduciary's accounts made in a suit to which such interested person was a party.”





 



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