What is a Trustee in Virginia, and What Do They Do?
There are fundamentally three parties to a trust: the grantor, who creates the trust and funds it with their assets; the beneficiaries, who benefit from the assets held in the trust; and the trustee, who is a person or legal entity (such as a bank) who the grantor designates to manage the trust on behalf of the trust beneficiaries.
When you set up a trust, you (the grantor) are typically the trustee of your trust during your lifetime. While you have the capacity, you will manage the trust assets similarly to how you managed them prior to transferring them to your trust. Then, when you become incapacitated or pass away, a successor trustee will step in to manage the trust.
If you were to become incapacitated, your successor trustee would manage your assets and pay your bills, sign legal documents on your behalf, and make decisions for you. Upon your death, your successor trustee ensures that all of your assets are distributed to your beneficiaries according to the terms of your trust.
Duties of a Trustee
A trustee is responsible for managing the assets held in the trust. This could include real estate and financial accounts. Typically, the trustee is the only one who has the authority to access the trust assets, distribute funds and assets from the trust to the beneficiaries, and conduct business on behalf of the trust. A trustee also has a duty to act in a fiduciary capacity for current and future beneficiaries and to manage the trust assets in their best interest.
To put it plainly, a trustee’s role is to manage a beneficiary’s assets long-term. That includes investment and distribution decisions and tax reporting. But the most important of the trustee’s responsibilities is making decisions regarding distributions from the trust to the trust beneficiaries.
For instance, a typical standard for a trust for an adult child is to make distributions for their health, education, maintenance, and support. These are very broad standards. So you want to ensure your trustee will act in line with your values whenever there is no clear-cut guidance.
Choosing a Trustee
It is important to carefully consider who you name as a trustee:
- Will they have the ability to effectively administer the trust and manage the trust assets while complying with Virginia trust law?
- What impact would the person’s relationship to the beneficiaries have on them making distribution decisions, especially when a request for distribution falls outside the terms of the trust?
The trustee can hire a financial advisor to manage the trust assets. They can also hire an accountant to do the tax reporting. So, the most important thing you want in a trustee is someone who will be transparent, accountable, responsive, honest, act in line with your values, and not block out the beneficiary or otherwise cause problems.
Consult with an Experienced Virginia Estate Planning Attorney
For more information regarding the duties and responsibilities of a trustee in Virginia and how to choose the right trustee for your trust, consult with an experienced Virginia estate planning attorney from our law firm. Call us today at (703) 553-2577 or use the contact form to arrange a consultation.
The information on this site is for general informational purposes only. The information presented in this site is not legal advice or a legal opinion. You should seek the advice of legal counsel of your choice before acting upon any of the information in this site.